Brief Fact Summary. Sinnar (Plaintiff) brought an action to recover four hundred fifty dollars, which he gave to the Le Roy (Defendant) in exchange for Defendant’s promise either to get a beer license for Plaintiff or return the money. Defendant appealed from a judgment against him.
Synopsis of Rule of Law. A party may not waive his right to plead the defense of illegality and if the evidence of the cause of action establishes the illegality of the transaction, it should be considered by the court, even thought the defense of illegality was not pleaded.
Issue. If the defense of illegality is not pleaded can the Defendant raise the theory of an illegal transaction?
Held. Yes. Judgment is reversed with instructions to dismiss the action.
Illegality need not be pleaded. If it appears in the evidence the court on its own motion can deny relief to the Plaintiff. The Defendant cannot waive the defense of illegality. If the court suspects illegality it may examine witnesses and develop facts to establish illegality that precludes recovery from the Plaintiff.
The only place a beer license was available was from the Washington state liquor board, not from the city. In the present case, the action involves a beer license, which can only be secured from a state agency. Since a party may not waive his right to plead the defense of illegality and if the evidence establishes the illegality of the transaction the court may consider the illegality of the transaction even though illegality was not pleaded as a defense. The court concluded that the parties contemplated the use of means that were not legal to secure a beer license.
Discussion. The concept underlying the theory of illegality is that the contract is not enforceable on grounds that it is against public policy. Considerations of public policy are paramount to private rights and when conflict between the two exists private interests must yield to the public good. More specifically, public policy is the principle of law, which states that no subject can lawfully do that which could harm the public or is against the public good.