In Simpson v. Bloss[[51]] it was laid down that the real test whether a demand connected with an illegal transaction is capable of being enforced at law, was, whether plaintiff requires any aid from the illegal transaction to establish his case. The plaintiff laid an illegal wager with B in which the defendant assumed a part. The plaintiff won. Plaintiff, expecting that B would pay by a certain time, advanced to defendant his share of the winnings to which he was entitled by his agreement by plaintiff. B became insolvent and never paid the bet.
Held that as plaintiff could not establish his case without the aid of the illegal wager, he could not recover.
Liability of partners in illegal firm to account.
In Sharp v. Taylor[[52]] the Court drew a distinction between enforcing an illegal contract, and enforcing a subsidiary contract arising therefrom. They held that although a partnership might have been formed to carry out an illegal object which the Court would not aid in effecting, yet one partner who has received moneys which have been realised in the illegal business, cannot set up the illegality in answer to a claim by his co-partner for an account.
But this case was subject to some unfavourable criticism by the late Master of the Rolls in the case of Sykes v. Beadon.[[53]] This was a case of a society not registered under the Companies Act, which the Master of the Rolls held was illegal as infringing that Act, though his decision on that point was overruled by the Court of Appeal in Smith v. Anderson.[[54]]
His lordship also was of opinion that it was illegal as infringing the Lottery Acts. The object of the suit was to have the trusts of the society administered by the Court. But his lordship held that as the society was illegal, it was impossible that its objects could be carried out by the Court. Even supposing a suit were framed for the object of putting an end to the society and dividing the assets, he thought it very doubtful whether the reasoning in Sharp v. Taylor was correct, that because an illegal transaction is closed, that therefore a Court of Equity is to interfere in dividing the proceeds of the illegal transaction.
In the case of Beeston v. Beeston.[[55]] Plaintiff had paid money to defendant to bet with on their joint account, plaintiff to receive a share of the winnings. Defendant won, and gave plaintiff a cheque in payment of his share. The cheque was dishonoured, and plaintiff sued defendant on it. It was urged for the defendant that it was a contract by way of gaming, and that the cheque was given to secure the moneys won thereby, and was therefore a void security, both under 8 & 9 Vict., c. 109, and 5 & 6 William IV., c. 41. The Court held that the plea was bad and the plaintiff was entitled to recover on the ground that the consideration for the cheque was entirely distinct from the wagering. Sharp v. Taylor was cited with approval as showing that one partner cannot set up the illegality of a transaction against a co-partner and thereby retain the whole of the profits arising from that transaction.
It was remarked by Pollock, B., that the two statutes quoted only applied to contracts and securities as between the parties to the wager.
This case will be referred to again when we come to deal with the rights of principal and agent;[[56]] and in the Chapter on Gaming Houses the question of illegal partnership is fully discussed (p. 162).
II. The consequences of an instrument being given for an illegal consideration.