Lapointe v. Messier

contractor with a municipality applied to the mayor thereof for financial assistance carrying out works had agreed to construct and obtained the necessary financial aid from him upon an understanding that the mayor should receive a bonus in consideration of the financial assistance to be rendered. the completion the works, but prior to the dates when the corporation was obliged to make payment, a promissory note was obtained from the municipality which was indorsed the contractor, delivered to the mayor as collateral security for the amount owing to him, and, by the latter, was discounted at a bank.

The mayor retained the proceeds the note for the purpose of satisfying the amount of the bonus promised to him and some other charges which he claimed in connection with his services in financing the contractor.

In an action the contractor to recover the funds,

Held, that the arrangement made had the effect of giving the mayor an interest in the contract incompatible with his duty as a member of the municipal council, contrary to public policy and in violation of the provisions of sections 1 and of the Quebec statute. Vict. and that was not entitled to retain the moneys.

Held, also, that, in the circumstances the case, the plaintiff's right of action was not affected the illicit nature of the agreement and that he was entitled to recover the amount retained *PRESENT:-Sir Charles Fitzpatrick C.J. and Idington, Duff, Anglin and Brodeur JJ.

Bench, appeal side, by which the judgment of Bruneau J., in the Superior Court for the District of Montreal was varied.

In the circumstances stated in the head-note, the plaintiff brought this action to recover from the defendant the sum of $11,136.24 with interest from 17th September, 1908.

With his plea the defendant tendered the sum of $5,122.25 as the whole amount of the balance due by him to the plaintiff, after deduction the amount -of the bonus and other charges mentioned in the head-note. In the Superior Court Mr. Justice Bruneau declared that the amount so tendered was insufficient and entered judgment in favour of the plaintiff for $10,519.25 with costs.

By the judgment appealed from the Court of King's Bench reduced the amount of the Superior Court judgment by the sum of $3,000, the amount of the bonus claimed by the defendant.

stated in the judgments now reported.

JUSTICE.-This an appeal from judgment of the Court of King's Bench of Quebec, varying a judgment of the Superior Court which had maintained the plaintiff's action.

That action was brought to recover from the defendant a sum of money alleged to be illegally retained by him out of a larger sum received from the plaintiff. The facts are susceptible of simple statement and the differences in the versions given by the parties of the circumstances out of which this suit arose are perhaps more apparent than real.

Where they differ, the trial judge says that he accepts in preference the plaintiff's story.

The undisputed facts are: In the year 1907, the defendant was mayor of the municipality of the Village of DeLorimier, and in the mouth of September of that year the plaintiff was awarded a contract for the building of sewers in some of the main streets of the village. The terms of the contract are fully set out in notarial deeds executed on the 26th of the same month. At that time the parties were apparently strangers to one another. On or about the 26th of October following, the plaintiff applied to the defendant for financial assistance to enable him to carry on his work, and it is admitted that without that assistance the contract could probably not have been executed.

There is some dispute as to what occurred at the time and the trial judge apparently believes the plaintiff, but, so far as the issue to be determined on this appeal is concerned, it is not material to say more than this. The parties after some negotiations agreed that the defendant would assist the plaintiff to obtain the advances he required in consideration of the payment of a bonus of $3,000 for which a promissory note was then given.

The contract was proceeded with vigorously, the defendant made the necessary advances amounting in all to $12,201.30 and the work was completed in the summer of 1908, the defendant being still in office as mayor of the municipality.

Notwithstanding the provision in the agreement that the contract price was to be paid in five equal annual instalments, the first falling due one year after the works were completed and accepted, on the 15th August, 1908, a promisssory note, payable at six months, was given for the total value of the work done.

The corporation gave the note to the contractor on his undertaking to renew at maturity, -but he indorsed it over at once to Messier, the mayor.

No importance seems to have been attached below to this serious departure from a term evidently inserted in the agreement for the protection of the municipality.

It was quite in the interest of the mayor, creditor of the contractor, that the contract price should be paid at once, and evidently his interest prevailed against that of the ratepayers which he was supposed to protect.

There is some dispute as to what occurred at the time the note was given to the mayor. The plaintiff says that it was given as collateral security for his then existing indebtedness, the defendant is assumed below to have said that it was in payment of that indebtedness. What he really says is at page 26 of the case.

The trial judge believes the plaintiff.

Be this as it may, the defendant refused at the time, under one pretext or another, to account to the plaintiff for the note against which he, the defendant, had obtained an advance of $17,797.95 from the bank, i.e., to the extent of his own claim for advances, commission and interest. There is some dispute here as to whether the note was discounted or merely given to the bank as collateral security for an advance then made.

The defendant says in his examination on discovery

Again, I do not think, in my view of the case, that the difference is important; the result was that the plaintiff took out of the advances made by the bank on the note of the municipality the amount of his claim against the plaintiff including the bonus of $3,000 which is in dispute here.

