Money paid by a principal to his agent to be used in violation of law, and remaining in the agent's hands, may be recovered.1 Even if part of the money has been paid over or expended by the agent in furtherance or accomplishment of the illegal purpose the balance is recoverable.2 Indeed, there are many cases which go to the extent of holding the agent responsible to his principal for money received by him from a third person as the proceeds of an executed illegal contract.3

1 Wasserman v. Sloss, 1897, 117 Cal. 425; 49 Pac. 566; 38 L. R. A. 176; 59 Am. St. Rep. 209, (stocks advanced for bribery); Morgan v. Groff, 1848, 4 Barb. (N. Y. Sup. Ct.) 524, (money given agent to bet and misappropriated); Smith v. Blackley, 1898, 188 Pa. St. 550; 41 Atl. 619; 68 Am. St. Rep. 887, (alleged abortion: here the principals were not in pari delicto with their agent, being induced to employ him in the proposed illegal transaction by his false and fraudulent representations); Kiewert v. Rindskopf, 1879, 46 Wis. 481; 1 N. W. 163, (money given agent to make payment on illegal contract). But see Smith v. Richmond, 1902, 114 Ky. 303; 70 S. W. 846; 102 Am. St. Rep. 283, (bribery).

2 Bone v. Ekless, 1860, 5 Hurl. & Nor. 925, (bribe); Benton v. Singleton, 1902,114 Ga. 548; 40 S. E. 811; 58 L. R. A. 181, (cotton on margin) ; Hardy v. Jones, 1901, 63 Kan. 8; 64 Pac. 969; 88 Am St. Rep. 223, (suppressing competition at sale); Ware v. Spinney, 1907, 76 Kan. 289; 91 Pac. 787; 13 L. R. A. (N. S.) 267, (inducing violation of trust); Sampson v. Shaw, 1869, 101 Mass. 145; 3 Am. Rep. 327, (corner in stock); Peters v. Grim, 1892, 149 Pa. St. 163 ; 24 Atl. 192; 34 Am. St. Rep. 599, (stock on margin).

3 Tenant v. Elliott, 1797, 1 Bos. & Pul. 3, (insurance money on foreign ship); McMullen v. Hoffman, 1899, 174 U. S. 639; 19 S. Ct.839, (suppressing competition at sale); Caldwell v. Harding, 1869, 1 Low. (U. S. C. C.) 326; Fed. Cas., No. 2302, (insurance on enemy's vessel); First Nat. Bank v. Leppel, 1886, 9 Colo. 594; 13 Pac. 776, (note in fraud of creditors); Brady v. Horvath, 1897, 167 111. 610; 47 N. E. 757, (lottery); Wilt v. Town of Redkey, 1902, 29 Ind. App. 199; 64 N. E. 228, (illegal sale of municipal bonds); Willson v. Owen, 1874, 30 Mich. 474, (horse racing); Gilliam v. Brown, 1870-71, 1 Morris (43 Miss.) 641, (trade with enemy); Roselle p. Beckemeir, 1896, 134 Mo. 380; 35 S. W. 1132, (proceeds of lottery ticket); Evans v. Trenton, 1853, 24 N. J. L. 764, (municipal funds raised illegally); Norton v. Blinn, 1883, 39 Ohio St. 145, (futures); Hertzler v. Geigley, 1900, 196 Pa. St. 419 ; 46 Atl. 366; 79 Am. St. Rep. 724, (illegal sale of liquor); Monongahela Nat. Bank v. First Nat. Bank, 1910, 226 Pa. St. 270; 75 Atl. 359, (fraud); Tate v. Pegues, 1887, 28 S. C. 463, (untagged fertilizer); Baldwin v. Patter, 1874, 46 Vt. 402, (boxes of candy containing prizes); Cheuvront v.

