It has been laid down on high authority that "When it is sought to avoid an agreement, not being in itself unlawful, on the ground of its being meant as part of an unlawful scheme, or to carry out an unlawful object, it must be shown that such was the intention of the parties at the time of making the agreement." 59
The correctness of this rule seems, however, questionable. Public policy certainly requires that the illegal intent whenever conceived should not be carried into execution. According to the rule stated in the text, an innocent party may be bound to aid in the execution of an illegal purpose or be liable for breach of contract. There seems no theoretical difficulty in saying that the change of purpose subsequent to the formation of the contract gives rise to a defence which did not previously exist.60
On the other hand if the original purpose of the parties was unlawful though their contract itself was not, and they subsequently make an agreement to supersede their original purpose when such sales were permissible was enforced after they had been forbidden by law.
58This may be inferred from Ware v. Curry, 67 Ala. 274; Pond v. Smith, 4 Conn. 297. In Ware v. Curry, the vendor's lien on real estate sold by him was held not lost by aid given the buyer after the sale in the illegal purposes of manufacturing iron for the Confederate government. In Pond v. Smith, a part owner of a ship who fitted the ship out was held entitled to reimbursement in spite of a subsequent agreement that the vessel should be illegally employed as a privateer. See also Johns v. Reed, 77 Neb. 492, 109 N. W. 738.
59 Lord Howden v. Simpson, 10 A.
& E. 793, 818, quoted by Sir Frederick Pollock, Wald's Pollock Contracts (3d ed.), 493. And see Church v. Proctor, 66 Fed. 240, 33 U. 8. App. 1,13 C. C. A. 426; Pape v. Wright, 116 Ind. 502,507, 19 N. E. 459; Sawyer v. Taggart, 14 Bush, 727, 734; Wall v. Schneider, 59 Wis. 352, 359, 18 N. W. 443.
60 Suppose a seller had contracted to sell a large number of rifles to a buyer who intended to dispose of them in lawful trade, but who subsequently, as the seller discovers before performance of the contract, plans to dispose of them to a government at war with the United States. Can the buyer hold the seller liable in damages for refusing to deliver the rifles according to contract?
and to carry out the agreement in a lawful way, there seems no reason why the courts should thereafter refuse to enforce the contract.61