seems to us that there was no claim against | 3. The unity, of such a contract cannot be the land at the time of the passage of the act

severed or its effect altered by putting part of 1864, and that years before the time of the

of it in writing and leaving the rest in parol. filing of the map of definite location in 1884 4. A written contract which appears to be the claim that once existed (in 1869) in

legal on its face may be proved to be only favor of Flett had ceased to exist in fact and

part of a contract the other portions of which

were Illegal. in law, and the title to the land

assed to

5. In any action brought in which it is necesthe railroad company by virtue of the grant

sary to prove an illegal contract in order to contained in the act of 1864 and by reason

maintain the action, courts will not enforce of the filing of its map of definite location

it, nor will they enforce alleged rights di. March 26, 1884. When, therefore, the de- rectly springing from such contract. fendant settled upon the land in April, 1886, 6. An accounting of the profits of a partner. and applied to make homestead entry there- ship will not be awarded where the partner. on, his application was rightfully rejected ship was only part of a contract of which for the reason that title to the land had the other portions were illegal. passed to the railroad company, as above mentioned, and therefore he was not entitled

[No. 271.] to make the entry.

For the same reason, when John Flett, in Argued April 27, 28, 1899. Decided May 22, September, 1887 (submitted proof in sup

1899. port of his pre-emption claim, founded upon his declaratory statement filed April 9, 1869 N WRIT OF CERTIORARI to the United (and which claim he had abandoned since 1870), he was too late. His right had ex. Ninth Circuit to review a decree of that pired many years before 1884, at which time court in an action brought by John McMullen the rigặt to the land passed to the company, against Lee Hoffman and on his death reand he had no right to prove up on his aban- vived against Julia E. Hoffman as the execudoned and expired claim.

trix of his will for an accounting of profits The record shows that at the time of the upon a contract with the city of Portland commencement of this action the railroad which the circuit court of appeals holds to company was the owner and entitled to the be illegal, reversing the decree of the Circuit immediato possession of the land in contro- Court of the United States for the District versy, and that it was entitled therefore to of Oregon. Judgment of Circuit Court of judgment in its favor, and the courts below Appeals affirmed. erred in dismissing its complaint.

See same case below, 69 Fed. Rep. 509, 78 (639) *The judgment of the United States Circuit Fed. Rep. 547, 48 U. S. App. 596, 83 Fed.

Court of Appeals for the Ninth Circuit is re- Rep. 372, 28 Č. C. A. 178. See also 170 U. roersed, and the case remanded to the Circuit s. 705, mem. Court for the Western Division, District of Washington, for further proceedings not in- Statement by Mr. Justice Peckham: consistent with the opinion of this court. *This action was originally brought by the 640] So ordered.

complainant McMullen against one Leo Hoff. Mr. Justice Harlan and Mr. Justice Mo- inan, and he having died before the trial, Kenna dissented.

the action was revived against the defendant Julia E. Hoffman, as the executrix of his will. When the defendant is hereinafter

spoken of the original defendant is intended. JOIN MCMULLEN, Petitioner,

The complainant filed his bill against the

defendant seeking an accounting of profits JULIA E. HOFFMAN, Executrix of Lec ant upon a certain contract for the construc

that he alleged had been made by the defend. Hoffman, Deceased.

tion of what is termed the Bull Run pipe

line and which contract was entered into be(See S. C. Reporter's ed. 639-670.)

tween the city of Portland in the state of Secret agreement between bidders for public Oregon, and the defendant on or about March contract, when illegalaction on contract 10, 1893. The complainant bases his right

of that contract by -unity of contract-contract partly writ. to share in the pro ten and partly parol-partnership ao

virtue of another contract in writing between counting.

himself and the defendant herein, executed

March 6, 1893. That agreement reads as 1.

follows: A secret agreement between bidders for a public contract, by which their separate bids are put in after mutual consultation and This agreement, made and entered into by agreement, and they have a common interest and between Lee Hoffman, of Portland, OreIn each bid, If any are accepted, and are to gon, doing business under the name of Hoffshare as partners in any contract obtained, man & Bates, party of the first part, and Is Illegal in Its nature and tendency. It is John McMullen, of San Francisco, Calinot necessary to show the particular effect of fornia, party of the second part, witnessthe contract. as such contracts are condemned eth: That, whereas, said Hoffman and by public policy.

