The general rule seems to be that steamers, in a fog, must go at such a rate of speed as will enable them to avoid a collision by slowing, stopping, or reversing, within the distance at which, under the particular circumstances of each case, an approaching vessel can be discovered.

In the case of The Europa (1 Pritch. Adm. Dig. 187), the Privy Council is reported to have decided that if the steamer was navigated at a rate which made it impossible for her to avoid collision with a ship, “discovering it only at the distance at which alone it could be discovered, that it followed as an inevitable consequence that she was going at a rate of speed at which it was not lawful for her to navigate."

“This,” as Mr. J. Lowell remarks, "makes the fact of collision the conclusive test of negligence in all cases in which the sailing vessel is in no fault,” to which may be added the qualification "where some overruling necessity does not deprive the steamer of liberty of action."

The diligence of counsel has collected a long list of cases in which the general rule above laid down is applied, under a great variety of circumstances, to steamers going at rates of speed, in some instances, far less than that (eight miles per hour) at which the City of Panama was navigated.

*

The cases also disclose the inflexibility with which the courts of this country and of England reject the various and sometimes plausible excuses set up by steamers for what is in fact a violation of the law.

Some of these are: that in inland navigation it is necessary to maintain, in a fog, the usual rate of speed, in order that the vessel's position may be known; that by running rapidly through a fog the vessel is sooner out of it, and thus the danger of collision is diminished; that the vessel was under contract with the government, or was carrying the mails; that in Atlantic voyages, to dimin ish the speed would paralyze mercantile transactions and interfere with business and trade; that a vessel is more easily and quickly checked if going at a considerable speed and with a high pressure of steam than if going at a slower rate and with low pressure of steam, and therefore that a high speed conduces to safety.

To all these excuses it is answered that the law requires steamers to go in a fog at a moderate speed, and it is not for their managers to violate or for the courts to disregard the provisions of the law.

In the case at bar the steamer's rate of speed was at least eight miles an hour. A very dense fog prevailed. The schooner was not discovered unti about half a minute before the collision. At the steamer's rate of speed a col lision was then inevitable.

The evidence shows that at a speed of eight miles an hour she would go about four times her length if shut off and reversed.

*"The Pennsylvania," 4 Bened. 257'; s. c. 19 Wall. 125; 4 Bened. 404-5; "The Guatemala,', 7 id. 521; "The Hansa," 5 id. 501; "The D. L. Gregory,' 2 id. 166; "TheFranconia," 4 id 181; "The Metropolis," 7 Blatchf. 214; "The Colorado," 1 Brown. 393-405; "The Magna Carta, 4 Mar. L. Cases, 153; "The Monticello," 1 Holmes, 7; "The Java," 6 Bened. 245; "The Great Eastern," Holt, 167, 180; "The Pennsylvania,” 3, Mar. Law Cas. 477; "The Virgil," 2 Wm. Rob. 202; Macready vs. Jones, 18th How. 91; "The Batavia," 1 Spinkes, 382; "The James Odger," 3 Blatchf. 516; "The Hansa," 1 Lowell, 485; Rogers vs. Str. "St. Charles," 19 How 108; "The Europa," 1 Pritch. Ad. Deg. 186.

This would be more than three times the distance between the vessels when the schooner was discovered. The steamer's course lay on the track of vessels entering the harbor from the north, and this was made known to her not only by the usual course of trade but by the fog-horns which she heard at intervals during the night. The quarter-master testifies that he heard a fog-horn about six or eight seconds before the collision. This witness, who was called by the claimant, states the speed of the steamer to have been eight or nine miles per hour, and that at the time of the collision the vessel had gone off only about a point and a half, notwithstanding that her helm was put hard a-starboard the moment the schooner was discovered.

I think there can be no doubt, under these circumstances, that the steamer was going at too great a speed, or else that her look-outs were inefficient.

Decree for the libellants and reference to the Commissioner to ascertain and report damages.

Recent Decisions.

United States Circuit Court.

NORTHERN DISTRICT OF NEW YORK.

December, 1877.

KNOWLTON vs. CONGRESS AND EMPIRE SPRING COMPANY.

RECOVERY OF MONEY PAID ON INCOMPETE ILLEGAL CONTRACT.

When payments are made upon an illegal contract and the parties are in pari delicto, a recovery can be had as for money had and received, where the illegality is in the contract itself and that contract is not executed. In such case there is a locus pœnitentiæ, the delictum is incomplete and the contract may be rescinded by either party.

