sulted in the annulment of that contract pursuant to 41 U.S.C.A. § 15.

[1] The statute cited presents a difficult problem of construction. The Supreme Court in Hobbs v. McLean, 117 U.S. 567, 576, 6 S.Ct. 870, 874, 29 L.Ed. 940, said that the statute in question, which was originally codified as section 3737 of the Revised Statutes, 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 the settlement made." The courts, however, have consistently held that the statute does not apply where the contractor enters into a partnership agreement with another to share the profits and the losses under the Government contract, Hobbs v. McLean, supra, and Field v. United States, 16 Ct.Cl. 434, or where the contractor merely subcontracts his duty to the Government. Chemicals Recovery Co. v. United States, 103 F.Supp. 1012, 122 Ct.Cl. 166. The rationale of these cases is clear. So long as the contractor remains primarily liable to the Government and retains the power to perform his duty under the contract, or to require its performance, the statute should not apply, since the Government is not being forced to deal with a stranger to accomplish its purpose.

[2] In the instant case, however, the plaintiffs contracted away their right to perform their contract with the defendant and their power to require its performance. Under their agreement with Mr. Toledo, Toledo was given all the powers necessary for performance, and plaintiffs retained no right to control Mr. Toledo's actions, since they gave him power of attorney to act in their place and stead. In such a situation, the Government, to obtain effective performance of the contract, would be forced to deal with Mr. Toledo since the plaintiffs had rendered themselves powerless to give any satisfaction. All dealings with regard to supervision, inspection, etc., had to be with him, and not with the contractor. We believe that it was precisely this type of transfer which is prohibited by 41 U.S.C.A. § 15, and we so hold.

1. In Chemicals Recovery Co. v. United States, 122 Ct. Cl. 166, 103 F. Supp. 1012 (1952), the court quoted with approval the following language from Stout, Hall & Bangs v. United States, 27 Ct. Cl. 385, 387 (1892):

“*** there is no evidence of an attempt to assign the contract. Plaintiffs adopted business methods which suited them in carrying out their engagements; they did not seek to avoid responsibility toward the Government or to place another contractor in their place. A contractor has a right to make subcontracts; He must not attempt to transfer his responsibility

to the government * * * But he has a perfect right to fulfill his contract duties in the business manner which best pleases him, provided he retain [sic] his personal responsibility and achieve[sic] the required result." 2. Re-read Mercantile National Bank v. United States, 280 F. 2d 832 (Ct. Cl. 1960), supra p. 375. Neither the prohibition upon the transfer or assignment of Government contracts, 41 U.S.C. § 15 (1958), nor the restriction upon the assignment of claims against the Government prior to the time that they have been allowed, 31 U.S.C. § 203 (1958), applies when "moneys due or to become due from the United States or from any agency or department thereof, under a contract providing for payments aggregating $1,000 or more, are assigned to a bank, trust company, or other financing institution, including any Federal lending agency; For discussion of this exception, see Nichols, Assignment of Claims Act of 1940-A Decade Later, 12 U. Pitt. L. Rev. 538 (1951); Shnitzer, Assignment of Claims Arising Out of Government Contracts, 16 Fed. B.J. 376 (1956); Speidel, "Stakeholder" Payments Under Federal Construction Contracts: Payment Bond Surety vs. Assignee, 47 Va. L. Rev. 640 (1961).

Section 2. CONTINGENT FEE PROHIBITION

PROVIDENCE TOOL COMPANY v. NORRIS

69 U.S. 45 (2 Wall.) (1864)

In July, 1861, the Providence Tool Company, a corporation created under the laws of Rhode Island, entered into a contract with the Government, through the Secretary of War, to deliver to officers of the United States, within certain stated periods, twenty-five thousand muskets, of a specified pattern, at the rate of twenty dollars a musket. This contract was procured through the exertions of Norris, the plaintiff in the court below, and the defendant in error in this court, upon a previous agreement with the corporation, through its managing agent, that in case he obtained a contract of this kind he should receive compensation for his services proportionate to its extent.

*

But a dispute now arose between Norris and the Tool Company, as to the amount of compensation to be paid. Norris insisted that by the agreement with him he was to receive $75,000; the difference between the contract price and seventeen dollars a musket; whilst the corporation, on the other hand, contended, that it had only promised "a liberal compensation" in case of success. Some negotiation on the subject was had between them; but it failed to produce a settlement, and Norris instituted the present action to recover the full amount claimed by him.