Bates have with the assistance of said Mc2. One of the parties cannot maintain an ac

tion on the valld part of the contract relat. Mullen at a recent bidding on the work of Ing to the partnership. by discarding or omit- manufacturing and laying steel pipe from ting to prove that portion which is illegal.

Mount Tabor to the head works of the Bull


Run water system for Portland, submitted | eight bids, the various bids from the highest
the lowest bid for such work, and expect to to the lowest being as follows:
enter into a contract with the water com.
mittee of the city of Portland for doing such The Risdon Iron & Locomotive
work, the contract having been awarded to Works.

$600,737 00 said Hoffman and Bates on said bid :

The Bullon Bridge Company. 533,507 00 (641] "It is now hereby agreed that said Hoff. Oscar Huber .

521,775 40 man and said McMullen shall and will share San Francisco Bridge Company. 514,664 00 in said contract equally, each to furnish and Wolff, Buener, & Zwicker. 495,682 00 pay one half of the expenses of executing the Ferry, Hinckle & Robert Wake


481,040 00 same, and each to receive one half of the profits or bear and pay one half of the losses E. W. Jones & O. W. Wagner... 477,552 00

Hoffman & Bates .

465,667 00 which shall result therefrom.

And it is further hereby agreed that if either of the parties hereto shall get a con. the part of the city, and were taken into con

All these bids were before the committee on tract for doing or to do any other part of the sideration at the time the award was made work let or to be let by said committee for to the defendant. After the acceptance of bringing Bull Run water to Portland, the his bid for the manufacturing and laying of profits and losses thereof shall in the same the pipe the defendant entered into a conmanner be shared and borne by said parties tract with the city of Portland to do the equally, share and share alike.

work mentioned in such bid and commenced Witness our hands and seals this 6th day the performance of the contract as provided of March, A. D. 1893.

for therein. The work was duly completed John McMullen. [Seal.] and the city paid defendant the contract Lee Hoffman. [Seal.] price for the same, retaining the percentage

provided for therein, as security that the

terms of the contract had been fully complied The contract for manufacturing and lay-with. ing the steel pipe was awarded to the defend- The complainant alleges that defendant, ant at a public letting of the whole work at after securing the contract, went on with the Portland of which the manufacturing and work thereunder, but refused to permit him laying of the pipe was a part, and the whole to participate in the profits arising therefrom work was divided into classes, and separate or to examine the books of the partnership, bids called for and received for each class.

and that although he (complainant) fur. The defendant put in bids in the name of nished some of the capital and performed Hoffman & Bates for several classes, while

some of the services provided for in the con-[648 the plaintiff in the name of the San Francisco of the expenses of the execution of the con

tract with the city, and participated in some Bridge Company (of which he was an of- tract, and devoted some of his time and atficer) put in separate bids for the same tention to the proper performance thereof, classes.

and was at all times ready to do everything The bids of complainant and defendant for required of him by his agreement of partnerthe several classes of the work were as fol ship, yet that the defendant received all the lows:

moneys paid by the city and absolutely refused to account to him for any part thereof,

and denied that he had any interest in or Conduit from head works to Mount Tabor right to any portion of such moneys. The of wrought iron or steel, making and laying complainant, therefore, asked for an accountpipe:

ing between himself and defendant, as partHoffman & Bates ..

$465,722 00 ners, and for a decree for the payment to San Francisco Bridge Company. 514,664 00 him of one half the profits arising from the (The profits arising out of this contract contract, the whole of which he alleged

amounted to $80,000 (the courts below say are the subject of the controversy herein.)

the evidence shows they were $140,000); that Head works

a receiver might be appointed to take charge Hoffman & Bates

$17,800 00 of the property of the partnership, its rec. San Francisco Bridge Company. 16,550 00 ords, books, papers, etc., and that the defend(642) *Bridges

ant might be restrained during the pendency Hoffman & Bates

$33,562 94 of the suit from making sale or other dispoSan Francisco Bridge Company. 31,279 07sition of the tools, equipments, or other per.

