Case ID: ohio-st_24/html/0565-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hugh Breslin v. Ervin Brown.
    _A contract for making a public improvement was about to be let to tbe lowest and best bidder. A, who had filed his bid, and B, who was about to file his bid, entered into an agreement to become partners in the doing of the work, in the event the contract should be awarded to either of them, and further agreed that the contraet so awarded should inure to the benefit of the firm. This agreement was not intended to influence the bid of either party. B, to whom the work was afterward awarded on his bid, refused to perform the work in partnership with A, and assigned the contract for the work to a stranger for a valuable consideration, which he received. Held:
    
    .'1. The agreement between A and B was mutual, and the undertaking of each was a sufficient consideration to support the undertaking of the other.
    '2. The agreement was not void as against public policy — it not appearing • that the intent, effect, or necessary tendency of the contract was to stifle fair competition at the letting.
    
      ■3. A was entitled to demand from B one-half the profits received on assignment.
    Motion for leave to file a petition in error to reverse the District Court of Highland county.
    The original action was brought by Ervin Brown against Hugh Breslin, in the Court of Common Pleas of Highland county. The following is a copy of the petition: “ The plaintiff, for a cause of action against the defendant, states ■as follows : “ The commissioners of Highland county, Ohio, •on the 7th day of June, 1870, on proceedings, before that time conducted before them, ordered a certain road improvement to be made, known as the New Lexington and Clinton county line road improvement; and the engineer of said road improvement having duly advertised, according to law, the said work of and on said improvement to be let to the lowest and best bidder, and invited bids for said work, and the said plaintiff" having made and filed his bid 'for said work, and the defendant being about to make and file his bid for said work, the defendant, on the 3d day of August, 1870, in consideration that the plaintiff then promised the defendant and agreed with him that if the contract for the doing of said work should be awarded to him (the plaintiff) on his said bid, the defendant should be and become an equal partner with him (the plaintiff’) in the said contract and the doing of said work and in the profits to be derived from said contract and the doing of said work, promised the plaintiff, and agreed with him, that, in case the said contract for the doing of said work should be awarded to him on his said bid, the plaintiff’ should be and become an equal partner with him (the defendant) in the said contract and the doing of said work and in the profits to be derived from said contract and in the doing' of the said work. The defendant did, on the said last-named day, make and file his said bid for the contract for said work. On the 3d day of August, 1870, the contract for said work was duly awarded to the defendant on his said bid. But the defendant did not keep his said promise and agreement with the plaintiff, but, on the contrary, though the plaintiff then, and frequently thereafter,, offered the defendant to carry the said agreement out on. his part, and to bear an equal share of the expense of doing said work, the defendant wholly refused to permit th& plaintiff to share or participate in any way in the said contract or the doing of said work ; and on or about the ■ 31st day of March, 1871, without the knowledge or consent of the plaintiff, the defendant sold and set over the said contract for doing said work to one B. E. Dyer, for the sum of one thousand dollars, to be paid in Highland county bonds. The defendant long since, and before the 1st day of October, 1871, received the said one thousand dollars in said Highland county bonds; but, though the plaintiff often demanded of the defendant his one-half of said bonds, the-defendant wholly refused, and still refuses, to deliver or pay to him any of said bonds whatever, or to pay to him,, though often requested thereto, one-half of the value of said bonds, or anything whatever, for his interest in said contract. The plaintiff says that, by reason of the premises, there is clue to him from the defendant the sum of five hundred dollars, with interest from the 1st day of October, 1871. Wherefore he asks,” etc.
    To this petition a general demurrer was filed by the defendant, which was overruled by the court.
    Afterward, the defendant having filed an answer denying the allegations of the petition, a tidal was had, and judgment was rendered for the plaintiff for $500 and interest. This judgment, on proceedings in error, was affirmed by the District Court.
    The questions in the case arise on the overruling of the demurrer to the petition by tbe Court of Common Pleas.
    
