There is some conflict in this country on this point, but the cases, on the whole, are consistent with the rule that the mere knowledge on the part of one party to a contract that the other contemplates an illegal purpose will not invalidate the contract. We can best arrive at a correct understanding of the rules established by the weight of authority in this country by taking cases of sales of goods and loans of money for illustrations, as it is generally with reference to them that the question arises. We will divide the subject accordingly, as some of the courts seem to have made a distinction between sales of goods and loans of money.
33 Earn. & Ald. 179. See "Contracts," Dec. Dig. (Key-No.) § 102; Cent. Dig. §§ 462-467.
43 Mees. & W. 435. See "Contracts," Dec. Dig. (Key-No.) | 102; Cent. Dig. §§ J,62-J,67.
5 Pearce v. Brooks, L-. R. 1 Exch. 213. This case seems to have gone further than the cases which the court followed, which were actions brought for the recovery of money lent for an Illegal object, the money being furnished for the express purpose of accomplishing that object See "Contracts," Dec. Dig. (Key-No.) § 102; Cent. Dig. §§ 462-467.
It is everywhere settled that, if it is a part of the contract under which the goods are sold that they shall be used for an unlawful purpose, then the contract is void, and the price cannot be recovered; and the same is no doubt true where goods are sold for the purpose of enabling the buyer to accomplish an unlawful purpose, for in the latter case there is an unlawful intention on the part of both parties.6 Some cases hold that the sale is void if made "with a view to" the illegal purpose.7
6 Talmage v. Pell, 7 N. Y. 328; St Louis Fair Ass'n v. Carmody, 151 Mo. 566, 52 S. W. 365, 74 Am. St. Rep. 571. It has been held, for instance, that if liquor is sold for the express purpose of enabling the buyer to retail it in violation of law, the sale is illegal. Kohn v. Melcher (C. C.) 43 Fed. 641, 10 L. R. A. 439. It has also been held that if a house is knowingly leased or furniture sold to be used as or in a bawdyhouse, or for any other unlawful purpose, the rent or price cannot be recovered. Dougherty v. Seymour, 16 Colo. 2S9, 26 Pac. 823; Ashbrook v. Dale, 27 Mo. App. 649; Ernst v. Crosby, 140 N. Y. 364, 35 N. E. 603; Riley v. Jordan, 122 Mass. 231; Edelmuth v. McGarren, 4 Daly (N. Y.) 467; Ralston v. Boady, 20 Ga. 449; Sherman v. Wilder, 106 Mass. 537; Reed v. Brewer, 90 Tex. 144, 37 S. W. 418; Chateau v. Singla, 114 Cal. 91, 45 Pac. 1015, 33 L. R. A. 750, 55 Am. St. Rep. 63; Standard Furniture Co. v. Van Alstine, 22 Wash. 670, 62 Pac. 145, 51 L. R. A. 8S9, 79 Am. St. Rep. 960. Some of the above cases come very close to the English rule. See, also, Mound v. Barker, 71 Vt 253, 44 Atl. 346, 76 Am. St. Rep. 767. See "Sales," Dec. Dig. (Key-No.) § 48; Cent. Dig. §§ 101-101; "Contracts;' Cent. Dig. § 464.
7 Webster v. Munger, 8 Gray (Mass.) 584; GRAVES v. JOHNSON, 156 Mass. 211, 30 N. E. 818, 15 L. R. A. 834, 32 Am. St Rep. 446, Throckmorton Cas. Contracts, 294; Davis v. Bronson, 6 Iowa, 410. "When a sale of intoxicating liquors in another state has just so much greater approximation to a breach of the Massachusetts law as is implied in the statement that it is made with a view to such a breach it is void. Webster v. Munger, 8 Gray, 584; Orcutt v. Nelson, 1 Gray, 536, 541; Hubbell v. Flint, 13 Gray, 277, 279; Adams v. Coulliard, 102 Mass. 167, 172, 173. * * * If the sale would not have been made but for the seller's desire to induce an unlawful sale in Maine, it would be an unlawful sale. * * * We assume that the sale would have taken place whatever the buyer had been expected to do with the goods. * * * The question is whether the sale is saved by the fact that the intent mentioned was not the controlling inducement to it * * * If the sale is made with the desire to help him (the buyer) to his end, although primarily made for money the seller cannot complain if the illegal consequence is attributed to him. If the buyer knows that the seller while aware of his intent is indifferent to it or disapproves of it it may be doubtful whether the connection is sufficient. It appears to us not unreasonable to draw the line as was drawn in Webster v. Munger, 8 Gray, 584, and to say that when the illegal intent of the buyer is not only known to the seller, but encouraged by the sale, as just explained, the sale is void." GRAVES v. JOHNSON, supra, per Holmes, J. See "Sales," Dec. Dig. (Key-No.) § 48; Cent. Dig. §§ 101-107; "Contracts," Cent. Dig. § 464.
