or to strengthen the belief on the part of | the committee in the fact of an active competition and the bona fide character of that competition, and that the lowest bid would be in all probability a reasonable one. It is, in truth utterly impossible to accurately or fully predict all the vicious results to be apprehended as the natural effect of this kind of an agreement. It cannot be said in all cases just what the actual effect may have been. The natural tendency and inherent character of the agreement are also unaffected by any evidence produced on the part of the complainant, that the chairman of the water committee had, when examined nearly three years after the occurrence, no recollection as to the bid of the bridge company or that it had any particular effect upon his mind, and that he said that the contract was awarded to the lowest bidder simply because he was the lowest bidder, and without reference to the bid of the bridge company. depend upon the success which attends the "It is sufficient to observe, generally, that *And in King v. De Berenger, 3 Maule & S.[649] 67, 72, cited in Scott v. Brown [1892] 2 Q.B. 724, 730, Lord Ellenborough, Ch. J., said: "A public mischief is stated as the object of this conspiracy; the conspiracy is by false rumors to raise the price of the public funds and securities; and the crime lies in the act of conspiracy and combination to effect that purpose, and would have been complete, although it had not been pursued to its consequences, or the parties had not been able to carry it into effect. The purpose itself is mischievous; it strikes at the price of a vendible commodity in the market, and if it gives it a fictitious price by means of false rumors, it is a fraud levelled against all the public, for it is against all such as may possibly have anything to do with the funds on that particular day." The question is not whether in this particular case any member of the water committee did or did not remember the fact that the bridge company had made a bid, or that such bid had no effect upon his mind. The question is not as to the effect a particular act in fact had upon a member of the water committee, but what is the tendency and character of the agreement made be18]tween the parties; and that tendency *or character is not altered by proof on the part of a member of the committee, given several years afterwards, that he had no special recollec- legal in their nature and tendency, and for tion that such a bid had been made. The that reason no inquiry is necessary as to the evidence is that all the bids that were given particular effect of any one contract, because received the consideration of the committee, it would not alter the general nature of conand there can be no doubt that the more bids tracts of this description or the force of the there were, seemingly of a bona fide char-public policy which condemns them. acter, the more the committee would be im pressed with the idea that there was active competition for the work to be done. Contracts of the nature of this one are il In the case at bar the illegal character of fact that it tends to lessen competition, but the agreement is founded, not alone upon the It might readily be surmised that if these also upon the fact of the commission of a parties had bid in competition, one or both of fraud by the parties in combining their inthe bids would have been lower than their terests and concealing the same, and in subcombined bid. It was not necessary, how-mitting different bids as if they were bona ever, to prove so difficult a fact. The inference would be natural. In Richardson v. Crandall, 48 N. Y. 348, 362, the court said: "In all cases where contracts are claimed to be void as against public policy, it matters not that any particular contract is free from any taint of actual fraud, oppression, or corruption. The law looks to the general tendency of such contracts. The vice is in the very nature of the contract, and it is considered as belonging to a class which the law will not tolerate," citing Atcheson v. Mallon, 43 N. Y. 147 [3 Am. Rep. 678]. Although these remarks were made when the court was dealing with the case of a bond taken colore officii, yet the principle applies equally to a case like the one at bar, and indeed it is seen that such was the view of the judge delivering the opinion, since he cited Atcheson v. Mallon, which in its nature is a case very similar to the one now before us. The vice is inherent in contracts of this kind, and its existence does not in the least 174 U. S. U. S., Book 43. fide, when they knew that one of them was so much higher than the other that it could not be honestly accepted, and when they put it in for the sake of keeping up the form and of strengthening the idea of a competition which did not in fact exist. The tendency of such agreements is bad, although in some particular case it might be difficult to show that it actually accomplished a fraud, while its intention to do so would be plain enough. Therefore, when it is urged that these parties had no intention of bidding for this work alone, and that unless they had combined their bids neither would have bid at all, and hence the agreement between them tended to strengthen instead of to suppress competition, this answer to *the illegality of the trans-[650] action is insufficient. The evidence, however, does not show that if these parties had not agreed upon a combination neither would have bid alone. It shows complainant came to Portland to see the defendant and to conclude their arrangements to go into the combination, but we are by no means of the opinion that the evidence shows that if they had 71 1121 not combined they would not have bid at all. Complainant's company had bid alone at a prior letting, some time before, and had then been the lowest bidder for the contract, which the city did not award