A CONTRACT IS A CONTRACT - ANOTHER VIEW

Yesterday, I posted the case CENTI v. McGILLIN, 2019 NY Slip Op 9058 - NY: Court of Appeals December 19, 2019 where the Court of Appeals refused to deny the enforceability of a loan on the ground that it was funded by illegal gambling proceeds. Now contrast that case with Doe v. Doe, NYLJ March 26, 2020, Date filed: 2020-03-16, Court: District Court, Nassau, Judge: Judge Scott Fairgrieve, Case Number: SC-002118-19OB:

 "Plaintiff commenced a small claims case against Defendant for $650 for breach of contract. Defendant brought a counterclaim against Plaintiff for $325 for nonperformance. On November 27, 2019, the court dismissed both the claim and counterclaim for the reasons set forth herein.

Testimony of Parties

The parties orally agreed that Plaintiff would work on Defendant’s daughter’s college applications, for an agreed upon rate of $125 per hour for each hour working with Defendant’s daughter in person. For any hours that Plaintiff was working independently at his residence, the rate was $100 per hour. There was no written agreement. The understanding was that the Plaintiff would provide assistance to work on the Defendant’s daughter’s college essays. Defendant regularly paid Plaintiff for the services he provided. Plaintiff alleges that Defendant was content with the services rendered.

The essays were to be submitted through the Common App, which is an online platform to submit college applications. On September 22 and 23, 2019, Plaintiff independently worked on two essays for Defendant’s daughter’s application to the University of Georgia at his home for a rate of $100 per hour. He sent the essays to the Defendant and her daughter for review. Plaintiff said they were very happy with the product. On September 24, Defendant met with her daughter’s school guidance counselor to discuss the essays. Defendant testified…, “any college advisor is fully aware that you show it to your guidance counselor. The guidance counselor read them and said who wrote these, a 40-year old man?” (Transcript at p10). Defendant called the Plaintiff on the phone to express her concerns that the essays were not written by Defendant’s daughter.

The final bill due to the Defendant was for $650. This was comprised of four hours working independently at a rate of $100 per hour, and two hours of working with Plaintiff’s daughter at a rate of $125 per hour. Plaintiff believed that the Defendant would pay the total $650 that was due but was never paid.

Defendant testified that her understanding of the agreement was that the Plaintiff would only edit the essays. Defendant and her daughter felt pressured to use Plaintiff’s services because they were on a time constraint to get the college applications sent out. The school guidance counselor expressed his concern for having the Plaintiff write the essays because the student must certify that they wrote the essay. Plaintiff admitted that he knew that the Defendant’s daughter had to certify that she wrote the essays.

Decision

The Common App is used as a platform for students to easily apply to colleges. As per the Common App students must certify that their whole work is their own. The Plaintiff’s occupation of writing and editing essays for students puts him on notice of the certification. He knew that students would have to certify that the essays are their own work because he has written essays for students in the past. The Defendant is also on notice because she allowed the Plaintiff to work on her daughter’s essays on his own time. Both parties knew that the Plaintiff was writing the essays on behalf of the daughter with the intention of sending the essays to the schools. Thus, the parties entered into an illegal contract.

When both parties are equally at fault (in pari delicto), the courts tend to leave the parties as is. “The doctrine of in pari delicto, Latin for equality of fault, is grounded on two premises: (1) courts should not lend their good offices to addressing disputes among wrongdoers; and (2) denying relief to a wrongdoer is an effective means of deterring illegality.” (28 N.Y. Prac., Contract Law §7:13).
Both the Plaintiff and Defendant are at fault because they knew the essays were not the work product of the Defendant’s daughter. The Plaintiff worked on the essay on his own time, at his own house, not in the presence of the daughter. The Defendant agreed to allow the Plaintiff to work on the essays at his home. Therefore, they both knew the work was not performed by the Defendant’s daughter.
It is well settled that illegal contracts will not be enforced by the courts. In Carmine v. Murphy, 285 N.Y. 413 (1941), plaintiff allegedly sold and delivered alcoholic beverages to the defendant and demanded that the unpaid balance be paid in full. The plaintiff was not properly licensed to sell or distribute alcoholic beverages in the State of New York. The general rule is that no action can be based upon an illegal contract (Carmine v. Murphy, 285 N.Y. 413 (1941)). The Court held that the contract was illegal and unenforceable.

Additionally, in Parpal Restaurant, Inc. v. Robert Martin Company, 685 N.Y.S.2d 481 (2nd Dept. 1999), plaintiff brought an action seeking a permanent injunction barring a construction project from expanding streets abutting the plaintiff’s subleased premises. The contract was deemed illegal since it was created for the purpose of improper tax avoidance. Thus, the contract was unenforceable.
Furthermore, in Sabia v. Mattituck Inlet Marina and Shipyard, Inc., 805 N.Y.S.2d 346 (1st Dept. 2005), plaintiff sued defendant for breach of contract and fraud. Plaintiff alleged that a boat purchased from defendant was faulty. As per their original agreement, both parties attempted to avoid payment of sales tax on the purchase of the boat. “Since no right of action can arise from an illegal contract, plaintiffs are barred, as a matter of law, from suing on the alleged agreement for the purchase of the boat…” Id. at 347. The court ruled the scheme to be illegal and therefore unenforceable.

Similarly, here the oral contract between the Plaintiff and Defendant is illegal. Both parties knew that the essays must be the sole product of the Defendant’s daughter. The Plaintiff cannot write the essays and have the daughter assert that it is her own work. As per their agreement, the Plaintiff and Defendant attempted to create a scheme in which they would present the Plaintiff’s work as the work of the Defendant’s daughter. The schemes in the previously mentioned cases, were deemed illegal leading the court to rule the contracts were unenforceable. Here, the contract was illegal since it was based on a scheme to defraud the institutions of higher learning, which the daughter was applying to for admission. Thus, the contract is unenforceable.

In Stone v. Freeman, 298 N.Y. 268, 271 (1948), plaintiff brought suit against defendant to recover commissions for the sale of clothing. The plaintiff sold clothing to the defendant. The plaintiff used a broker and the defendant used a purchasing agent. The agreement between the broker and purchasing agent provided that the broker was to pay a portion of his commissions to the purchasing agent. This alleges a conspiracy since it is illegal to pay commissions or bonuses to a purchasing agent because they are on different sides of the contract. Due to this conspiracy, the contract was unlawful, thereby making it unenforceable. “A broker or agent who knowingly participates in a criminal scheme is a principal, and in pari delicto with the one who employs him, so that neither may sue the other.” (Id. at 271). The court held that the case should be dismissed.

Here, Plaintiff and Defendant were involved in an illegal agreement. Plaintiff and Defendant were in pari delicto. The present contract was illegal since both parties knew they were submitting plagiarized work. Plaintiff testified, “They have to certify the whole work is their own.” (Transcript at p14). Defendant testified that when her daughter sent in her application, she was not supposed to have a ghost writer (Transcript at p11). Therefore, they were both at fault and could not be granted a money judgement from the court.

According to The Common App, the college application process prepares students for independence that comes with college. This forces students to take responsibility for their work and be proud of their work product.

Since the agreement between the Plaintiff and Defendant is based on illegal conduct, the court refuses to aid a litigant who petitions relief. The law does not aid either party since they are equally at fault (28 N.Y. Prac., Contract Law §7:13).

Conclusion

The court will not grant a money judgement to the parties since the agreement is based on illegal conduct. Both the claim and counterclaim are dismissed with prejudice."