Case Name: FRANK CROCKER, TRUSTEE, v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1913-12-01
Citations: 49 Ct. Cl. 85
Docket Number: No. 28966
Parties: FRANK CROCKER, TRUSTEE, v. THE UNITED STATES.
Judges: Campbell, Chief Justice, concurs in the conclusion.
Reporter: United States Court of Claims Reports
Volume: 49
Pages: 85–105

Head Matter:
FRANK CROCKER, TRUSTEE, v. THE UNITED STATES.
[No. 28966.
Decided Dec. 1, 1913.]
On the Proofs.
The Postal Device & Lock Co. entered into a contract to furnish the Post Office Department certain satchels for a period of four years from July 1, 1902. Some time after the contract had been in force and the work partly performed, investigation developed conspiracies in the Post Office Department to defraud the Government, and that department ceased to order satchels under the contract here involved, and withheld the money then due the contract company for satchels theretofore furnished the department. This suit was brought to recover the money so retained, less the cost of satchel straps which had not been furnished as required by the contract. The defendants interpose a plea of fraud. ,
I.In order to involve the plaintiff in the admitted wrongdoings of others connected wit it in the execution of the contract, it must appear that it knew either actually or constructively of what was to be done and what was done.
II.Where a contractor in anywise participates in the machinations of his agents in their conspiracies with an officer of the Government to share to any extent in the profits of the company it is estopped to assert any claim for compensation under its contract.
III.Acts of manifest bad faith or breaches of duty toward the corporation on the part of one of its officers are not binding upon it.
IY. Where an agent goes beyond the scope of his authority and commits a wrong or fraud to accomplish a purpose designedly his own, the principal is not liable.
V.The defendants can not be charged with a default in performance due to the remissions of a duly authorized agent of the plaintiff acting within the scope, of his employment. The loss must fall upon the plaintiff.
VI.Where the contractor did not perform his contract but committed a breach thereof, such breach is not cured by an offer to make restitution after the fact.
VII.Where a suit is predicated upon a written contract it is within the province of the court to award judgment as upon a quantum, meruit.
The Reporter's statement of tbe case:
The following are the facts of the case as found by the court:
I. On November 18, 1904, by order of the District Court of the United States for the Southern District of New York, entered in a cause pending therein entitled: “In the Matter of the Postal Device & Lock Co., Bankrupt," the said company was declared and adjudged a bankrupt, and the said cause was referred to Macgrane Coxe, Esq., one of the referees in bankruptcy of the said court, to take such further proceedings therein as might be required by law and competent to be performed by such referee. Thereafter, on December 6, 1904, the said referee appointed the claimant, Frank Crocker, trustee in bankruptcy of the said Postal Device & Lock Co.
II. On May 3, 1902, the Postmaster General published an advertisement for proposals to furnish letter carriers’ and collectors’ satchels for a period of four years from July 1, 1902, all bids to be received on or before June 6, 1902. Accompanying this public advertisement were detailed specifications of the satchels to be furnished, and among said specifications were three requiring satchels of A and C grade to be furnished with straps and B grade without straps.
III. On or about June 5, 1902, the Postal Device & Lock Co. submitted its proposals for the manufacture and delivery of said satchels according to said specifications, stating as a price therefor $2.19 for Class A satchels, $3.16 for Class B satchels, and $3.15 for Class C satchels. On or about June 17, 1902, a committee of three persons theretofore appointed by the Postmaster General to receive and examine all bids submitted under said proposals reported to the Postmaster General recommending the letting of said contract to the Postal Device & Lock Co., and on June 25, 1902, the said Postmaster General did let said contract to the Postal Device & Lock Co., the same being appended to and made a part of the petition herein.
IY. From time to time, after the execution of the said contract, and prior to March 17, 1903, the said Postal Device & Lock Co., in the performance of the said contract on its part, did furnish and deliver to the Post Office Department certain of the said satchels, except that satchels of Classes A and C were furnished without shoulder straps. The Post Office Department accepted and retained the satchels so delivered. Shoulder straps for them were purchased by the Post Office Department from a third party at a cost of 39J cents each, at or before the time when the satchels were delivered. The following list represents the number of satchels delivered and accepted, as aforesaid, together with the contract rates for satchels of the several classes and the price of all satchels of each class so delivered:
Olasa A, 5,032 satchels, at $2.19 each.$11,020.08
Olasa B, 5,000 satchels, at $3.16 each.'.. 15,800.00
Class 0, 55 satchels, at $3.15 each. 173.25
Total (10,087 satchels). 26,993. 33
From time to time, on or before March 17, 1903, the United States paid to the said company, for and on account of the said satchels, delivered as aforesaid, the following sums:
Oct. 15, 1902. $15,800.00
Dec. 20, 1902. 5,481.57
Jan. 15, 1903. 3,337.02
Mar. 17, 1903 . 2,374.74
26,993.33
V. From time to time between the date of the said contract and April 30, 1903, the said Postal Device &Lock Co. did furnish and deliver to the Post Office Department certain satchels, in addition to those enumerated in Finding IY, except that satchels of Classes A and C were furnished without shoulder straps. The Post Office Department accepted and retained the - satchels so delivered. Shoulder straps for them were purchased by the Post Office Department from a third party at a cost of 39£ cents each, at or before the time when the satchels were delivered. The following list represents the number of satchels of each class delivered and accepted as aforesaid, in addition to those delivered and paid for as stated in Finding IV, together with the contract rates for satchels of the several classes and the price of all satchels of each class so delivered:
Class A, 3,835 satchels, $2.19 each. $8,598.65
Class B, 1,289 satchels, $3.16 each. 4,073.24
Class C, 1,077 satchels, $3.15 each. 3,424.05
Total (6,201 satchels). 15,895. 94
These satchels were accepted and retained by the United States, but the United States has failed and refused to pay for the same.