The declaration contained several counts; the first and second ones, special; the third, fourth, and fifth, general. The special ones set forth specifically a contract, that if he, Norris, procured the Government to give the order to the company, the company would pay to him, Norris, "for his services, in obtaining, or causing and procuring to be obtained, such order, all that the Government might, by the terms of their arrangement with the company, agree to pay above $17 for each musket." The general counts were in the usual form of quantum meruit, &c.; but in these counts, as in the special ones, a contract was set forth on the basis of a compensation, contingent upon Norris's procuring an order from the Government for muskets for the Tool Company; reliance on this contingent sort of contract running through all the counts of the declaration. There was no pretence that the plaintiff had rendered any other service than that which resulted in the contract for the muskets.

On the trial in the Circuit Court for the Rhode Island District, the counsel of the Tool Company requested the court to instruct the jury, that a contract like that declared on in the first and second counts was against public policy, and void; which instruction the court refused to give. The same counsel requested the court to charge, "that upon the quantum meruit count the plaintiff was not entitled in law to recover any other sum of money, for services rendered to the Tool Company in procuring a contract for making arms, than a fair and reasonable compensation for the time, speech, labor performed, and expenses incurred in performing such services, to be computed at a price for which similar services could have been obtained from others.” The court gave this instruction, with the exception of the last nine words in italics. The jury found for the defendant on the first and second-that is to say, upon the special-counts, and for the plaintiff on the others, and judgment was entered on $13,500 for the plaintiff. The case came, by writ of error, here.

Mr. Justice FIELD delivered the opinion of the court.

Several grounds were taken, in the court below, in defence of this action; and, among others, the corporation relied upon the proposition of law, that an agreement of the character stated,—that is, an agreement for compensation to procure a contract from the Government to furnish its supplies,-is against public policy, and void. This proposition is the question for the consideration of the court. It arises upon the refusal of the court below to give one of the instructions asked.

The question, then, is this: Can an agreement for compensation to procure a contract from the Government to furnish its supplies be enforced by the courts? We have no hesitation in answering the question in the negative. All contracts for supplies should be made with those, and with those only, who will execute them most faithfully, and at the least expense to the Government. Considerations as to the most efficient and economical mode of meeting the public wants should alone control, in this respect, the action of every department of the Government. No other consideration can lawfully enter into the transaction, so far as the Government is concerned. Such is the rule of public policy; and whatever tends to introduce any other elements into the transaction, is against public policy. That agreements, like the one under consideration, have this tendency, is manifest. They tend to introduce personal solicitation, and personal influence, as elements in the procurement of contracts; and thus directly lead to inefficiency in the public service, and to unnecessary expenditures of the public funds.

The principle which determines the invalidity of the agreement in question has been asserted in a great variety of cases. It has been

asserted in cases relating to agreements for compensation to procure legislation. These have been uniformly declared invalid, and the decisions have not turned upon the question, whether improper influences were contemplated or used, but upon the corrupting tendency of the agreements. Legislation should be prompted solely from considerations of the public good, and the best means of advancing it. Whatever tends to divert the attention of legislators from their high duties, to mislead their judgments, or to substitute other motives for their conduct than the advancement of the public interests, must necessarily and directly tend to impair the integrity of our political institutions. Agreements for compensation contingent upon success, suggest the use of sinister and corrupt means for the accomplishment of the end desired. The law meets the suggestion of evil, and strikes down the contract from its inception.

There is no real difference in principle between agreements to procure favors from legislative bodies, and agreements to procure favors in the shape of contracts from the heads of departments. The introduction of improper elements to control the action of both, is the direct and inevitable result of all such arrangements.

The same principle has also been applied, in numerous instances, to agreements for compensation to procure appointments to public offices. These offices are trusts, held solely for the public good, and should be conferred from considerations of the ability, integrity, fidelity, and fitness for the position of the appointee. No other considerations can properly be regarded by the appointing power. Whatever introduces other elements to control this power, must necessarily lower the character of the appointments, to the great detriment of the public. Agreements for compensation to procure these appointments tend directly and necessarily to introduce such elements. The law, therefore, from this tendency alone, adjudges these agreements inconsistent with sound morals and public policy.

Other agreements of an analogous character might be mentioned, which the courts, for the same or similar reasons, refuse to uphold. It is unnecessary to state them particularly it is sufficient to observe, generally, that 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, without reference to the question, whether improper means are contemplated or used in their execution. The law looks to the general tendency of such agreements; and it closes the door to temptation, by refusing them recognition in any of the courts of the country.

It follows that the judgment of the court below must be reversed, and the cause remanded for a new trial; and it is

SO ORDERED.