Also for steel conduit for head works sonal property belonging to the partnership, to Mount Tabor

and from drawing from the city of Portland Hoffman & Bates ..

$359,278 00 the moneys withheld by it on account of the San Francisco Bridge Company. 348,781 00 contract, as well as any other money due for

other work done by the defendant under the

contract of partnership. There were several other bids by different The answer of the defendant, while deny. bidders for these various classes. The bid ing niany of the allegations of the complaint, in the name of Hoffman & Bates for the man. set up as a special defense the making of an ufacture and laying of the wrought iron or agreement between the parties (of which the steel pipe from the head works to Mount partnership agreement was a portion), by Tabor being $465,722, was the lowest out of the terms of which they were to put in bids 1118

174 U. S.

for the construction of the work, the com- duty of Hoffman to account to him for ball plainant in the name of the San Francisco their earned profits, which duty grew ori al Bridge Company and the defendant in the and rested upon their relationship as partname of Hoffman & Bates; that the bids ners. should not be in reality competitive, but Hanks v. Baber, 53 lll. 292; Chace v. Trafshould be submitted to each other before they ford, 116 Mass. 532, 17 Am. Rep. 171; Tenwere put in, and their terms should be mu- ant v. Elliott, 1 Bos. & P. 3; Farmer v. Rus. tually agreed upon, the higher bids to be scll, i Bos. & P. 296. merely formal, and the bids themselves as An obligation will be enforced, though inagreed upon should be delivered to the wa- directly connected with an illegal transacter committee; that if either party received tion, if it is supported by an independent the contract, they should both share in the consideration, so that the plaintiff does not profit or loss resulting from its performance, require the aid of the illegal transaction to but that their mutual interest in each other's make out his case. bids should not be made known when the Swan v. Scott, 11 Serg. & R. 155; Arm

bids were offered, so that it would appear strong v. American Exch. Nat. Bank, 133 U. 14]that they were apparently *competing for the S. 433, 33 L. ed. 747; Frost v. Plumb, 40

various classes of the work and for furnish-Conn. 111, 16_Am. Rep. 18; Wright v. Pipe ing the material, when in fact they were Line Co. 101 Pa. 204, 47 Am. Rep. 701. not. This agreement, the defendant alleged, The grounds upon which McMullen is enwas carried out, and the contract secured by titled to recover in this suit have been estabmeans thereof.

lished and repeatedly declared by this court The court upon motion of the complain and by other courts of the Union, both Fedant granted a temporary injunction as eral and state. prayed for in the bill. Exceptions were tak- Planters' Bank v. Union Bank, 16 Wall. en to certain parts of the answer of the de- 483, 21 L. ed. 473; Union P. R. Co. v. Duo fendant as being insufficient. Material por- rant, 95 U. S. 576, 24 L. ed. 391; Wann v. tions of these exceptions were overruled by Kelly, 2 McCrary, 628; Hipple v. Rice, 28 the court upon the ground that the answer Pa. 406; Gilliam v. Brown, 43 Miss. 641; set up an illegal contract between the par. Willson v. Owen, 30 Mich. 474; Owen v. Da. ties, and one which could not be enforced by vis, 1 Bail. L. 315; Harvey v. Varney, 98 either. 69 Fed. Rep. 509.

Mass. 118; Lewin, Trusts, 68; McDaniel v. Upon the final hearing of the case the Maxwell, 21 Or. 202; Smith v. Hubbs, 10 Me. same judge, becoming convinced that he had 71; Ownes v. Ownes, 23 N. J. Eq. 60; King erred in his former decision in overruling v. Winants, 71 N. Č. 469, 17 Am. Rep. 11. the exceptions to the answer, decided that Each portion of said agreement between the case as made on the part of the defend Hoffman and McMullen was readily severant showed no defense to the complainant's able from the other, and each was substan. cause of action, and thereupon he made a tially a distinot contract, which could, if decree for an accounting substantially as necessary, be enforced quite independently asked for in the complainant's bill. 75 Fed. of the other. Rep. 547.

