Michigan Steel Box Co. v. United States

49 Ct. Cl. 421, 1914 U.S. Ct. Cl. LEXIS 184, 1914 WL 1413
CourtUnited States Court of Claims
DecidedMarch 23, 1914
DocketNo. 30433
StatusPublished
Cited by11 cases

This text of 49 Ct. Cl. 421 (Michigan Steel Box Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michigan Steel Box Co. v. United States, 49 Ct. Cl. 421, 1914 U.S. Ct. Cl. LEXIS 184, 1914 WL 1413 (cc 1914).

Opinion

Campbell, Chief Justice,

delivered the opinion of the court:

The claimant sues for an alleged balance upon the contract price of letter boxes delivered to the defendants under the contract, a copy of which is attached to the petition. The contract was annulled by the Government in June, 1903, after a large number of the letter boxes of different sixes as called for in the contract had been furnished. Payments had been regularly made until about the time of the annulment, and at that time there remained unpaid upon the contract price of the letter boxes furnished the sum of $32,331.90. There was due to the subcontractors who manufactured the boxes, for the contractor the sum of $18,227.40, which was subsequently paid by the Government under a special act of [438]*438Congress authorizing it, and the balance, $13,917, is now sued for in this action.

The defense relies upon the illegality of the contract and proceeds upon the line that the contract was procured by fraud or through improper influences; that it was violative of the statutes; that it was in contravention of public policy; and, further, that Machen, the superintendent of the free-delivery system, was interested pecuniarily in the contract or had received gratuities which gained his influence in securing the contract. Either of said matters, if true, would furnish grounds for condemning the contract. The Government filed an extensive answer, alleging the different matters of defense above referred to, and the claimant in a long replication denies all allegations and charges of fraud. The replication, which is a part of the record, does not enter into explanations of matters charged in the answer as acts of misconduct or fraud, but contents itself principally with emphatic denials.

The execution of the contract being admitted the burden of proof as to the alleged frauds rests upon the defendants. It has been said that the evidence in a suit to annul a contract on the ground of fraud alleged to have been practiced by a defendant upon a plaintiff and upon which to found a decree in such a case “must be clear and satisfactory. It may be circumstantial, but it must be persuasive.” Lalone v. United States, 164 U. S., 255; United States v. Iron Silv. Min'g Co., 128 U. S., 673.

The evidence should be sufficient to reasonably satisfy the jury of the truth of one or the other of the defenses relied upon. Rea v. Missouri, 17 Wall., 532; Bigl. Fraud, 474. It is not required in cases of this kind, as in criminal cases, to prove a conspiracy between the Government’s agent and claimant or his associates, or to prove any of the several matters offered as defenses beyond a reasonable doubt. The rule is that where a party has the affirmative he must make out a prima facie case or one at least sufficient to shift the burden of proof to the other side, and therefore “ a prima facie case, with nothing to rebut it, is a case made out.” Butler v. Maples, 9 Wall., 766, 778.

[439]*439If the contract here sued on was procured directly or indirectly by or through the unlawful, corrupt, or other improper influence of the then superintendent of the free delivery system, with the knowledge or connivance, express or implied, of the claimant, the contract is fraudulent, and the court will not enforce it. And it does not materially alter the question whether said superintendent had a financial interest in the contract or the profits supposed to flow therefrom, or was actuated by gratuities furnished him by claimant, or by the hope thereof, for in either case the law will not tolerate a breach of trust on the part of a public official or allow such breach to be made the basis of an action.

It has accordingly been held to be against public policy to enforce a contract between two parties where the consideration involved the violation by one party, as agent, of a duty he owed his principal to act for and represent the latter. Oscanyan v. Arms Co., 103 U. S., 261.

While an agreement to procure such a contract is void as against public policy, equally strong and perhaps stronger, is the reason in law for saying that if the parties succeed in securing a contract with the Government by virtue of the fraudulent agreement that the agent shall aid in its procurement, and because of the agent’s activities under such agreement, the Government on discovering the fraud may annul the contract, and the courts will not aid in enforcing it. In either case the contract comes under the denunciation of that class of frauds which have been declared to be an “ unmixed evil.”

The reason of the rule inhibiting a party who occupies confidential and fiduciary relations toward another from assuming antagonistic positions to his principal in matters involving the subject matter of the trust is sometimes said to rest in a sound public policy, but it also is justified in a recognition of the authoritative declaration that no man can serve two masters; and considering that human nature must be dealt with, the rule does not stop with actual violations of such trust relations, but includes within its purpose the removal of any temptation to violate them. Hence the principal, on being informed of the participation of his agent on [440]*440his own account and interest in a transaction wherein there was an obligation to represent the principal, may disaffirm the contract so entered into without reference to any actual damage to the principal or benefit to the agent. It is, in such cases, the breach of the agent’s or trustee’s duty toward those he has undertaken to represent which gives the right of disaffirmance and not the quantum of damage to the one or the amount of benefit to the other. The rule is in nowise relaxed when the actions of public officials are involved. Recognizing that the freedom of contract should not be too much abridged, the law does not prohibit a Government official from contracting with or becoming interested in a contract with the Government which does not affect the duties imposed upon him by his office, but where the matters contemplated by the contract or the execution of it on the Government’s part are directly imposed upon him the official may not assume the dual relation of acting as the representative of the Government and for himself or his associates. City of Findlay v. Pertz, 66 Fed., 427.

Section 1781, Revised Statutes, makes it a misdemeanor for any officer or agent of the Government to take, receive, or agree to receive, directly or indirectly, any money, property, or other valuable consideration whatever from any person for procuring or aiding to procure a Government contract, and likewise makes it a misdemeanor for any person to offer, or agree to give, or to give or bestow any money, property, or other valuable consideration for the procuring or aiding to procure such a contract. This statute is comprehensive and its meaning is clear. No right growing out of a contract made in violation of a penal statute will be enforced by the courts at the instance of a party participating in the wrong. Powhatan v. Appomattox, 24 How., 247 ; 9 Cyc., 476 and cases there cited. See also Rev. Stat., secs. 412, 5440. “Whether forbidden by statute or condemned by public policy the result is the same. No legal right can spring from such a source. They are the sappers and miners of the public welfare and of free government as well.” Meguire v. Corwine, 101 U. S., 108; Triest v. Child, 21 Wall., 441; Oscanyan v. Arms Co., 103 U. S., 261.

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Bluebook (online)
49 Ct. Cl. 421, 1914 U.S. Ct. Cl. LEXIS 184, 1914 WL 1413, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michigan-steel-box-co-v-united-states-cc-1914.