VI. Of the satchels furnished by the Postal Device and Lock Co., as stated in Findings IV and V, there were satchels of Classes A and C, as follows:
Class A. 8,867
Class C. 1,132
or a total of 9,999 satchels which should have been furnished with straps, for which the Government paid 39£ cents each but which were not furnished as per terms of claimant's contract, amounting in all to $3,949.61.
VII. Some time prior to June 3, 1902, and before the contract was awarded or made, A. W. Machen, then superintendent of the Free Delivery Division of the Post Office Department, conceived a scheme to share in the profits that might- arise from the manufacture and sale to the department of th'e satchels mentioned in claimant’s contract. In connection with George E. Lorenz, then a citizen of Toledo, Ohio, and W. G. Crawford, vice president of plaintiff company, it was arranged that said Crawford was to induce said claimant company to enter into an independent agreement with Lorenz by the terms of which Lorenz was to prepare the bid to be made by said company and, if the contract was awarded it, that he, in conjunction with Crawford, was to contract as agents for and in name of said company for the manufacture of said satchels, attend to all details of same, and Lorenz was to receive as compensation therefor all profits arising therefrom in excess of 25 cents on each satchel, as set forth in Finding XII. Said contract was duly prepared by said Crawford and submitted to said claimant company and duly executed by it on the 3d day of June, 1902, without any actual knowledge upon its part of the secret understanding between Machen, Lorenz, and Crawford, and during the course of the execution of claimant company’s contract with the Government claimant company, made payment in full to Lorenz according to the terms of their contract with him.
VIII. On some date in- August, 1902, before any satchels were furnished the defendants, claimant company modified, by a new contract, their contract with Lorenz of June 3, 1902, set forth in Finding XII, under the terms of which the said Lorenz was to furnish the straps that by the specifications of their contract with the Government should accompany satchels of Classes A and C, and this contract further provided that the claimant company was to receive and retain $1.74 for Class A, $1.97 for Class B, and $2.31 for Class C satchels. Said contract was duly executed by the claimant company in so far as it was concerned, and out of the sums of money paid by the Government to said claimant company it paid over to said Lorenz his compensation as was provided in bis contract with the claimant.
IX. The claimant company did not manufacture satchels nor the material that went into the same, and in order to execute its contract with the Government it made a contract with William H. Wiley & Son Co., of Hartford, Conn., through its agent, Crawford, to furnish the material and manufacture the satchels called for under its contract. On June 30, 1902, the Wiley Co. notified the claimant company that it would be impossible for them to furnish the straps provided for in the specifications of claimant’s contract because the buckle on said straps was a patented article and the patentee declined to sell said buckle separate from the straps and in no event would sell direct to a contractor. On or about this time Crawford, vice president of the claimant company, in a conversation with Machen at the Post Office Department, inquired if there were any orders for satchels. Machen replied by saying that the department wanted 5,000 satchels in a hurry and that they must be furnished with Lamb straps. Crawford replied by saying that he would get the straps if they did not cost any more money and if they conld get them, to which Machen said that it did not make any difference abont the cost of the straps; that the Government would get them, ship the straps to the claimant company’s manufacturer, pay for the same, and adjust any difference later on in the year’s orders. To this Crawford assented. Said Machen did order said straps as aforesaid and paid therefor out of Government funds the sum of 39J cents each.
X. The said George E. Lorenz never furnished any of said straps, nor did he do anything else in any way, shape, or manner toward discharging his obligations under his agreement with claimant company. The Government, through Machen, made all the payments heretofore mentioned to the claimant as provided by the terms of its contract, without any deduction for straps, and both he and Lorenz knowing at the time said payments were made that the Government had furnished and paid for said straps. The claimant company received all such payments, receipted for them in full, and paid over to said Lorenz all sums of money it had agreed to pay him for said straps, which said Lorenz subsequently divided with said Machen and Crawford. The claimant company had no actual knowledge at any time that Lorenz was not furnishing said straps and never knew until after its contract had been annulled that the Government had furnished and paid for said straps.
