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Sinnar v. Le Roy

The Supreme Court of Washington, Department Two
44 Wash. 2d 728, 270 P.2d 800 (1954)
ELI5:

Rule of Law:

A court will not enforce a contract that is illegal or violates public policy, and it may raise the issue of illegality on its own motion, even if not pleaded by a party, especially when the contract's nature suggests potential corruption.


Facts:

  • John, a grocery store owner, applied for a license to sell beer from the Washington state liquor control board, but his application was denied.
  • His friend and customer, the defendant, told John that he knew a man named Mr. Lewis who could procure the license.
  • The defendant informed John that obtaining the license through this third party would cost $450.
  • John gave the defendant $450 in cash on the condition that the defendant would either get him the beer license or return the money.
  • Both parties understood that a third party, Mr. Lewis, would be involved in securing the license.
  • The defendant claimed to have given the $450 to Mr. Lewis.
  • John never received the beer license, and the defendant did not return the $450.

Procedural Posture:

  • The plaintiff, John, brought an action in a trial court to recover $450 he had paid to the defendant.
  • The trial court entered a judgment in favor of the plaintiff.
  • The defendant appealed the trial court's judgment to the Supreme Court of Washington.

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Issue:

Does a contract to procure a government-issued license for a fee through an unspecified third party constitute an illegal agreement against public policy, thereby precluding a party from recovering money paid under it, even if the defense of illegality was not formally pleaded?


Opinions:

Majority - Weaver, J.

Yes. A contract to procure a government license through means that contemplate corruption is an illegal contract that violates public policy and is therefore unenforceable. The court will not knowingly aid in the furtherance of an illegal transaction but will instead leave the parties where it finds them. Although the defense of illegality was not pleaded, the court may raise the issue on its own motion when the illegality is of a serious nature and appears from the evidence. The court found that this agreement, which involved paying an intermediary to secure a state license, contained the "germ of possible corruption" and inferred that the parties contemplated using means other than legal ones. Citing public policy and the precedent in Goodier v. Hamilton, the court refused to assist the plaintiff in recovering his money from this illegal transaction.



Analysis:

This decision reinforces the significant role of the public policy doctrine in contract law, particularly the court's authority to act as a gatekeeper against illegal agreements. It establishes that for serious illegalities, the defense is not waivable and need not be pleaded for a court to deny relief. This precedent serves as a strong deterrent against forming contracts that aim to improperly influence government actions or subvert public processes. Future litigants are on notice that courts will refuse to become arbiters for disputes arising from corrupt or illegal bargains, leaving the parties to bear their own losses.

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