      White $■ Waters, for the motion:
    I. The promise set forth in the petition as the cause of action, is without consideration, and therefore void.
    Breslin promised Brown a partnership with him, if he (Breslin) was awarded the contract, and Brown made a like promise to Breslin. Now, it is clear that if Breslin got the contract, Brown would have nothing to give Breslin, or if Brown got the contract, Breslin would have nothing to give Brown.
    Here is a want of mutuality and consideration.. The happening of the contingency which made it possible for one promisor to perform his promise, made it impossible for the other to perform his. 1 Parsons on Contracts, 459, sec. 13, and cases cited in note “F;” Batten on Contracts (side paging), 60-72.
    H. The contract is against public policy, and therefore void.
    The object of the law in inviting bids for the work, is that the work may be done at the least expense. In principle it is analogous to sales at auction.
    It is well settled that an agreement between two or more parties, that one of them shall bid, and then divide the articles purchased, is void as against public policy. Dudley et al. v. Little, 2 Ohio. 509; Doren v. Ward, 6 Johns. 194; 
      Thompson v. Davis, 13 Johns. 110; Jones v. Caswell, 3 Johns. Cases, 29.
    By the contract a strong inducement was held out to the lowest bidder not to comply with the terms of the sale, especially if the other was the next lowest bid; for if the contract be a valid one, Breslin and Brown had in two bids, thus defeating the policy of the law to secure the performance of the work at the lowest price. Wilber v. How, 8 Johns. 444 (side paging); Atcheson v. Mallon, 43 N. Y. 147.
    To enforce such a contract might allow a party, by an outside bargain, to become a public contractor in spite of the decision of the commissioners that he was an unfit person to be awarded a contract for the doing of public work.
    III. The amount which would have been received if the contract had been kept, is the measure of damages if the contract is broken, and not what Breslin sold the contract for; in other words, what Breslin might cheat Dyer out •of. If, to do the work, it would have cost Breslin and Brown more than the contract price, then Brown has lost nothing, and has no right of action against Breslin. Doolittle & Chamberlain v. McCullough, 12 Ohio. St. 360.
    
      TJlric Sloane, contra:
    Mutual promises constitute a sufficient consideration for the support of a contract. Nott v. Johnson, 7 Ohio St. 270.
    The mutual promise sufficient to support a contract may be conditional. Briggs v. Tillotson, 8 Johns. 235; Sage v. Hazzard, 6 Barb. 181; James v. Fulcrod, 5 Texas, 512.
    As to the impossibility of consideration, see Story on Contracts, see. 463; Briggs v. Tillotson, 8 Johns. 235.
    The contract is not against public policy, and is valid and binding. Atcheson v. Mallon, 43 N. Y. 147; Jones v. Caswell, 3 Johns. Cases, 29; Doolin v. Ward, 6 Johns. 194; Wilber v. How, 8 Johns. 346; Thompson v. Davis, 13 Johns. 112; Piatt v. Oliver, 1 McLean, 295; Gulick v. Ward, 5 Halst. 87; Phippen v. Stickney, 3 Met. 388; Briggs v. Tillotson, 8 Johns. 235; Smull v. Jones, 1 Watts & Serg. 128; McMinn 
      v. Phipps, 3 Sneed (Tenn.), 196; James v. Fulcrod, 5 Texas, 512.
   McIlvaine, J.

It is claimed by plaintiff in error, ■that the agreement set out in tbe original petition, as the ground of action, is nudum pactum.

Upon a fair construction, we think the petition shows •that the plaintiff and defendant mutually agreed to form a partnership for the purpose of making the proposed road improvement, in case the contract for making the’ ■same should be awarded to either of them, and that the •contract so awarded should inure to the benefit of the co-partnership. In such agreement the undertaking of each •party is based on the undertaking of the other, which, in law, is a sufficient consideration to support the contract. The fact that the contract could be awarded to only one of the parties, they being separate bidders, did not at all •affect the mutuality of the agreement.

It is also claimed that the contract, as set out in the petition, was in contravention of public policy, and therefore void.