Oregon Steam Nar. Co. v. Winsor, 20 An appeal from the decree of the circuit Wall. 70, 22 L. ed. 319; Pickering v. Ilfracourt was taken to the United States circuit combe R. Co. L. R. 3 C. P. 235; Bank of court of appeals for the ninth circuit, and Australasia v. Breillat, 6 Moore, P. C. c. that court held that the contract between the 200; Treadwell v. Davis, 34 Cal. 601, 94 Am. parties was illegal, and that no action could Dec. 770; Erie R. Co. v. Union Locomotive be maintained thereon by either, and the de- & Exp. Co. 35 N. J. L. 240. cree in favor of the complainant was there- The action of McMullen in submitting a fore reversed. 18 U. S. App. 596. Com-high bid for the work in suit had no ration: plainant then applied to this court for a writ al tendency to deceive the water committee. of certiorari to review the judgment of the Wicker v. Hoppock, 6 Wall. 94, 18 L. ed. circuit.court of appeals, which was granted 752; Veazie v. Williams, 8 How. 134, 12 L. May 9, 1898. 170 U. S. 705, mem.

ed 1018; Conolly v. Parsons, cited in 3 Ves.

Jr. 625, note e; National Bank of the MeMessrs. William A. Maury and L. B. tropolis v. Sprague, 20 N. J. Eq. 159. Cox, for petitioner:

Mr. Rufus Mallory, for respondent: No partnership touching the work in con- McMullen and Hoffman combined, not as troversy resulted from anything which honest bidders, but to prevent competition. transpired between Hoffman and McMullen Atcheson v. Mallon, 43 N. Y. 147, 3 Am. prior to the award made upon Hoffman's Rep. 678; Doolin v. Ward, 6 Johns. 195; bid, nor until they had signed the partner. Wilbur v. How, 8 Johns. 444; Swan v. Chor. ship agreement of March 6, and entered upon penning, 20 Cal. 182; Gulick v. Ward, 10 N. the performance of the work contemplated J. L. 107; Thompson v. Davies, 13 Johns. therein.

112; Holladay v. Patterson, 5 Or. 177; Rich. Powell v. Maguire, 43 Cal. 11; Reboul v. ardson v. Crandall, 18 N. Y. 348; Gibbs v. Chalker, 27 Conn. 114; Wilson v. Campbell, Smith, 115 Mass. 592; Engelman v. Skrain10 Ill. 383; Lycoming Ins. Co. v. Barringer, ka, 14 Mo. App. 438; Woodruff v. Berry, 40 73 Ill. 230; Doyle 7. Bailey, 75 Ill._418; Ark. 251; Jenkins v. Frink, 30 Cal. 586, 89 Meagher v. Reed, 14 Colo. 335, 9 L. R. A. Am. Dec. 134; Hunter v. Pfeiffer, 108 Índ. 435.

197. McMullen's cause of suit was not based Agreements, the natural tendency of upon the partnership contract, but upon the which is to prevent competition in sales at

usction or letting upon sealed bids, are con- | the other's bid, and *all bids were to be put[646)
trary to public policy, and cannot have the in only after mutual consultation and agree-
aid of the courts to enforce them.

ment. Bids for the various classes of work Bharp v. Wright, 35 Barb. 236; People v. were put in as above set forth, and among Stephens, 71 N. Y. 527; Hilton v. Eckersley, them the bid for the manufacture and laying 6 El. & Bl. 64; Gibbs v. Smith, 115 Mass. of the pipe, which was accepted by the water 592.

committee. All of them were put in pursuThe law leaves parties to illegal contracts ant to this agreement, part of them in the as it found them.

