Fowler v. Scully.

the mortgage as delivered anew, on each discount or advance. This will do inter partes, to prevent wrong; but such a fiction cannot confer a power upon a corporation, withheld from it by its charter. The error is in forgetting that this is a question of statute power and public policy, not of mere equity between the parties. Any want of corporate power might be supplied by this means, and the mere interests of parties be made to override the law.

Whether Van Kirk, the voluntray assignee of Fowler, can set up the defense here, depends, not on his character as a volunteer, but on the question whether the law will aid the plaintiff's recovery. If it will not, it is clear that Van Kirk, as the owner of the estate by assignment, and under bond to administer his trust according to law, may and ought to defend for the interests of the creditors. This brings us to the second question stated in the outset of this opinion. The mortgage being void, will the law enforce it? All the authorities, English, Federal and State, say no. Mr. Powell, in his work on Contracts, page 166, says that all contracts repugnant to the welfare of the State, or against some maxim or rule in law, or in contradiction to some positive statute, are void. Then follow numerous instances. Mr. Comyn, in his work on Contracts, pages 59 to 67, enumerates many statutes upon which contracts have been declared by the courts to be void as mala prohibita, and it is not essential that the statute itself should declare the contract to be void.

The doctrine that a contract in violation of the provisions of a statute, though not expressly made void by it, is null and will not be enforced by the courts, is very distinctly stated and sustained by authorities in the case of the Bank of the U. S. v. Owens, 2 Pet. 538. JOHNSON, J., said: "No court of justice can in its nature be made the handmaid of iniquity. Courts are instituted to carry into effect the laws of the country; how can they become auxiliary to the consummation of violation of law? There can be no civil right where there can be no legal remedy, and there can be no legal remedy for that which is itself illegal." The same principles are recognized in Coppell v. Hall, 7 Wall. 558. Justice SWAYNE, com. menting on the instruction of the court below, that the illegality had been waived by the act of the defendant, says: "In such cases there can be no waiver. The defense is allowed, not for the sake of the defendant, but of the law itself." Again, "Whenever

Fowler v. Scully.

the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original contract, and void for the same reasons. Where the contamination reaches, it destroys. The principle to be extracted from all the cases is, that the law will not lend its support to a claim founded on its own violation." See also Bank v. Lanier, 11 Wall. 369. And in Bank of Augusta v. Earle, 13 Pet. 587, TANEY, C. J., says: "It may be safely assumed that a corporation can make no contracts and do no acts within or without the State which creates it, except such as are authorized by its charter."

Coming now to our own State, a long line of decisions testifies that our courts will not lend their aid to enforce illegal contracts. In Mitchell v. Smith, 1 Binn. 110, a case of the sale and purchase of a Connecticut title to Pennsylvania lands, SHIPPEN, C. J., says: "The contract is illegal, being founded on the breach of the law, and of consequence is a void contract and cannot be enforced in a court of law." In Siedenbender v. Charles, administrator, 4 S. & R., it was held that there could be no recovery upon a ticket in an illegal lottery. TILGHMAN, C. J., said: "I consider it perfectly settled that an action cannot be sustained, founded on a transaction prohibited by statute, although it is not expressly declared that the contract is void." Page 160, YEATES, J., said: "The principle of public policy is, that no court will lend its aid to a man who grounds his action upon an immoral or illegal act. Justice as between these individuals would require either payment of the money or reconveyance of the property, but principles of public convenience demand that the justice of the case shall yield to higher considerations, the operation of the precedent on public morals and the public interest. It is for these reasons courts of justice will not assist an illegal transaction in any respect." In Biddis v. James, 6 Binn. 329, a case of lottery ticket also, TILGHMAN, C. J., states the same doctrine in fewer words. There is, therefore, no room for equitable presumptions, or estoppels, in cases of illegal contracts. Without protracting the statement too much, I may refer to the following cases of illegal contracts, which the courts have refused to aid by a recovery: Maybin v. Coulon, 4 Dall. 298; Duncanson v. McLure, id. 308; Badgeley v. Beale, 3 Watts,

Fowler v. Scully.