It is also settled that if, in addition to a sale of goods which the vendor knows are to be used for an illegal purpose, he does some act in aid or furtherance of the unlawful design, his contract is void, and he cannot recover the price. An example of such a case is where a person who sells goods not only knows that his vendee intends to smuggle them into the country, but packs them up or marks them in a manner convenient for the purpose, with a view of their being smuggled.8
If the vendor of goods knows that they are to be used for the perpetration of a crime which is not merely malum prohibitum or of inferior criminality, even though he may not expressly stipulate that they shall be so used, and though he does nothing further than furnishing them to aid in such use, the contract of sale is illegal and void, and he cannot recover the price.9 It seems that it is otherwise where the crime intended to be perpetrated is merely malum prohibitum or of inferior criminality.10
8 Tracy v. Talmage, 14 N. Y. 162, 67 Am. Dec. 132; Waymell v. Reed, 5 Term R. 599; Gaylord v. Soragen, 32 Vt. 110, 76 Am. Dec. 154; Arnot v. Coal Co., 68 N. Y. 566, 23 Am. Rep. 190; Foster v. Thurston, 11 Cush. (Mass.) 322; Skiff v. Johnson, 57 N. H. 475; Banchor v. Mansel, 47 Me. 58. Concealing and disguising form of liquor sold, in order to evade the law. Aiken v. Blaisdell, 41 Vt. 655. In Massachusetts the court has shown an inclination to follow the English rule on this point. In McIntyre v. Parks, 3 Metc. (Mass.) 207, it was held that the bare fact of knowledge on the part of the vendor of the vendee's unlawful intent was not enough to avoid the sale; but this case, though not overruled, was criticised in Webster v. Munger, 8 Gray (Mass.) 584. And see GRAVES v. JOHNSON, 156 Mass. 211, 30 N. E. 818, 15 L. R. A. 834, 32 Am. St Rep. 446, Throckmorton Cas. Contracts, 294; Hubbard v. Moore, 24 La. Ann. 591, 13 Am. Rep. 128; Sampson v. Townsend, 25 La. Ann. 78; Fishel v. Bennett, 56 Conn. 40, 12 Atl. 102. See "Sales," Dec. Dig. (Key-No.) § 48; Cent. Dig. §§ 101-107; "Contracts," Cent. Dig. § 464.
9 Hanauer v. Doane, 12 Wall. 342, 20 L. Ed. 439: Tatum v. Kelley, 25 Ark. 209, 94 Am. Dec. 717; Lightfoot v. Tenant, 1 Bos. & P. 556; Langton v. Hughes, 1 Maule & S. 593; Tracy v. Talmage, 14 N. Y. 162, 67 Am. Dec. 132; Howell v. Stewart, 54 Mo. 400; Russell v. Post, 138 U. S. 425, 11 Sup. Ct 353, 34 L. Ed. 1009. See "Sales," Dec. Dig. (Key-No.) § 48; Cent. Dig. §§ 101-107; "Contracts," Cent. Dig. § 464.
10 Hanauer v. Doane, 12 Wall. 342, 20 L. Ed. 439; Gaylord v. Soragen, 32 Vt 110, 76 Am. Dec. 154; Hodgson v. Temple, 5 Taunt. 181; Howell v. Stewart 54 Mo. 404. See "Sales," Dec. Dig. (Key-No.) § 48; Cent. Dig. §§ 101-107; "Contracts," Cent. Dig. § 464.
If the particular circumstances do not bring the contract of sale within any of the cases mentioned above, then, according to the weight of authority in this country, the contract of sale is not illegal merely because the vendor knew that the goods were intended to be used for an unlawful purpose.11 "The law," it is said in a New York case, "does not punish a wrongful intent when nothing is done to carry that intent into effect; much less bare knowledge of such an intent, without any participation in it. Upon the whole, I think it clear, in reason as well as upon authority, that in a case like this, where the sale is not necessarily per se a violation of law, unless the unlawful purpose enters into and forms a part of the contract of sale, the vendee cannot set up his own illegal intent in bar of an action for the purchase money." 12 In accordance with this principle a contract by which a person sells his property and business good will to another cannot be repudiated on the ground that the purchaser acquired the property for the purpose of obtaining a monopoly of the business and in pursuance of an illegal combination in restraint of trade.18