§ 674. We now come to the third class of illegal contracts, namely, contracts which violate the rules of public policy. The rule of law, applicable to this class of cases, is, that all agreements which contravene the public policy are void, whether they be in violation of law or of morals, or tend to interfere with those artificial rules which are supposed by the law to be beneficial to the interests of society, or obstruct the prospective objects flowing indirectly from some positive legal injunction or prohibition.1
§ 675. Public policy is in its nature so uncertain and fluctuating, varying with the habits and fashions of the day, with the growth of commerce and the usages of trade, that it is difficult to determine its limits with any degree of exactness. It has never been defined by the courts, but has been left loose and free of definition, in the same manner as fraud. This rule may, however, be safely laid down, that wherever any contract conflicts with the morals of the time, and contravenes any established interest of society, it is void, as being against public policy.2
§ 676. The enlargement of trade and the growth of cities, with the new and various relations created thereby, have renand the defendant takes advantage of the plaintiff's condition or situation, there the plaintiff shall recover; and it is astonishing that the reports do not distinguish between the violation of the one sort and the other." Astley v. Reynolds, 2 Str. 916; Browning v. Morris, 2 Cowp. 790; Vandyck v. Hewitt, 1 East, 98; Worcester v. Eaton, 11 Mass. 376, 377.
1 1 Story, Eq. Jur. § 294 to 305.
2 "The power of courts to declare a contract void for being in contravention of sound public policy is a very delicate and undefined power, and, like the power to declare a statute unconstitutional, should be exercised only in cases free from doubt." Richmond v. Dubuque, etc, R. R. Co., 23 Iowa. 191 (1868), per Coles, J. The case under consideration was a monopoly A written contract, upon good consideration, and without fraud or undue influence, wherein one party binds himself to devise his real estate to another, is not against public policy; and the heirs or legatees of the promisor may be held liable for a failure to fulfil it. Parsell v. Stryker, 41 N. Y. 480 (1869); Johnson v. Hubbell, 5 Am. Law Reg. 177. And see Rivers v. Rivers, 3 Desaus. 195; Jones v. Martin, 3 Anst. 882; Podmorc V. Gunning, 7 Sim. 644; Stephens v. Reynolds, 2 Seld. 458.
dered many species of contracts valid, which were formerly-considered to conflict with public policy. For instance, forestalling, which is the buying and contracting for any merchandise or victual on its way to the market, or dissuading persons from bringing their provisions there; regrating, which is the buying of corn and dead victual in any market, and reselling it within four miles of the place where it is bought; and engrossing, which is the purchasing of large quantities of dead victual or corn, to sell again, - all of which were formerly considered to be against public policy, when trade was small, and money scarce, and markets few, constitute, at the present day, great arteries of commerce, and are the very form and pressure of certain branches of trade. Indeed, without them, what would become of wholesale commission merchants and jobbers ?
§ 677. A general example of a contract against the publie policy of the present day is to be found in a confederation or combination of persons for the purpose of preventing competition at an auction sale, and of depressing the price of the property below its fair market value. Thus, if two or more persons should agree not to bid against each other at auction, but that one should bid, and then divide with the others the subject-matter of sale, the agreement would be absolutely void, and incapable of ratification,1 on the ground that it tends injuriously to affect the character and value of sales by auction.2 So a contract between two persons, each of whom sends in sealed proposals for the collection of town taxes, that they should share equally in the profits and losses, whoever should obtain the contract, is against public policy, and void; without any proof that any injury arose in the particular case.3 But if an association of bidders be formed for honest and just purposes, and do not conflict with the rights and interest of the seller, - as, if it be for the purpose of enabling them to purchase together what they could not purchase separately, - their agreement will be valid, as being no fraud on the public, while it is a positive advantage to the seller. It must, in such cases, be clearly proved, that the association was for honest and just purposes, and did not operate as a fraud, or any agreement between the parties not to bid against each other will be void.! So a contract between creditors, for whose benefit an assignment is made by a debtor of all his property, and the assignee, that the latter may buy the property at the auction sale and apply the proceeds to their debts, is not void as tending to prevent competition at the sale.2 So, also, two or more persons may agree together to purchase property sold by auction, and fix the price which they are willing to give, and appoint one of their number to bid for them; for such an agreement could operate to the injury of no one.3 But an agreement to create " a corner "in stock, by buying it up so as to control the market, and then purchase for future delivery, is illegal and void.4 And an agreement by a turnpike corporation, to grant to certain individuals the privilege of passing the gate free from toll, in consideration of their withdrawing their opposition to a legislative act, touching the alteration of the road, has been held to be void, as being prejudicial to fair and unbiassed legislation.5
1 Wheeler v. Wheeler, 5 Lans. 355 (1872).
2 Ante, § 637; 1 Story, Eq. Jur. § 293 to 302; Doolin v. Ward, 6 Johns. 194; Wilbur v. How, 8 Johns. 444; Thompson v. Davies, 13 Johns. 112; Jones v. Caswell, 3 Johns. Cas. 29; Toler v. Armstrong, 4 Wash. C. C. 297; 11 Wheat. 258; Gardiner v. Morse, 25 Me. 140.
3 Atcheson v. Mallon, 43 N. Y. 147 (1870). And see Mills v. Mills, 40 N. Y. 545; Gulick v. Ward, 5 Halst. 87.
1 Phippen v. Stickney, 3 Met. 384, 387; Smull v. Jones, 1 Watts & Serg. 128; Smith v. Greenlee, 2 Der. 126; Wolfe v. Luyster, 1 Hall, 146; Jenkins v. Hogg, 2 Const. 821. In New York, however, this distinction is not adhered to, but in all cases an agreement not to bid against particular persons, or not to bid at all, is treated as a fraud. See Jones v. Caswell, 3 Johns. Cas. 29; Doolin v. Ward, 6 Johns. 194; Wilbur v. How, 8 Johns. 444; Thompson v. Davies, 13 Johns. 112. See also Dudleys. Little, 2 Ohio, 504; Piatt v. Oliver, 1 McLean, 295; Gulick v. Ward, 5 Halst. 87.
2 Bradley v. Kingsley, 43 N. Y. 534 (1871). And see Phippen v. Stickney, 3 Met. 384; Smull v. Jones, 1 Watts & Serg. 128.
3 Smull v. Jones, 6 Watts & Serg. 122. An agreement by the subscribers to a charity to vote for the same candidate for aid is not against public-policy. Bolten v. Madden, Law R. 9 Q. B. 55 (1873).
4 Sampson v. Shaw, 101 Mass. 145 (1869).
5 Pingry v. Washburn, 1 Aik. 264. See Simpson v. Lord Howden, 1 Keen, 583; s. c. 3 Myl. & Cr. 97; Lord Howden v. Simpson, 10 Ad. & El. 793; The Vauxhall Bridge Co. v. Earl Spencer, 2 Madd. 356; Jacob, 64; Edwards v. Grand Junction Railway Co., 1 Myl. & Cr. 650; Hah v. Dyson, 17 Q. B. 785; 10 Eng. Law & Eq. 424, and Bennett's note.
So, a contract to erect a building for a school district, issued by a board of directors to one of their own number, who takes part in letting the contract, is void as against public policy, the two positions being antagonistic.1
§ 678. In the consideration of contracts against public policy, we shall somewhat arbitrarily divide the subject into the following heads: 1st. Contracts in Restraint of Trade; 2d. Contracts in Restraint of Marriage; 3d. Marriage Brokage Contracts; 4th. Wagers and Gaming; 5th. Contracts to offend against the Law and Public Duty; 6th. Usury; 7th. Trading with an Enemy.