On these facts two questions arise: Was the promissory note for $3,000 given for an illegal consideration, and if so, is the defendant entitled to retain that sum out of the proceeds of the note given by the municipality in payment of the work done under contract ? I am quite satisfied that although there was no concert between the parties at the time the contract was awarded, the plaintiff's subsequent undertaking to pay a bonus of $3,000 for the advances which the defendant undertook to make was, in the circumstances, within the mischief of the Act hereafter cited and come within the words of the enactment, because it gave the mayor an interest in the contract which made him liable to the penalty prescribed by 58 Vict. ch. 42, see. 2, which reads:- What is an interest sufficient to disqualify ? See cases collected in 19 Halsbury, Laws of England, No. 627, p. 304, also Miles v. Mellwraitle(1); Mayor of Salford v. Lever(2) ; Norton v. Taylor(3) ; In re Campbell(4) ; Burgess v. Clark(5) ; Hunneings v. Williamson (6).

I have looked at the case of Le Feuvre v. Lankester (7), much relied upon at the argument and, if still binding as an authority, it can be distinguished from this case.

There the defendant sold the contractor certain ironwork which was used in carrying out the contract. No attempt was made to shew fraud or any interest which would affect the price of the goods or the manner in which they were to be paid for. Here the bonus of $3,000 was to be paid at the expiration of the contract out of the profits, which the contractor expected to make, and the defendant admits that if the contract was unprofitable, he stood a chance to lose not only his bonus, but also his advances. So that, if we take the view which is most favourable to the defendant, there is no doubt that by reason of that agreement he had a pecuniary interest in the result (2) 1 the contract and he was, therefore, in a position where he had necessarily to choose between that interest and his duty towards the municipality. I entirely agree .E with what is said by Arnold, Law of Municipal Corporations, pp. 26, 27. The members of a council should have no interest to bias their judgments in deciding what is for the public good. Members of a town council should be advised to keep themselves absolutely free from the possibility of any imputation in this respect.

This case affords a striking illustration of the necessity of strictly interpreting the section above quoted. As evidence, I refer again to the way the interests of the municipality were, to say the least, put in jeopardy by the payment of the contract price before the time fixed to ascertain if the work had been satisfactorily executed.

As to the second question the right to recover it has been argued that the old Roman maxim veino anditur propriam turpitudinem allegans applies, and much reliance is placed, and very properly so, upon the opinion of Pothier, Obligations, No. 45. But it must not be overlooked that the legislature had the opinion of Pothier brought to its notice when the Civil Code was enacted and that opinion was deliberately departed from.

If the undertaking to pay a bonus gave the mayor an interest in the contract, then the statute makes that undertaking unlawful and the payment was without consideration. The right, therefore, to recover exists. There was no debt and the defendant received a sum that was not due him. (See arts. 1047-1048 and 1140 C.C.)

Neither was there a natural obligation.

(16 Laurent 164; Marcad6 4, p. 399.)

is quite evident here that the defendant took an unfair advantage of the financial necessities of the 1ESE plaintiff, and the latter cannot be said to have been a party to the illicit agreement. His promise to pay the bonus was not made to give the defendant an interest in the contract, although that was the effect of it, and as Planiol puts it, vol. 2, No. 846:- It would be a curious result, if, under the statute, a briber could withhold from the bribee,. in a case like this, the money paid when an innocent party would be obliged to suffer his loss.

It is said in the respondent's factum that Consumers Cordage Co. v. Connolly (1), decided in this court, is based upon modern French jurisprudence, but that is not the case.

As far back as 1839, the French courts began to restrict the application of the Roman maxims nemo auditur, etc., and quod nullum est nullum producit effectum.

(S.V. 33, 1, 668; S.V. 44, 584; S.V. 90, 2, 97;

Meynial's note and Marcad6, vol. 4, at page 399), and to-day it is universally admitted that they do not apply where the obligation is based on an illicit, as distinguished from an immoral, cause.

(Vide Fuzier-Herman, vo. "Paiement," No. 451.

All the cases on this subject are collected in "La Revue Trimestrielle," 1913, at page 553 et seq.)

The appeal should be allowed with costs.

J.-Whilst respondent was mayor of De- Lorimier, a municipal corporation, appellant tendered for the work of constructing some sewers and his tender was accepted and contract let accordingly. Idintn It seems the appellant, who was not a man of much financial substance, then applied to respondent to finance him through the execution of these works. There were proposals and counter proposals between these men, which ended by appellant giving respondent his promissory note for three thousand dollars, which is the note referred to in the following receipt given by respondent:- See]ig that the total amount earned under said contract and owing by the corporation in respect of these works when finished was the sum of twenty-two thousand seven hundred and twenty dollars and fifty cents ($22,720.50), for which the corporation gave its promissory note, on the 18th of July, 1908, and that the entire advances of the respondent to the appellant between the dates of his getting the remarkable document above quoted and the acquisition of this promissory note of the corporation was never more than nine thousand four hundred and fifty-nine dollars and twenty cents ($9,459.20), one is surprised at the audacity which can claim that the transaction truly represents interest or compensation of that sort for making such advances and means nothing else.

