The general rule is that an illegal contract, made in violation of the statutory prohibition designed for police or regulatory purposes, is void and confers no right upon the wrongdoer. To this general rule, however, the courts have found exceptions. For the exception, resort must be had to the intent of the legislature, as well as the subject matter of the legislation. The test for the application of the exception is as follows: while, as a general rule, a penalty implies a prohibition, yet the courts will always look to the subject matter of it, the wrong or evil which it seeks to remedy or prevent, and the purpose sought to be accomplished in its enactment; and if, from all these, it is manifest that it was not intended to imply a prohibition or to render the prohibited act void, the court will so hold and construe the statute accordingly.
District of Columbia Housing Regulations provide that rental properties shall be kept in a safe and sanitary manner. If not, the property may not be offered for rent. Southall Realty Co., plaintiff, owned a rental property in the District of Columbia, which had several housing code violations. These included an obstructed commode, a broken railing, and insufficient ceiling height in the basement. Without repairing the violations in question, plaintiff rented the property to Mrs. Brown, defendant. When Mrs. Brown fell behind on her rent payments, plaintiff brought an action against her. During the trial, Mrs. Brown agreed that she was in arrears on her rent, but argued that her lease was an illegal contract due to the living conditions of the apartment. The trial court ruled in favor of plaintiff. Mrs. Brown appealed to the District of Columbia Court of Appeals.
May a person may avoid the terms of a contract if the contract was made in violation of a statutory prohibition?
The evidence developed, at the trial, revealed that prior to the signing of the lease agreement, appellee was on notice that certain Housing Code violations existed on the premises in question. An inspector for the District of Columbia Housing Division of the Department of Licenses and Inspections testified that the violations, an obstructed commode, a broken railing and insufficient ceiling height in the basement, existed at least some months prior to the lease agreement and had not been abated at the time of trial. He also stated that the basement violations prohibited the use of the entire basement as a dwelling place. It appears that the violations known by appellee to be existing on the leasehold at the time of the signing of the lease agreement were of a nature to make the "habitation" unsafe and unsanitary. Neither had the premises been maintained or repaired to the degree contemplated by the regulations. The lease contract was, therefore, entered into in violation of the Housing Regulations requiring that they be safe and sanitary and that they be properly maintained.