MR. JUSTICE VAN DEVANTER delivered the opinion of the court.
This is a claim for furnishing letter carriers' satchels under a contract with the Postmaster General. The contractor was a New Jersey corporation and its trustee in bankruptcy is the present claimant. In the Court of Claims a small part of the claim was sustained and the balance rejected. 49 Ct. Cls. 85. Only the claimant appeals, so the part sustained is not here in controversy.
Thereafter and prior to March 17, 1903, the company furnished over 10,000 satchels pursuant to the terms of the contract, save that the shoulder straps on those of classes A and C, which were in excess of 5,000, were provided and paid for by the Government, through Machen, at a cost of 39 1/2 cents each. These satchels were all paid for by the Government, through Machen, at the contract rates without any deduction for the straps. Out of the moneys so received the company paid Lorenz 45 cents on each satchel of class A, $1.19 on each of class B and 84 cents on each of class C, and he in turn divided what he received with Machen and Crawford.
Between March 17 and April 30, 1903, the company furnished 6,201 more satchels pursuant to the terms of the contract, save that the shoulder straps on those of classes A and C, of which there were 4,912, were provided and paid for by the Government, through Machen, at a cost of 39 1/2 cents each. These satchels were accepted and retained by the post office authorities. But when payment for them under the contract was requested, it was refused. This was because the Postmaster General had then learned of the corrupt arrangement giving
No shoulder straps were furnished by the company, through Lorenz or otherwise, and both he and Crawford knew that the straps were purchased and supplied by the Government. Before the rescission by the Postmaster General the company did not know that Machen was to share or was sharing in the profits, or that the Government was supplying the shoulder straps, save as the company may have been chargeable with the knowledge of Lorenz and Crawford who represented it in securing and executing the contract.
It was for furnishing the 6,201 satchels after March 17, 1903, that a recovery was sought in the Court of Claims and the part of the claim rejected was for the 4,912 satchels of classes A and C, the rejection being put on the grounds (a) that no recovery could be had upon the contract, because it called for satchels with shoulder straps and the company did not furnish the straps, and (b) that no recovery could be had upon a quantum valebat, because the value of the satchels as furnished was not shown.
In the briefs reference is made to portions of the opinion delivered in the Court of Claims as if they were not in accord with the findings. We do not so read the opinion, but deem it well to observe, as was done in Stone v. United States, 164 U.S. 380, 382, 383, that "the findings of the Court of Claims in an action at law determine all matters of fact precisely as the verdict of a jury," and that "we are not at liberty to refer to the opinion for the purpose of eking out, controlling or modifying the scope of the findings." See also Collier v. United States, 173 U.S. 79, 80; United States v. New York Indians, 173 U.S. 464, 470.
We are of opinion that in the transactions out of which the claim arose there was an obvious departure from recognized legal and moral standards. It began when the company employed Lorenz, upon a compensation contingent
The secret arrangement whereby Machen was to share in the profits was most reprehensible. Its natural effect, as also its purpose, was to secure for the company an inadmissible advantage. The satchels were wanted for the free delivery service and Machen's relation to that service made it probable, if not certain, that his advice respecting the reasonableness of the bid, the number of satchels required from time to time, and the company's performance of the contract, would be sought and given consideration by his superiors in the Post Office Department. The advertisement for bids, the postal regulations (ed. 1902, §§ 17 and 70) and the findings leave no doubt that he was charged with important duties of that character. Public policy and sound morals forbade that he should have any personal interest in the bid or contract lest he might be tempted to advance that interest at the expense of the Government. Under the secret arrangement, which was made before the bid was submitted, he had such an interest and therefore was in a position where the hope of personal gain was likely to exercise a predominant influence and prevent a faithful discharge of his public duties, as in fact it did. Referring to this arrangement, this court said in Crawford v. United States, 212 U.S. 183, 192: "Its almost necessary result, if carried out, would be to defraud the United States. The fraud might be perpetrated by getting the contract at a higher price than otherwise would have been obtained, or, if already obtained, then the United States might be defrauded by the General Superintendent [Machen] accepting improper satchels, not made of the materials, or in the manner specified in the contract, or by his requiring the delivery of more satchels than were sufficient for the wants of the department. . . . Such a corrupt agreement, if
Of course, the secret arrangement with Machen operated to vitiate the company's contract and justified the Postmaster General in rescinding it on discovering the fraud. Wardell v. Un. Pac. R.R., 103 U.S. 651, 658; Thomas v. Brownville &c. R.R., 109 U.S. 522, 524; McGourkey v. Toledo & Ohio Central R.R., 146 U.S. 536, 552, 565; Smith v. Sorby, L.R. 3 Q.B. Div. 552; Harrington v. Victoria Graving Dock Co., ibid. 549; 2 Dillon Municipal Corporations, 5th ed., § 773. And this is so, even though the company was without actual knowledge of the corrupt arrangement. It was made by Lorenz and Crawford while endeavoring to secure the contract for the company and was a means to that end. They were the company's agents and were securing the contract at its request. It accepted the fruits of their efforts and thereby sanctioned what they did and made their knowledge its own. Krumm v. Beach, 96 N.Y. 398, 404; Fairchild v. McMahon, 139 N.Y. 290; White v. Sawyer, 16 Gray, 586, 589; First National Bank v. New Milford, 36 Connecticut, 93, 101; Barwick v. English Joint Stock Bank, L.R. 2 Ex. 259, 265; Mackay v. Commercial Bank of New Brunswick, L.R. 5 P.C. 394, 410, et seq.; Leake on Contracts, 6th ed., 255, 335-336; Wald's Pollock on Contracts, 3d ed. 392.
It results that no recovery could be had upon the contract with the Postmaster General, because it was tainted with fraud and rescinded by him on that ground. But this was not an obstacle to a recovery upon a quantum valebat. Clark v. United States, 95 U.S. 539, 543; Wardell v. Un. Pac. R.R., supra, p. 659; Thomas v. Brownville &c. R.R., supra, p. 525. Whether requisite proof was made of the value of the satchels as furnished is another
MR. JUSTICE McKENNA and MR. JUSTICE HOLMES dissent, being of opinion that the case should be remanded for findings on the question of value.
MR. JUSTICE McREYNOLDS took no part in the consideration or decision of this case.