OSLER

J.A.

not prohibited by positive laws nor adjudged illegal by Judgment. precedent may nevertheless be void as against principle." And in the great leading modern case on the subject, Egerton v. Earl Brownlow, 4 H. L. C. 1, it is laid down that contracts are illegal from their tendency to promote unlawful acts without regard to any circumstances which go to affect the probability of such acts being done. I have not succeeded in finding any later cases in which it has been suggested that too wide a limit has been set in that case to the mode in which Courts are to deal with public policy as affecting the legality of contracts, or in which the opinions of the Judges have been unfavourably criticised, and when we compare the venial character of the fault which vitiated the condition of the will in question in that case with the frauds and other evil results likely to flow from and to be connected with the contract in this, I am not afraid of being told that the doctrines and rules of that case are being misapplied in holding that the plaintiff ought not to be suffered to recover. I may refer to Pollock on Contracts, 5th ed., p. 298; Anson on Contracts, 5th ed., p. 190, where the subject is very fully discussed.

It appears to me that the direct tendency of the business of the company, consisting as it did of transactions of which that now in question is one, was to promote and encourage fraud and fraudulent dealings, and to inflict injury and loss upon a large portion of the community. Were the case an isolated one we might smile at the folly of the parties, but when it developes itself as part of an organized business, it is the tendency which I have referred to which makes every one who hears of it denounce it, and every phase of it, as a swindle.

With the intimate knowledge which the evidence discloses each party to have had of the nature of the business, and the deliberate undertaking of each to "promote the sale of grain and the interests of the company," it is in my opinion impossible to say that each contract is not tainted with the vice of the whole business of which it forms part. Though as between the immediate parties it may, as in

OSLER
J.A.

Judgment. this instance, be free from actual fraud in the sense of imposition, it is nevertheless void and illegal, because on the ground and for the reasons I have specified, it is contrary to public policy that such contracts should be permitted or enforced. When every one admits that the business as a whole, and in its results, is a swindle, I think we cannot be charged with introducing an "unsatisfactory vagueness" into the law, by holding that the agreements which are the life of it are contrary to public policy, and we may safely hold them to be so without contravening that paramount public policy, as Sir George Jessel calls it, "that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred, and shall be enforced by Courts of justice.”

By refusing to enforce the contract now in question we are only declaring that the parties have not a sacred right to aid in carrying on a business which has a direct tendency to the commission of fraud, and which is fraught with such injurious consequences to the public.

It can hardly be necessary to say that one is reluctant to assist a defendant who has taken the benefit, and now disclaims the burden, of the transaction.

Collins v. Blantern, 2 Wils. 341, and Fleicher v. Lord Sondes, 3 Bing. 501, are remarkable instances in which the Courts gave effect to the defence of illegality on the ground of public policy, although in one case the defendant was escaping from a liability, and in the other retaining a valuable property.

The defendant has the right to urge the defence of illegality, and when proved, we are bound to give effect to it as we do by dismissing the appeal. As, however, we do so on a different ground from that on which the learned Judge below dismissed the action, we may mark our sense of the defendant's demerits by dismissing it without costs.

MACLENNAN, J. A. :

I agree entirely in the judgment of the learned Chief Justice.

I think the business, in which Hess and the company, or pretended company, which he professed to represent, were engaged, was nothing but a cunningly devised scheme of fraud, having in it none of the elements of legitimate trade or business. It is perfectly evident that the transaction with the plaintiff could not be carried out without somebody being cheated and swindled sooner or later. In order to its success some one must be induced to buy thirty bushels of oats at $10 a bushel, while their real value was not and could not be more than 50 cents a bushel, and either he or some other foolish person must lose his money. It is plain that every time the transaction was repeated the magnitude of the undertaking of Hess or the company to find purchasers at the fictitious price, was increasing in a geometrical ratio, and that failure was inevitable. On its very face the business was a swindle, as transparent, and hardly as plausible, as many of the ordinary tricks of card sharpers and confidence men of which we have heard. And it is to be regretted that there were found numerous persons at once so simple and so greedy of gain as to lend. themselves to transactions which could plainly only end in disaster to themselves or others.