The appellant says that the respondent proferred a partnership in the contract on the basis of sharing equally in the profits, that he (appellant) did not assent, but, after several interviews that the respondent J preferred it should be put in the shape of giving him the promise above set forth of three thousand dollars, and that when he discounted the corporation's note or renewal thereof (broken into four notes spread over a term of years) and wanted him to settle up, he claimed two thousand dollars in addition to this three thousand dollars, besides an item of three hundred and ninety-six dollars and sixty-five cents, for interest, which together would so closely represent the half of the actual profits admittedly made on this small contract, that I think it quite clear the respondent never let the proposal of partnership out of his mind. In truth, I infer, he was determined on the double advantage of securing at least three thousand dollars and, if the results should so turn out that he would find half the profits to be still -better, to claim that as he did, in the mode he did.

The item of three hundred and ninety-six dollars and sixty-five cents ($396.65)

for interest, the respondent says was interest computed up to the 22nd of May, 1908, at 7% or 8% on the actual advances made up to that date, and, in the witness box claimed he ought to get interest on later advances, but indicates that was overlooked by reason of the disputes that followed.

If all this does not indicate that he had in mind the idea that he intended to be and was interested in the profits, I am puzzled to know what his process of reasoning was.

It is quite clear he claimed he intended he should get five thousand dollars over and above the usual bank interest.

If it could not be called anything else, it certainly was a lavish commission coming to him out of a trans- Itington J. action in which the corporation of which he was mayor was concerned, and, I think, unless the statute prohibiting such officers from taking commission or other interests on its contracts is to be frittered away or repealed by judicial interpretation and construction, it is a violation thereof.

There'are, besides the plain import of the transaction, several things in the respondents' evidence, such as his attempt to represent there were two contracts, when clearly only one, between the appellant and the corporation, and the erasure in the respondent's books, which, when taken with his evidence, shew or tend to shew a possibly false and fraudulent purpose on the part of the respondent and colour the whole story as against him.

The section 1, of 58 Vict., ch. 42 (Que.), relied upon is as follows:- 1. Any member of a municipal council who knowingly, during the existence his mandate, has or had, directly or indirectly, by himself or his partner any share or interest in any contract or employment with, or on behalf the council, or who knowingly during the existence of his mandate, has or had through himself or his partner or partners, any commission or interest, directly or indirectly, or who derives any interest in or from any contract with the corporation or counil of which he is a member, shall, upon a judgment obtained against him under the provisions of this Act, declared disqualified from holding any public in the said council under the control thereof during the space of five years.

Section 2 puts the matter thus:- Any member of a municipal council who knowingly, during the existence of his mandate, has or had, directly or indirectly, through a partner or partners, or through the agency of any other I have quoted these sections to shew how clear the purpose of the legislature was to prevent any member of the council from entering into any transaction which should place his personal interest in conflict with his duty to the corporation.

From the moment the respondent accepted the document I have quoted above from a man whose financial position was such as to induce him to give it, he (respondent) was no longer fit to sit in council and effectively discharge his duty.

The restrictive interpretation pressed up-on us of this statute is not in harmony with the rules laid down in Heydon's Case as applicable to penal as well as other statutes. The duty of the judge relative to statutes and their interpretation can never be better defined than as expressed therein. And, if we are ever tempted by reason of a case presenting a want of "honour among thieves" or such like cause, to forget this, let us read the rule again.

Then it is argued that the three thousand dollars by the discounting of the corporation's note or notes were paid and cannot be recovered back.

Had the parties so proceeded as to bring this about, an arguable question might have been raised. But the best evidence they did not is that the respondent held on to the document quoted above and was driven to a tender thereof in answer to the demand of the appellant to settle by paying the balance of the proceeds of the corporation's notes.

His rapacity was such that he insisted on retaining the whole five thousand dollars and the interest he claimed and shews how and what he thought of the question of payment. It was still an unsettled thing and so remained, has herein been in substance and effect claimed by him in his pleadings as his due, and asserting that as his right he has never so pleaded as to raise the question his counsel now seeks to raise as a matter of law.

The issue has been fought out on such contentions at the trial and the suggestion now made is the thought of the able and ingenious counsel, who was not at the trial. There is no room left for arguing that this is a suit to recover back that already paid. If there were I should have to consider the effect of 58 Vict. ch. 42, sec. 11, cited in the appellant's factum.

The appeal should be allowed with costs here and in the court of appeal and the judgment of the learned trial judge should be restored.

DUFF J.-In September, 1907, the appellant entered into a contract for the construction of certain municipal sewers. Finding himself unable to obtain the necessary advances from his bankers he applied to the defendant for assistance, who agreed to lend his credit in consideration of a bonus of $3,000. This term of the arrangement was evidenced by a promissory note for the sum of $3,000 and a contemporaneous acknowledgment in writing by the appellant the receipt of the note which was declared to be renewable until the municipal works in question should be completed.

The respondent was the mayor of the municipality and, on behalf of the municipality, had executed the IES contract to which the appellant was a party. In August, 1908, the works in question having been finished, the appellant received from the municipality a promissory note for $22,720.50 (the sum due to him under his contract), payable in six months, the understanding being that the note was to be renewable at maturity. This promissory note, indorsed by the appellant, was delivered to the respondent; and one of the controversies at the trial related to the. terms of the arrangement under which that was done. On this point it is sufficient for the present to observe that the appellant himself admits that the note of the municipality was transferred to the respondent "en garantie of the notes which I owed him."