XI. The said George E. Lorenz also divided with said Machen and Crawford all sums of money which he received from said claimant company either as payment for straps or his portion of the profits made by said company with said Machen and Crawford in pursuance of an understanding existing between them. These payments were also made without any actual knowledge upon the part of the. claimant that the same was being done. No objection or deduction was ever made to or from claimant’s contract with the Government, and no actual knowledge ever existed upon its part as to any of the transactions between Machen, Crawford, and Lorenz as to any division of any sum or sums of money received by any of them from the profits of said con tract. . The claimant company preferred its claim for satchels not paid for by the Government soon after its contract was annulled. Said claim was refused payment by the Post Office Department on the ground of fraud, and this suit was thereafter commenced, its contract with the Government, as heretofore mentioned, being annulled by. the Postmaster General in August, 1903.
Lorenz, Machen, and Crawford, in their agreement for division of funds received from the contractor, allotted one-fourth to Crawford, one-fourth to Lorenz, and one-half to Machen; and Machen and Lorenz also had a secret understanding with each other, unknown to even Crawford, by which their three-fourths was to be divided equally between them.
XII. The contract between George E. Lorenz and the Postal Device & Lock Co. is as follows:
“This agreement entered into this 3rd day of June, A. D. 1902, by and between the Postal Device and Lock Company, a corporation organized under and by virtue of the laws of the State of New Jersey, and having one of its offices at #11 Broadway (Borough of Manhattan), in the city and State of New York, party of the first part, and George E. Lorenz, of Toledo, county of Lucas, and State of Ohio, party of the second part, witnesseth:
“The party of the first part has agreed and does hereby agree to employ the party of the second part, as hereinafter provided, the compensation of said party of the second part for services rendered under and by virtue of this agreement, from and after the date of its execution up to and including the 30th day of June, 1902, to be one (1) dollar, the receipt of which is hereby acknowledged. If and in the event that the object of this employment, as hereinafter stated at length, to wit, the award to said party of the first part of a certain contract for the manufacture of letter carriers’ mail bags or satchels, is attained, then the said party of the second part shall'be further compensated for his services rendered under this agreement and contract as hereinafter provided.
“The said party of the second part agrees to give to the said party of the first part all of his best effort and services toward securing the award to the said party of the first part of a certain contract with the Post Office Department of the United States Government for the manufacture of letter carriers’ mail bags or satchels, the advertisements for bids for said contract heing hereto attached and marked ‘Ex. A.’
“The parties hereto, said party of the first part acting by and through its vice president, William G. Crawford, of Washington, D. C., shall jointly determine on bids to be made to said Post Office Department of the United States Government with a view to securing the award to the said party of the first part of said contract for the manufacture of said letter carriers’ mail bags or satchels, and if said contract is awarded to said party of the first part, the said party of the second part and said Crawford, acting for the said party of the first part, shall jointly enter into agreements and contracts with manufacturers for the manufacture of said letter carriers’ mail bags or satchels and for the materials necessarily required in the manufacture of said bags or satchels; provided that the bid or bids submitted for the purpose of securing the award of said contract for the manufacture of said letter carriers’ mail bags or satchels shall be presented or submitted to the post-office authorities in the name of said party of the first part and all contracts made with any manufacturers or other persons for the manufacture of said letter carriers’ mail bags or satchels shall be entered into in the name of said party of the first part.
“The said party of the second part agrees that he will not make any bias or bids on or pertaining to the said contract for the manufacture of said letter carriers’ mail bags or satchels other than the bid or bids mutually agreed to by the parties hereto, as hereinbefore provided, which said bid or bids shall be presented or submitted in the name of said party of the first part; and the said party of the second part further agrees that he will not participate save as herein provided m any bid or bids having for its or their object the securing of said contract for the manufacture of said letter carriers’ mail bags or satchels, either directly or indirectly; and the said party of the second part also agrees not to furnish any figures to or aid or assist any person or persons, other than the said party of the first part, either directly or indirectly, to secure the award of said contract for the manufacture of said letter carriers’ mail bags or satchels.