The public policy which, it is supposed, avoids this com tract, is that which favors fair and honest competition at public sales, and forbids all contracts and combinations between bidders which stifle such competition. We unhesitatingly admit the rule to be, that any agreement ■entered into for the purpose of preventing competition at such sales is not only void, but it also renders any sale procured thereby voidable, at the option of the seller. So also any contract, the effect of which, or even the necessary tendency of which, is to stifle competition. Such contracts are absolutely void as between the parties thereto, because they are fraudulent as against the seller. But, on the other hand, we think the public, as well as the seller, has no right to interfere between the parties to a contract, where neither its purpose, its effect, nor its necessary tendency is to prevent fair competition at the sale.

How, then, stands the contract as set out in the petition,, when tested hy these principles ?

It is quite clear that no purpose to restrain competition is expressed on the face of the contract; but, on the contrary, it does appear that the intention of the parties was that each should bid and compete at the sale. The bid of' the plaintiff* below had already been made and filed; and; the defendant, as was contemplated by the parties, afterward made and filed his bid, which proved to be the lowest' and best bid offered, as it was the successful one. The bid of each was based upon his own judgment, and filed at his own discretion. It does not appear that either had knowledge of the other’s bid, and we are not authorized to presume to the contrary. Such being the nature of the agreement, and such the result of the bidding, it is impossible-to say that the contract had the effect of stifling competition at the letting.

But it is said that the necessary tendency of the contract, was to restrain rivalry as between these parties. This may be so, if rivalry means simply a desire to defeat a competitor. But is this a proper test of the legality of such contracts? The rule of public policy under consideration is-not based on the theory, that the successful bidder at a. public sale should pay more than the fair value of the thing sold, or should take a public contract for less than the work is -worth. Such a policy would be as pernicious-as the evil against which the true rule is intended to guard. Eair competition among bidders, to the end that sellers-■may be protected against fraudulent combinations, is all the law seeks to secure, and this is accomplished when each bidder is left free to act in accordance with his own wishes and in conformity to his own judgment.

In a case, therefore, like the present, when no actual fraud against the rights of the seller was intended by the parties, it can not be said that the necessary tendency of such a contract is to restrain either party from bidding to the full limit his judgment of values will permit. Indeed, my own opinion, as well as experience, is, that such contracts, especially when the parties are personally anxious-to succeed, have a strong tendency to stimulate their bids,, inasmuch as losses, if any accrue, are distributed.

Our attention has been called to a decision by the Court of Appeals of New York, Atcheson v. Mallon, 43 N. Y. 147, which follows an earlier case in the same state, wherein a different conclusion was reached. Much as we esteem the decisions of that court, we can not follow it to the full extent to which it has applied this rule of public policy. Nor do we think it is sustained by the weight of authority. In Phippen v. Stickney, 3 Met. 388, the court said: “ The extent to which the doctrine of invalidating such contracts-can safely be carried would rather seem to include within the rule all cases of fraudulent acts and combinations having for their object to stifle fair competition at the biddings,, with the design of becoming the purchasers at a price less than the fair value of the property. Beyond this, the application of the principle contended for may be found productive of mischief, and an unwarranted interference-with the course of business at auction sales.”

To the same effect are Smith v. Greenlee, 2 Dev. 729; McMinn v. Phipps, 3 Sneed, 196; Smull v. Jones, 6 Watts & Serg. 128, and James v. Fulcrod, 5 Texas, 512.

It is farther claimed that the Court of Common Pleas-erred, in assessing as damages to the plaintiff, one-half the profits realized by the defendant on the assignment to Dyer of the contract for the work of constructing the road improvement. In this we see no error. This contract, by the agreement of the parties, was to inure to their joint benefit as partners. The defendant, in violation of his agreement to do the woz’k with the plaintiff as partners, and to hold this contract for the benefit of the firm, assigned it to another for a valuable consideration, which he received. The defendant should not be permitted to take advantage of his owzz wz’ong, by denying that the profits i'ealized were received by him for the joint use of the parties.

Motion overruled.

Day, C. J., Welch, White, and Réx, JJ., concurring.