The respondent discounted the municipality's note at the Merchants Bank. In September, the appellant offered to repay the respondent the sums actually advanced by the respondent to him, with interest, demanding at the same time the return of the promissory note just referred to.

This the respondent refused, alleging that he was entitled to retain a sum $17,500 out of the proceeds, offering at the same time to return the difference between that sum and those proceeds. The appellant then procured possession of the note by paying the amount due upon it at the Merchants Bank; and this action was brought to recover the difference between the amount so paid and the advances made by the respondent.

The dispute concerns the amount nominally payable in respect of the promissory note already referred to by way of bonus. The position taken by the appellant is this. He says that this note was the outcome of an arrangement which in effect gave to the respondent an interest in his contract with the municipality. And such an agreement he says is void as offending against public policy. The respondent meets this by Duff J. denying that the arrangement gave him any interest in the appellant's contract and by asserting that, in any event, the note was paid and that, consequently, the appellant is in the position of being obliged to rely upon an agreement which he alleges was unlawful to which he himself was a party.

The appellant's contention is based upon the provisions of sections 1 and 2 of 58 Vict. ch. 42 (Que.), which are as follows:- 1. Any member of a municipal council, who knowingly during the existence of his mandate has or had, directly or indirectly, himself or his partner, any share or interest in any contract or employment, with, by or on behalf of the council, or who knowingly during the existence of his mandate, has or had through himself, or his partner or partners, any commission or interest, directly or indirectly, or who derives any interest, in or from any contract with the corporation or council of which he is a member, shall, upon a judgment obtained against him under the provisions of this Act, be declared disqualified from holding any public in the said council or under the control thereof during the space of five years.

Any member a municipal council, who knowingly during the existence of his mandate has or had, directly or indirectly, through a partner or partners, or through the agency of any other person, any interest, commission or percentage (in a contract) with the municipal council of which he is a member or knowingly during the existence of any mandate has or had derived any pecuniary remuneration from any contract for work performed or to performed, shall, upon a judgment obtained against him under this Act, declared disqualified from holding any public in the said council or under the control thereof for the space of five years.

There can be no doubt, I think, that it was understood between the appellant and the respondent in September, 1907, that the bonus of $3,000 should be paid out of the proceeds of the appellant's contract. Such being the understanding it appears to me that the respondent acquired an interest in the contract within the meaning of this statute, and that an agreement having that as its effect and one of its direct objects must, in view of the statute, be held to be an agreement contrary to public policy and void as such. The substantial point in issue appears to be whether or not the appellant is precluded from recovering the amount of the note in question on the principle that -the court will not assist a party to an illegal contract to recover moneys paid or property delivered under it where, at all events, the illegal purpose of the contract has been completely performed.

The appellant disputes the application of this principle, first, on the ground that, in the circumstances, there was no payment.

This particular contention, I think, misses the mark.'

As I have already pointed out the note was delivered, by the appellant's own admission, to the respondent as collateral security for the promissory notes held by the respondent.

It is not suggested that any exception of .this note of $3,000. was made and, if the arrangement under which the note was given had not been tainted by illegality, it seems indisputable that the respondent would have been entitled to retain the note received from the municipality until the bonus note had been discharged. Assuming that the respondent committed a wrongful act in negotiating the municipality's note, the appellant would still only be entitled to recover, all question of illegality put aside, the damages suffered by him which would be measured by the difference between the value of the municipality's note and the amount for which the respondent was entitled to retain it as security. In either view the appellant must impeach the bonus note as given for an illegal consideration and could, therefore, succeed only through setting up the illegality of his own contract.

The question comes Duff J. squarely to be decided whether, according to the law of Quebec, such an action can succeed on such grounds.

The respondent's counsel largely rests upon the decisions of the English courts, and, since the argument was mainly devoted to a discussion of these decisions, it is worth while, perhaps, going through them, although they do not appear to me to be strictly relevant to the point to be determined. In applying the English law it may be observed the same principles apply as if the amount of the bonus note had been paid in money. Taylor v. Ohester(1).

The general rule of the English law is stated in the judgment of Lord Mansfield in Holman v. Johnson (2) :- The objection that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth the defendant.

It is not for his sake, however, that the objection is ever allowed, but it is founded in general principles of policy, which defendant has the advantage of contrary to the real justice as between him and the plaintiff, accident, if may say The principle of public policy is this: ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.

If from the plaintiff's own stating otherwise the cause action appears to arise ex turpi causi, or the transgression of positive law the country, there the court says he has no right to assisted.

It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage it; for where both are equally in fault. potior est conditio defendentis.

Cowp. at &

There are, however, apparent exceptions to this TLAoiNTE rule and the question is whether or not the present MEssIEB. case comes within any of those exceptions.

These f J exceptions have been stated in two text books of high repute and in two comparatively recent judgments. And before considering the scope of them in their application to this case it will be convenient to reproduce the passages:-Ist, Pollock on Contracts, pages 404, 405:- Money paid or property delivered under an unlawful agreement cannot recovered back, nor the agreement set aside at the suit either party unless nothing has been done in the execution of the unlawful purpose beyond the payment or delivery itself (and the agreement is not positively criminal or immoral);

Or unless the agreement was made under such circumstances as between the parties that, if otherwise lawful, it would voidable at the option of the party seeking relief.-Note b. This form of expression seems justified Harse Pearl Life Assurance Co. (1). Or in the case of an action to set aside the agreement, unless the judgment of the court the interests of the third persons require that it should be set aside.

