Court Opinion

ID: 8006309
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:53:40.045929+00
Date Added: 2024-06-11T16:35:53.970577
License: Public Domain

Henry, J.
20. Railroad contract: bribery of director. I concur in the foregoing opinion, except that portion relating to the Seelye bonds. By section 58 of the corporation act, (R. S. 1855, p. 438,) -if any officer or agent, employee or servant of a railroad, company shall, directly or indirectly, be a. contractor, or shall receive any profits or proceeds, of- any contractor, on account of any contract for the grading or repairing of any railroad belonging to such corporation, he is declared guilty of a felony, and punishable by imprisonment in the penitentiary. Section 59 declares every person having a contract, or any interest in a contract, as specified in the preceding section, to be ipso facto ineligible to be a director or engineer, or to fill any other office or place of trust and profit in the employ of or for any company or corporation, owning or having supervision. of such road; and also provides that all contracts made by the directors of any such company or corporation, containing any such person in its board as a director, and all contracts of any kind, or for any purpose whatever, made and entered into in violation of any provision of the act, shall be absolutely null and void, and incapable of enforcement in any court of this State.
Section 58 denounces no contract, but one by which an officer or employee of the company becomes a party to or a participant in the profits or proceeds of a contract for the construction, building, grading or repairing of the road. Here Hamilton was the contractor. Sexton and Brayman were not parties to Hamilton’s contract with the company. The agreement by which they were to have an-interest in that contract was collateral to it; and while they might *349have been prosecuted for a felony, and were incapable of enforcing their agreement, the fact that such a contract •was entered into by Hamilton with them, did not invalidate his construction contract with tire company. It will not be denied that Hamilton’s contract with the company would have -been valid if he had not made the alleged contract with Sexton and Brayman. There is nothing in the statute expressly declaring that Hamilton shall forfeit all rights under that contract if he make an agreement by which a director, or other officer of the company, shall become interested with him. Admitting that before he made the contract with the company to build the road, he had agreed with Sexton and Brayman that they should participate in the profits of the contract which he might make with the company, it is the same as if the contract with Sexton and Brayman had been made'after the construction contract had been entered into, so far as the validity of the latter is concerned. The statute does not declare that a director, or other officer, who contracts for a portion of the profits, shall be guilty of a felony ; but it is the making of a contract with the company or the receipt of profits, portions, proceeds, commissions or charges from a contractor which constitutes the offense. Section 58 defines a criminal offense, nothing more. If an officer or employee be a party to a contract with the company, he violates that section, but if he only enters into a contract for the receipt of profits, portions, proceeds, &c., of a construction contract made by another party, he is guilty of no crime, unless, under this contract, he actually receives profits, &c. .An indictment under that section against Sexton or Brayman would allege the contract between Hamilton and the company merely as inducement, and that-the accused feloniously received profits, &c., of the contractor, or in the other aspect of the case, that Sexton and Braymay were parties to the contract made by Hamilton with the company.
The first clause of section 59 declares ineligible as a *350director, engineer, &c., any one having a contract or interest in a contract, as specified in section 58 ;• and the second clause makes null and void all contracts made by the directory of any such company or corporation containing any such person in the hoard as a director. The .contracts mentioned in that portion of the second clause, are other contracts than those forbidden in section 58, which make the person ineligible to be a director. By said second clause, also, all contracts of any kind, made in violation of any provision of the act, are declared null and void. The contracts for which an officer of the road is made guilty of a felony, if he be a party to them, would have been void without the 59th section, as would any contract entered into by an officer for the' receipt of moneys which he is forbidden to receive by that section, and declared a felon if he do receive them. These two are the only sections of the act having any bearing on the questions we are considering. The 58th section uses phraseology which'obscures the sense of the section. It prohibits the person therein named from becoming “ directly or indirectly ”• contractors, or from, directly or indirectly, receiving any profits, proceeds, &c., of any contract for the construction, building, grading or repairing, &c. We cannot comprehend how one can be indirectly a contractor, except by directly orindirectly sharing in the profits, &c., with a party or parties who are contractors. But that the General Assembly did not understand that a mere participation in the profits would make a lesson either directly or indirectly a contractor, is evident from an obvious recognition .in the section of a distinction. A person could not, at the same time, be a contractor and subject to indictment for so being, and by the very same contract or agreement a mere recipient of profits. & under the second clause of section 58. The contract between Hamilton and the company cannot be void, as mode by the company while a member or members of the directory were concerned in that contract, because it had to be made before Sexton and Bray-*351man could receive any money under it. When Hamilton’s contract was made, these directors had no interest in a contract which Hamilton had with the company. A contract before that time between them and Hamilton, by which they were to have a share of the profits, &c., of the contract he might make with the company, if it did not make them co-contractors, could have had no effect whatever upon Hamilton’s contract with the company. It is a collateral contract to Hamilton’s construction contract, and its validity is determined by section 58. The construction of section 59, contended for by defendant’s counsel, makes all contracts entered into with the directory containing a member who had violated section 58, null and .void, although the other members were ignorant of the violation, of that contract by such director, and although the subsequent contracts have no connection whatever with that to which such director’s contract may relate.
If such a construction is to prevail, no one would be safe in making a contract with a railroad company, for the most diligent inquiry to ascertain if any director had been guilty of a violation of section 58 would most probably be unavailing, as a director concerned in a contract in disregard of that section, would be interested and anxious to conceal it to avoid a criminal prosecution. So if the construction of the two sections prevails, which our associates favor, then not only is Hamilton’s contract void, but all sub-contracts made by him, and all contracts made by such sub-contractors with teamsters and day-laborers are also null and void. A construction of these sections which would work such manifest injustice in hundreds of eases which might be supposed, in addition to those already suggested, should not be adopted, unless it be clearly indicated by their phraseology. The express terms of the statute, as we have seen, do not declare, nor is it a necessary implication from any words employed in either section, or demanded by the spirit and purpose of the act, that any contract shall be affected by the provisions of those see-*352tions, except the very contract named therein, and for.entering into which the officer or employee is indictable for a felony. • It forbids an officer from being a contractor with the company, or receiving any proceeds of a contract of another, and avoids all .such contracts made by the officer. This is the scope and meaning of the two sections, we think; and as a contract to share in the profits of another who has a construction contract, docs not make the officer a contractor with the company, it is only null and void under other provisions of the sections, and would have been if not declared so by the statute, because a contract to' receive what the officer would have been guilty of a felony for receiving; but it has no effect upon that other contract.
21. Bonds ; illegal contract. But conceding that Hamilton’s construction contract was tainted with illegality and void, because Sexton and Bray man had an interest, yet these bonds were not made in- furtherance of that contract, or in compliance with any of its provisions, but were made to be used by the company as occasion might require, and after the completion of the work by Hamilton, under his contract, were delivered to him in payment therefor. The consideration for this transfer was neither immoral nor illegal. As the work done by Hamilton could not be returned to him, and was valuable to the company, there was a moral obligation resting upon it to pay Hamilton its value, notwithstanding the original contract under which that work was done could not be enforced. There being a valid consideration to support the promise contained in the bonds, and it being unnecessary for Seelye, in making out his case, to rely upon the illegal contract with Hamilton, his right to recover cannot be successfully questioned. Gwinn v. Simes, 61 Mo. 335; Buck v. Albee, 26 Vt. 184; Thomas v. Brady, 10 Barr 164; Scott v. Duffey, 14 Pa. St. 18; Lestapies v. Ingraham, 5 Pa. St. 81. The judgment of the circuit court is reversed and the cause remanded, to be proceded with as heretofore directed.
Napton and Hough, JJ., concur.