
    Peck, Agent of the State Prison, against Burr and another.
    Where a contract of hiring for a term of years, providing for the payment of wages at the end of each month, had been rescinded on the ground of illegality, before the expiration of the stipulated time, by the party who had agreed to furnish the labor, it was held, that he could not recover for the labor performed under the contract prior to its rescission.
    Where a contract on behalf of the state with an individual, has been declared illegal by the proper law officer of the state, acting under instructions from the legislature, and has been accordingly rescinded, the state and its agents are thereby estopped from denying its illegality.
    No recovery can be had for value parted with upon an illegal contract.
    ' On the 10th of July, 1839, the agent of the state prison at Mount Pleasant, of the first part, and William H. White, of the second part, entered into a sealed agreement embracing the following provisions: “ The party of the second part is to have the .labor of thirty of the convicts employed in said prison, to labor and work for said party of the second part, at the manufacturing of hats in all its branches, and all such work connected with such manufactory. For the labor of such convicts the said party of the second part agrees to pay the said party of the first part the sum of forty cents per day each, for every day’s work done and performed. The said party of the second part is to furnish all the stock, materials and tools for said convicts to work with, at their own cost and expense, and to instruct said convicts in said trade of hat manufactory.” “ The said party of the second part is to pay for the labor of said convicts at the end of each month, in cash or with satisfactory paper, payable in three months from date.” The contract was to commence on the first of August thereafter, and to “be continued for the term of five years.” There was a clause authorizing the assignment of the contract by the party of the second part, in accordance with which he assigned his interest therein to the defendants, Henry A. Burr and Stephen White, in April, 1840.
    By an act of the legislature, passed in 1842 (Laws, ch. 148, § 5), the inspectors of state prisons were required to lay before the attorney-general a copy of every contract for convict labor in their possession; and it was further provided, “If, on examination, the attorney-general shall be of opinion that any such contracts are in violation of existing laws, he shall certify such opinion in writing to the inspectors having charge of the same; and the inspectors shall cause every such contract which, in the opinion of the attorney-general, is illegal, to be annulled or rescinded on the 1st day of May, 1843.” In accordance with this statute, the attorney-general, in March, 1843, certified to the inspectors of the Mount Pleasant state prison his opinion that the contract in question was one which “ violated the provisions of existing laws of this state,” and “ under the provisions of said act (of 1842), ought to be annulled or rescinded.” The agent of the prison accordingly at once gave notice to the defendants to discontinue their work; and in July of the same year he brought this action of assumpsit, upon the common counts, to recover the value of four months’ labor performed under the contract prior to its rescission. The cause was tried before Mr. Justice Barculo, and a jury, in 1846, and a special verdict found, subject to the opinion of the court, upon which judgment was afterwards entered for the plaintiff for $966.75. From this judgment the defendants appealed} and the cause was submitted here on printed arguments by
    
      Ambrose L. Jordan for the appellants.
    
      Joseph S. YorJc for the respondent.
   McCoun, J.

It appears that the contract for convict labor in the state prison, under which the work in question was done, violated the provisions of the act in relation to state prisons, passed May 11, 1835, and that upon the certificate of the attorney-general, whose duty it was, by the subsequent act of 9th April, 1842, to examine all the then existing contracts for convict labor, the contract between the parties to this suit was rescinded on the ground that it did violate the provisions of the previous law. This rescission was the act of the agent of the prison under the direction of the prison inspectors, without the consent of the other contracting parties, the defendants below.

The question then is, whether, after rescinding the contract, the agent of the prison can recover for the labor performed under it, anterior to the time of the rescission ?

By the terms of the contract the labor was to have been paid for monthly at the end of each month; and the action is brought upon an implied assumpsit, for several of such monthly payments. The contract, however, appears to have been resorted to upon the trial, in order to fix the price or value of convict labor, and to show that, by its terms, each month’s earnings constituted a distinct demand, and might be the subject of an action. In this respect the contract which was here made differs from those of a hiring for a definite length of time, where the contract is entire, both as to the period of service and the payment, and where performance to the end of the period agreed upon is a condition precedent to any right of action, although the amount of compensation may happen to be fixed at a certain specified rate per day or per month. Such were the circumstances in McMillen v. Vanderlip (12 John., 165), Reab v. Moor (19 John., 337), and in other cases of that class.

Notwithstanding the contract was put an end to in the manner above mentioned, the respondent’s counsel insists that it is not to be considered an illegal contract because no evidence was given of the existence of such facts as are required to bring it within the prohibition of the 7th and 9th sections of the statute of 1835; that the opinion of the attorney-general did not make it illegal, but only caused it to be annulled.