because of a lack of means of payment for the work consequent upon a veto by the governor of the bill providing for the issuing of bonds to make such payment. And it seems that the defendant himself was well able to carry on the contract alone. If it be granted that the fact was proved that neither party would have bid separately and that by virtue of the combination a bid was made which otherwise would not have been offered, the significance of the other facts in the case is not thereby altered. Those other facts are the concealment of the interest which the parties had in each other's bids, and the making of what were under the circumstances nothing more than fictitious bids for this and the other classes of work for which both parties put in bids, evidently for no other purpose than to endeavor thereby to deceive the committee into believing that there was real competition between them, when in fact there was none. If there had been competition, the bid of each for the contract that was obtained might very likely have been lower than the one that was accepted. It is not necessary to prove that fact in order to show the nefarious character of the agreement. The reason given for the making of these fictitious bids by the complainant, that it was a formal matter and to keep the name of his company before the public, is entirely inadequate. The bids actually put in by them for the other classes of work had the same tendency to strengthen belief in the reality of the competition which in fact did not exist between these persons. The whole transaction was intentionally presented to the water committee in a false and deceptive light. [651] *Upon general principles it must be apparent that biddings for contracts for public works cannot be surrounded with too many precautions for the purpose of obtaining perfectly fair and bona fide bids. Such precautions are absolutely necessary in order to prevent the successful perpetration of fraud in the way of combinations among those who are ostensible rivals but who in truth are secretly banded together for the purpose of obtaining contracts from public bodies such as municipal and other corporations at a higher figure than they otherwise would. Just how the fraud is to be successfully worked out by the combination, it is not necessary to show. It is enough to see what the natural tendency is. Public policy requires that officers of such corporations, acting in the interest of others, and not using the sharp eye of a practical man engaged in the conduct of his own business and not controlled by the powerful motive of self-interest, should, so far as possible and for the sake of the public whom they represent, be protected from the dangers arising out of a concealed combination and from fictitious bids. To hold contracts like the one involved in this case illegal is not to create any new rule of law for the purpose of affording the pro tection spoken of. It is but enforcing an old rule, and applying it to such facts as exist in this case because it naturally fits them. Its enforcement here is to but carry into effect the public policy upon which the rule itself is founded. People who have been guilty of the conduct exhibited in this record cannot be heard to say that although their arrangement was fraudulent and illegal, they would nevertheless have obtained the contract even if they had not been guilty of the fraud, because the bids show they were the lowest bidders. The bids might have been lower yet if there had been competition where there was in fact combination. The parties must accept the consequences resulting from entering into the agreement proved in this case all of which they carried out, and included in which and as a consequence thereof was the agreement with the city and the written agreement of partnership between themselves. In Hyer v. Richmond Traction Company, 168 U.S. 471 [42 L. ed. 547], in *speaking as to[652] the character of the agreement in that case, Mr. Justice Brewer remarked that the vice of a combination "lies in the fact of secrecy, concealment, and deception; the one applicant, though apparently antagonizing the other, is really supporting the latter's application, and the public authorities are misled by statements and representations coming from a supposed adverse, but in fact friendly, source.' In that case the demurrer admitted the allegation of the complaint that the combina tion of the two interests asking for the concession from the common council was known and announced to that body before its decision was made. The case simply shows the part which concealment takes in a combination, being in fact one of the great dangers springing therefrom. In Atcheson v. Mallon, 43 N. Y. 147, 151, Judge Folger, in delivering the opinion of the court, said: "But a joint proposal, the result of honest co-operation, though it might prevent the rivalry of the parties, and thus lessen competition, is not an act forbidden by public policy. Joint adventures are allowed. They are public and avowed, and not secret. The risk, as well as the profit, is joint, and openly assumed. The public may obtain at least the benefit of the joint responsibility, and of the joint ability to do the service. The public agents know, then, all that there is in the transaction, and can more justly estimate the motives of the bidders, and weigh the merits of the bid." We have here nothing to do with a combination of interest which is open and avowed. which appears upon the face of the bid and which is therefore known to all. Such a combination is frequently proper, if not essential, and, where no concealment is practised and the fact is known, there may be no ground whatever for judging it to be in any manner improper. But in this case there is more even than concealment. There is the active fraud in the putting in of these, in substance, fictitious bids, in their