Summary
holding that “agreements to procure government contracts by ... secret and corrupt influences, or by personal influence, are void as against public policy”
Summary of this case from Ex parte First Exch. BankOpinion
3 Div. 349.
June 20, 1918. Rehearing Denied November 14, 1918.
Appeal from Circuit Court, Montgomery County; Gaston Gunter, Judge.
Rushton, Williams Crenshaw, Ball Beckwith, Hill, Hill, Whiting Stern, and Steiner, Crum Weil, all of Montgomery, for appellants.
Horace Stringfellow and W. A. Gunter, both of Montgomery, for appellee.
In that aspect of it which needs now to be considered, this is a bill by appellants against appellee for an accounting of the profits earned by appellee in the construction of a cantonment for troops of the United States near the city of Montgomery. The facts alleged will appear in the reporter's statement of the bill as amended. Demurrer to the bill was sustained in the court below, and on this appeal two propositions are relied upon as sufficient, either of them, to sustain that ruling: (1) The alleged agreement between complainants (appellants) and defendant (appellee) was void as against public policy; and (2) said agreement was so indefinite in one of its terms as to be incapable of enforcement by judicial process.
1. Public policy is a phrase of exceeding great generality, and in every case needs definition with reference to the facts involved. Stated with a view to the field in which lies the contract under consideration, the rule of public policy condemns agreements which tend injuriously to affect the public service. Of this branch of the rule more or less familiar examples are found in contracts to use personal influence, as distinguished from professional services, to secure the nomination, election or appointment of any person to office and in agreements to procure legislation by personal solicitation, or — and this more nearly touches the question at hand — the favorable action of a public servant.
Nothing can be said against the nature of the joint adventure upon which, according to the bill, the parties agreed to embark their efforts and resources. The demurrer asserts that the method by which complainants agreed to assist appellee in obtaining the contract with the government was against public policy, and so that the joint adventure, which depended upon appellee's procurement of the contract, created no obligations on the part of any one. There is nothing in the literal terms of the agreement to mark it as illegal; but, if by necessary implication the agreement tended to bring to bear upon the officers of government secret or improper influences in awarding the contract to appellee, then it must be condemned. In Marshall v. Baltimore Ohio R. R. Co., 16 How. 314, 14 L.Ed. 953, cited by appellee, the court said:
"Legislators should act from high considerations of public duty. Public policy and sound morality do therefore imperatively require that courts should put the stamp of their disapprobation on every act, and pronounce void every contract, the ultimate or probable tendency of which would be to sully the purity or mislead the judgments of those to whom the high trust of legislation is confided."
That on the facts stated by the court, was a clear case of a contract to corrupt the Legislature.
In Bush v. Russell, 180 Ala. 590, 61 So. 373, a case in which, on the facts pleaded, we refused to condemn a contract by which Russell agreed to pay Bush a fixed sum for services to be rendered by the latter in assisting the former in her efforts to sell to the government of the United States a lot in the city of Mobile for a post office site. In that case, saying we intended "no disparagement whatever of the salutary rule which is established by the authorities, that agreements for the procurement of favors from public officials in the discharge of public duties by personal solicitation or influence as considerations to be addressed to them over and above the merits of the action sought, or by any secret or devious approaches, are without the pale of remedial law because they tend to introduce inefficiency and corruption into the administration of government," we upheld the contract as pleaded for the reason that there was on its face no appearance of secrecy or deception to be practiced, no fraud or corruption contemplated — nothing to justify a judicial declaration that it was against fair dealing, good morals, or public policy.
Another consideration which should not be ignored in cases of this character is thus stated by Sir George Jessel, M. R., in Printing Company v. Sampson, 19 L. R. Equity Cases, 462:
"It must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because, if there is one thing which more than another public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by courts of justice."
This, as said by the Supreme Court of Wisconsin in Houlton v. Nichol, 93 Wis. 393, 67 N.W. 715, 33 L.R.A. 166, 57 Am. St. Rep. 928, means no more than that it should be made to appear clearly — that is, beyond reasonable controversy — that the contract is void as contrary to law or sound morals, else it should be sustained.
Appellee lays stress upon the decision in Tool Co. v. Norris, 2 Wall. 45, 17 L.Ed. 868. In that case the court made use of this very broad expression:
"All agreements for pecuniary considerations to control the business operations of the government, or the regular administration of justice, or the appointments to public offices, or the ordinary course of legislation, are void as against public policy."
In Lyon v. Mitchell, 36 N.Y. 235, 93 Am. Dec. 502, Judge Hunt, afterwards on the bench of the Supreme Court of the United States, expressed the opinion that the Tool Company Case was not well considered, and in Bush v. Russell, supra, we indulged quotations from later decisions of the Supreme Court of the United States which very clearly demonstrated that the language of the Tool Company Case was too broad, and that it is legitimate to employ agents to lay before officers authorized to contract for government all such information as may apprise them of the character and value of the article offered, and enable them to act for the best interest of the country. Oscanyan v. Arms Co., 103 U.S. 261, 26 L.Ed. 539; Trist v. Child, 21 Wall. 441, 22 L.Ed. 623. Confining our observation to cases like that before us, the rule seems to be that agreements to procure government contracts by "lobbying," that is, by secret and corrupting influences, or by personal influence, are void as against public policy; but, where the contract evidences a purpose to engage in a fair business enterprise and there is no concealment of the agency, it is good and should be enforced. Parsons v. Trask, 7 Gray (Mass.) 473, 66 Am. Dec. 502, note. Or, to employ the language of the court in Houlton v. Nichol, supra:
"Unless the contract was for the performance of some act illegal per se, or to do something of itself of a corrupting tendency, or by its terms or by necessary implication it contemplated a resort to improper means, such as personal solicitation or influence, something other than an appeal to the reason of the department officers whose action was sought, or to obtain their action as a favor instead of as a right, it should be upheld."
