Same - Illegality Distinguished From Fraud

Fraud is a civil wrong, and an agreement to commit a fraud is an agreement to do an illegal act; but fraud as a civil wrong must be kept apart from fraud as a vitiating element in contract. Fraud may vitiate a contract because it prevents the consent of the other from being genuine; and in such case the contract can be avoided by the party defrauded, because his consent was unreal.

Same - Agreements In Breach Of Statute - Constitutional Law

151. The legislature, in the exercise of its police power, may regulate or prohibit the making of contracts.

The United States, or a state, in the exercise of its police power, may regulate or prohibit the making of contracts where, in the judgment of the legislature, the public good requires the restriction, and ordinarily the courts will not review its judgment as to the propriety of the law. There is, however, some limitation to the police power. The federal constitution protects the vested rights of the people, and prohibits congress and the state legislatures from passing any law which shall deprive a citizen of his liberty or property without due process of law. The courts are bound to enforce the constitution even as against the legislatures; and if the legislature, assuming to act under the police power of the state, should pass a statute depriving a person of the right to make contracts, where the public good clearly does not require such interference, the statute would be unconstitutional and void.17

5 Am. Rep. 260, Throckmorton Cas. Contracts, 219; Arnold v. Clifford, 2 Sumn. 238, Fed. Cas. No. 555; Ives v. Jones, 25 N. C. 538, 40 Am. Dec. 421; Clay v. Yates, 1 Hurl. & N. 73. See "Contracts;' Dec. Dig. (Key-No.) § 103; Cent. Dig.

§ 474.

16 Jewett Pub. Co. v. Butler, 159 Mass. 517, 34 N. E. 10S7. See "Contracts," Dec. Dig. (Key-No.) § 103; Cent. Dig. § 474.

17 Allgeyer v. Louisiana, 165 U. S. 578, 17 Sup. Ct. 427, 41 L. Ed. 832; Hol-den v. Hardy, 169 U. S. 366, 18 Sup. Ct. 383, 42 L. Ed. 780; People v. Coler, 166 N. Y. 1, 59 N. E. 716, 52 L R. A. 814, 82 Am. St. Rep. 605; People v. Gillson, 109 N. Y. 389, 17 N. E. 343, 4 Am. St Rep. 465; In re Jacobs. 08 N.

A discussion of the police power and of its limitations, however, in its bearings upon the power of the legislature in this regard, is beyond the scope of this book.

Same - Prohibition -By Statute

152. In determining whether a contract, or an act or omission involved in the performance of a contract, is prohibited by statute, the intention of a legislature must be ascertained, and must govern; and in ascertaining the intention the court will look to the language and subject-matter of the statute, and the evil which it seeks to prevent. Subject to this fundamental rule, the following rules of construction, which are frequently applied, may be stated:

(a) Where the statute imposes a penalty for an act or omission, this is prima facie evidence of intention to prohibit.

(b) If the object of the penalty is protection of the public, it amounts to a prohibition; but if the object is solely for revenue purposes, the act or omission is not prohibited.

Where it is contended that an agreement is illegal as being in violation of a statute, the question is whether the acts contemplated are prohibited by the statute; and the answer to this question depends upon the construction of the statute. In all cases the intention of the legislature must govern.18 If a statute was intended to prohibit a particular agreement, or the acts involved in its performance, then that agreement is clearly illegal.

The law does not make any distinction between acts which are mala in se, and which for this reason are prohibited by statute, and acts which are mala prohibita, or wrong merely because they are prohibited by statute. If the statute prohibits an act, an agreement involving its commission.is illegal, without regard to the ground of prohibition, or the morality or immorality of the act.19

Y. 98, 50 Am. Rep. 636; People v. Marx, 99 N. Y. 377, 2 N. E. 29, 52 Am. Rep. 34; State v. Scougal 3 S. D. 55, 51 N. W. 858, 15 L. R. A. 477, 44 Am. St. Rep. 756; Godcharles v. Wigeman, 113 Pa. 431, 6 Atl. 354. See "Constitutional Law," Dec. Dig, (Key-No.) § 276; Cent. Dig. §§ 845, 846.

18 Cope v. Rowlands, 2 Mees. & W. 149; Miller v. Ammon, 145 U. S. 421, 12 Sup. Ct 884, 36 L. Ed. 759; Bowditch v. Insurance Co., 141 Mass. 292, 4 N. E. 798, 55 Am. Rep. 474; Aiken v. Blaisdell, 41 Vt. 655; Griffith v. Wells, 3 Denio (N. Y.) 226; Harris v. Runnels, 12 How. 79, 13 L. Ed. 901; Pangborn v. Westlake, 36 Iowa, 546; Dillon v. Allen, 46 Iowa, 299, 26 Am. Rep. 145; Lester v. Bank, 33 Md. 558, 3 Am. Rep. 211; Ruckman v. Bergholz, 37 N. J. Law, 437; McKeever v. .Beacom, 101 Iowa, 173, 70 N. W. 112. Bee "Contracts;' Dec. Dig. (Key-So.) § 105; Cent. Dig. §§ 478-497. Clark Cont.(3d Ed.)-21