Case Name: GEORGE A. WILBUR, Respondent, v. THE NEW YORK ELECTRIC CONSTRUCTION COMPANY, Appellant
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1891-01-05
Citations: 26 Jones & S. 539
Docket Number: 
Parties: GEORGE A. WILBUR, Respondent, v. THE NEW YORK ELECTRIC CONSTRUCTION COMPANY, Appellant.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 58
Pages: 539–555

Head Matter:
GEORGE A. WILBUR, Respondent, v. THE NEW YORK ELECTRIC CONSTRUCTION COMPANY, Appellant.
Contract, when void as being against public policy.
Plaintiff claims to recover on a contract made with defendant for his work, labor and services in soliciting, advocating and procuring for defendant from the municipal corporate authorities of the city of Utica, a three years contract for the lighting of said city with electricity, and for a franchise granting defendant the right to erect and use wires, poles and other necessary appurtenances, and thoroughfares of said city, etc., etc.,
Held, That the evidence in the case establishes a contract that is void as against public policy, it being a contract to exert personal influence to induce public officers and members of a legislative body to do official acts and tending towards secret and improper influence over official action. It is not necessary to adjudge that the parties stipulated for corrupt action, or that they intended that secret and improper action and influence should be exerted and used. It is enough that the contract tends directly to those results, and furnishes temptation to plaintiff to resort to secret or corrupt means, or improper devices, to influence legislative action, and tends to subject the legislature to influence, destructive of its character and fatal to public confidence in its action. In Tool v. Norris, 2 Wallace, 255, an agreement for compensation to procure a contract from the government to furnish it supplies, was held against public policy and void, the court saying: “There is no real difference in principle between an agreement to procure favors from legislative bodies and an agreement 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 results of all such arrangements.” In this case the express object of the contract was to influence the municipal corporate authorities of the city of Utica to grant a contract, and the conduct of the plaintiff in his interviews with the aldermen and councilman, and the influence he endeavored to exercise over them, is a practical construction of what was intended by the parties and the object of his employment.
Held also, That the evidence failed to establish a contract between the plaintiff and defendant, and the plaintiff failed to establish a cause of action against the defendant, and the complaint should have been dismissed.
Before Sedgwick, Ch. J., Freedman and Ingraham, JJ.
Decided January 5, 1891.
On verdict for plaintiff, the exceptions taken by the defendant were ordered to be heard in the first instance at general term.
A. J. Dittenhoefer and I, M. Dittenhoefer, attorneys and of counsel, for appellant, argued :—
' I. The agreement set forth in the complaint being void as against public policy, the action should have been dismissed, (a.) As alleged in the complaint, the claim is principally for work, labor and services rendered by the plaintiff for the defendant “ in soliciting, advocating and procuring for and in the name of the defendant from the municipal authorities of the city of Utica, state of New York, a three years’ contract for the lighting of said city by electricity * * * and in arguments before the said municipal corporate authorities.” (b.) To establish the claims, plaintiff testified : “I first went to the city clerk of Utica, found out what the city was paying for lighting the streets, and other necessary information for me to do my work ; I also learned who were the aldermen and chairman of the committee of the board for lighting the city. After a talk with him, I found out how he was disposed to the plan of lighting the city by electricity. I made frequent visits to the city and got acquainted with nearly all the aldermen. I got many of the councilmen on my side. As time progressed I made frequent visits to them and canvassed the city. * * * I made a full and complete argument before the council, and on. the strength of that and a bid I put in, a vote was taken and we were awarded the contract.” On cross-examination he further testified : “ My first business when I got there was to try and get the contract. For that purpose I went to see all the aldermen and the mayor. I guess I saw all the twelve aldermen except two. I saw them individually, talked the matter over with them, met any objections they might raise and made any explanations they asked relating to the .system and the manner in which we were to do the lighting. I saw them separately and collectively ; also the mayor and city clerk and city attorney, city engineer, city officials and board of aldermen ; and after seeing them separately went before the committee on lighting, made an argument there, and before the mayor talked the matter over extensively with him, went before the board of aldermen wdien in session.; made an argument-Q. But you already captured the aldermen before that ? A. I had tried and I hoped I had. Q. You thought you had? A. Yes, sir, I thought I had. After they had met and heard my argument they passed a resolution in favor of my bid. Q. What prior experience had you had before lobbying in Utica ? A. I have been at it more or less since I have been in business ; all my business life. Q. That did not require any scientific knowledge ? A. It required some experience. Q. A good address and glib tongue. A. Yes, and a general acquaintance with the electrical business. * * * There is no other testimony as to plaintiff’s service in this branch of the work and it stands uncontradicted, (c.) It has been uniformly held that no recovery can be had for services of that character, on the ground that they are detrimental to the public good. Carey v. W. U. Tel. Co., 20 Abb. N. C. ; Tool v. Norris, 2 Wallace, 45 ; Oscanyon v. Arms Co., 103 U. S. 61 ; Frost v. Child, 22 Wallace, 441 ; 16 Howard, U. S. 314 ; Mills v. Mills, 40 N. Y. 553 ; Harris v. Simonson, 28 Hun. 318 ; Millbank v. Jones, 57 Superior, 135 ; Sedgwick v. Stanton, 14 N. Y. 289 ; 5 Watts & Sergt. 315.