It is impossible also not to see an element of deliberate wickedness, on the part not merely of Hess and his confederates who contrived the swindle, but on the part of every one who like the plaintiff and the defendant allowed themselves to take part in it, for they all proposed to themselves large gains at the expense of others. While they saw plainly enough that some one must be cheated each hoped it would not be himself.

Now, if as I think the business was a swindling scheme, the plaintiff and the defendant lent themselves to it, and became parties to it. The purchases they made, and the notes they gave, were in furtherance of it, and were merely so many steps in the fraud.

Judgment.

MACLENNAN

J. A.

Judgment. The plaintiff had full knowledge of the nature of the MACLENNAN Scheme, and that the notes in question were given by the

J. A.

defendant in furtherance of it. It is true the plaintiff delivered thirty bushels of oats to the defendant as the ostensible consideration for the notes, but that delivery also was part of the swindle, and I do not think it entitles the plaintiff to recover.

I think that on the making of the notes by the defendant, and the delivery of them to the plaintiff, both the plaintiff and the defendant were knowingly engaged in promoting a business necessarily mischievous and injurious to the public, and calculated and intended to defraud persons who might, and who were expected to, become their dupes. I think the defendant and the plaintiff are equally to blame; that they are both equally foolish and wicked, and that the law applicable to such cases requires us to afford no assistance to either of them, but to leave them in the position in which they have placed themselves.

BURTON, J.A.:

I most fully agree in the strong expressions of condemnation of the transactions of the company and its agents . referred to in the statement of defence, and regret that the Legislature, which we were told had been applied to, had not interfered for the suppression of such practices, although the delusive character of the transaction is so apparent that they might well consider that the most simple person could not be deceived, and no legislation was therefore necessary. Such, at all events, was not the case with either of the parties to this litigation, who were fully aware of what they were doing, and it is their rights and liabilities upon which we are adjudicating in this action.

I am at a loss to understand what defence this defendant can be heard to urge to the plaintiff's demand.

It is a hal it with me, which I have frequently found very useful, to consider how the defendant would have formulated his defence on the old system of pleading, and

BURTON
J.A.

I think any one would find it very difficult to frame a plea Judgment. which would stand the test of a demurrer. The defendant could not plead with any hope of success that the note was obtained from him by fraud, for he went into the transaction with his eyes open, and after several days for deliberation. Neither can he, nor does he, pretend to urge that any misrepresentations were made to him by the company; but it is now contended that it is against public policy-a very wide, and not a very satisfactory attempt at a solution-one to which I am most unwilling to give effect, inasmuch as if held to apply, the result must be that this defendant, although a particeps criminis, will not be debarred from setting up his own iniquity in order to be relieved from a liability deliberately entered into.

I can quite understand that rule applying where the plaintiff founds his cause of action upon an agreement or a note the consideration of which is contra bonos mores or a transgression of a positive law. I might concede for the purpose of the argument that a bond entered into by a person to act as the agent of this company in carrying out such transactions as are contemplated under their scheme of operations, and to recover a commission for his services, would be illegal and not enforceable in a Court of justice, but that would not be by any means decisive of this case.

The contract to sell to this defendant 30 bushels of oats at an extravagant price was not in itself illegal if the defendant without any misrepresentation was foolish enough to enter into it, nor is the plaintiff precluded from recovering upon it, because he knew all the facts and had committed a similar folly himself. It is said that by entering into his own contract he had agreed to do all he could to promote the sale of grain and the interests of the company, but he had nothing to do with promoting the sale to the defendant, and there is a broad distinction between a mere mental purpose that an illegal act shall be done, and a participation in the unlawful transaction: Hobbs v. Henning, 17 C. B. N. S. at p. 819, referring to Holman v. John67-VOL. XVII. A.R.