Sec 364

It does not follow, on the other hand, because a statute imposes a penalty on a particular act, that such act is illegal. A penalty may be a mere police tax; it may be equivalent to saying, "You are at liberty to do this, but if you do, you must pay a certain amount to the state." When a penalty is thus in the nature of a tax, a contract to do the act on which the penalty is imposed is not in itself unlawful.3 When statutory conditions, also, are imposed on the conduct of a business or profession, agreements made without observing these conditions, if no stigma of wrong is attached to the specific transaction, and if it appears that the condition was imposed for merely administrative purposes, e. g., the convenient collection of the revenue, will not be held invalid.4 Hence, a contract of sale is not void, because the thing sold may be open to seizure under a license or excise law;1 nor because the broker or peddler making the sale was not duly licensed, thereby exposing himself to a penalty;2 nor because the agent was prohibited from acting as such;3 nor because certain formalities presented by law have not been complied with.4 sec 365. But when a statute imposes a penalty, not as a tax, but as a punishment, then a contract to do the thing on which the penalty is imposed is ordinarily unlawful;5 and so when an act is absolutely prohibited.6 And when conditions on the exercise of a business are imposed in a statute for the maintenance of public order, or for the protection of parties, or on grounds of public policy, then contracts by such persons, in violation of the statute, are void.7 Thus it has been held that where a pawn-broker lends money without complying with the statutory requisites, he cannot recover the loan;8 nor can a foreign Not necessary that penalty should be prescribed.

Mere penalty imposed does not make an act illegal.

Bartle v. Coleman, 4 Pet. 184; Fuller v. Dame, 18 Pick. 472; White v. Bass, 3 Cush. 449; and other cases cited, 2 Ch. on Cont. 11th Am. ed. 1003.

1 Leake, 2d ed. 723; Forster v. Taylor, 5 B. & Ad. 896; Cope v. Rowlands, 2 M. & W. 157; Cork & Youghel R. R. in re, L. R. 4 Ch. 748; Cowan v. Milburn, L. R. 2 Ex. 230; Combs v. Emery, 14 Me. 404; Pattee v. Greely, 13 Mete. 284; White v. Bass, 3 Cush. 449; Mitchell v. Smith, 1 Binn. 118; and see Sussex Peerage Case, 11 Cl. & F. 148-9, cited Pollock (Wald's ed.) 261.

2 2 Hawk. c. 25, s. 4; R. v. Davis, Say. 163; R. v. Gregory, 2 N. & M. 478; 5 B. & Ad. 555; Mayor of Norwich v. Norfolk R. R., 4 E. & B. 397; Harris v. Runnels, 12 How. U. S. 80;.

State v. Fletcher, 5 N. H. 257; Com. v. Shattuck, 4 Cush. 141; Seidenbender v. Charles, 4 S. & R. 159; Keller v. State, 11 Md. 525.

3 Leake, 2d ed. 724; Johnson v. Hudson, 11 East, 180; Gremare v. Valon, 2 Camp. 144; Smith v. Mawwood, 14 M. & W. 463; Brown v. Duncan, 10 B. & C. 93; Bailey v. Harris, 12 Q. B. 905; Harris v. Runnels, 12 How. U. S. 79; Lared v Andrews, 106 Mass. 435.

4 Pollock, 262; Benj. on Sales, 3d Am. ed. sec 538. That it is otherwise when the object of the statute is to make the contract illegal, see Lamed v. Andrews, 106 Mass. 435; Favor v. Philbrick, 7 N. H. 340; Schermerhorn v. Tolman, 4 Kern. 93; and cases cited infra, sec 365.

Otherwise when act is made unlawful.

1 Bailey v. Harris, 12 Q. B. 905; Wetherell v. Jones, 3 B. & Ad. 221.

2 Smith v. Linds, 4 C. B. N. S. 395; Johnson v. Hudson, 11 East, 180; Jones v. Barry, 33 N. H. 209; see Lewis v. Welch, 14 N. H. 294.

3 Ward v. Smith, 7 Wall. 447; Conn v. Penn, Pet. C. C. 523; Griswold v. Waddington, 16 Johns. R. 438; Chas-tain v. Bowman, 1 Hill, S. C. 270; Lyon v. Kent, 45 Ala. 656.

4 Smith v. Mawwood, 14 M. & W. 452; see Aiken v. Blaisdell, 41 Vt. 655. That a statute which does not absolutely prohibit a thing not in itself immoral, should not be strained beyond its reasonable meaning so as to interfere with liberty, see Barton v. Muir, L. R. 6 P. C. 134.

5 Drury v. Defontaine, 1 Taunt. 136; Bensley v. Bignold, 5 B. & Al. 335; Fennell v. Ridler, 5 B. & C. 406; see Elkins v. Parkhurst, 17 Vt. 105; Com. v. Shattuck, 4 Cush. 141; Smith v. Arnold, 106 Mass. 269; Lamed v. Andrews, 106 Mass. 435; People v. Albany, 11 Wend. 539; Bell v. Quin,.

2 Sandf. 146; Seidenbender v. Charles, 4 S. & R. 151; Morris Run Coal Co. v. Barclay Coal Co., 68 Penn. St. 173; Woods v. Armstrong, 54 Ala. 150; see Prescott v. Battersley, 119 Mass. 285, and cases cited supra, sec 364.

6 Cope v. Rowlands, 2 M. & W. 149; see Bensley v. Bignold, 5 B. & Ald. 335; Griffith v. Wells, 3 Denio, 226; Schermerhorn v. Tolman, 4 Kern. 93; Burkholder v. Beetem, 65 Penn. St. 496. "A contract is void if prohibited by a statute, though the statute inflicts a penalty only, because such a penalty implies a prohibition." Cope v. Rowlands, 2 M. & W. 149; adopted in Pollock, 3d ed. 271. It would be better to say "when such a penalty implies a prohibition." See De Begnis v. Arm-istead, 10 Bing. 110; S. P. Roby v. West, 4 N. H. 289; Mitchell v. Smith, 1 Binn. 110; Stanly v. Nelson, 28 Ala. 514.

7 Taylor v. Gas Co., 10 Ex. 293; Ritchie v. Smith, 6 C. B. 462.

8 Fergusson v. Norman, 5 Bing. N. C. 76.

insurance company without complying with the statutory conditions.1 When a statute, also, makes a license from two justices a condition precedent to certain kinds of contracts by surveyors of highways, contracts without such license are invalid.2 Under the act of congress, also, mortgages given to national banks to secure future loans are void;3 though it is otherwise with loans by national banks to a particular customer in excess of one-tenth of the capital.4 Where, also, a penalty is imposed on selling by the cord wood not measured by a wood measurer, the object being to prohibit all such sales, a sale of this kind is void, and the seller cannot recover the price;5 and so of a sale of shingles not of a size permitted by local statute.6