It is a sufficient answer to this argument to say, that the contract has been pronounced illegal by the proper officer of the state; and upon the ground that it violated the provisions of existing laws, it has been annulled. The state, and its agents or servants acting in this matter, are therefore estopped from making any question on the subject, or from denying that the contract was malum prohibitum at the time it was entered into, and also at the time it was rescinded by them. The illegality consists in applying the labor of the convicts in such a way as to teach them the trade or business of “ manufacturing hats in all its branches.” The employers expressly stipulating “ to instruct said convicts in said trade of hat manufacturing”—hats being articles of which the chief supply for the consumption of the country is not imported from foreign countries. The work about which the convicts were employed was, therefore, unlawful, and it is for the wages of such work that this action is brought. If the action had been brought upon the contract during its existence, or while it remained executory, there can be no doubt that a successful defence might have been made, provided it was proved that the contract was illegal; and at the expiration of the five years, if anything remained due for labor performed under it up to that time, it is equally clear, upon such proof being made, that no action could have been sustained as upon an executed contract. In pari delicto, potior est conditio defendentis, is the rule of the courts in all such cases. (2 Com. on Contracts, 109.)

This action, it is true, proceeds upon the ground that the contract has been disaffirmed, that is, it has been brought after the contract was rescinded; but it is a mistake to say that it proceeds in disaffirmance of the contract. On the contrary, it rather affirms the contract, for it claims exactly what the contract was intended to give. The plaintiff seeks to have the full benefit of the contract, though in a form of action a little different. The case is not, therefore, within the principle of those cases where actions have been sustained to recover back mone;y paid or property parted with, as the consideration for a void contract which has failed, or one which is capable of being set aside or disregarded; nor .is it within the principle of the cases of The Utica Insurance Company v. Kip (8 Cow., 20), and of King v. Brown (2 Hill, 485), relied upon by the respondent’s counsel. In the first the action was sustained to recover back the money lent because the loan was not unlawful, though the securities taken upon the loan were such as the company had no authority to take—indeed were prohibited from taking— and were, therefore, unlawful. (Beach v. Fulton Bank, 3 Wend., 583.)

In the other case (King v. Brown), the plaintiff was allowed to recover for work which he had performed for the defendant, though the work was to have gone in payment for land which was to have been conveyed to him by the defendant under a contract void by the statute of frauds. The true principle, says Nelson, Oh. J., in that case, is “that the contract being void and incapable of enforcement in a court of law, the party paying the money or rendering the service in pursuance thereof, may treat it as a nullity and recover the money, or the value of the services, under the common counts. This is the universal rule in cases where the contract is void for any cause not illegal, if the defendant be in default.”

In the case in hand, the contract was not merely void, it was illegal; at least it is so to be regarded for the present purpose: and to allow the plaintiff to recover in this case is, in my judgment, virtually to allow an illegal contract to be enforced.

Ruggles, Ch. J., and Jewett, Paige and Gray, Js., concurred in the above opinion;

Gardiner, J.

The contract, in this case, was entire; but the agent had a right of action against the contractor at the end of each month for the amount earned by the convicts according to the price fixed by the agreement. But the plaintiff could not rescind the special contract, and recover upon the common counts. The agreement was not wholly performed by the plaintiff, and could not, in the nature of things, be performed until the expiration of the whole period stipulated. A farmer hires a laborer for a year, at $10 per month, payable at the end of each month. The laborer works two months and abandons the employment of his master altogether,—in other words, rescinds the contract on his part—and sues for his wages. He must recover, if at all, upon thé special contract, and upon the stipulation for monthly payments as an independent covenant. He cannot by his own act, without cause, put an end to the contract, and then ask the court to imply an assumpsit in his favor. (12 John., 168.)

If the contract in this case was rescinded without cause, the plaintiff cannot recover. If for the cause suggested by the attorney-general in his opinion, then the agreement was against public policy, as settled by an act of the legislature and expressly prohibited by the statute. No cause of action can arise from an undertaking prohibited by statute, whether the contract is malum in se or malum prohibitum. Two persons enter into a contract to smuggle goods: the law will not imply a contract in favor of either in any matter growing out of the transaction.

I think the judgment erroneous.

Foot, J. (dissenting.)

The first question in this cause is, whether the covenants between the parties are dependent.

