Admissibility of illegal agreements as evidence under Washington Law

Author: LegalEase Solutions 

Introduction

A tenant fell from a poorly maintained deck when a railing collapsed and he sustained a severe brain injury. The tenant had previously signed a lease agreement, and a purchase and sale agreement with the Defendant landlord.  The purchase and sale agreement obligated the tenant to purchase within three years.  The Judge has ruled that the Plaintiff was a tenant, and that the clauses contained in the purchase and sale agreement stating he bought the property “as is” and agreed to “hold harmless” the seller/landlord were unenforceable and illegal.

In these circumstances, you have asked us to research whether an “as is” agreement and “hold harmless” agreement, which were ruled unenforceable and illegal, are admissible at trial for some other purpose.

Discussion

  1. Statutory Law.

The Law of Evidence in Washington does not specifically deal with admissibility of illegal or unenforceable contracts.  However, the Law of Evidence in Washington does state in Rule 402 that “Evidence which is not relevant is not admissible.” 1-402 Law of Evidence in Washington § 402.01.  Rule 401 defines relevant evidence as “having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.”  1-401 Law of Evidence in Washington § 401.01.

In light of the Judge’s prior conclusion, the purchase and sale agreement is irrelevant and thus inadmissible.  The Judge has already determined that the Plaintiff is a tenant and not a buyer, that the purchase and sale agreement is unenforceable, and that the purchase and sale agreement is against public policy.  Because the Judge has made these determinations, discussing the unenforceable purchase agreement at trial would be immaterial and inconsequential.  In other words, discussing the unenforceable purchase agreement would have no tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable.

But note, the Defendant landlord may attempt to establish the relevancy of the clauses by some other means.  While the landlord cannot offer the purchase agreement to argue that the Plaintiff accepted the property “as is” or “hold harmless” the Defendant;  the Defendant might try to argue that admitting the contract is relevant for another purpose.  For example, the Defendant may argue that it is relevant to demonstrate that the Plaintiff and Defendant knew one another, or that they intended a long term relationship.  Defendant may make the argument that the Plaintiff and Defendant had a mutual understanding that the Plaintiff would make all repairs – and try to use the “as is” and “hold harmless” agreements to infer that fact.  It depends on what the issues are at trial.

However, because the Judge has already determined that the purchase agreement is unenforceable and against public policy, it is unlikely that the Judge will find the agreement admissible as Rule 403 will bar the introduction of such evidence  Rule 403 states: “Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.”  1-403 Law of Evidence in Washington § 403.01.
In this case, admitting the unenforceable purchase agreement that is against public policy for some other “relevant” purpose, will probably cause a danger of unfair prejudice, confuse the issues, mislead a jury and waste time.  Therefore, the purchase agreement is inadmissible pursuant to the statutory Law of Evidence in Washington.

  1. Washington Case Law.

Washington cases confirm the above conclusion, and Courts have consistently found that illegal and unenforceable contracts are inadmissible at trial.

The Court in Charles P. Coey v. James r. Low , 36 Wash. 10, (Wash. 1904) considered the question of whether any rights accrue in favor of a lessee from an invalid lease agreement. The lessee verbally sublet the land to two individuals, who farmed the land and were to render to the lessee one-third of the crops grown thereon. The court affirmed the judgment of the trial court which held that the two leases were invalid and dismissed on the merits.  The Supreme Court while affirming the judgment reiterated the view of the courts that they will not lend their aid in any event to the enforcement of illegal agreements.  Minnesota Sandstone Co. v. Clark, 35 Wash. 466 (Wash. 1904).

In Irons Investment Company,, v. Loretta M. Richardson, 184 Wash. 118, 127 (Wash. 1935), it was held that the appellant broker’s agreement to perform, and its performance of, the alleged service, was illegal.  In these circumstances, the Court followed the well-established principle and said, “When a plaintiff, to make a case, must rely upon an illegal contract or upon the performance of an illegal act, he cannot recover.”  (See Deaton v. Lawson, 40 Wash. 486,and see also Stirtan v. Blethen, 79 Wash. 10).

Similarly in, Guy A. Armitage, v. Ann Tracy Hogan, 25 Wn.2d 672, (Wash. 1946), the Court followed the view “which is so generally recognized as to need no other citation of authority” taken in In Lewer v. Cornelius, 72 Wash. 124 (Wash. 1913).  In Lewer the court said:

A court will not knowingly aid in the furtherance of an illegal transaction… And if it be found that the differences which it is called upon to adjudicate arise out of an illegal transaction it will leave the parties where it found them, to work out their differences as best they may.

Id at 129.

This view was upheld in Evans v. Luster, 84 Wn. App. 447, 450 (Wash. Ct. App. 1996) where the Court noted, “If a contract is illegal or flows from an illegal act, a court will leave the parties as it finds them.”

In another case, Herbert E. Vedder v. Harry F. Spellman, 78 Wn.2d 834, (Wash. 1971), the Plaintiffs performed repair work on defendants’ home, although not licensed to do so. Defendants gave plaintiffs a check for the major portion of the agreed compensation, but issued a stop payment order before the check was cashed. The court held that the contract to perform work was illegal and unenforceable. The Court pointed out earlier decisions where this court said:

The non enforcement of illegal contracts is a matter of common public interest, and a party to such contract cannot waive his right to set up the defense of illegality in an action thereon by the other party.  . . . it becomes the duty of the court to refuse to entertain the action.  . . . The appellants are not estopped to raise the illegality of the contract because of their course of dealing with respondents under the contract.  Validity cannot be given to an illegal contract through any principle of estoppel.” – Reed v. Johnson, 27 Wash. 42, 56 (Wash. 1902), Emphasis Added

In summary, Washington Courts are emphatic in their view that they will not in any manner aid the furtherance of an illegal contract and no person can reap the benefit of a contract that is unlawful.

Conclusion

In the case at hand the “as is” agreements and “hold harmless” agreements have been ruled unenforceable and against public policy. Admissibility of such unlawful contracts as evidence will not be permissible since the information is legally irrelevant.  Even if there is some other relevant purpose, the little probative value is substantially outweighed by other concerns.

Second, Washington Courts contemplate the complete suppression of unenforceable and illegal contracts. When a plaintiff must rely upon an illegal contract, he cannot recover. Therefore, admissibility of such contracts at trial for any purpose is denied by Washington Courts.