Anheuser-Busch Brewing Asso. v. Mason - 44 Minn. 318, 46 N.W. 558 (1890)

Rule:

Mere knowledge by a vendor of the unlawful intent of a vendee will not bar a recovery upon a contract of sale, yet, if, in any way, the former aids the latter in his unlawful design to violate a law, such participation will prevent him from maintaining an action to recover. The participation must be active to some extent. The vendor must do something in furtherance of the purchaser's design to transgress, but positive acts in aid of the unlawful purpose are sufficient, though slight. While it is certain that a contract is void when it is illegal or immoral, it is equally as certain that it is not void simply because there is something immoral or illegal in its surroundings or connections. It cannot be declared void merely because it tends to promote illegal or immoral purposes. The American text-writers generally admit this to be the prevailing rule of law in the states upon this point. However, it has been suggested that this statement is subject to the modification that the unlawful use of which the vendor is advised must not be a felony or crime involving great moral turpitude.

Facts:

The plaintiff vendor instituted a suit against the defendant vendee to recover a balance claimed to be due plaintiff for and on account of bottled beer sold to the defendant. The answer alleged that at the time of the sale defendant, as plaintiff well knew, was the keeper of a house of prostitution; that plaintiff sold the beer expressly for use and dispensation in and for carrying on and maintaining said house; and that when sold and delivered it was agreed between plaintiff and defendant that the beer was to be paid for out of the profits accruing to the latter from her unlawful occupation. At trial, the vendee did not attempt to establish her defense but relied upon the admissions of the vendor's agent that he had supposed that the vendee would sell or use the beer in her brothel. The trial court dismissed the case on the basis of the agent's admissions. Plaintiff appealed. 

Issue:

Was the vendor’s knowledge of the vendee's purpose sufficient to preclude recovery? 

Answer:

No.

Conclusion:

On appeal, the court held that the vendor's knowledge of the vendee's purpose was insufficient to preclude recovery. The illegality of the transaction occurred, if at all, in a matter collateral to the sale. The consideration essential to a valid contract had to be valuable, lawful, and not repugnant to law, sound policy, or good morals. However, the American rule was that mere knowledge by a vendor of the unlawful intent of a vendee did not bar a recovery upon a contract of sale unless the vendor had aided the vendee in the unlawful design to violate a law. The vendor's participation in the unlawful design had to be active to some extent.