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CONTRACTOR INDUSTRIES AND ACCEPTANCE CORPORATION v. EDNA B. ZERR (06/28/76)

decided: June 28, 1976.

CONTRACTOR INDUSTRIES AND ACCEPTANCE CORPORATION
v.
EDNA B. ZERR, APPELLANT



COUNSEL

Michael A. Nemec, Braddock, for appellant.

Gilbert M. Gerber, Pittsburgh, for appellee.

Spaeth, Judge. Van der Voort, J., concurs in the result. Cercone, J., files a dissenting opinion in which Hoffman, J., joins.

Author: Spaeth

[ 241 Pa. Super. Page 94]

This appeal is from a judgment entered on an action in assumpsit to recover the contract price of an above-ground swimming pool installed by appellee in appellant's front yard.

On July 15, 1972, appellant signed a work order for the pool to be installed. The work order provided that appellant should get the building permit, but she did not. On August 8, 1972, almost immediately after the pool had been installed, the municipal authorities notified appellant that the location of the pool violated a local ordinance.*fn1

[ 241 Pa. Super. Page 95]

Appellant made a written demand upon appellee to remove the pool. When appellee refused, she dismantled the pool with the assistance of a young man, to whom she paid $30, and stored the pool in her basement.

On October 26, 1972, appellee brought the present action. The case was tried before a judge sitting without a jury on October 18, 1974.*fn2 The judge awarded appellee a verdict of $2,398, representing appellee's costs for labor and materials; no award was made for loss of profit. (Memorandum Opinion at 1).*fn3

In her exceptions to the verdict, filed pursuant to Pa.R.Civ.P. 1038(d), appellant principally argued that the verdict was legally erroneous "as formation of a contract cannot occur where the transaction or performance is void by statute." Three other exceptions, although stated as separate propositions, were really corollaries of this argument. Thus, appellant contended that the verdict enforced an illegal agreement, that there was a failure of consideration, and that the contract was promptly

[ 241 Pa. Super. Page 96]

    and properly rescinded by her. Appellant also argued that "plaintiff [appellee] has increased its harm by its own negligence and by unreasonably refusing to mitigate its harm in not taking back its swimming pool."

At trial and presumably during argument against the exceptions, appellee conceded that the pool had been erected in violation of the local ordinance (N.T. 16); it took the position that it could nonetheless recover since it was appellant's responsibility to get the building permit. Since appellant did not fulfil this responsibility, appellee reasoned, she was the party more at fault, and the doctrine of in pari delicto therefore did not preclude appellee's recovery.*fn4 The court en banc accepted this argument:

The law of the Commonwealth of Pennsylvania is clear that relief may be granted on a contract otherwise against public policy or illegal where the parties are not in pari delicto. This case provides an excellent example for the application of this rule. The loss to the plaintiff was brought about by the defendant's breach of her clearly expressed duty. While not awarding the plaintiff loss of profit, the Court has

[ 241 Pa. Super. Page 97]

    awarded the plaintiff the out of pocket loss sustained by the plaintiff as a result of the defendant's breach of the defendant's clearly defined duty.

(Memorandum Opinion at 2.) The court en banc did not address appellant's mitigation argument.

On this appeal appellant has worded her arguments somewhat differently than she did before the court en banc, but again, the arguments come down to two issues: Was the contract illegal? If not, did appellee fail to mitigate its damages?

I

WAS THE CONTRACT ILLEGAL?

-A-

A court's refusal to enforce an illegal contract is motivated by a desire to promote goals transcending the isolated litigation before the court:

"The principle of public policy is, that no court will lend its aid to a man who grounds his action upon an immoral or illegal act . . . [P]rinciples of public convenience demand that the justice of the case shall yield to higher considerations, the operation of the precedent on public morals and the public interest. It is for these reasons courts of justice will not assist an illegal transaction in any respect."

Fowler v. Scully, 72 Pa. 456, 467 (1872) (quoting YEATES, J.).

A contract is illegal "if either its formation or its performance is criminal, tortious, or otherwise opposed to public policy." Restatement, Contracts § 512 (1932). See O'Brien v. O'Brien Steel Constr. Co., 440 Pa. 375, 379, 271 A.2d 254, 256 (1970). The illegality must appear from the plaintiff's statement of his cause of action. Holt v. Green, 73 Pa. 198, 201 (1873); Restatement, Contracts § 598, comment a, at 1110 (1932). The

[ 241 Pa. Super. Page 98]

    test for determining whether a contract should be denied enforcement because of illegality was concisely stated by Lord MANSFIELD:

If, from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causa or the transgression of a positive law of this country, there ...


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