II. The defendant was not bound, by the agreement made between Hapgood and the plaintiff, “ to divide the commissions on the sale of the plant.” There is no evidence—not the slightest—to connect the defendant with Hapgood’s acts, or that it has subsequently ratified the agreement. The contract— whether the one set up in the complaint, as it stood at the trial or as subsequently amended, be conr sidered—was made with Hapgood on the 22d of October, 1887. That was before the defendant corporation was formed, the certificate of incorporation having been filed only in the following November, and there is no evidence that the defendant after its incorporation took any action whatever in the premises. The only evidence that can be said to have any bearing on the question is that Hapgood became an officer of the corporation, and that plaintiff, after the Utica franchise was obtained, was introduced by Hapgood to Soulard, its president, without, however, having any conversation with him about his services in Utica. That is clearly insufficient to establish ratification ; but if any presumption could arise from these facts, it is completely and absolutely rebutted by the evidence of the officers of the defendant, that they neither individually, nor the corporation as a body, ever ratified any agreement between Wilbur and Hapgood. Certainly not the one “ to divide the commissions on the sale of the plant,” on which recovery was finally had.
III. As the defendant did not sell the plant, or earn or receive any commissions on its sale, plaintiff was not entitled to recover against the defendant on the agreement “ to divide the commissions.” To entitle the plaintiff to recover, he was bound to show affirmatively that the defendant either made a sale of the plant, or received or was entitled to the commissions. The franchise was not included in the plant; only the dynamos, lamps, towers, mast-arms, buildings, and generally the apparatus for generating and working the electricity were included. The word “ plant ” implies that, and it was proven by the plaintiff, by Cartwright, by McDonald, by Grimwood and by Hapgood. That the plant was never owned by the defendant was not disputed. It was the individual property of Hapgood, who bought and paid for it with his own money and was never assigned or sold by him to the defendant. The defendant owned the franchise, but, as already stated, it was not included in the sale of the plant. It may be contended that the statement of Hapgood to Wilbur that the commissions on the sale of the plant amounted to $10,000, is sufficient to sustain the verdict, but surely the defendant cannot be bound by Hapgood’s statement of the profit he made, assuming that he ever made it, which he denied. As the plant was not owned by the defendant but by Hapgood he, of course, could not represent the defendant in the sale, and what he said as to the profit realized could not therefore be evidence against defendant. But even if it were otherwise, if the plant had been the company’s, Hapgood could not bind the company by such representations, for that was not within the scope of his duties as an officer.
