Washington Supreme Court - 44 Wash.2d 728, 44 Wash. 2d 728
In the 1954 Washington Supreme Court case Sinnar v. Le Roy, grocery store owner Sinnar sued Le Roy, his friend and business machine operator, to get back $450 paid in exchange for a beer license. When Sinnar's initial application for a license was denied, Le Roy claimed he knew someone in the city who could acquire the license for that sum. Sinnar paid, but never received the license. Le Roy argued he couldn't get their money back from the contact, so Sinnar sued for breach of contract.
Both the original trial and appellate court ordered Le Roy to pay back the $450. Le Roy appealed, and the Supreme Court reversed and dismissed the case. The court held that the contract between Sinnar and Le Roy was illegal, as both trying to buy a license from an unauthorized source and attempting to bribe the state liquor board were crimes. This illegal behavior meant that the contract was void, as it went against public policy by encouraging corruption and undermining rules regulating liquor sales.
The case illustrates the legal principle of illegality, where a contract is invalid if it goes against the law or public interest. This can involve specific violations of statutory or common law, or broader moral and ethical concerns.
The plaintiff gave the defendant $450 in cash to obtain a beer license, but did not receive the license. The defendant claimed that he warned the plaintiff to be careful who he gave the money to, and that he believed the transaction was legitimate. The case is on appeal from a judgment against the defendant. The court disagreed with the defendant's argument that the plaintiff cannot claim illegality of the transaction because it was not pleaded as a defense. According to Restatement, Contracts, § 600, Comment a, serious illegality does not need to be pleaded and can be denied by the court even if the defendant does not raise it as a defense. The only way to obtain a beer license was through the Washington state liquor control board, and the transfer of a license required a fee of $10 and could not result in a change of licensee and location.
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