Bank v. Wallace , 61 N.H. 24 ( 1881 )

It is a well established legal principle, that all contracts which provide that anything shall be done which is positively prohibited by law, or morality, or public policy, are void, and that, consequently, money knowingly advanced and expended in furtherance of such contracts cannot be recovered; but this case does not fall within the principle.

The presumption of law is in favor of contracts; illegality will not be presumed; and if a contract is susceptible of two meanings, one legal and the other illegal, it is elementary that courts will adopt the former and not the latter, so that, if practicable, the contract may be rendered operative. Hence, if an agreement like the one here is entered into for the performance of an act which may be effected by lawful or unlawful means, the law will presume that the former was contemplated by the parties, and that what was done under it was legally done, until the contrary appears.

The obvious purpose of the plaintiffs and the other owners of the stolen securities, which were the subject-matter of the agreement, was to recover them; and it is equally obvious that this purpose of itself was not unlawful, nor was the manner of its proposed execution, unless it expressly contravened public policy. The securities were private property, and the public had no interest in their recovery provided nothing was done to compound the crime, or lessen or hinder the opportunities for the prosecution or conviction of the criminals. But, so far as appears, nothing whatever was done by the owners whereby the rights of the public were impaired or infringed in any respect by the arrangement entered into and carried out by them for the recovery of the property; for the case wholly fails to disclose any purpose or agreement on their part to suppress a prosecution of the offenders, or the evidence necessary to support it. This being so, the compromise of their civil rights was not unlawful, for it is well settled that "in all offences which involve damages to an injured party for which he may maintain an action, it is competent for him, notwithstanding they are also of a public nature, to compromise or settle his private damage in any way he may think fit." Tyndall, C. J., in Keir v. Leeman, 9 Ad. E. 395; Richardson, C. J., in Plumer v. Smith, 5 N.H. 554.

But if it be conceded that the original transaction was illegal, it does not follow for that reason that the plaintiffs are precluded from recovery. Their suit is not brought in affirmance, but in disaffirmance, of that transaction, and requires no aid from it in its support. The money sued for was not to be expended except upon a certain contingency which did not happen. On the contrary, it is admitted that Towne did not pay out this particular money, or return it to the plaintiffs, but converted it to his own use. Under these circumstances, and upon every principle of natural justice, the plaintiffs are entitled to recover it from his estate; for there is fortunately no rule of law which requires that the conversion of trust funds (no matter for what purpose they may be held) should be encouraged by way of estoppel. On the other hand, the policy of the law is, that he who has the money of another shall not be permitted to keep it. Therefore, when the securities were obtained, and Towne's agency thereby terminated, the law created a promise to refund the unexpended balance in his hands to the plaintiffs; and on such implied promise this suit is maintainable.

And adopting even the defendant's theory, that the money was knowingly advanced by the plaintiffs for an illegal purpose, he cannot be permitted to retain the benefit which in his representative capacity he seeks to derive from the wrongful act of his intestate; for it is consonant to the letter as well as to the spirit of the law that, as such alleged purpose was not fully executed, there was a locus poenitentiae as to the unexpended balance of the money of which the plaintiffs might legally and properly avail themselves. 2 Com. Cont. 109; Perkins v. Eaton, 3 N.H. 152; 2 Par. Cont. (5th ed.) 746, and cases cited; Vischer v. Yates, 11 Johns. 23; Hastelow v. Jackson, 8 Barn. Cr. 224; Bousfield v. Wilson, 16 M. W. 185; Farmer v. Russell, 1 Bos. Pul. 296; McKee v. Manice, 11 Cush. 357; Fisher v. Hildreth, 117 Mass. 562, 563; Chit. Cont. (6th Am. ed.) 637, 638, and cases cited; Sampson v. Shaw, 101 Mass. 145.

Exceptions overruled.

SMITH, J., did not sit: the others concurred.