plugubius t1_irj362m wrote
Reply to comment by Uncle_Father_Oscar in Pot twist: Cannabis firm refuses federal judge's ruling because its business isn't legal under federal law by Doc_Dante
>If the contract is for something illegal, the feds are not going to enforce it.
What is the unlawful part of the contract? This is not is contract for the sale of cannabis. This is a lease. It is unlawful to engage in insider trading, but that does not make a lease to someone who violates that law unenforceable, even if the lessor knows about the insider trading.
A federal court sitting in diversity applies state law. Here, state law says the contract is enforceable. Federal law can preempt state law, but the bare illegality of cannabis sales is not going to preempt state contract law concerning leases. That is why I asked what federal law the poster was talking about that would make it illegal to enforce this lease.
Mental_Cut8290 t1_irjdr8w wrote
I think the issue is the landlord trying to evict solely because of the "insider trading" but they're in a state that allows it.
Also the issue is back rent, so the "illegal" activity is not relevant.
So, I think the whole picture is the Landlord is owed rent, decided to take it to federal so that the renter would be considered the bad guy, but this just made it so the landlord didn't have a valid contact for knowingly renting the space for that purpose.
On state level, everything is above board and the store owes rent. On a federal level, everything is illegal and the contract is void.
Don't know why you're getting down voted. Seems like a reasonable question for a complicated issue.
plugubius t1_irjg0sd wrote
As you note, the issue here isn't whether the tenant's business is lawful. It is whether the agreement to pay rent for the property is lawful. The unlawfulness of a business does not render every contract that business signs unenforceable against the business. Under federal law, state law provides the rules of decision in this case. Unless there is a federal law specific to cannabis that expressly invalidates the lease, federal law says nothing at all the validity of the lease here.
Sumthin-Sumthin44692 t1_irjlr6q wrote
A commercial lease for the purpose of running a cannabis business is illegal under federal law. A lot of commercial leases have the business use/purpose expressly stated in them. But even if this one didn’t the court is not going to ignore what the lease was for. The court cannot enforce a contract, including rent, if it is for an illegal purpose.
Similar cases involve personal service contracts for “physical assistance” that are actually for sex. The court looks to how a contract actually functions. Not just how it appears to function.
plugubius t1_irjm9et wrote
>A commercial lease for the purpose of running a cannabis business is illegal under federal law.
I have asked repeatedly for someone to identify this law. I know of none. A prohibition on cannabis sales alone won't alter state contract law (which is what the federal court must apply here).
PullDaLevaKronk t1_irjnl5o wrote
plugubius t1_irjrzhz wrote
That law does not expressly preempt state contract law, and it would be very hard to argue that conflict preemption applies. It allows the Attorney General to seek a variety of criminal, civil, and administrative penalties. That power does not clearly conflict with a state's ability to decide contractual rights in the absence of the Attorney General's action, and it does not provide for any private enforcement. The scope of federal preemption in the drug context is very narrow.
lorgskyegon t1_irk5wl7 wrote
The landlord can't ask a federal court to enforce a contract that is illegal under federal law.
PullDaLevaKronk t1_irk0xll wrote
Never made the argument. Just provided a reliable link to a mention of the law you were looking for.
Sumthin-Sumthin44692 t1_irjnt9i wrote
As a Schedule I drug, it is illegal to possess or sell cannabis under the Controlled Substances Act. Federal judges have to follow the CSA. State courts don’t (usually).
ankelbiter12 t1_irjmdhy wrote
IANAL, but my understanding is that because it’s a business property, the landlord is aware of what the business is. I take it as the court is looking at it as “you’ve filed a contract / lease with the tenants, so that they pay you money, in exchange, they can use the property to sell cannabis”. Federally, last I checked, cannabis isn’t legal. Since the landlord knows the property is being used federally illegally, the federal court won’t discuss the contract because it’s invalid. Plus, they also know the landlord could just take it to the Illinois state court so I imagine they’re using some slight discretion there. Now if the property were a residence type instead of business, the landlord would have no reason to know that they’re using their property for selling cannabis, so then I think the federal court would touch it.
plugubius t1_irjmqng wrote
IAAL. There is no prohibition on leasing space to Vito Corleone, even if you know who Vito Corleone is. If you know about a murder he commits, you can be charged in connection with that, but the lease is still valid, and he still owes you rent.
Sumthin-Sumthin44692 t1_irjorhy wrote
There is. A landlord can be held liable for conspiracy if they know crimes are taking place on their property. This comes up with so-called “crystal palaces” where motel owner knowingly rent rooms to meth users and prostitutes
plugubius t1_irjs909 wrote
>A landlord can be held liable for conspiracy if they know crimes are taking place on their property.
I agree, and I said as much. That potential liability is different from whether the lease contract is enforceable.
Sumthin-Sumthin44692 t1_irjwei1 wrote
A landlord renting a unit for an illegal purpose can be criminally liable as a co-conspirator. The lease is also void so they won’t be entitled to contractual rent. A court could order some payment to the landlord based on equitable principles but the doctrine of unclean hands and public policy considerations would most likely bar or limit recovery.
Bottom line: landlords, don’t lease out space for criminal activity.
CaptainTripps82 t1_irjnf5l wrote
I was just thinking, the basis for a lot of mob arrests in the past was that even if the underlying business is illegal, you still owe taxes on the income.
crwlngkngsnk t1_irjueo4 wrote
But you can't rent out a murder room, with the explicit understanding that this is his murder room, to be used for murdering people.
I think, like another poster said, that it might depend on if the lease spells out the purpose of the business. If the nature of the business is known and illegal then Federal law isn't going to enforce a contract for that.
I don't know enough about the law to know if this case is heard under Illinois law, but I do know that Federal courts sometimes evaluate cases under State law, so you might be right about that. I guess it depends on the issues raised in the suit. I haven't actually, you know, read anything about the case.
[deleted] t1_irjiglz wrote
[removed]
Uncle_Father_Oscar t1_irjionk wrote
How can the landlord plausibly argue that he did not know they are a cannabis business? He either leased to them knowing they are a cannabis business, or continued to lease to them when he found out. The underlying contract most likely acknowledges what the premises are going to be used for.
Your failure to appreciate what laws are being broken is not a defense to the clear illegality of the of what they are doing.
plugubius t1_irjj453 wrote
He doesn't need to argue he didn't know. This is a suit for rent, not a defense against a criminal charge of aiding and abetting. This is a question of state contract law, and Illinois is clear that the lease is enforceable. Federal law is vlear that state law applies in this situation.
Uncle_Father_Oscar t1_irk69di wrote
Yes he does. So what? Doesn't matter. No it's not.
plugubius t1_irk7emx wrote
The applicability of state law is straight-forward Erie. The federal court must ask whether the Illinois Supreme Court would hold the lease is invalid. In answering that question, the federal court is allowed to ask whether federal law preempts any state court or legislative pronouncements, but preemption is narrow.
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