Obviously, they are not. The appellants engaged to pay “the sum of forty cents per day each, for every day’s work done and performed ” by the thirty convicts mentioned in the articles of agreement, and “to pay for the labor of said convicts at the end of each month in cash, or with satisfactory paper payable in three months from date.” On these terms, the appellants were to have the labor of the thirty convicts for five years. It is clear, that the respondent had a right of action at the end of every month, for the previous month’s wages, and was not bound to wait until the end of the five years, before he could enforce his claim for them.

When the contract was rescinded by the respondent, in obedience to the opinion of the attorney-general, given under the statute on that subject (Laws of 1840, ch. 148, § 5, 128), the right of action of the respondent for the wages of the previous month was perfect. The rule is perfectly well settled, that when a right of action has accrued and become perfect in favor of a person, he cannot be deprived of it except by his.release under seal, or by an agreement by which he engages to accept, and does accept, something else in satisfaction and discharge. This rule is one of the oldest in the common law, and has never, as I am aware, been departed from. This court has acted upon this rule of law at the present term, in the case of Dunlop v. McKnight, and rendered a judgment in accordance with it.

It is obvious, that if this judgment is reversed on the ground that the respondent cannot recover, because he rescinded the contract after his right of action became perfect, this ancient and valuable rule of law is violated; for the respondent is deprived of his right of action after it had become perfect, because he did a subsequent wrong. For which wrong, however, the party injured may have full redress by an action on the covenant; and he might also have redressed the wrong, if it existed, by recoupment in this action.

The fact that the respondent did hot commence his action for the two months’ wages till after he rescinded the contract, cannot, it seems to me, make the slightest difference. The only inquiry is, was his right of action perfect; not whether he had commenced an action to enforce it. The right to deprive him of it surely cannot rest on any such ground.

There is only one case in the books, so far as my own or the researches of counsel have gone, where a party commenced a suit for previously earned wages after he had rescinded the contract. That is the case of Read v. Moor (19 John., 337). In that one the supreme court decided against the plaintiff, because the covenants were dependent, and the plaintiff not entitled to recover any wages until he worked the whole eight months as he had engaged; but in delivering the judgment of the court, Mr. Justice Woodworth distinctly and in terms states, that if the covenants had been independent, and the plaintiff had been entitled to his wages at the end of every month, and to sue for them if they were not paid, he would have been entitled to judgment (Id., 341). The doctrine of this case is decisive of the present one, and should control it.

The next question is, whether the respondent is barred of his right of recovery, because the contract is illegal by reason of containing a provision that the appellants shall teach the convicts hired to them the trade of manufacturing hats; and by reason of the number of such convicts not being limited to the number of convicts who had learned a trade before coming to prison.

Our statute declares that no mechanical trade shall be taught to. convicts in our state prisons, “ except the making of those articles of which the chief supply for the consumption of the country is imported from foreign countries.” {Laws of 1835, ch. 302, § 7, p.342.) The same statute also directs, that “ in all those branches of business of which the consumption of the country is chiefly supplied without foreign importations, the number of convicts to be employed or let shall be limited by the number of convicts who had learned a trade before coming to prison.” (Id., § 9, 343.)

In 1840 the legislature directed all contracts for convict labor to be submitted to the attorney-general, and “if, on examination, he shall be of opinion that any of such contracts are in violation of existing laws, he shall certify such opinion to the inspectors having charge of the same, and they shall rescind the same on the 1st May, 1843.” (Laws of 1840, ch. 148, § 182.)

The contract in question was rescinded under this statute, on the certificate of the attorney-general, who simply certified that in his opinion it was illegal, without stating any grounds or reasons for his opinion.

The special verdict does not show that the trade of manufacturing hats is one of the kind in which the convicts may not be instructed, nor that the number of convicts hired to .the appellants is greater than the number who had learned a trade before coming to prison. It appears to me, therefore, that the question of illegality of the contract cannot be raised. There is no fact which furnishes a basis for it. The certificate of the attorney-general is no proof of any fact except of his giving such an opinion. It may be right or wrong; and whether the one or the other, depends on the facts upon which he expressed it.

The counsel for the appellants contends that the respondent, who .sues for the state, is estopped from denying that the contract is illegal, because the law officer of the state expressed an opinion that it was. This would be using the doctrine of estoppel in pais to establish an affirmative fact, and would make it perform the office of legal evidence. Had the appellants proved the contract illegal, then, if ever, they might contend that the state was estopped from denying its illegality. I must not, however, be understood as countenancing the idea that they could so contend with success. But until the appellants prove something, there is nothing for the respondent to deny, or to be estopped from denying.

I think the judgment should be affirmed with costs.

Mullett, J., did not hear the argument.

Judgment reversed.  