name of Hoffman & Bates and part in the Bartle v. Nutt, 4 Pet. 187, 7 L. ed. 825; | name of the San Francisco Bridge Company. Dent v. Ferguson, 132 U. S. 50, 33 L. ed. The bid in the name of the San Francisco 242; Meguire v. Corvine, 101 U. S. 108, 25 Bridge Company for the manufacture of the L. ed. 899; Woodstock Iron Co. v. Richmond pipe was nearly $50,000 higher than the DE D. Extension Co. 129 U. S. 643, 32 L. ed. amount bid in the name of Hoffman & Bates, 819; Miller v. Davidson, 8 Ill. 518, 44 Am. and was put in after consultation with aná Dec. 715,

approval by the defendant. This last bid

was put in, as stated by Mr. McMullen (644) *Mr. Justice Peckham, after stating the in his evidence, as a matter of form only, and

facts, delivered the opinion of the court: to keep the name of his company before the

The foregoing statement shows that there public, but it appeared on its face to be a

is a difference of opinion in the courts below bona fide bid. The water committee received [645]as to the law applicable to the * case. The the bids in ignorance of the existence of this

question is one of importance, involving as it agreement and in the supposition that all does the principles which should control in the bids which were received were made in regard to the procurement of contracts at good faith, and they all received considerapublic lettings for work to be awarded to the tion at the hands of the committee. After lowest bidder. Assuming the same facts, the the computations were made by which it apcourts below have come to opposite conclu: peared that the bid of the defendant was the sions upon the character of the contract and lowest for the manufacture and laying of the upon the right of the complainant to obtain pipe, the contract was awarded him, and afredress for his alleged wrongs.

terwards that portion of the agreement It was on account of the general import- which had been made between the parties to ance of the question and the many lettings this combination, viz., that relating to the for public works by the government and by partnership, was reduced to writing, and is municipal corporations which are affected by set out in the foregoing statement. the law relative to bidding, that this court Upon these facts the question arising is thought it a proper case to issue the writ of whether a contract between the parties certiorari herein. The cases upon the sub-themselves, such as is above set forth, is ilject are not entirely harmonious, and we legal? In order to answer the question we think it well to again consider some of them would first naturally ask what is its direct and so far as possible to remove the doubts and necessary tendency? Most clearly that which seemingly have arisen in this branch it tends to induce the belief that there is of the law.

really competition between the parties mak. Looking in the record before us, we find ing the different bids, although the truth is that the pleadings, and proofs taken herein, that there is no such competition, and that show that for some time prior to the 6th of they are in fact united in interest. It would March, 1893, the city of Portland intended also tend to the belief on the part of the comto add to its water supply by bringing to the mittee receiving the bids that a bona fide city the water from a creek or river called bidder, seeking to obtain the contract, reBull Run, some thirty miles distant, and for garded the price he named, although much that purpose it had issued through its water higher than the lowest bid, as a fair one for committee proposals for bids to build the the purpose of enabling him to realize reaworks, which proposals were divided into sev. sonable profits from its performance. A bid eral different classes as already stated. thus made *amounts to a representation that[647)

The complainant McMullen, living in San the sum bid is not in truth an unreasonable Francisco and being a large stockholder in or too great a sum for the work to be done. and manager of the San Francisco Bridge We do not mean it is a warranty to that Company, came to Portland for the purpose effect or anything of the kind, but simply of giving his attention to the matter, and if that a committee receiving such a bid and aspossible to make an arrangement with the suming it to be a bona fide bid would natudefendant by which they night together be- rally regard it as a representation that the come bidders for the work. He and the de- work to be done, with a fair profit, would, in fendant had many interviews before the time the opinion of the bidder, cost the amount of delivering the bids arrived, and they fi- bid. Hence it would almost certainly tend nally agreed that each party should put in to the belief that the lower bid was not an separate bids in his own or his firm name, or unreasonably high one, and that it would be in the name of his company, for certain unnecessary and improper to reject all the classes of the work, but that they both bids and advertise for a new letting. The should have a common interest in each bid if fact that there were other bids even higher any were accepted. This community of in- than that of the San Francisco Bridge Comterest was to be kept secret and concealed pany, for the manufacture and laying of the from all persons, including the water com- pipes, does not alter the tendency of the mittee. Each was to know the amount of agreement, when carried into effect, to create

