RESTITUTION - EFFECT OF ILLEGALITY - RIGHT OF PERSON NOT A PARTY TO THE ILLEGAL TRANSACTION TO INVOKE DEFENSE OF ILLEGALITY

Authors

Alfred I. Rothman, University of Michigan Law School

Abstract

In an action for conversion of stock, plaintiff alleged that her intestate was the actual owner of the capital stock of a brewing corporation. Intestate had in fact furnished the consideration for the stock, but it was issued in the name of one Vogel as his dummy and agent. After the death of intestate, the defendant, with knowledge of plaintiff's interest, acquired the stock from Vogel by means of a pretended purchase and converted it to his own use. As a defense to the conversion action, defendant interposed a plea of illegality, alleging that the capital stock was issued to Vogel as part of a fraudulent scheme to conceal the fact that the intestate was the true owner. The purpose of the scheme was to induce the federal and state liquor authorities to issue permits for the operation of the brewery. Plaintiff's motion to strike out this defense was granted at special term. The appellate division denied the motion. Held, that the defense is sufficient in law. "The transactions of plaintiff's intestate . . . were so far against the public good as to disable the plaintiff from invoking the aid of the court in her endeavor to disengage herself (as administratrix) from the unlawfulness of the conduct of her intestate." Flegenheimer v. Brogan, 284 N. Y. 268, 30 N. E. (2d) 591 (1940).

Recommended Citation

Alfred I. Rothman, RESTITUTION - EFFECT OF ILLEGALITY - RIGHT OF PERSON NOT A PARTY TO THE ILLEGAL TRANSACTION TO INVOKE DEFENSE OF ILLEGALITY, 39 Mich. L. Rev. 1245 (1941).
Available at: https://repository.law.umich.edu/mlr/vol39/iss7/21