“If and in the event that said contract is awarded by the post office authorities of the United States Government to said party of the first part under and by virtue of bid or bids mutually agreed to and presented by the parties of this agreement, then the parties hereto shall be entitled to the net profits of or arising from the said contract in the shares following, to wit: The party of the first part shall be entitled to a profit of twenty-five (25) cents on each and every said letter carriers’ bag or satchel furnished to the said Post Office Department of the United States Government under said contract, and said profit of twenty-five (25) cents on each and every said bag or satchel shall become the sole property of the said party of the first part, while all the remainder of said profit shall become the sole property of said party of the second part, said excesses or surplus of said net profit over and above said twenty-five (25) cents on each said mail bag or satchel furnished the said Post Office Department of the United States Government being full compensation to the said party of the second part for all services rendered or to be rendered by him in the premises up to and including the date when said contract with the United States Government is terminated. If and in the event that the said net profit on said bags or satchels does not amount to more than twenty-five (25) cents on each and every of said bags or satchels furnished to the said Post Office Department of the United States Government, then the entire net profit growing out of said contract for the manufacture of said letter carriers’ mail bags or satchels shall become the sole property of said party of the first part, it being understood and agreed that the term ‘net profit,’ where used in this agreement shall mean the difference between the cost of manufacture and delivery (including necessary materials of said letter carriers’ mail bags or satchels); and the terms of the said contract with the Post Office Department of the United States Government, and that office expenses of said party of the first part, salaries of its officers, etc., shall not be included in calculating the said net profit arising out of said contract for the manufacture of said letter carriers’ mail bags or satchels.
“In testimony thereof we have hereunto set our hands and affixed our respective seals, each in the presence of two subscribing witnesses.
“Postal Device & Lock Co.,
“By Wade ChaNce, Prest.
“Geo. E. Lorenz.” [seal.]
‡ ‡ ‡ * *
Copy of memorandum agreement between the said parties is as follows:
“This memorandum of agreement, entered into this-1902, by and between the Postal Device and Lock Company, organized under and by virtue of the laws of the State of New Jersey, and having one of its offices at # 11 Broadway (Borough of Manhattan), in the city and State of New York, party of the first part, and George E. Lorenz, of Toledo, county of Lucas, and State of Ohio, party of the second part, witnesseth:
“Whereas the parties hereto did on the 3rd day of June, A. D. 1902, enter into a certain agreement having for its . object tbe securing of a contract with the United States post office authorities for the manufacture of letter-carriers’ mail bags or satchels for the four years next succeeding the 1st day of July, 1902, and
“Whereas the bid or proposal to furnish said letter-carriers’ mail bags or satchels under and by the terms of said agreement between the parties hereto, dated the 3rd day of June, 1902, was to be and was presented in the name of the Postal Device and Lock Company, party of the first part, and
“Whereas said bid or proposal for furnishing said letter-carriers’ mail bags or satchels for said period of four years next succeeding July 1st, 1902, was accepted by the Post Office Department, acting through the Postmaster General, and a contract by and between the said department and the said Postal Device and Lock Company, party of the first part herein, was duly entered into and executed by the said parties thereto, the Post Office Department being represented by said Postmaster General and the Postal Device and Lock Company by its president, said contract being dated on the 25th day of June, 1902.
“Now, therefore, in consideration of the premises and of the mutual covenants and agreements of the parties aforesaid, it is hereby covenanted and agreed between the parties of the first and second parts as follows:
“First. That the Postal Device and Lock Company, of the first part, shall and is to have the exclusive right, under said contract of June 25th, 1902, with the postal authorities, hereinbefore referred to, to place contracts for the manufacture of the body portions of said letter-carriers’ mail bags or satchels, styled 'A,’ 'B,’ and ‘C,’ in said contract of June 25th, 1902, it being understood and agreed that the term 'body portions’ shall be construed to mean the bags or satchels excluding the shoulder straps required under the said contract of June 25th, 1902, with the Post Office Department.
“ Second. That the said Postal Device and Lock Company, of the first part, shall retain out of the contract price, stated in the said contract with the United States Government, the sum of one dollar and seventy-four cents for each ‘A,’ bag or satchel, the sum of one dollar and ninety-seven cents for each' B ’ bag or satchel, and the sum of two dollars and thirty-one cents for each 'C’ bag or satchel manufactured and furnished to the United States Government, f. o. b. Hartford, Connecticut, or other place of manufacture, by the said Postal Device and Lock Company; the said Postal Device and Lock Company to pay from the retained sums herein referred to the cost of all material necessarily used in the manufacture of the said ‘body portions’ and also the cost of manufacturing the ‘body portions’ of the above-referred to satchels, so long as said satchels are manufactured of the same quality or grade of Pegamoid or Fabrikoid leather as that of which the sample bags are made which were furnished to the United States Government; any saving effected or balance remaining after delivery of the said satchels ‘A,’ ‘B,’ and ‘C’ at the prices herein agreed upon to be retained out of the contract price with the United States Government, above referred to, to be the exclusive-property of the Postal Device and Lock Company.
“ The parties to this agreement further agree that should the said United States Government require during the four years next succeeding the 1st day of July, 1902, that the said ‘body portion’ of said satchels being made of other material than Pegamoid or Fabrikoid leather, or of a different grade of Pegamoid or Fabrikoid leather than that of which the sample bags furnished to the United States Government are made, that a sufficient sum be retained by the said Postal Device and Lock Company to enable it to manufacture the said satchels of whatever material may be designated or required and in addition to net the Postal Device and Lock Company a profit of twenty-five (25) cents on each of said satchels so manufactured and furnished to the United States Government.