James Edward Graybill, attorney and of counsel, for respondent, argued :—
I. The defendant is bound by the agreement that Hapgood made with the plaintiff. It is in evidence that the defendant transacted business under its corporate name long prior to its actual incorporation and to the time the agreement was entered into between the plaintiff and Hapgood ; that Hap-good was a promoter of, and subsequently the vice-president and treasurer of, the defendant corporation ; that he “ was the general business man of the defendant corporation,” that he “ was in fact the New York Electric Construction, Company,” that he usually transacted and performed all the business and attended to all the affairs of the defendant at the offices of the defendant, and had charge of this Utica matter ; that he was allowed habitually to assume and had openly exercised these powers without objection on the part of the defendant. That plaintiff was engaged and his services were rendered, for and on behalf of and with the knowledge and approval of the defendant’s officers and that the defendant received the benefit of his services at Utica and subsequently ratified and conformed his acts by accepting the contract with the city of Utica which he had procured, and then disposed of the same at a great advance over its cost. “ A corporation which takes and retains the benefit of a contract, made for it by its promoters, although made prior to its corporate existence, is estopped from denying that the contract is its contract.” McLaughlin v. Concordia College (Mo. App.), 2 West. 426, and cases cited. “ A corporation having availed itself of the benefits of purchase made on its behalf by using the articles bought, is estopped from setting up the fact that the agent exceeded his powers in making the purchase.” Ten Broek v. Winn Boiler C. Co. (Mo. App.), 2 West. 442. “It is a general principle, that where a company, by taking the proper steps, can become a corporation, and holds itself out as such, and contracts obligations with persons dealing with it in good faith, it cannot avoid corporate liabilities by setting up "that it has not taken all the steps prescribed as conditions precedent to its legal existence ; and upon the same ground where it has dealt in excess of its powers and retains the fruits of its dealings, it cannot, nor can any one in its place, refuse to pay the consideration to one who has acted in good faith.” Abb. Tr. Ev. 28, 29, and cases cited. “ To sustain an action for services, it is enough to show that the officer or agent who made the engagement did so' within the scope of his duty or authority, or that the engagement was performed with the knowledge of the directors and they received its benefit without objection, and in such a case, the corporation having enjoyed the performance, will be presumed to have ratified the contract and will not be permitted to deny the authority of the agent.” Abb. Tr. Ev. page 42.
II. The services rendered by plaintiff are not void as against public policy. It is not contended that they influenced legislation, nor is there any proof of any improper conduct or the use or attempt to use any improper or undue influence of any kind on any one. There was no element of lobbying in the case until the astute counsel for the appellant introduced his lobbying questions for the purpose of establishing some shadow" of excuse for an appeal from a verdict which he was convinced would be against his client. The services consisted, according to the evidence, in going to "Utica on behalf of the defendant in answer to a public invitation to compete for lighting the city, visiting the clerk to ascertain what was required, i. e., “to find out what the city was paying for lighting its streets, and get other information necessary for him to do his work ; ” and the committee on lighting to as certain if they were disposed to the plan of lighting the entire city by electricity, and then “ to see if it could not be lighted by electricity, at the same sum paid for a poorer light, and. to locate the necessary lights, etc,, and see if defendant could afford to put in a bid, and making his estimate upon which to base his bid ” preparing the bid and submitting it in accordance with the city’s advertisement appearing before the mayor and committee on lighting “ to tell them what he proposed to do and how, and just what his bid would be, and to explain the advantages of the 1 Jenny ’ system and to meet any objection they might raise, or make any explanation they might ask, in relation to the system and the manner the defendant was to do the lighting and to advocate the acceptance of the defendant’s bid,” attending before the board of aldermen, with other competitors, “ to make an argument for the adoption of his plan and the acceptance of his bid.” The services subsequent to November 3, 1887, are not claimed to be illegal. On cross-examination the plaintiff did not change his statement as to what he had done, although the able and learned counsel for the defendant deftly sought to bring out evidence to skow wrongful acts, and by shrewd questions to entrap the witness into an admission that, in his honest and zealous efforts to serve the defendant, he had so far transgressed the moral law as to enable it to sneak out of its legal obligation to compensate him for services that netted it a clean $32,000, in cash or $172,000 in stock and bonds. There is nothing illegal, immoral or improper in such action. It was a lawful effort to get a lawful contract for a lawful purpose. The plaintiff was simply acting as the agent of one corporation, whose business it was to sell electric apparatus, and negotiating a sale with the agent of another corporation that desired to purchase such apparatus. It was a