Secondly, Anson on Contracts, p. 253-4:- But there are exceptional cases in which a man may relieved an illegal contract into which has entered; cases to which the maxim just quoted does not apply. They fall into three classes: (1) The contract may of a kind made illegal statute in the interests of a particular class of persons of whom the plaintiff is one; the plaintiff may have been induced to enter into the contract fraud or strong pressure;

no part of the illegal purpose may have been carried into effect, before it is sought to recover the money paid or goods delivered in furtherance of it.

The first of the judgments is in Kearley v. Thomson(2), where Lord Justice Fry says (pp. 745-6) :that general rule there are undoubtedly several exceptions, apparent exceptions.

of these is the case of oppressor and [1904] 1 K.B.

I do not think the transaction in question here could be brought within the exceptions as stated by Lord Justice Fry, by Sir Frederick Pollock, or by Sir William Anson. Take first the judgment of Fry L.J. The transaction, as I view it, is not one prohibited by a statute passed for the "protection of a class of persons" of whom the appellant is one.

It is a statute merely intended to disqualify from occupying certain positions of trust in relation to municipalities persons who bring themselves within the provisions the Act.

The object is to protect the municipalities and the public generally against the evils of corruption in municipal office.

I do not think there is any ground for saying that this statute was passed with the object of protecting the interests of persons who engage in contracts with municipalities. The statute has nothing material to the present purpose in coinmon with the class of statutes to which Lord Justice Fry refers to the "Usury Acts" and the statutes against lottery-keepers.

Then, is this a transaction between "oppressorand oppressed" as the pirase is used by Lord Justice Fry ?

It will be convenient to expand this phrase a littly.

Sir William Anson puts it in a slightly different way.

He speaks of contracts procured "by strong pressure."

And Sir Frederick Pol- .

lock sums up the exceptions as consisting of agreements made in other words, all cases in which illegal agreements completely executed may be set aside by a person who is a party to them and in the interests of such persons alone are cases in which on substantive grounds, independently altogether of illegality, the transaction would be voidable by and for the benefit of such persons according to the general principles of law according to the true intendment and effect of the statute which forbids it. The author cites in support to his proposition the following passage from the judgment of Collins M.R. in Harse Pearl Life Ass. Co.(1), p. 563:- Whether or not this view of the law on this point be open to criticism, it is clear enough when one comes to consider the decisions referred to in the text-books mentioned illustrating the attitude of the courts towards such plaintiffs, that one cannot bring the pre- * sent transaction within the class of cases referred to by Fry L.J., as being cases of "oppressor and oppressed" or by Sir William Anson as contracts procured "under strong pressure."

In Reynell v. S rye it was held that the champertous agreement was obtained by fraud and that alone was sufficient J. ground for setting it aside. In Osborne v. Williams(2) the court had to consider a transaction between a father and son, the transaction itself being unfair and the son being at the time wholly within the father's control. In Atkinson v. D)enby(3) the defendant had taken advantage of the plaintiff's situation to force him into an unfair bargain.

There is no evidence in this case of any such fraud or undue influence or unconscientious taking advantage of the appellant's situation.

The appellant had a valuable contract; he approached the respondent, not as mayor, but as a person of capital in a position to assist him. The respondent was able to dictate terms quite independently of his position as mayor, and I think there is no adequate ground for holding that in fact the appellant was intimidated by the circumstance that the respondent held that office. The appellant had not entered upon the performance of his contract; if he were unable to get the necessary assistance to carry it out there is no reason to suppose that the municipality would not have permitted him to abandon it.

It was suggested that public policy would be better served by compelling the respondent to refund. That may be so; but I do not think the law of England on this subject leaves it to the judge or the court to determine in each particular case whether or not public policy will be 'best served by allowing moneys paid or property delivered under an executed contract void as against public policy to be recovered back by the party paying.

On the contrary the general principle of the law is that stated by Lord Mansfield in the passage quoted above.

The person seeking to recover must bring himself within one of the recognized exceptions to that principle or lie must fail. I think in this case the appellant has not done so, and that if his right to recover were to be determined according to the law of England he could not succeed.

It remains to consider the question whether according to the law of the Province of Quebec the appellant is precluded from recovery because of the unlawful character of his agreement with Messier. The present case, I think, is not a case of payment of money.

The appellant affirms that the respondent had no authority to discount the note; and, in view of the conduct of the respondent in the litigation and the discredit cast upon him by the trial judge, the appellant's story should, I think, be accepted. However, as I have already pointed out, the appellant can only make out his case by alleging the illegality of his contract and on principle he appears to be in the same position as if payment had been made; and, moreover, as I have already said, it was, no doubt, understood that the bonus was ultimately to be paid out of the proceeds of the contract.

The general question is dealt with very elaborately in the judgment of the late Mr. Justice Gironard in Consumers' Cordage Co. v. Connolly(1), with which Mr. Justice Sedgwick and Mr. Justice King concurred.