“Third. That the said George E. Lorenz, party of the second part, shall and is to have the exclusive right to furnish or cause to be furnished to the said Postal Device and Lock Company from time to time and in such quantities at a time as may be required under said contract of June 25th, 1902, with the postal authorities hereinbefore referred to, all shoulder straps used or required to be used under and by virtue of the said contract of June 25th, 1902; and the said George E. Lorenz, party of the second part, binds himself to furnish and deliver at Hartford, Connecticut, or at any other place designated by the party of the first part, or by the United States Government, shoulder straps, as required, satisfactory to the United States Government, and agrees to be held accountable in every particular for the proper delivery of the said shoulder straps, as required.
“ Fourth. That the said Postal Device and Lock Company, party of the first part, shall pay over to the said George E. Lorenz, party of the second part, the sum of forty-five (45) cents for each ‘A’ bag or satchel, the sum of one dollar and nineteen cents for each ‘B’ bag or satchel, and the sum of eighty-four cents for each ‘C’ bag or satchel so long as the ‘body portion’ of said ‘A,’ ‘B,’ and ‘C’ bags or satchels are manufactured of Pegamoid or Fabrikoid leather, and for which bag shoulder straps have been furnished by the party of- the second part, and which satchels have been manufactured and furnished by the said Postal Device and Lock Company to the United States Government under said agreement or contract of June 25th, 1902, hereinbefore referred to; the said sums to be the exclusive property of the said George E. Lorenz, party of the second part; and which sums are accepted by him in full settlement of all claims against the said Postal Device and Lock Company, party of the first part, and- the United States Government, and for any interest the said George E. Lorenz may have in the said contract of the Postal Device and Lock Company with the United States Government, bearing date of June 25th, 1902; any saving effected or balance remaining after delivery of the said shoulder straps by the said George E. Lorenz to be the sole property of the said George E. Lorenz, party of the second part, it being understood that the said George E. Lorenz, party of the second part, is to be paid the said amounts on each shoulder strap or satchel delivered to the United States Government immediately after warrant in payment for said bags or satchels shall have been drawn, issued, delivered, and paid to the said Postal Device and Lock Company, of the first part, by the Post Office Department of the United States Government, after deducting the necessary traveling expenses incurred by the Postal Device and Lock Company in connection with the manufacture of the said satchels ‘A,’ ‘B, ’ and ‘C.’ It being understood between the parties that the said George E. Lorenz is to receive payments as herein provided on the same number of shoulder straps as there are bags manufactured and delivered by the Postal Device and Lock Company to the United States Government. The payments for bags and shoulder straps by the ..United States Government to be evidence of satisfactory delivery by the said George E. Lorenz, party of the second part.
“Fifth. The agreement by and between the parties hereto dated the 3rd day of June, A. D. 1902, is hereby revoked only in so far as it conflicts with the provisions of this agreement “In witness whereof the said parties hereto have hereunto set their hands and affixed their seal on the date first above written.
“Postal Device & Lock Co.,
“Wade ChaNCe, Prest.
“George E. LoreNz.”
* * * * *
Mr. James H. Hayden for the plaintiff. Mr. Robert G. Hayden was on the brief.
Mr. L. G. Bissell, with whom was Mr. Assistant Attorney General Huston Thompson, for the defendants.
The Government’s plea of illegality was timely, since the defense of illegality can be interposed at any time. Coppell v. Hall, 17 Wall., 542, 548; Oscanyan v. Arms Co., 103 U. S., 361; New Yorlc Market Gardeners’ Association v. United States, 43 C. Cls., 114; Northport v. Northport Townsite Co., 27 Wash., 543.
In Wardell v. Railroad Company, 103 U. S., 651, an action to recover the contract price of coal delivered to the railroad under a contract which it had repudiated before its natural expiration, because Wardell, the original contractor, had acted for and subsequently gratuitously assigned the contract to, a mining company, in which six of the railroad company’s directors held a majority of the shares of stock it was Held, there could be no recovery, either on the contract or for its repudiation.
Said the court:
“ * * * It hardly required argument to show that the scheme thus designed to enable the directors, who authorized the contract, to divide with the contractors large sums which should have been saved to the company, was utterly indefensible and illegal. Those directors, constituting the executive committee of the board, were clothed with power to manage the affairs of its company for the benefit of its stockholders and creditors. Their character as agents forbade the exercise of their powers for their own personal ends against the interest of the company. They were thereby Erecluded from deriving any advantage from contracts, made y their authority as directors, except through the company for which they acted. Their position was one of great trust, and to engage in any matter for their personal advantage inconsistent with it was to violate their duty and to commit a fraud upon the company.