[ocr errors][ocr errors]

or to strengthen the belief on the part of depend upon the success which attends the
the committee in the fact of an active com- execution of any particular agreement.
petition and the bona fide character of that In Providence Tool Company v. Norris, 2
competition, and that the lowest bid would be Wall. 45, 56 [17: 868, 871], the court said,' in
in all probability a reasonable one. It is, in speaking as to illegal agreements :
truth utterly impossible to accurately or ful- "It is sufficient to observe, generally, that
ly predict all the vicious results to be ap: all agreements for pecuniary considerations
prehended as the natural effect of this kind to control the business operations of the gov-
of an agreement. It cannot be said in all ernment, or the regular administration of
cases just what the actual effect may have justice, or the appointments to public of

fices, or the ordinary course of legislation,
The natural tendency and inherent charac- are void as against public policy, without
ter of the agreement are also unaffected by reference to the question whether improper
any evidence produced on the part of the means are contemplated or used in their exe-
complainant, that the chairman of the water cution.”
committee had, when examined nearly three *And in King v.De Berenger, 3 Maule & S.[649)
years after the occurrence, no recollection as 67, 72, cited in Scott v. Brown (1892] 2 Q.B.
to the bid of the bridge company or that it 724, 730, Lord Ellenborough, Ch. J., said:
had any particular effect upon his mind, and “A public mischief is stated as the object
that he said that the contract was awarded of this conspiracy; the conspiracy is by false
to the lowest bidder simply because he was rumors to raise the price of the public funds
the lowest bidder, and without reference to and securities; and the crime lies in the act
the bid of the bridge company.

of conspiracy and combination to effect that The question is not whether in this par purpose, and would have been complete, alticular case any member of the water com- though it had not been pursued to its consemittee did or did not remember the fact that quences, or the parties had not been able to the bridge company had made a bid, or that carry it into effect. The purpose itself is such bid had no effect upon his mind. mischievous; it strikes at the price of a The question is not as to the effect a vendible commodity in the market, and if it particular act in fact had upon a member of gives it a fictitious price by means of false the water committee, but what is the tend rumors, it is a fraud levelled against all the

ency and character of the agreement made be- public, for it is against all such as may pos(648]tiveen the parties; and that tendency *or char. sibly have anything to do with the funds on

acter is not altered by proof on the part of a that particular day.”
member of the committee, given several years

Contracts of the nature of this one are il-
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 con-
and 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.

In the case at bar the illegal character of pressed with the idea that there was active the agreement is founded, not alone upon the competition for the work to be done.

fact that it tends to lessen competition, but 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 infer- fide, when they knew that one of them was so ence would be natural.

much higher than the other that it could not In Richardson v. Crandall, 48 N, Y. 348, for the sake of keeping up the form and of

be honestly accepted, and when they put it in 362, the court said: "In all cases where con strengthening the idea of a competition which tracts are claimed to be void as against pub- did not in fact exist. The tendency of such lic policy, it matters not that any particular agreements is bad, although in some particu. contract is free from any taint of actual lar case it might be difficult to show that it fraud, oppression, or corruption. The law actually accomplished a fraud, while its in. looks to the general tendency of such contention to do so would be plain enough. tracts. The vice is in the very nature of the Therefore, when it is urged that these parties contract, and it is considered as belonging had no intention of bidding for this work to a class which the law will not tolerate,” alone, and that unless they had combined citing Atcheson v. Mallon, 43 N. Y. 147 [3 their bids neither would have bid at all, and Am. Rep. 678].

hence the agreement between them tended to Although these remarks were made when strengthen instead of to suppress competi. the court was dealing with the case of a bond tion, this answer to *the illegality of the trans-[650] taken colore officii, yet the principle applies action is insufficient. The evidence, how. equally to a case like the one at bar, and in ever, does not show that if these parties had deed it is seen that such was the view of the not agreed upon a combination neither would judge delivering the opinion, since he cited have bid alone. It shows complainant came Atcheson v. Mallon, which in its nature is a to Portland to see the defendant and to conca se very similar to the one now before us. clude their arrangements to go into the com

The vice is inherent in contracts of this bination, but we are by no means of the opin. kind, and its existence does not in the least 'ion that the evidence shows that if they had 174 U. S. U. S., BOOK 43.



« ForrigeFortsett »