Every case of this general character must depend upon its own facts and circumstances. The result in the particular case may very properly, we think, be made to turn upon the question whether it appears by the contract alleged, construed in the light of its circumstances, that complainants thereby corruptly or improperly made merchandise of their indorsement of appellee's fitness in character and ability to perform the work required by the government. It hardly needs to be said that this was not a contract to stifle bids; the government was not letting its contract in that way. Its plan was to select a contractor and let the work to him on a fixed commission. The contract was a big one, and the work needed to be done with utmost expedition. Honest co-operation, openly engaged in, could offend against no interest of the government. Gibbs v. Smith, 115 Mass. 592; Atcheson v. Mallon, 43 N.Y. 147, 3 Am.Rep. 678.
It is said that the agreement between the parties was in violation of section 6890 of the Compiled Statutes of the United States (1916), which reads as follows:
"No contract or order, or any interest therein, shall be transferred by the party to whom such contract or order is given to any other party, and any such transfer shall cause the annulment of the contract or order transferred, so far as the United States are concerned."
But it is plain enough that there was no transfer of a contract in this case, nor does it appear that there was any offense against section 6890, which was "passed in order that the government might not be harassed by multiplying the number of persons with whom it had to deal, and might always know with whom it was dealing until the contract was completed and a settlement made." Burck v. Taylor, 152 U.S. 634, 648, 14 Sup. Ct. 696, 701, 38 L.Ed. 578.
The contract in question contemplated that the government would deal with appellee alone but appellants were to assist in its execution — necessarily appellee would need help — and, if there is any force in our statement of the reason of the matter and its supporting authorities, this contract should have been performed by the parties. It is likewise clear that article 12 of the contract, upon which also appellee relies for his contention that appellants have no rights, was, in effect, nothing more than an affirmation of section 6890 of the Compiled Statutes. Its office in the contract and its effect upon the cause are therefore to be determined on the principles which in our judgment sufficed to answer the objections that this contract was prohibited by the statute.
It is clear upon the whole that appellee relies upon Tool Co. v. Norris, supra, and Egerton v. Brownlow, 4 H. L. Cases, 1-256, for some definitions of public policy which would cover the case shown by the bill. We are perfectly willing to agree that the contracts shown in both those cases were properly condemned. In the first a contract with the government was to be obtained by "personal influence," of that case in other respects we have said enough. In the other case there was in a will a limitation over of an estate upon condition that the beneficiary of the condition should obtain a peerage. A peerage at that time (1853) was a very important office in England. The Lord Chief Baron says that the framer of the will seemed to consider the peerage "as being a bauble, the subject of bargain or barter, contract or condition, and to have forgotten that a peer is at once a legislator and an expounder of the statutes, that it is his office to frame and also to decide upon the law, and that he has, in the Constitution of this country, duties to perform of the greatest importance to the public welfare." After noting the fact that testator had endeavored to create a strong pecuniary interest to procure the renewal of peerage in his family, the Chief Baron said that it was "quite inconsistent with the public welfare, and even the public safety, that property should be bequeathed subject to conditions unnecessarily, capriciously, wantonly, and officiously introduced, and made to depend on any public act of state, whether the Crown, the Legislature, or any branch of it, or of the executive department." Lord Lyndhurst from whom appellee quotes, taking substantially the same view of the question of policy involved, observed that what cases come within the rule must be decided as they successively occur. We cannot go through the case (covering 256 pages of the report) about which the law lords seem to have had all sorts of opinions. Enough, perhaps, to say that the facts involved were vastly different from those in the case under consideration, and that, in every court, if a case varies from the facts and circumstances of preceding authorities, the court is at liberty to found a new decision on those circumstances. (Realty Investment Co. v. City of Mobile, 181 Ala. 184, 190, 61 So. 248. But we make no new rule, as the authorities to which we have referred abundantly show. In conclusion on this branch of the case as showing decisions upholding the validity of contracts involving quite similar elements, we cite Hegness v. Chilberg, 224 Fed. 28, 139 C.C.A. 492, and Valdes v. Larrinaga, 233 U.S. 705, 34 Sup. Ct. 750, 58 L.Ed. 1163.
It is further urged that this contract was too indefinite to support judicial action, for that it provided that it was to be performed "by the contribution of such of the services, equipment and organizations of said parties as might be deemed advantageous to the ends sought by the government." It may be said, no doubt, of the great majority of contracts of joint adventure and of partnership, that they do not point out precisely what each party is to do under them. Such a provision is quite unusual, and, we should say, quite impossible in many cases. The law exacted of each of the parties the utmost good faith and fairness in the prosecution of the common enterprise (Saunders v. McDonough, 191 Ala. 119, 67 So. 591), while, as for a division of the profits to be earned that was to be determined, if necessary, by arbitration — a not uncommon method of determining such matters. We may add, if that be important, that the bill shows that before this suit was commenced arbitrators agreed upon in advance had apportioned among the parties their respective shares of the profits earned and to be earned in the performance of defendant's contract with the government.
On the facts alleged in the bill, considered with reference to the reason and spirit of the law as we have ascertained it from the modern authorities, we hold that the contract into which the parties entered was on its face a fair and lawful contract, and, for aught appearing, should be enforced by the court.
Reversed and remanded.
ANDERSON, C. J., and McCLELLAN and GARDNER, JJ., concur.