“It is among the rudiments of the law that the same person can not act for himself and at the same time, with respect to the same matter, as the agent of another whose interests are conflicting. Thus, a person can not be a purchaser of property and at the same time an agent of the vendor. The two positions impose different obligations, and their union would at once raise a conflict between interest and duty; and, ‘constituted as humanity is, in the majority of cases duty would be overborne in the struggle.’ ” Marsh v. Whitmore, 21 Wall., 178, 183.
*****
“The complainant therefore can derive no benefit from the contract thus tainted or sustain any claim against the - railroad company for its repudiation.” Thomas v. Brown-mileetc., B. B. Go., 109 U. S., 522; West v. Oamden, 135 U. S., 507; McGourlcey v. Toledo <& Ohio Bailway, 146 IT. S., 536; to same effect.
In United States v. Garter, 217 IT. S., 286, an Army engineer officer assigned to the duty of supervising the perform- ' anee of a public working contract was compelled in equity to disgorge secret profits paid to him by the contractors out of the profits which they realized from the transaction.
“Any direct or indirect interest in the subject matter is sufficient to taint the contract with illegality, if the interest be such as to affect the judgment and conduct of the officer either in the making of the contract or in its performance.” 2 Dillon, Municipal Corporations (5th ed.), p. 1146.
Thus the ownership of stock in the contracting company is sufficient; and even its possession as pledgee since, as we have shown, the law does not regard the motives of the fiduciary, but only the probable effect of the antagonism existing between his duty and his interest, human nature being what it is. San Diego v. San Diego & L. A. B. Go., 44 Cal., 106; Drake v. Elizabeth, 69 N. J. L., 190; Foster v. Cape May, 60 N. J. L., 78.
Illegal contracts are unenforceable regardless of the knowledge, motive, and intention of the parties, such considerations being material only in the determination of the right of one of the parties to such a contract to recover from the other the value of the benefits conferred in misreliance upon the illegal agreement. And such recovery, if allowed, is only in guasi contract and never on the illegal contract itself, the latter never being saved by the innocence of the parties except in unusual cases where intent is the essence of the offense. Cent. Dig., Contracts, vol. 11, § 462; Woodward, Quasi-Contracts, 1913, c. 8, p. 210 et seg.; Hentig v. Stani-forth, 5 Maul. & Sel., 122; Oom v. Bruce, 12 East., 225.
On its face this was a lobbying contract and therefore illegal. Improper dealings on the part of Lorenz with Machen and the holding out of improper inducements were well within the scope of the employment stipulated, and Lorenz’s compensation was made contingent upon the success of his endeavors. Providence Tool Company v. Norris, 2 Wall., 245; McMullen v. Hoffman, 174 IT. S., 639.
Having apparently employed Lorenz for an illegal purpose, therefore, the company can not now escape the consequences of its conduct and the imputation to it of Lorenz’s knowledge of the whole conspiracy and of Machen’s interest in the contract, since Lorenz’s acquisition of knowledge and •his employment by the company were contemporaneous and all one transaction. See The Distilled Spirits, 11 Wall., 356; Dresser v. Norwood, 11 C. B., N. S., 466; RoTland v. Hart, 6 Ch. App., 678.
Furthermore, Lorenz’s subsequent payment of a part of his profits received from the company to Machen was plainly a fraud toward the Government, the probable effect of the payment being to corrupt Machen with respect to future orders for satchels. And since this act was certainly within the apparent scope of Lorenz’s employment and as certainly for the company’s benefit, the company is responsible for Machen’s participation in the contract through Lorenz. See Bank of Commerce v. Hoéber, 88 Mo., 37.
The authorities are divided as to the availability of an action in quasi contract to recover the benefits actually conferred in reliance upon a contract subsequently repudiated because of a breach of fiduciary relationship. 15 Am. and Eng. Encvc. of Law, 2d ed., p. 1149; Smith v. Albany, 61 N. Y., 444; Stoops v. Board of Education Green Go., 72 Ind., 42; Greenhood, Public Policy, p. 298. However, the Supreme Court apparently sanctions the action, which is conclusive unless the fact that this is a public contract creates a distinction. Wardell v. Railroad Company, 103 U. S., 651, supra; Thomas v. BrownviTle, etc., R. R. Co., 109 U. S., 522, supra; N. Y. Market Gardener’s Asso. v. U. S., 43. C. Cls. K., 114, 135-136.