A corporation in which plaintiff was a stockholder and trustee, illegally instituted proceedings to increase its stock, plaintiff participating in such proceedings and subscribing for stock. By the agreement of subscription it was provided that payments on the new stock should be made to the corporation as called for by the directors, and that in case of failure to pay within sixty days, the party failing should forfeit all previous payments. Plaintiff paid the first call but failed to pay the second, and a forfeiture was declared against him, but before any scrip was issued for any of the increased stock the project to increase the stock was abandoned. HELD, in an action thereafter brought to recover the money paid on the first call, that the locus pœnitentiæ was still open to the plaintiff and he might recover. Knowlton vs. Empire Spring Co., 57 N. Y. 518, dissented from.

Action to recover back money paid on subscription to shares of corporate stock. The facts appear in the opinion.

WALLACE, J., delivered the opinion of the court.

This case comes here by removal from the State court, after a decision adverse to the plaintiff by the Commission of Appeals, reversing the judgment of the Supreme Court in favor of plaintiff, and ordering a new trial. 57 N. Y.

518.

The plaintiff seeks to recover $13,980 paid by him to the defendant upon a subscription for shares of its capital stock. The defendant, by the action of its directors and stockholders, instituted proceedings for an increase of its capital, and the subscription agreement was prepared and executed in furtherance of that object. It has been assumed, in the arguments of counsel, that these proceedings were illegal, as in contravention of the statute under which defendant was organized, and constructively fraudulent as to the public and all stockholders not assenting thereto, and the decision of the case in the State courts has been adjudicated upon this assumption. The plaintiff was a stockholder and trustee of the defendant, and participated actively in these proceedings.

The subscription agreement provided that the subscribers should pay the defendant for the new shares in installments as called for by the directors, and, upon failure to pay any call for sixty days, should forfeit all sums theretofore paid upon the subscription. Plaintiff paid the sum in controversy upon the first call under the subscription, but failed to respond to subsequent calls for more than sixty days. After a resolution had been passed by the directors forfeiting plaintiff's rights for delinquency, but before any scrip was issued for the new stock, and while the proceedings were inchoate, the stockholders resolved to abandon the project to increase the stock, and pursuant to this action the directors adjusted with parties who held receipts for payments under the subscription by giving them bonds of the defendant issued for that purpose.

No bonds were tendered to the plaintiff. He demanded repayment of the money paid upon the subscription, and, being refused, brought this action.

If the subscription agreement was valid the plaintiff can have no redress, but must be held to his stipulation to forfeit the payment for his delinquency in responding to subsequent calls. The defendant had become entitled to the plaintiff's money by the terms of the subscription agreement at the time it concluded to abandon the scheme for increasing its capital, and, however hard and inequitable it may seem that defendant should retain this money, while abandoning the project for which it was received, its legal right so to do is clear. On the other hand, if the subscription was executed as part of an illegal scheme, it is void in all its conditions and the defendant can take nothing under color of the forfeiture stipulated for. The sole question in any view, therefore, is whether the plaintiff will be permitted to recover money paid in partial performance of an illegal transaction. . The defendant has no right to the money unless that of possession under circumstances which deny to the plaintiff the assistance of the court in reclaiming it.

Certain propositions applicable to the present case are not debatable.

Courts of justice refuse to entertain any application to enforce a contract or transaction which is immoral or subversive of public policy, or in contravention of a statute. Where the transaction has been consummated or the contract has been executed, if the parties to it are in pari delicto, neither will be permitted to recover money or property delivered to the other in furtherance of it.

When the law which the transaction contravenes is designed for the coercion

of one party or the protection of the other, or where one party is the principal offender and the other acquiesces by constraint of circumstances, the parties are not in pari delicto, and the lesser offender will be relieved, although the illegal transaction has been consummated.

So far there is no diversity of opinion among text-writers or in the reported cases. Another proposition of controlling importance in this case, advanced by all the commentators and sanctioned by many decisions, has been denied by the high authority of the Commission of Appeals, which is, that when the contract or transaction is but partially performed, there is a locus pænitentiæ, and either party may rescind.

In deciding the present case the Commission of Appeals (Dwight, Commissioner, dissenting) have held that money paid by one party in part performance of an illegal transaction can not be recovered back where both parties are in pari delicto, and that no distinction exists as to the right of recovery between cases of partial and of entire performance.