different names, but in truth forming no competitive bids, and put in for the purpose already stated. It is not Itoo much to say that the most perfect *good faith is called for on the part of bidders at these public lettings, so far as concerns their position relating to the bids put in by them or in their interest. The making of fictitious bids under the circumstances detailed herein is in its essence an illegal and most improper act; indeed, it is a plain fraud, perpetrated in the effort to obtain the desired result. the result of that law in regard to illegal contracts. They are cited in all law books upon the subject, and are known to all of us. They mean substantially the same thing and are founded upon the same principles and reasoning. They are: Ex dolo malo non oritur actio; Ex pacto illicito non oritur aotio; Ex turpi causa non oritur actio. About the earliest illustration of this doctrine is almost traditional in the famous case of The Highwayman. It is stated that Lord Kenyon once said, by way of illustration, that he would not sit to take an account be tween two robbers on Hounslow Heath, and it was questioned whether the legend in reThe evidence shows that this written part-gard to the highwayman did not arise from nership agreement was only a part of the en- that saying. It seems, however, that the tire agreement existing between the parties. case was a real one. He did file a bill in That agreement covered and was clearly in- equity for an accounting against his partner, tended to cover their whole action from the although it was no sooner filed and its real time they agreed to put in their bids in a nature discovered than it was dismissed common interest up to and including the with costs, and the solicitors for the plainexecution and performance of the contract tiff were summarily dealt with by the court obtained from the city. The agreement (of as for a contempt in bringing such a case which that for a partnership was but a por- before it. 1 Lindley, Partnership, 5th ed. tion) was that they should combine their 94, note n; 9 Law Quarterly Review (Loninterests; that they should put in bids don), pp. 105-197. known to each; that they should conceal the fact of their combination; that they should put in fictitious bids without expectation or purpose of having them taken; that if the contract were procured they should perform the work as partners and share expenses and divide profits. No division of that contract into two periods, the one prior and the other subsequent to the written agreement between the parties, can be made. The complainant cannot count only upon the contract of partnership as evidenced by the writing of March, 1893. That writing evidenced only a portion of the agreement that had been made between these parties, the result being that, although their agreement was in the first instance by parol, a portion of it was subsequently reduced to writing. The whole contract is none the less one and indivisible, just as much as if it had all been put in writing. If it had been, it would scarcely be argued that complainant might maintain an action by relying on that part of it which was valid and relating to the partnership between them, and that he might discard or omit to prove that portion which was illegal. If the complainant did not, the defendant could, prove the whole contract, as well the part lying in parol as that which was reduced to writing, so that the court might, upon an inspection of the whole contract, determine therefrom its 54]character. The unity of the contract is not severed or its meaning or effect in any degree altered by putting part of it in writing and leaving the rest in parol. Concluding as we do that this agreement between these parties is as a whole of an illegal nature, and that the portion thereof which is reduced to writing cannot be separated from the balance of the agreement, the question then arises as to the result of such conclusion upon the parties to the agreement. There are several old and very familiar maxims of the common law which formulate The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying out the terms of an illegal contract. In case any action is brought in which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it, nor will they enforce any alleged rights directly springing from such contract. In cases of this kind the maxim is Potior est conditio defendentis. *The following are only a few of the numer-[655] ous cases upon the subject in England and in this country: Holman v. Johnson (1775) 1 Cowp. 341; Booth v. Hodgson (1796) 6 T. R. 405: Thomson v. Thomson (1802) 7 Ves. Jr. 470; Shiffner v. Gordon (1810) 12 East, 296; Sykes v. Beadon (1879) L. R. 11 Ch. Div. 170; Scott v. Brown (1892) 2 Q. B. 724; Belding v. Pitkin (1804) 2 Cai. 147a; Atcheson v. Mallon (1870) 43 N. Y. 147; Leonard v. Poole (1889) 114 N. Y. 371 [4 L. R. A. 728]; Wheeler v. Russell (1821) 17 Mass. 258, 281; Snell v. Dwight (1876) 120 Mass. 9; Marshall v. Baltimore & O. Railroad Company (1853) 16 How. 314, 334 [14: 953, 961]; McBlair v. Gibbes (1854) 17 How. 232 [15: 132]; Coppell v. Hall (1868) 7 Wall. 542 [19: 244]; Trist v. (1874) 21 Wall. 441, 448 [22: 623, 624]; Woodstock Iron Company v. Richmond & D. Extension Company (1888) 129 U. S. 643 [32: 819]; 1 Lindley, Partnership, 5th ed. 93, note, giving the result of the American cases. Child The general proposition is not disputed, but certain explanations as to its meaning and extent have been announced by the courts in cases now to be referred to, and the effort has been to show that the case before us comes under some of the exceptions to the rule, and ought not to be governed by the so-called harshness of the rule itself. If the partnership agreement that is contained in the writing above set forth is in truth but part of an entire agreement, which | other parts of it negative an assumpsit.”