Opinion:
Booth, Judge,
delivered the opinion of the court:
This suit concerns a contract with the Post Office Department. The defendants interpose a plea of fraud. The con-contract in question obligated the plaintiff company to furnish and deliver letter carriers' and collectors' satchels to the department for a period of four years from July 1, 1902. It was made in response to an advertisement for proposals so to do issued during the preceding .month of May. A corn-committee of three disinterested and reputable gentlemen duly commissioned recommended the award to plaintiff company, and no fraud is charged; most certainly none is proven in the inception of the contractual relations between the plaintiff company and the defendants. The infamous transactions as alleged which subsequently occurred were conceived by three men, one the vice president of plaintiff company, one a private citizen, and the other a then trusted employee of the Post Office Department. All of these men were subsequently indicted, and the vice president of the plaintiff company alone escaped judicial condemnation. The alleged scheme for defrauding the Government which was consummated imposed upon the vice president of the plaintiff company the duty of inducing his corporation to enter into an independent contract with one Lorenz, he to prepare and submit the bid of the company, and, if successful in securing the award, then in conjunction with the vice president as a representative of the plaintiff company, they were to negotiate the necessary contracts for the material for and the manufacture of said satchels and such contracts were to be made in the company's name. The plaintiff company did not and never had manufactured satchels or dealt in the materials necessary so to do. The plaintiff company made in good faith the proposed agreement with Lorenz, by which he was to have all profit in the transaction in excess of 25 cents on each satchel, and faithfully executed the same until its terms were modified by a subsequent one. The plaintiff executed its contract with the Government, furnished without complaint to it all the satchels ordered by the department until the same was annulled in August, 1903, because of the fraudulent conduct of its vice president. The conspiracy to defraud the Government consisted of an oral agreement between Lorenz, the vice president of the company, one Crawford, and a Mr. Machen, then superintendent of the free delivery department of the Post Office Department. These three men, prior to the letting of the contract, agreed among themselves that in the event of the claimant securing the same, that Lorenz would divide among them all the sums of money he was to receive from the plaintiff company under his agreement with it. Lorenz and Crawford were to have one-fourth each and Machen the remaining one- half, and this agreement was observed at least to the extent of Lorenz and Machen, for they have so admitted.
The satchels to be furnished under the contract were classified into three grades, "A," "B," and "C." The "A" and "C" grades were to be provided with straps. Herein appears criminal vice. It was found impossible to secure the straps desired. The claimant company had previous to this modified its first contract with Lorenz by which it was to retain a larger share of profit than 25 cents on each satchel, and Lorenz agreed to furnish the necessary straps. Machen thereupon orders from one Lamb, a New York manufacturer, the necessary straps, they being a patented article and alone obtainable from him, and has the Government pay for them, duplicating this payment to plaintiff by paying it the full contract price as though it had furnished straps. It is not pretended that the plaintiff had actual knowledge of this or any other criminal transaction between its agent Lorenz and Machen. The plaintiff was wholly ignorant of Machen's or Lorenz's peculations as to straps, and honestly supposed it was discharging its contractual obligations in full. Payments were repeatedly made to the company, without complaint or deduction, and they in turn made repeated payments for straps to Lorenz, who at least divided with Machen. No part of the money paid for straps was retained by the plaintiff. This continued until the annulment of the contract, at which time the defendants had received satchels for which they have never paid. This suit is upon the contract to recover the contract price for the same, less the full amount paid by the defendants for straps.
We have set forth somewhat in extenso the facts of the case. The defendants relying upon a plea of fraud, which always challenges the close attention of the court, and as in this case it is more or less a question of fact we deem it wise to do so.
In order to involve the plaintiff in the admitted wrongdoing of others connected with it in the execution of the contract it must appear that they knew, either actually or constructively, of what was to be done and what was done. It is quite too apparent and requires only assertion to say that if the plaintiff company in anywise participated in the machi nations of its agents in tbeir conspiracy with an officer of the Government to share to any extent in the profits of the company, it is now estopped to assert any claim for compensation under its contract.
The findings disclose the absolute want of any actual knowledge, participation with, interest in, or direction to any of its agents to do anything unlawful. If such knowledge is to be imputed the imputation must arise from inferences gleaned from the positive testimony in the record or be chargeable to it by law.
The conspiracy to defraud the Government, punishable under section 5440, Revised Statutes, while doubtless concocted previous to the letting of the contract, was peculiar in the respect that it did not contemplate deceit in the quality or price of the supplies to be furnished. No claim is made that the letting or terms of the contract as awarded were at all tainted. It was wholly a conception to lay illegal hands upon a portion of the legitimate profits of the contractor, and share the same with a Government officer charged with the administration of the contract. It is of course obvious that the administration of the contract under the supervision and control of a corrupt fiduciary of the Government was fraught with great possibilities as to graft; nevertheless, there is nothing in all these circumstances standing alone to exclude the idea of innocence upon the part of the contractor. Weighing against these circumstances, even if they were sufficient to indulge a suspicion of guilt, are the correlative transactions of the plaintiff company as distinct from the conduct of its agents. The record presents uncontradicted proof that no portion of the tainted money ever reached its exchequer; that it faithfully discharged its monetary obligations under its contract with Lorenz, and at no time retained, nor does it now possess, a single penny above its legitimate profits under the contract. Motive for the commission of crime is always a pertinent inqiiiry. Fraud is not usually practiced as a pastime; the participants contemplate an unjust accumulation and conceive methods to bring it about. The plaintiff not only does not profit by anything done by its agents, but, on the other hand, must be penalized to the extent of the payments corruptly made by Machen for the satchel straps, this money it paid to Lorenz under an Lonest mistake that be was complying with his agreement with it to furnish the straps.