263; Kepner v. Keefer, 6 id. 231; Wagonseller v. Snyder, 7 id. 343; Clippenger v. Hepeaugh, 5 W. & S. 315; Filson v. Himes, 5 Barr, 452; Columbia Bank & Bridge Co. v. Haldeman, 7 W. & S. 233; App v. Coryell, 3 Penn. 494; Edgell v. McLaughlin, 6 Whart. 176; Brua's Appeal, 5 P. F. Smith, 295. Two of these cases may be noticed particularly on the ground that the contracts were collateral to the illegal act, and that the court refused its aid. Badgeley v. Beale was for wages as a marker at an illicit billiard table; and Columbia Bank, etc. v. Haldeman, was on a bond of indemnity to a stakeholder for paying over money won on a wager on an election. Here the bank, as plaintiff, asks to recover on an illegal mortgage; and it follows, from the doctrine stated, that the court will not assist the illegal act; and that the argument in regard to the State, being the only party to avail herself of the illegal forfeiture, has no place here. The defendant has the right to avail himself of the defense, and prevent a recovery. The doctrine of Leazure v. Hillegas, 7 S. & R. 313, and cases following in its track, is founded on the law of Pennsylvania as to corporations, that though they may take real estate, except for superstitious uses, yet they cannot hold it in consequence of the statutes of mortmain, but as the title has passed into the corporation, it must rest there, till the State enforces the forfeiture. This is very clearly shown by TILGHMAN, C. J., in that case. But in the case now before us, as we have seen, the act of Congress forbids the taking of a mortgage, except as a security for debts previously contracted. The disability attaches, therefore, to the acquisition, and not to the retaining of the mortgage. The transaction is without authority and illegal from the start, and the law will not enforce it. The defendant may, therefore, defend against it, not because of his own merit, but because the law will not suffer itself to be prostituted. This being the rule, it only remains to state the test adopted. "The test," says Judge DUNCAN, in Swan v. Scott, 11 S. & R. 164, "whether a demand connected with an illegal transaction is capable of being enforced at law is whether the plaintiff requires the aid of the illegal transaction to establish his case. If the plaintiff cannot open his case without showing that he has broken the law, the court will not assist him, whatever his claim in justice may be upon the defendant." This test has been repeated in the following cases: Thomas v. Brady, 10 Barr, 170; Scott v. Duffy, 2 Harris, 20; Evans v. Dravo, 12 id. 65. The mortgage of Fowler to the plaintiff is, on

Scott v. National Bank of Chester Valley.

its face, a security for future advances, and the schedule of the debts claimed under it shows also their subsequent character. The plaintiff could not open its case, therefore, without disclosing that it sought the enforcement of an illegal security-one forbidden by the law. The action must, therefore, fail.

SHARSWOOD and WILLIAMS, JJ., dissented.

Judgment reversed.

SCOTT, plaintiff in error, v. NATIONAL BANK OF Chester Valley.

(72 Pennsylvania State, 471.)

Bailment Liability of bank for deposits for safe-keeping.

In an action to recover of a bank the value of bonds deposited for safe-keeping by plaintiff, and stolen by the teller of the bank, held, that the bank being a gratuitous bailee was not liable, although an examination of the teller's accounts, after the theft, proved them to have been falsely kept, and showed that he had been abstracting funds for two years, and although it was known to the president of the bank that he had dealt once or twice in stocks. Mistaken confidence is not a ground of liability in such cases.*

A

CTION brought by John Scott, Jr., and Amos Scott, constituting the firm of Scott & Brother, against the National Bank of Chester Valley to recover the value of four government bonds of the value of $1,000 each, which had been placed by plaintiffs with the bank for safe-keeping, and which had been stolen by a clerk or teller of the bank. It appeared that when the bonds were deposited the bank gave a check or card in the form: "Scott & Brother left with the bank a package containing valuable securities, said depositor assuming all risk from robbery or otherwise." The teller absconded after the theft, when, on examining his books, it was found that his accounts had been falsely kept for two years, and that he had abstracted funds to the amount of $26,000. From the evidence he appeared to have had the confidence of the entire community as well as the bank officers. The cashier and president

*See Wiley v. First National Bank, post, and note.

Scott v. National Bank of Chester Valley

knew that he had dealt in stocks once or twice. The judge charged that the bonds were delivered to the officers of the bank as mere depositees, without any benefit to the depositee so far as had been proved, and for the convenience of the plaintiffs, and the bank was bound to no greater care of the deposit than a person of ordinary care and prudence generally takes of his goods of equal value. The bank was not bound to search into the accounts of the teller for the benefit of a gratuitous bailor, and his loss did not arise out of any account kept by the teller, but from a transaction outside of his employment. It is assumed that if the bonds were stolen by defendant's teller it is liable whether his propensity to steal was known or not, and without regard to his general character. We instruct you that there is no legal principle as applied to the loss of goods bailed without hire for the accommodation of the bailor. "The defendants had a verdict, whereupon the plaintiff brought error to this court."

W. B. Waddell and W. Darlington, with whom was R. T. Cornwell, for plaintiff in error, cited Story on Agency, § 452; Bank of Kentucky v. Schuylkill Bank, 1 Pars. 215, 216.

J. S. Futhey and P. Frazer Smith, with whom was G. F. Smith, for defendants in error, cited Coggs v. Bernard, 2 Ld. Raym. 909; Mytton v. Cock, 2 Strange, 1099; Finucane v. Small, 1 Esp. 315; Shiells v. Blackburne, 1 H. Black. 158; Foster v. The Essex Bank, 17 Mass. 479; Tompkins v. Saltmarsh, 14 Serg. & Rawle, 275; Doorman v. Jenkins, 2 Ad. & Ell. 256; Lancaster County Bank v. Smith, 12 P. F. Smith, 47.

AGNEW, C. J. As early as the case of Tompkins v. Saltmarsh, 14 Serg, & Rawle, 275, it was decided that a delivery of a package of money to a gratuitous bailee, to be carried to a distant place, and delivered to another for the benefit of the bailor, imposes no liability upon the bailee for its safe-keeping, except for gross negligence. In that case, the package was stolen from the valise of the bailee, at an inn, in the course of his journey, after it had been carried to his room, in the usual custom of inns in that day (1822). The same rule is laid down by Justice COULTER, arguendo in Lloyd v. West Branch Bank. He says, a mere depositary, without any special undertaking, and without reward, is accountable for the loss of the