[657] contains utterly illegal provisions, then this The defendant therefore had judgment. action cannot be maintained within any of the authorities. It is only by proving the partnership agreement as an entire agreement, separate and free from the balance of the agreement between the parties, that argument can be made in favor of its validity. It has been sometimes said that where a contract, although it be illegal, has been fully executed between the parties so that nothing remains thereof for completion, if the plaintiff can recover from the defendant moneys received by him without resorting to the contract, the court will permit a recovery in such case. The cases cited as illustrating the exception are, among others, Tenant v. Elliott (1797) 1 Bos. & P. 2; Farmer v. Russell (1798) 1 Bos. & P. 296; Sharp v. Taylor (1849) 2 [656]Phill. Ch. 801, 817; *Armstrong v. Toler (1826) 11 Wheat. 258, 269 [6: 468, 471]; McBlair v. Gibbes, supra, 17 How. 232, 235 [15: 132, 134]; Brooks v. Martin (1863) 2 Wall. 70 [17: 732]; Planters' Bank v. Union Bank (1872) 16 Wall. 483 [21: 473]; Armstrong v. American Exchange National Bank of Chicago (1889) 133 U. S. 433, 466 [33: 747, 759]. Upon the point as to the ability of the plaintiff to make out his cause of action without referring to the illegal contract, it may be stated that the plaintiff for such purpose cannot refer to one portion only of the contract upon which he proposes to found his right of action, but that the whole of the contract must come in, although the portion upon which he founds his cause of action may be legal. Booth v. Hodgson, 6 T. R. 405, 408; Thomson v. Thomson, 7 Ves. Jr. 470; Embrey v. Jemison, 131 U. S. 336, 348 [33: 172, 177]. In the first of the above cases the plaintiff sought to maintain his action by referring to that part of the contract which was not illegal, and to ask a recovery upon that alone. Lord Kenyon, Chief Justice, observed that it seemed to be admitted by counsel for plaintiff "that if the whole case were disclosed to the court there was no foundation for the demand. They say to the court, 'suffer us to garble the case, to suppress such parts of the transaction as we please, and to impose that mutilated state of it on the court as the true and genuine transaction, and then we can disclose such a case as will enable our clients to recover in a court of law.' Such is the substance of this day's argument. It is a maxim in our law that a plaintiff must show that he stands on a fair ground when he calls on a court of justice to admin ister relief to him." Mr. Justice Ashhurst, in the same case, said: "The plaintiffs wish us to decide this case on a partial statement of the facts, thereby admitting that if the whole case be disclosed they have no prospect of success; but we must take the whole case together, and upon that the plaintiffs cannot recover.' Mr. Justice Grose said: "We cannot decide on a part of the case; and taking the whole together, and assumpsit cannot be raised from one part of the case when the وو In Thomson v. Thomson, supra, the plaintiff was not permitted to recover, because he had no claim to the money except through the medium of an illegal agreement. The master of the rolls (Sir William Grant) said: "If the case could have been brought to this, that the company had paid this into the hands of a third person for the use of the plaintiff, he might have recovered from that third person; who could not have set up this objection (the illegality of the contract) as a reason for not performing his trust. Tenant v. Elliott is, I think, an authority for that. But in this instance it is paid to the party; for there can be no difference as to the payment to his agent. Then how are you to get at it, except through this agreement. There is nothing collateral; in respect of which, the agreement being out of the question, a collateral demand arises; as in the case of stock jobbing differences. Here you cannot stir a step but through that illegal agreement; and it is impossible for the court to enforce it. I must therefore dismiss the bill." And in Embrey v. Jemison, supra, although the action was upon four negotiable notes, the court would not permit a recovery to be had upon them, because the consideration for the notes was based upon a contract which was illegal. Mr. Justice Harlan, in delivering the opinion of the court, said that the plaintiff could not "be permitted to withdraw attention from this feature of the transaction by the device of obtaining notes for the amount claimed under that illegal agree ment; for they are not founded on any new or independent consideration, but are only written promises to pay that which the obligor had verbally agreed to pay. They do not, in any just sense, constitute a distinct or collateral contract based upon a valid consideration. Nor do they represent anything of value, in the hands of the defendant, which, in good conscience, belongs to the plaintiff or to his firm. Although the burden of proof is on the obligor to show the real consideration, the execution of the notes could not obliterate the substantive fact that they grew immediately out of, and are directly connected with, a wagering contract.