Notwithstanding the great respect which I entertain for the authority of the Commission of Appeals, I am constrained to differ from the conclusion thus reached, and must hold, in the language adopted by Mr. Justice Bradley (Thomas vs. City of Richmond, 12 Wall. 355): “A recovery can be had as for money had and received, where the illegality consists in the contract itself and that contract is not executed; in such case there is a locus peœnitentiæ, the delictum is incomplete and the contract may be rescinded by either party." This statement of the law finds support in the early case of Walker vs. Chapman, Lofft. 342, where the plaintiff had paid money to procure a place in the customs, but which he did not get, and brought suit to recover back the payment, and Lord Mansfield decided in his favor; and upon the authority of this case, in the subsequent case of Lowrey vs. Bourdiew, Doug. 468, which was an action to recover a premium paid upon an insurance which was merely a gaming contract, but was brought after the event had happened upon which the insurance was to be paid, Buller, J., said, "There is a sound distinction between contracts executed and executory," and the plaintiff was defeated because the agreement was not executory. In Tappenden vs. Randall, 2 Bos. & P. 466, an action was maintained to recover payment upon an illegal contract, Heath, J., after adverting to the distinction between executed and executory contracts, stated by Justice Buller, saying, "I think there ought to be a locus pœnitentiæ, and that a party should not be compelled to adhere to his contract." In Hazelton vs. Jackson, 8 B. & C. 221, Littledale, J., says: "If two parties enter into an illegal contract and money is paid upon it by one to the other, that may be recovered back before the execution of the contract, but not afterward," and a recovery was allowed on this ground. Other cases which proceeded upon this same rule are : Aubert vs. Walsh, 4 Taunt. 277; Bush vs. Place, id. 291; Bone vs. Eckless, 1 Hurlst. & Norm. (Exch.) 925.

526.

The same doctrine has been recognized in our own court.

White vs. Frank

lin Bank, 22 Pick. 184; Nellis vs. Clark, 4 Hill, 424; Morgan vs. Groff, 4 Barb. And in the latest English case, Taylor vs. Bowers, 34 L. T. Rep. (N. S.) 938, decided in the Court of Appeal in 1876, the plaintiff was permitted to recover property transferred to defraud creditors where the scheme was not fully carried out, Mellish, L. J., saying: "If money is paid or goods delivered

for an illegal purpose, and that purpose is afterward abandoned and repudiated, I think the person paying the money or delivering the goods may recover; but if he waits until the illegal transaction is carried out, or seeks to enforce it, he can not maintain his action."

In opposition to these authorities there is not a single case, of which I am aware, sustaining the conclusion of the Commission of Appeals. The cases cited in support of that conclusion, in the opinion of Lott, Chief Commissioner, are: Perkins vs. Savage, 15 Wend. 412; Bell, ex parte, 1 M. & S. 751; Howson vs. Hancock, 8 Term. 575; Bush vs. Place, 6 Cow. 431, and Saratoga County Bank vs. King, 44 N. Y. 92. In none of these cases did the question arise whether the plaintiff could succeed in an action in disaffirmance of an unexecuted illegal contract.

In conclusion, I concur in the dissenting opinion of Dwight, Commissioner, "That the rule is well stated in 2 Comyn on Cont. 109; if the contract continues executory, and if the party paying the money be desirous of rescinding it, he may do so and recover back his deposit." A different rule would hold out an inducement to parties to an illegal transaction to persevere in their efforts to violate the law.

That the transaction in furtherance of which the payment was made has never been consummated is clear. Before any stock was issued the scheme to issue it was rescinded by the defendant. The real question is, was the locus pœnitentiæ open to the plaintiff at the time he brought this suit. He had declined to respond to the second call when the plaintiff rescinded. Can there be any doubt that up to the time of the abandonment of the scheme by the defendant the plaintiff could have resorted to a court of equity and restrained further proceedings and vacated the proceedings already taken? The cases are numerous where courts of equity have interfered to prevent the consummation of a wrong upon the motion of a party who was instrumental in its inception. It is laid down by Judge Story (1 Eq. Jur. § 298) that "where the agreements or other transactions are repudiated on account of being against public policy, the circumstance that the relief is asked by a party who is particeps criminis is not in equity material. The reason is that the public interest requires that relief should be given, and it is given to the public through the party. And in these cases relief will be granted not only by setting the agreement or transaction aside, but also, in many cases, by ordering a repayment of any money paid under it." See, also, Nevill vs. Wilkinson, 1 Brown's Ch. 473, note "a." If the plaintiff had received the fruits of the illegal transaction, in equity as at law, he could not have recovered his payment, but until then not only could he have been heard, but restitution would have been made to him.

The locus pœnitentia was open to the plaintiff so long as he was in a position to resort to a court of equity, and surely it was not closed to him by the action of the defendant in rescinding the illegal scheme.

After that action on the part of the defendant the plaintiff took the only steps he could take in repudiation of the transaction by demanding his money and bringing his suit. He is not to be denied relief upon the theory that the delictum was complete.

It is claimed that no payment was in fact made of the sum sought to be recovered by plaintiff. A dividend of four per cent. had been declared by the