Defendants insist that the terms of the agreements between Lorenz and the plaintiff are in themselves so unusual as to excite suspicion. The insistence would be forcible indeed if the plaintiff had been and was then engaged in the manufacture of satchels and was fully informed upon every detail of the same. The business was, however, entirely new to it outside its usual occupation, and there is nothing to be implied from its engagement of Lorenz. Many contracts have been made by the Government with contractors not at the time engaged in the manufacture of the supply contracted to be furnished. The Government was alone concerned in getting the supply in accord with its specifications at the lowest responsible price. The contractor entered into bond to fulfilThis contract, and it would certainly he a somewhat violent presumption to attach guilt to a contractor because he may have been overreached by a subcontractor. It is a matter of little difficulty to view a (past) transaction which ultimately resulted in fraud, and after being in possession of all the details of the criminal offense, wonder why each one of the deceiving movements did not arouse our suspicion. The plaintiff had confidence in Crawford; he was its trusted agent, clothed with authority to solicit and contract for business; Lorenz was his discovery, and it was no more remarkable transaction for the plaintiff to adopt his suggestions and ratify his contract than it would be for any other corporation to do so. It is done repeatedly every day. It is certainly not to be presumed that the company retained in its employ an agent in whom it distrusted. The truth about the whole matter is that the company was the victim and suffered equally with the defendants.
This court in Garman v. United States, 34 C. Cls., 237, awarded judgment to an innocent subcontractor despite the positive proof that the original contractor had been guilty of attempted bribery of a Government official in securing the contract. The court in so doing used this language: "He performed the service, apparently, in good faith, and was not chargeable with notice of the corrupt and fraudulent practices which had secured it."
United, States v. State Bank, 96 U. S., 30, is one of a series of cases involving tbe fraud of agents, wherein Government and private funds were embezzled by agents of tbe parties. Tbe cases are quite too famibar to review. Tbe language of tbe opinion seems apropos: "Tbe agent was agent for no sucb purpose. His doings were vitiated by tbe underlying dishonesty, and could confer no rights upon his principal."
Cyclopedia of Law and Procedure, vol. 10, p. 911: "Acts of manifest bad faith or breaches of duty toward tbe corporation on tbe part of its president are not binding upon it."
It is useless to prolong tbe discussion, as it is tbe well-established rule that where an agent goes beyond tbe scope of bis authority and commits a wrong or fraud to accomplish a purpose designedly bis own, tbe principal is not bable.
There are some features of this case, however, clearly separable from tbe criminal transactions of tbe plaintiff company's agents which preclude an assertion of lack of knowledge on its part of what was done by them. Acting within tbe scope of their conceded authority tbe agents did withhold actual information from tbe company which they should have communicated, but the company can claim no exemptions on this account, for it was business intrusted to their care, and which it had authorized them to do. The Government dealt with them on this basis, payments were made and received by them which the company received, and the relation of principal and agent clearly obtains. The company, as before observed, contracted with Lorenz to furnish satchel straps; of this contract the defendants had no knowledge and were not privy to the contract. The plaintiff's contract expressly obligated it to furnish the straps, and it was its affair to see that the contract was faithfuhy executed in all respects. The defendants can not be charged with a default in performance due to the remissions of a duly authorized agent of the plaintiff's, acting within the scope of his employment. The loss must fab upon the company. Machen did communicate the fact that the Government was paying for satchel straps to Crawford. This was a communication to the company, for Crawford was its agent for this and other purposes, and the defendants had a right to treat it as a communication to the company. The Government was under no obbgations to go further. The result, therefore, is that the plaintiff company did not perform its contract, but committed a breach thereof, which is not cured by its offer to make restitution after the fact. The company never did at any time furnish more than the body of the satchels. This suit, it is true, is predicated upon the written contract. The allegations of the petition are confined strictly to such a cause of action; nevertheless, we believe it is within the province of the court to award judgment as upon a quantum meruit. Clark v. United States, 95 U. S., 539; Warded v. United States, 103 U. S., 651; Thomas v. Brownville, etc., R. R. Co., 109 U. S., 522. Defendants practically concede this authority, but contest the sufficiency of proof to sustain the value of the goods furnished. With this contention we agree. A careful examination of the whole record discloses a complete absence of any competent evidence upon which we might predicate such a judgment.
The plaintiff company is entitled to recover under its contract for satchels furnished and known as class "B." These were to be furnished without straps and the contract in this respect was executed.
The court deducts from this judgment the overpayment made by defendants under the contract. This amount totals $3,949.61 for 9,999 satchel straps at 39J cents each, leaving a total balance due the plaintiff company of $123.63, for which amount judgment will be entered. It is so ordered.
Campbell, Chief Justice, concurs in the conclusion.