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WOLK v. BENEFIT ASSN. OF RY. EMPLES.

April 6, 1959

L. E. WOLK, Plaintiff,
v.
BENEFIT ASSOCIATION OF RAILWAY EMPLOYEES, Defendant



The opinion of the court was delivered by: GOURLEY

In connection with defendant's motion for partial summary judgment directed at plaintiff's suit for commissions allegedly due for solicitation of Group Life Insurance from the membership of the Furniture Club of Pittsburgh, this court, pursuant to memorandum order of January 9, 1959, confined argument to the following issue:

Where the defendant Insurance Company, at the request of the plaintiff, prepared, formulated and made available for distribution among the membership of the Furniture Club of Pittsburgh a prospectus to secure the membership of said organization for Group Life Insurance to be written by and with said Company, and in reliance upon defendant's inducements and representations the plaintiff secured the required number of applications of said Furniture Club which were not accepted or approved by the defendant Company, is it a legal defense to an action by the plaintiff against defendant for the commission which would have been earned and due if the Group Life Policy had been written by the defendant Company, that said Group Life Insurance Policy which had been submitted in the prospectus prepared by the defendant was not in conformity with law and/or not approvable by the Insurance Commissioner of the Commonwealth of Pennsylvania?

 In the first instance, I shall, for purpose of argument, accept defendant's thesis that the Group Life Insurance prospectus made available by defendant to plaintiff for solicitation among members of the Furniture Club of Pittsburgh was not in conformity with the requirements and provisions of Pennsylvania law.

 Plaintiff's Claim Based on Quasi-Contract

 Nevertheless, two sound and equally poignant reasons would, in my judgment, authorize a recovery on quantum meruit or quantum valebat.

 First: It is true that, generally, a court will not lend its aid to the enforcement of an illegal contract but will leave the wrongdoers where it finds them. Holst v. Butler, 379 Pa. 124, 108 A.2d 740, and cases cited therein.

 Any bargain is illegal if either the formation or the performance thereof is prohibited by Constitution or Statute, Restatement of Contracts, Section 580. Nevertheless, where the illegality of the bargain is due to facts of which one party is justifiably ignorant and the other party is not, the illegality does not preclude recovery by the ignorant party of compensation for any performance rendered while he is still justifiably ignorant, or for losses incurred or gains prevented by non-performance of the bargain. Restatement of Contracts, Section 599.

 As further stated in section 597 of the Restatement of the Law of Contracts:

 '(a). The statement that all illegal bargains are void is not wholly accurate. It is true that many such bargains are entirely without effect on the legal relations of the parties and that a Court will only under exceptional circumstances, enforce specifically an illegal agreement, but the rule of public policy that forbids an action for damages for breach of such an agreement is not based on the impropriety of compelling the defendant to pay the damages. That in itself would generally be a desirable thing. When relief is denied, it is because the plaintiff is a wrong doer, and to such a person, the law denies relief.'

 Second: The court should only entertain a defense that the contract is illegal where the suit has as its object and effect accomplishment of illegal ends which would be consummated by the judgment sought. Kosuga v. Kelly, 7 Cir., 257 F.2d 48; Bruce's Juices v. American Can Co., 330 U.S. 743, 67 S. Ct. 1015, 91 L. Ed. 1219.

 The contract which is the subject matter of this suit is a claim for services in connection with the sale of group life insurance, based upon defendant's representations and inducement that said insurance was saleable and valid, and justified the rendition of plaintiff's labors in the solicitation of the membership of the Furniture Club of Pittsburgh. The contract or arrangement for services between plaintiff and defendant Benefit Association of Railway Employees is neither prohibited by law, statute or public policy, and being the contract sued upon, the insurer cannot now be heard to complain that because the policy, when issued, might not conform to Pennsylvania law.

 It would appear, therefore, that plaintiff would be justified to, at least Prosecute his claim based upon the value of his labors brought about in ...


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