Page:Harvard Law Review Volume 9.djvu/290

262 HARVARD LAW REVIEW, hibited contract might be treated as voidable, and not void. No court seems to have developed this theory, except as respects the question of agency which is involved between stockholders and directors when such a contract is made. On this point, as is well known, there have been many decisions, — especially in England, where Ashbury Ry. Carriage Co. v. Riche^ settled the law upon its present footing. (2) An unauthorized or prohibited agreement might be treated as immoral. In that event, no action would lie against the corporation or in its favor for a breach of the contract ; nor could a suit be maintained by either party for benefits con- ferred thereunder. It has been seen that this is declared by Judge Thompson to have been the ** ancient doctrine " upon this subject. No authorities which support this position are cited by the learned author, and none are known to the present writer. (3) An unauthor- ized or prohibited agreement being " unlawful and void, not because it is in itself immoral, but because the corporation, by the law of its creation, is incapable of making it," ^ the courts would refuse to per- mit an action to be maintained upon the void agreement, but would permit a recovery in quasi contract. That is to Say, the courts would recognize the right of a plaintiff who had performed his part of an agreement to be put into the status quo as respects a defend- ant who refused to perform, — unless, indeed, the nature of the case were such that the parties would be treated as in pari delicto. The courts would also, on such a view, recognize the right of a plaintiff who was unwilling to perform the illegal contract to sue a defendant not in default and recover from him the money or prop- erty with which the plaintiff had parted.^ This doctrine bears a resemblance to what Judge Thompson* styles the more modern doctrine," which is a result of the revolt " above described. No jurisdiction is known to the present writer, however, in which this doctrine is recognized in its completeness. After the decision in Pearce v. R. R., it seemed as if the Supreme Court of the United States would adhere to this line of development, and a strong assertion of the essentials of the doctrine is to be found in the language of Mr. Justice Gray in Central Transportation Co. v. ' L. R., •) H. L. 653. ^ Mr. Justice Gray in Certral Transportation Co. 7.'. P. P. Car Co., 139 U. S. 24, 55(1890). "* In Keener on Quasi Contracts (p. 273, n.) there is a suggestion to the effect that this is the true position for a court to take if an u//ra vires contract is to be treated as unenforceable. 4 Page 391.