Contracts — illegal contracts — restitution

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United States District Court

Civil

Contracts — illegal contracts — restitution

Even if the defendant was not a licensed broker, he is entitled to keep a brokerage fee already paid to him.

“To begin with, it should be emphasized that Schlueter benefitted from Latek’s brokerage services and, as far as the record reveals, was entirely satisfied with Latek’s work and voluntarily paid the fee. Thus, in seeking restitution, Schlueter is trying to obtain a windfall at Latek’s expense. However, courts are normally not in the business of creating an inequitable situation where one does not already exist. Fausnight v. Perkins, 994 So.2d 912, 921 (Ala. 2008). True, courts will sometimes refuse to award compensation to one otherwise entitled to recover it on the ground that the court will not assist a party in obtaining the fruits of an illegal act. See Evans v. Cameron, 121 Wis. 2d 421, 426-27 (1985); Venisek v. Draski, 35 Wis. 2d 38, 50-51 (1967). In that situation,  [t]he plaintiff must be punished, even though it be at  the expense of allowing the defendant, an equally guilty party, to obtain most unjust and unfair advantage for himself. Clemens v. Clemens,28 Wis. 637, 654 (1871). But as Judge Cardozo emphasized in a frequently quoted passage, this does not mean that courts will go one step farther and take away money that the defendant has earned: ‘The law may at times refuse to aid a wrongdoer in getting that which good conscience permits him to receive; it will not for that reason aid another in taking away from him that which good conscience entitles him to retain.’ Schank v. Schuchman, 212 N.Y. 352, 359 (1912). Thus, absent some compelling policy reason, the court will not order restitution of benefits conferred under an illegal contract when to do so would be to create an inequitable situation. See Remsen Partners, Ltd. v. Stephen A. Goldberg Co., 755 A.2d 412, 416 (D.C. 2000). Instead, the general rule is that “a court will not aid either party to an illegal agreement, whether executory or executed, but leaves the parties where it finds them.” Venisek, 35 Wis. 2d at 50 (emphasis added).”

11-C-0127 Schlueter v. Latek

E.D.Wis., Adelman, J.