[658] They must therefore be regarded as tainted with the illegality of that contract, the benefits of which the plaintiff seeks to obtain by this suit. That the defendant executed the notes with full knowledge of all the facts is of no moment. The defense he makes is not allowed for his sake, but to maintain the policy of the law," citing Coppell v. Hall, 7 Wall. 542, 558 [19: 244, 248]. In the latter case Mr. Justice Swayne, de livering the opinion of the court, said: "Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches it destroys. The principle to be extracted from all the cases is, that the law will not lend its support to a claim founded upon its violation." clearly appear that the defendant was not himself a party to the original contract; for there was a circumstance in the report which These authorities uphold the principle that gave much countenance to the idea that the the whole case may be shown, and the plain-carrier knew what he was doing, viz., that he tiff cannot prevent it by proving only so much as might sustain his cause of action, and then objecting that the defendant himself brings in the balance which was not necessary for plaintiff to prove. The cases above cited as illustrative of the exceptions to the general rule also show what is meant by the cause of action being founded on some new consideration, or upon a contract collateral to the original illegal one. In Tenant v. Elliott, supra, it was held that where two persons had entered into an illegal contract in regard to insurance, and, a loss having occurred, the insured paid the money to a third person to be paid to plaintiff, the third person could not himself retain the money because it arose out of an illegal contract. Eyre, Chief Justice, asked "whether he who had received the money to another's use on an illegal contract can be allowed to retain it, and that not even at the desire of those who paid it to him?" In such case clearly the defendant had nothing whatever to do with the illegality of 659]the original contract. He received the money to be paid to another, and when he received it for that purpose he promised, either expressly or by implication arising from the facts, that he would deliver the money to the plaintiff, and when he refused to do it the plaintiff could recover upon this express or implied contract, without resorting in any manner to the original contract between himself and another, which in its nature was illegal, but with which the defendant was in nowise concerned. Farmer v. Russell, supra, is to the same effect. The defendant received the money from a third person to deliver to the plain tiff, and it was held that he was bound to pay it to the plaintiff, athough the original consideration upon which the money was to be paid the plaintiff by the third person was illegal. Eyre, Chief Justice, said: was lending his assistance to an infamous *The verdict in this case had been for the[660] defendant. There was a question in the case whether the defendant was privy to the contract between the plaintiff and the man at Portsmouth. The goods transported were counterfeit pennies or half pence, and it was the opinion of Eyre, Chief Justice, that if the defendant had been privy to the original illegal agreement so that the whole thing was but one transaction, the plaintiff could not have recovered. Mr. Justice Rooke was of opinion that it was not important whether the defendant were privy or not; that if the contract were illegal, the plaintiff could not recover from the defendant in any event. The other two judges were of opinion that the money having been delivered to the defendant for the purpose of being paid to the plaintiff, the defendant was bound to make such payment without reference to the illegality in the original transaction. The difference in the principle upon which a recovery was allowed in these two cases and that upon which the defense in this case is based is very clear. In the case before us the cause of action grows directly out of the illegal contract, and if the court distributes the profits it enforces the contract which is illegal. But where A claims money from B, although due upon an illegal contract, and B acknowledges the obligation and waives the defense of illegality and pays the money to a third party upon his promise to pay it to A, the third party cannot successfully defend an action brought by A to recover the money by alleging that the original contract between A and B was illegal. This is the principle decided, and we think correctly de"It seems to me that the plaintiff's demand cided, in the cases cited. It was certainly arises simply out of the circumstances of no business of the third party to inquire into money being put into the defendant's hands the reasons which impelled the person to give to be delivered to him. This creates an in-him the money to pay to the plaintiff. That debitatus, from which an assumpsit in law was a matter between those parties, and if the arises, and on that action on the case may party from whom the money was due admitbe maintained. The case therefore ted his indebtedness and chose to pay it, the is brought to this, that the money is got into defendant, who received it upon his promise the hands of a person who was not a party to to pay the plaintiff, would have no possible the contract, who has no pretence to retain defense to an action by the plaintiff to comit, and to whom the law could not give it by pel such payment. Such an action is in no rescinding the contract. Though the court sense founded upon an illegal contract. That will not suffer a party to demand a sum of matter was closed when the party *owing the[661] money in order to fulfil an illegal contract, money under it paid it to a third person to yet there is no reason why the money in this be paid to the plaintiff. The action by the case should not be recovered notwithstand- plaintiff in such case is founded upon a new ing the original contract was void. The dif- contract upon a totally different consideraficulty with me is, that the contract with the tion and of a perfectly legitimate character. carrier cannot be connected with the contract The next case cited by complainant as an between the plaintiff and the man at Ports-authority for the maintenance of this action mouth, and in that view I think the verdict is is Sharpv. Taylor, supra. It was stated by the not to be supported. However, I incline to a chancellor in that case that where one of two new trial on another ground. It does not partners had possessed himself of the prop |