commercial trans - action—a bargain and sale; the city of Utica wanted its streets lighted, and the New York Electric Construction Company was ready and willing to do it, cheaper and better than any one else, if the agents of the city of Utica, who had the matter in charge, could be informed of that fact, and it was a proper thing for Mr. Wilbur to confer with them and explain to them the merits of his principal’s wares and the advantage to be derived from their purchase. It did not in any way concern or affect legislation— it did not result in any legislation, but merely in the execution ®f a written contract between two contracting parties. It was necessary to see the clerk and the committee, and the other officers of thé city, for the reasons above given. There is no evidence of any improper motives or of any attempt by political, personal or any other undue influence, to induce them or any of the city officers to adopt his plan and accept his bid—on the contrary, the evidence shows that his success was due to his careful and elaborate preparation of facts and figures, and to his thorough knowledge and experience in the business, which enabled him to prepare and present his case to them in so masterly a way as to convince them that it was to the interest of the city to accept his bid. Lyon v. Mitchell, 36 N. Y. 239 ; Mills v. Mills, 40 lb. 543 ; Southard v. Boyd, 51 lb. 179 ; Denison v. Crawford Co., 48 Iowa, 211. In the case of Lyon v. Mitchell, supra, the court held—opinion of Mr. Justice Hunt : “ As a general rule contracts for contingent compensation for obtaining legislation or to use personal, secret or sinister influence on legislators, are void ; but a different principle prevails when property is offered for sale to the government and where a bargain is sought to be made with them, and where there is no concealment of the agency—it then becomes a matter of traffic. The present case was one of bargain and sale simply ; no fraud upon the government is imputed ; no suggestion is made of pecuniary influence to be used ; no intended corruption is suggested. The case is free from the existence of any of these elements, * * * A contract for an honest purpose, avowed to the body before which the appearance is made, and for the use of just arguments and sound reasoning, is not unlawful. * * * The decision in Norris v. The Tool Co., 2 Wall. 45, confounds a sale or traffic, openly made by an avowed agent to a party wishing to purchase, with the forbidden case of an interference with legislative action or executive clemency ¿ where the party does not profess to act upon commercial principles. There is a manifest difference in the principle governing the cases. I think that case was not well considered and cannot adopt it as an authority for the present. Mr. Justice Grover, in a dissenting opinion (16. 686), also draws the distinction between skilled services and services of a political or lobbying nature. He says : “ The inquiry upon this state of facts arises whether this extravagant commission ($30,000) was agreed to be given for the extraordinary skill of the plaintiff in such negotiations, or whether it was to compensate him for bringing to bear upon the administration political influence to induce a purchase it would not otherwise make, or- upon terms more favorable than it would otherwise accept. If to compensate for the former, the contract is lawful, but if for the latter, it is corrupt and against public policy. In the case of Mills v. Mills, supra, where the agreement in question was founded upon an undertaking on the part of the plaintiff reciting that a bill was pending in the senate which granted to the plaintiff certain railroad franchises in the city of Brooklyn, and promising to give all the aid, time, influence and exertion in his power to procure the passage of the bill referred to, it was held : “ That such a contract was void as against public policy, as leading to secret, improper and corrupt tampering with legislative action, and furnishing a temptation to the plaintiff to resort to corrupt means or improper devices to influence legislative action and tending to subject the legislature to influences destructive of its character and fatal to public confidence in its action.” In this leading case bn “ illegal contracts ” the opinion was written by Mr. Justice Hunt, who wrote the opinion in Lyon v. Mitchell, supra, and refers to and approves the latter case on the point in question. In the case of Southard v. Boyd, supra, in which it was claimed that plaintiff’s services were illegal, the court there held—citing Lyon v. Mitchell : “ That although one of the plaintiffs was a son and another a son-in-law of the government agent, whose business it was to select the vessels for the government, and that plaintiffs had facilities for chartering vessels which others had not, yet they did not contract to do any illegal services, nor agree to use any corrupt means to procure the charter. The fact that they had intimate relations with the government agents did not forbid their employment, and the order of the general term was reversed and judgment upon the verdict affirmed with costs in favor of plaintiff.” In the case of Denison v. Crawford Co., supra, in which the plaintiff was authorized by defendant to make the proper application to the general government for swamp lands or indemnity therefor, and was to receive for his services one-half of what he might procure, held, “ That the contract was not void as against public policy, although to affect the object of the contract certain congressional action became necessary, which plaintiff aided in procuring by legitimate means—that a county may lawfully employ agents for such purpose, and an agreement to pay them is valid.”