In support of this last rule it is sometimes argued that since the action is based upon the receipt by the agent of money belonging to his principal, the illegality of the contract is irrelevant. If this is the true ground of recovery, the rule applies to the case of a contract malum in se as well as to that of a contract malum prohibitum. Another reason, though one not often clearly expressed, is that the policy of requiring of an agent the strictest fidelity to the interests of his principal outweighs that of denying relief to a participant in an illegal transaction. As was said by McIlvaine, J., in Norton v. Blinn:1

"It is contrary to public policy and good morals, to permit employees, agents or servants to seize or retain property of their principal, although it may be employed in illegal business and under their control. No consideration of public policy can justify a lowering of the standard of moral honesty required of persons in these relations."

In some cases, a distinction is made between a case in which the illegal business is transacted by the defendant agent and one in which such agent is not a participant in the illegal transaction, but is merely a channel through which the proceeds are to be delivered to the principal. In the former, it is argued, the payment over of the money collected by the agent is an inseparable part of the unlawful undertaking, and therefore to compel such payment over would be practically to enforce the performance of an illegal contract, while in the latter the illegal transaction is completely executed when the money reaches the agent's hands and there is consequently no object in denying a recovery against him:

Horner, 1907, 62 W. Va. 476; 59 S. E. 964, (fraudulent conveyance); Hurd v. Doty, 1893, 86 Wis. 1; 56 N. W. 371; 21 L. R. A. 746, (insurance money on life in which plaintiff had no interest). See Ruem-meli v. Cravens, 1903, 13 Okl. 342; 74 Pac. 908, (sale of liquor).

1 1883, 39 Ohio St. 145, 149. See also Lovejoy v. Kaufman, 1897, 16 Tex. Civ. App. 377; 41 S. W. 507, in which the court said: "The illegality of the contract ... in no wise lessens his responsibility as agent."

Lemon v. Grosskopf, 1868, 22 Wis. 447; 99 Am. Dec. 58: Action to recover from an agent the proceeds of the sale of tickets in a lottery scheme. Some of the tickets had been sold by the defendant and the remainder by Kilgore, another agent of the plaintiff, who had turned over to the defendant the money collected by him. Cole, J. (p. 452): "Here the defendant was employed by the plaintiff to sell these lottery tickets, receive and retain the money from them until he became satisfied that the drawing of the prizes in the scheme was fairly conducted, and then account to the plaintiff. It was as well a part of his agency to receive and account for the money, as to sell the tickets. And an action to recover this money goes in affirmance of the illegal contract, and to enforce the performance of this duty. . . . But the money which the defendant received from Kilgore stands upon different grounds. So far as that money was concerned, it seems to us that it stands precisely upon the same ground it would, had Kilgore delivered the money to some stranger, or to an express company, to transmit it to the plaintiff. It is disconnected with the illegal transaction and is not affected by it." 1

Sec. 149. (IV) Illegal transaction by partner: Rights of copartner.

- A question similar to that considered in the preceding section frequently arises in cases of illegal partnerships. As early as in 1725, in the famous case of Everet v. Williams,2 a bill for an accounting between two gentlemen engaged as partners in the profession of highway robbery was declared scandalous and impertinent. But in Sharp v. Taylor,3 it was held that a partner cannot escape his obligation to account for profits by showing that in realizing them a statute was violated. "The transaction alleged to be illegal," said the court,4 " is completed and closed and will not be in any manner affected." This case has had some following in America,1 but it was severely criticized in the later English case of Sykes v. Beadon,2 and its doctrine appears to be repudiated by the weight of American authority.3 Apparently, the courts in most jurisdictions have not felt, in the cases of illegal partnerships or illegal transactions by partners, that the importance of requiring fidelity between fiduciaries is greater than that of denying relief to lawbreakers.

1 See also Caldwell v. Harding, 1869, 1 Low. (U. S. C. C. ) 326, 330; Fed. Cas., No. 2, 302; McMullen v. Hoffman, 1899, 174 U. S. 639, 660; 19 S. Ct. 839. In many of the cases in which a recovery is allowed, the defendant was not employed in making the illegal contract but was an agent for the collection of proceeds only.

2 Commonly called the Highwayman's Case, Exch., 1725, 9 Law Quart. Rev. 197; 2 Evans' Pothier on "Obligations," 3, n. 1; Lindley, "Partnership," 7th Eng. ed., 107.

31849, 2 Ph. Ch. 801, (violation of registry laws). 4 At page 818.