The authorities cited appear to shew that according to the more modern view the effect of section 989 of the Civil Code, a plaintiff in the situation of the appellant is -entitled to relief on the ground that the illegal contract being without effect the defendant ought not to be permitted to retain that to which he never had any legal right.

Although it may be doubtful whether that decision is strictly binding upon us in view of the subsequent course of the litigation, yet I think 1 ought to give effect to the opinion of the majority of the court which was not overruled by the Judicial Committee. J.-The evidence, in my opinion, clearly discloses that the defendant had a share or interest in the plaintiff's contract with the municipal corporation of the Village of DeLorimier which falls under the penalizing provisions of articles and of the Quebec statute, 58 Vict. ch. 42.

If I could read the evidence as warranting a conclusion that the plaintiff had never authorized the defendant to retain out of the proceeds of the note of the municipal corporation, the amount of the $3,000 note now in question, the disposition of this case would be comparatively simple. The plaintiff would, in that event, be suing to recover money had and received to his use by the defendant, and the latter would be compelled to invoke the illicit contract as his only justification for retaining it. In such a defence he certainly could not succeed.

I feel constrained, however, to take the view that, in directing the defendant to retain out of the proceeds of the note of the municipal corporation the sums due him, the plaintiff intended that he should pay to himself the amount of the $3,000 note which represented his illicit share of the plaintiff's profits on the contract with the municipality, and that this should be deemed a payment this sum of $3,000 by the plaintiff to the defendant. It is, I think, a fair inference from the evidenee that "it was understood" that the defendant was to pay himself the amount of the $3,000 note out of the proceeds of the discount of the note of the municipality. I agree with the view which has prevailed in the provincial courts in regard to the $2,000 kept by the defendant on the pretext that he was entitled to it for financing a second contract that he has neither right nor colbur of right to retain it. There was no second contract.

Two objections are urged against the plaintiff's right to recover the sum of $3,000: 1st, that it was paid voluntarily, and, if in mistake, that the mistake was of law, not of fact; and 2ndly, that, in order to recover, the plaintiff must invoke the illegality of the contract under which this money was paid. Notwithstanding these objections, under the Civil Code of the Province of Quebec, the right to recover appears to exist.

Article 1047 of the Civil Code provides that:- Money voluntarily paid in mistake of law is, therefore, recoverable, as has been held in many cases: Le- Le Maire Miontrial ; Leclerc v. Leclerc ; Bain v. City of Montreal(3), at pages There appears to be no doubt that under the system which prevailed before the adoption of the Civil Code full effect was given in French courts to the maxim the Roman law, turpi cau.vi non oritur actio, and the action en r6pitition de l'indu did not lie to recover moneys paid under illegal contracts, save in cases of the sale or cession of public offices, which were treated as exceptional. It suffices to cite Pothier in support of this statement. But, by article 989 C.C., it is declared that

Modern commentators, as well as modern decisions, appear to agree that, by this article, it was intended to do away with the operation of the Roman rule in so far as it precludes actions to recover back moneys paid under illicit contracts.

Otherwise, it is said, some effect would be given to the illicit contract in contravention of the article of the Code.

And it is pointed out that, while the Code was based largely upon the views of Pothier, in this particular his ideas were deliberately departed from. The right to recover moneys illegally paid is now the accepted rule, at all events where, as in the present case, the contract wider which the payment has been made is merely illicit or contrary to public policy and not in se immoral or criminal. With this latter class of contract we are now called upon to deal.

This subject was carefully reviewed by the late Mr. Justice Girouard in Consumers' Cordage Co. v. Connolly(1), at pages 298 et seq.

His conclusion was that, under the Civil Code, money paid upon such an illicit contract is recoverable. I regard this authority as binding and I follow it without hesitation both as to the principal sum of $3,000 and as to the interest, $396.65, which the provincial courts disallowed. In such a case as we have now before us, if the difficulty as to voluntary payment did not exist (Wilson v. Ray(2) ), the money illegally paid to the defendant would be recoverable in an English court. Although ordinarily money paid upon an illegal contract is not recoverable in a court administering English law, because nemo allegans suain turpitudinam est audiendus, and the maxim potior est conditio defendentis is applied

As I have already said, the principle of the decisions in such cases as Osborne v. Williams(3), and Morris v. M'Cultock(5), appears to have been accepted in France in regard to the sale of public offices even when it was held that the action en rdp6tition VOL. XLIX.j SUPREME COURT OF CANADA. did not lie to recover payments under illegal contracts.

Where, as here, there is a statutory prohibition of the contract under which the money has been paid and a penalty imposed on only one of the parties, they may be regarded as not in ptri delicto; and, where public policy requires it, the party who is not penalized-may have relief. 15 Am. and Eng. Encye. (2 ed.) Brown ing v. Morris (I), at page per Lord Mansfield; Willianis v. Hedley(2). :iere the penalties are imposed only on the municipal office-holder. The purpose of the legislation is to ensure, for the protection of the public, whom the office-holder represents, that he shall not have interests which may conflict with his duty to them. Public policy requires that he shall not be allowed to retain profits made out of contracts which give or may give him such a conflicting interest. In such a case public policy demands the intervention of the court.