III. The defendant, not having pleaded the defence of illegality, cannot avail itself of it in the action. Milbank v. Jones, 57 N. Y. Sup. 135, opinion of Mr. Justice Freedman, and cases cited by him ; Dingeldein v. Third Ave. R. R. Co., 9 Bosw. 79 ; Honegger v. Wettstein, 13 Abb. N. C. 393 ; s. c. 94 N. Y. 252; Tathill v. Roberts, 11 Weekly Dig. 35; Valton v. Natl. L. &c. Co., 20 N. Y. 32; Boswell v. Welshœffer, 9 Daly, 196; O’Toole v. Garvin, 1 Hun, 92; Codd v. Rathbone, 19 N. Y. 37.

Opinion:
By the Court.—Ingraham, J.
The contract sued on is alleged in the complaint as follows : "At the special instance and request of the defendant herein, the plaintiff rendered to and for said defendant certain work, labor and services in soliciting, advocating and procuring for and in the name of the said defendant from the municipal corporate authorities of the city of Utica in the state of New York, a three years contract for the lighting of said city by electricity, and for a franchise granting to said defendant the right to erect and use wires, poles and other necessary appurtenances in the streets and thoroughfares of said city, and to transact its business in and throughout said city ; and in the making of drafts, surveys, examinations, calculations, illustrations and drawings to be used in the preparation of the bid for the contract aforesaid, and in the arguments before the said municipal corporate authorities; and after the awarding of said contracts to said defend-1 ant by said municipal corporate authorities, in making examinations and surveys for the location of, and in locating and superintending the erection of the electric lights in said city pursuant to the said contract."
To prove this allegation in the complaint, plaintiff testified to a conversation between himself and one Hapgood at which time Hapgood told the plaintiff "to go to Utica and, if possible, secure a contract for lighting all of the city or as much of it as he could get. He told me he wanted me to secure a contract and wanted me to use my own discretion in the matter of putting the bid and doing the preliminary work."'
Plaintiff went to Utica, and as portion of the work that he said, he did, "I made frequent canvasses of the city and got acquainted with nearly all the aldermen. I explained how much more advantageous it would be lighting the city by our system of electric light than by their combined system. I got many of. the conn oilmen on my side as time progressed. I made frequent canvasses to them, and canvasses of the city. On Friday evening I had a. meeting with the • committee of the council in the chairman's office, at which the mayor was present. I told them at that time what I proposed to do and how, and just what my bid would be, and asked them if they thought it was for the best interest of the city to advocate my bid, and they promised to do so. That evening the bids were all opened; it was a very hotly contested fight, and there were many bids by different companies."
Plaintiff was not a lawyer but described himself as in the electric light business and as representing other electric light companies in procuring contracts for the sale of their apparatus. He said in answer to a question "What prior experience have you had before lobbying in Utica," that he had been at it more or less since he had been in business; all his business life.
I think this contract is void as against public policy. It has long been settled that a contract to exert personal influence to induce a public officer or member of a legislative body to do any official act is illegal and void, and this principle has been applied to all the departments of government, judicial, executive or legislative, and is placed upon the broad principle that all contracts leading to secret, improper and corrupt tampering with official action are void.
Thus in Sedgwick v. Stanton. 14 N. Y. 294, the court say : " Persons may no doubt be employed to conduct an application to the legislature as well as to conduct a suit at law, and may contract for and receive pay for their services in preparing documents, collecting evidence, making statements of facts or preparing and making oral and written arguments, provided all these are used or designed to be used for the legislature itself or some committee thereof as a body, but they cannot with propriety be employed to exert their individual influence with individual members or to labor in any form privately with such members out of the legislative halls. The point of the objection in this class of cases then is the personal and private nature of the services to be rendered."
