Bovard v. American Horse Enterprises, Inc.

201 Cal.App.3d 832 (1988)

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Nature of the Case

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Facts

P owned a corporation called American Horse Enterprises, Inc. It made jewelry and drug paraphernalia, which consisted of 'roach clips' and 'bongs' used to smoke marijuana and tobacco. P sold the business to Ralph (D) in exchange for D's promissory note. D agreed to purchase American Horse Enterprises, Inc. from Bovard (P). D signed promissory notes. D failed to pay them, and P sued D and American Horse (D). Testimony at trial revealed that the corporation was in the business of manufacturing jewelry and drug paraphernalia; primarily bongs and roach clips used to smoke marijuana and tobacco. The trial court excused the jury to determine if the contract for sale was illegal and thus void. At the time of the sales contract, it was legal to manufacture such items, but it was later criminalized. The trial court held that a public policy against the manufacture of drug paraphernalia was implicit in state statutes making the possession use and transfer of marijuana unlawful. The trial court then held that the contract was illegal and void. The court found the parties were in pari delicto and thus with respect to their contractual dispute should be left as the court found them. P appealed.