The guilty party to whom relief is granted is simply the instrument by which the public is served.

7 Cyc. 750.

It is upon grounds of public policy that similar relief is granted by English courts of equity in marriage brokage cases.

Hermann v. Charlesworth(3) Hall Potter(4).

These references to English law are probably quite superfluous in the present case, since I dispose of it on the authority of Consumers' Cordage Co. v. Con- I make them merely to indicate that, in courts in which the maxinY taxpi caUsd non oritur actio ordinarily precludes relief where the plaintiff is Jobliged to set up illegality in which he has participated, such a case as the present would, on grounds of public policy, be deemed an exception to the general rule and the public official would not be permitted .to retain the fruits of his illicit bargain.

While the plaintiff's conduct may savour of ingratitude and may appear to be such as not to entitle him to assistance of a court of justice, it must be borne in mind that he succeeds, notwithstanding his own demerit, solely because of the supreme importance, in the public interest, of frustrating attempts on the part of public officials to enrich themselves by forbidden means.

I am, with respect, of the opinion that the plaintiff's appeal should be allowed with costs in this court and in the Court of King's Bench, and that the judgment of the Superior Court should be restored. J.-Nous avons a d6terminer dans cette cause:- Si le maire d'une municipalit6 peut ftre inthress6 dans un contrat qu'un entrepreneur a fait avec cette municipalit6;

Nous avons aussi h examiner en troisi~me lieu si le billet promissoire ayant 6t6 pay6 on compens6 il y a lieu ai une action en rcpitition de la part de lentrepreneur signataire du billet.

Le 16gislateur a vu avec un soin jaloux a ce que les conseils municipaux soient compos6s d'hommes d~sintdress~s qui, en acceptant de devenir membres du conseil, doivent se laisser guider exclusivement par l'intfrit public.

II peut arriver sans doute que la decision de certaines questions affecte particulibrement un plusieurs membres du conseil. Par exemple, s'agit-il d'un chemin ou d'un cours d'ean dans lequel des conseillers municipaux pourraient tre intbress6s, ils doivent alors s'abstenir de sidger ainsi que le declare 1'art. 135 du code municipal qui dit:- .

La question de savoir s'il est intress6 on non, doit tre dcid~e par ses callegues sans qu'il puisse voter sur cette question.

Nombre de decisions out 6t6 rendues par nos tribunanx annulant des proecs-verbaux on des rPgIements parce que les conseillers qui les avaient adopt~s 6taient personnellement intbress6s.

Quand il s'agit de contrats avec la municipalit6, non soulement ils ne peuvent pas voter sur ces contrats mais ils ne peuvent pas tre nommbs membres du conseil ni agir comme tels (art. 205 du Code Municipal).

Dans le cas actuel, Lapointe, I'appellant, avait le 26 septembre, 1907, fait un contrat avec le municipalit6 de DeLorimier pour la confection d'6gofits. II s'est trouv6, h un moment donn6, g~n6 dans ses affaires, et it s'est an maire, l'intim6, Messier, [VOL. XLrX. - pour qu'il lui aide it financer son entreprise. Ce deracceda volontiers Li sa demande, mais exigea en retour que Lapointe lui donint la moiti6 de ses profits. Lapointe a trouv6 que les exigeances de Messier Ataient trop fortes et its se sont entendus pour une sonme de $3,000.

Et Lapointe donia son billet pour ce montant le 26 octobre, 1937.

Messier avanga alors, dans le cours de l'automne 1907 et du printemps 1908, I'argent n~cessaire, savoir environ $12,000, pour payer les mat~ri-aux et la main d'oeuvre en prenant des billets promissoires de Lapointe qu'il escomptait dans une banque on qu'il gardait en sa possession.

L'entreprise fut termine an commencement de l't6 de 1908. Tous comptes tires, la municipalit6 devait Lapointe $22,720.50, et comme il n'avait d6pens6 qu'environ $12,000, il se trouvait -avoir fait un profit de $10,000.

II 6tait convenu par le contrat entre Lapointe et la corporation que les paiements devaient se faire par cinq versements annuels et cons~cutifs dont le premier devenait dft un an apris 1'acceptation des travaux. Le premier versement serait done devenu an commencement de 1'6t6 de 1908. Messier, le maire, a-til trouv6 que les behdances 6taient trop 61oignes, on bien est-ce le rdsultat d'une erreur de la part des autoritis municipales ?

Le conseil municipal, it tout 6venement, a dcid4 d'autoriser son maire it signer an nom de la municipalit6 un billet promissoire qui serait payable en janvier, 1909, pour toibt le montant. C'6tait li une faveur considerable qui 6tait faite h l'entrepreneur mais qui en mime temps permettait an maire de rentrer dans ses fonds sans plus de d6lai. La preuve ne nous dit pas les circonstances qui ont motiv6 ce changement dans les termes de paiement. Mais il est h presumer que Pintimb n'y a pas 6 absolument tranger.

D'ailleurs il a sign6 lui-m~me le billet qui allait lui pernettre de se renibourser de suite des avances qu'il avait faites Li Lapointe. Le billet est endoss6 par Lapointe et remis h Messier qui en fait faire Fescompte et en touche le montant.

