Opinion
[No. 95, October Term, 1951.]
Decided February 8, 1952.
JUDGMENTS — Summary — Directed Verdict for Defendants Proper, in Suit on Note Based on Unlawful Contract. Where defendants moved to set aside a judgment by confession on a promissory note, filing in support thereof an affidavit stating that defendants were to construct a building for plaintiffs to be used as a gambling establishment and that such an enterprise was unlawful and against public policy, and plaintiffs filed a motion for summary judgment, and no other affidavits were filed in support of, or in opposition to, the motion for summary judgment, and plaintiffs conceded that the "contract was a gambling contract", a directed verdict should have been entered for defendants, on the motion for summary judgment, where defendants had given plaintiffs the note in return for money advanced by plaintiffs for construction purposes. pp. 300-302
CONTRACTS — for Unlawful Purpose — Where Not Executory, Loan or Advance Could Not Be Recovered. An unlawful contract by which defendants agreed to construct a place to be used as a gambling establishment for plaintiffs was not executory, where the contract had been performed, in part at least, and money had been advanced by plaintiffs to defendants to be applied to the unlawful purpose. Thus, plaintiffs could not recover their advance or loan, and in an action on the promissory note executed by defendants in connection with the loan, summary judgment should have been entered for defendants, General Rules of Practice and Procedure (1951), Part Two, IV, Rule 4 (a), and for cross-defendants on a set-off and counter-claim for $4,000, allegedly expended by defendants, over and above the advance by plaintiffs, on construction. p. 302
J.E.B.
Decided February 8, 1952.
Appeal from the Circuit Court for Prince George's County (MARBURY, J.).
Action by J. Edward O'Brien and James H. Cochran against Sherbert S. Dowell and Garner T. Grover on a confessed judgment note, in which action defendants filed a set-off and counter-claim, to which the court sustained a demurrer filed by plaintiffs. From a judgment for plaintiffs, defendants appeal.
Judgment reversed, and summary judgment entered for defendants, and for cross-defendants on the set-off and counter-claim.
Before MARBURY, C.J., and DELAPLAINE, COLLINS, HENDERSON and MARKELL, JJ.
Submitted on brief by J. Wilmer Johnson for the appellants.
Submitted on brief by William Meverell Loker, W.M. Loker, Jr., and David A. Harkness for the appellees.
This is an appeal from a summary judgment in an action on a confessed judgment note. Defendants moved to set aside a judgment by confession for two reasons, one that the note "was given for promotion of a gambling enterprise which is against public policy, and renders said note void". In a supporting affidavit defendants said that a building was to be constructed by defendants for use of plaintiffs "for the purpose of operation of a house for gambling, * * * that such enterprise was unlawful and against public policy". Plaintiffs demurred to the motion, the demurrer was overruled and the judgment was opened for trial and the lien preserved. Defendants filed the general issue pleas and later a "set-off and counter-claim" for $4,000, expended by defendants, over and above $1,000 advanced by plaintiffs, on construction; it was alleged that plaintiffs were to advance all money necessary to complete the construction to plaintiffs' specifications, defendants were to lease the place constructed to plaintiffs and to repay advances out of rent, defendants began construction, plaintiffs went into possession and later abandoned possession, and defendants had no profitable use for the premises. Plaintiffs demurred to the "set-off and counterclaim". The case was removed from Calvert County to Prince George's County. Before the confessed judgment was opened plaintiffs filed a motion for summary judgment, upon which no action was taken. After removal plaintiffs filed another motion for summary judgment, to which defendants filed a "demurrer". The demurrer was overruled and the motion granted. No affidavits were filed in support of or in opposition to the motion for summary judgment, but the affidavit on which the confessed judgment had been opened was in the record.
The proceedings in defense of this case are crude and informal. Whether, at the hearing on the motion for summary judgment, the affidavit in support of the motion to open the confessed judgment was ignored or was held inadequate, after it had been held sufficient to open the judgment, the record does not show. As the case was submitted on briefs, we had no opportunity to ask enlightenment by counsel. Summary judgment is not a formal, technical proceeding. We think the affidavit should not be ignored. Apparently counsel regard the allegations of fact in the affidavit and the unsworn "set-off and counter-claim" as before this court, undisputed, and therefore as having been before the lower court. Plaintiffs say in their brief they "believe that the status of the pleadings in the case is tantamount to a concession by all parties that the contract was a gambling contract. * * * It may well be that these parties are in pari delicto." In both briefs the question of illegality of the contract is discussed, as practically the only question before the court. In a suit on an illegal contract, it has been held that, a verdict may be directed for the defendant on the plaintiff's opening statement. Oscanyan v. Arms Co., 103 U.S. 261, 263-269, 26 L.Ed. 539. On motion for summary judgment on the crude proceedings in the instant case, we think similar action may be taken.
Plaintiffs contend that they "are not seeking to enforce the contract which was entered into to violate the gambling laws of this State"; they "seek to recover back what they have paid out ( i.e., lost) in the gambling venture in disaffirmance of the contract and in abrogation thereof while the same was executory". They rely on Harrington v. Boschenski, 140 Md. 24, 30-31, 116 A. 836, in which the plaintiff was permitted to recover from a bootlegger the price paid for liquor yet to be delivered, i.e., while the contract was still executory. The principle of Harrington v. Boschenski is of limited application; it is not applicable in the instant case. In the instant case the unlawful contract is no more executory than an unlawful sale of liquor, delivered and consumed, in which only the unpaid bill is "executory". The contract to construct a place to be used as an unlawful gambling establishment has been performed, in part at least, and the money advanced has been applied to the unlawful purpose. The contract was not (as plaintiffs say) "a gambling contract", but an unlawful contract to construct a place to be used as a gambling establishment.
The note now in suit represents an advance or loan made to be applied to an unlawful purpose, known to all the parties. In these circumstances the loan cannot be recovered. Maryland Trust Co. v. Mechanics Bank, 102 Md. 608, 631-632, 63 A. 70; Burke v. Smith, 111 Md. 624, 628, 75 A. 114. The judgment must be reversed and summary judgment entered for defendants, and for the cross-defendants on the "set-off and counterclaim". Summary Judgment Rule 4(a).
Judgment reversed, with costs, and summary judgment entered for defendants, and for the cross-defendants on the "set-off and counter-claim".