And in Mills v. Mills, 40 N. Y. 546, it was stated : " To procure the passage of such a law for the benefit of the defendant, he undertook to use his utmost influence and exertion. This contract is void as against public policy. It is a contract leading to secret, improper and corrupt tampering with legislative action. It is not necessary to adjudge that the parties stipulated for corrupt action or that they intended that secret and improper resources should be had. It is enough that the contract tends directly to those results ; it furnishes a temptation to the plaintiff to resort to corrupt means or improper devices to influence legislative action. It tends to subject the legislature to influence destructive of its character and fatal to public confidence in its action."
And in Tool v. Norris, 2 Wallace's Repts. 255, an agreement for compensation to procure a contract from the government to furnish it supplies was held against public policy and void, the court saying : " There is no real difference in principle between an agreement to procure favors from legislative bodies and an agreement 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."
It is sometimes difficult to draw the line between contracts that fall within the prohibition above stated and those which provide for legitimate services, for it may be said to be settled that when a person has something to sell which the government wishes to buy, or is able to make a contract to do an act which the government wishes done, he has a perfect right to appoint an agent to act for him in making the sale or the contract, and that such an agent is entitled to recover compensation for his services. And it is also clear that an employment to appear before a legislative committee and publicly favor the passage of a law is valid, but it seems to me equally clear that a contract which contemplates the use of personal influence or solicitation with public officers to procure a contract is as much opposed to public policy as a contract to use personal influence or solicitation with members of the legislature to procure the passage of a law; in either case the object to be attained is to induce a public officer or a legislator to act from personal motives and not for the benefit of the public; in other words to violate his duty, and public policy requires that no contract which recognizes such influences shall be upheld.
The case of Lyon v. Mitchell, 36 N. Y. 235, is an illustration of a contract which has been held valid, as that was the mere appointment of an at torney to sell property to the government with an agreement for compensation for services to be rendered under the employment. Nothing appeared in the contract that would indicate that anything was to be done by the agent except the ordinary act of offering to the government officials the property to be sold.
In this case, however, the services to be performed were " soliciting, advocating and procuring " a contract and a right to use the street from the common council of the municipal corporation.
The express object was to influence the municipal corporate authorities of the city to grant a.contract, and the conduct of the plaintiff in his interviews with the aldermen and conn oilmen, and the influence he endeavored to exercise over them, is a practical construction of what was intended by the parties and the object of the employment.
I also think the proof failed to establish that any contract was made with the defendant at the time of the alleged conversation with Hapgood. The defendant was not incorporated. Hapgood spoke in the first person. What he said was, "I will'pay you for your time and services and all expenses, and if you get the contract we will divide the commissions on the sale of the plant ; " and again he said, " Get the contract and I will do what is right by you : we will divide the commission or sell the plant." There was thus no agreement on behalf of a company to be formed whereby the company on accepting the benefits of the contracts would be held liable for its obligations, and the form in which the compensation is to be made would indicate that it was one half of the commissions that Hapgood, was to make or receive that was to be divided with plaintiff. The corporation, after it was formed, was the contracting party, sold the plant to the city of Utica and received a certain consideration therefor. It received and could receive no commissions as it was the principal and made the sale; it was the broker or agent for the company who would receive the commission, and it is clear that the agreement that was made was to divide not what the company should receive but what Hapgood individually should receive.
Plaintiff on cross-examination was asked, " Who got the commissions ? " and answered, " Nobody got the commissions, but there was $10,000 commission on the plant."
If nobody got the commissions under the contract as alleged in the complaint as amended, there was nothing to divide, and consequently plaintiff failed to show that he was entitled to recover from any one, and in no aspect of the case can it be held that the corporation, that was not in existence at the time of the employment, could be held liable on an agreement made between third parties to divide commissions for services to be rendered on a sale to be made by the corporation.
I think, therefore, the plaintiff failed to show a cause of action, and the complaint should have been dismissed. Exceptions sustained and new trial ordered with costs to abide the event.
Sedg-wick, Oh. J., and Freedman, J., concurred.