Messier, qui n'avait avancd qu'environ $12,000 h Lapointe, aurait dft remettre a ce dernier environ $10,000.

Mais il exigea d'abord $3,000 pour le billet qu'il s'(tait fait donner le 26 octobre, 1907, et il r6clamait en outre environ $2,000 pour lavoir aid l'6gard d'un autre contrat avec la municipalit6. La cour sup~rieure et la cour d'appel ont kt unaninement d'opinion que Messier n'avait pas droit h ces $2,000.

La cour d'appel cependant a d6clar6 que Messier pouvait garder les $3,000, montant du billet du 26 octobre, 1907.

Ce billet de $3,000 reprbsente-t-il une convention 16gale ?

Je n'hbsite pas h dire que non.

Le maire d'une municipalit6 ne pent pas avoir directement ni indirectement un int6rit dans un contrat avec sa corporation (art. 205). Cette prohibition du code municipal a kt 6dict~e en termes encore plus s6vres daus la 16gislation contenue dans le chapitre 42 de 58 Vict.

Le section 2 dit:cipal dont il est membre, ou qui a sciemment, pendant la durde de son mandat, retir6 contrat quelque avantage pecuniaire pour travaux ex~cutis on a ex6cuter, sera, sur jugement obtenu contre lui, vertu cette loi, d6clar6 inhabile D, remplir une charge dans le dit conseil ou sous le contrOle du dit conseil durant I'espace de cinq Brodeur J. ans.

Nous relevons h la section 11 du mime statut la disposition suivante qui autorise dans certains cas l'action en r6p6tition et qui dit:- Quiconque a pay6 quelque somme d'argent, commission, honoraire on rdcompense a un membre du conseil municipal pour services rendus ou A rendre par tel membre en sa qualit6 officielle, qu'il s'agisse servkes rendus par tel membre lui-meme, directement on indirectement ou par 1'entremise d'nn tiers, et pour s'occuper d'une affaire devant conseil ou devant un comit du conseil, pent, en tout temps, recouvrer cette somme par action ordinaire devant une cour jurisdiction compdtente.

II est bien 6vident pour moi que la consid6ration du billet de $3,000 en question 6tait pour la part de b6nbfice. du d6fendeur intim6 dans les travaux ex6cuths pour la corporation.

Cette consid6ration 6tait illgale parce qu'elle est contraire h 1'ordre public et aux bonnes mteurs. L'article 990 du Code dit:- La considdration est illegale quand elle est prohibde par la loi, contraire aux bonnes mocurs on L l'ordre public.

Les bonnes meaurs et I'ordre public requibrent que les municipalitis soient administrbes par des personnes d6sint6resses, que les membres du conseil n'aient pas d'int6rfts ni directement ni indirectement dans aucun contrat municipal.

Ils sont les mandataires des municipes et l'int6r~t public doit 6tre leur seul guide. Mme s'il n'y avait pas de disposition formelle dans nos lois statutaires contre la mauvaise foi du mandataire infiddle, sa responsabilit6 serait la mrie sous la loi commune. Toute convention qu'il fait contrairement h cela, viole les principes de la loi naturelle et elle est contraire h Fordre public et aux bonnes meurs.

Le billet du 26 octobre, 1907, est donc nul et de nul effet. Je trouve dans la jurisprudence ambricaine la d6cision suivante qui peut s'appliquer a la prbsente cause: Smith City of Albany(1) : "Where by the charter of a city the members of the common council were prohibited from being interested in any contract for which payment must be made under any ordinance of the common council and a member of the council, by a secret arrangement with a contractor, became interested in such a contract, it was held that a note given by the contractor to such member for his share of the profits of the contract was void and, being void, an assignee thereof could not recover upon it." L'action en rdp6tition existe-t-elle si ce billet a 6t6 pay6 ?

Il y a en divergence d'opinion a ce sujet. Mais l'opinion gn6rale chez les auteurs modernes est que cette action existe. Voir Marcad6, vol. 4, No. 458; Huc, vol. 8, No. 392; Laurent, vol. 16, No. 164; Baudry Lacantinerie, vol. 11, No. 316.

Cette question est venue devant cette cour dans la cause de Consumers' Cordage Co. Connolly(2), et mon pr~d~cesseur, le regrett6 juge Gironard, dans son jugement, en a fait une 6tude complite. On a dit que cette opinion avait kt renvers~e par le Conseil Priv4. C'est une erreur. Au contraire, le Conseil Priv6 la adoptbe, puisqu'il a ordonn6 un nouveau procks pour trouver si Pacte criminel que Pon reprochait aux parties et qui donnait lieu h l'action en r~p6tition avait re1lement eu lieu. Voir la d6cision du Conseil Priv6 rapport6 au volume 89 du Law Times, p. 347. En rdsuin6, je suis d'opinion que le billet de $3,000 .. avait 6t6 donn6 pour une consid6ration ill~gale et que le maire est oblig6 de le remettre Pentrepreneur Lapointe sans pouvoir en exiger le paiement.

L'appel doit done tre maintenu avec d6pens de cette cour et de la cour d'appel.

Appeal allowed with costs.