Case: THE MICHIGAN STEEL BOX CO. v. THE UNITED STATES
Abbreviation: Michigan Steel Box Co. v. United States
Decision Date: 1914-03-23
Docket Number: No. 30433
Citation: 49 Ct. Cl. 421
Volume: 49
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: THE MICHIGAN STEEL BOX CO. v. THE UNITED STATES.
Judges: 
Pages: 421–453

Head Matter:
THE MICHIGAN STEEL BOX CO. v. THE UNITED STATES.
[No. 30433.
Decided Mar. 23, 1914.]
On the Proofs.
The plaintiff entered into a contract with the United States in May, 1901, for the furnishing of letter boxes. The management and control of the plaintiff’s business was committed to and under the direction of Eugene D. Scheble. After the delivery of boxes to the value of $95,797.40, the contract was annulled by the Government, and this suit is brought to recover an alleged balance due under said contract. The defense is that the contract was procured by fraud, and therefore illegal.
I.Where a contract is procured directly or indirectly by or through the unlawful, corrupt, or other improper influence of an official of the Government with the knowledge or connivance, express or implied, of the contractor, the contract is fraudulent, and the court will not enforce it.
II. It is against public policy to enforce a contract between two parties where the consideration involved the violation by one party, as agent, of a duty he owed his principal to act for and represent the latter.
III. Where the business contemplated by the contract or the execution of it on the Government’s part are directly imposed upon him, the official may not assume the dual relation of acting as the representative of the Government and for himself or his associates.
IY. No right growing out of a contract made in violation of a penal statute will be enforced by the courts at the instance of a party participating in the wrong.
Y. The execution of a contract being admitted the burden of proof of fraud set up as a defense is upon the departments. Such evidence should be dear and satisfactory, and may be circumstantial.
VI. Where fraud, is relied upon to defeat a contract the party pleading it must adduce evidence that reasonably satisfies the court or jury of the existence of the fraud; and frequently the rule is met by proving a prima fade case or one that is sufficient , to shift the burden of proof.
VII. Where the evidence adduced tends strongly to show that a contract is tainted with illegality or fraud and the contractor fails to offer any explanation of charges or deductions, the absolute knowledge of the facts relating to which rests with him, the contract will not be enforced at his instance.
The Reporter’s statement of the case:
The following are the facts of the case as found by the court:
I. The claimant is a citizen of the United States and a resident of the city of Toledo, in the State of Ohio; and the claimant, trading as the Michigan Steel Box Co., entered into the contract with the United States for the furnishing of letter boxes, dated May 2, 1901, a copy of which is attached to the petition in this case.
II. Said Michigan Steel Box Co. was not incorporated; but was a partnership or voluntary association of persons in which Eugene D. Scheble, Otto Marx, A. W. Smith, B. E. Lee, one Graves, and W. C. Maybury, respectively, had interests, the said Otto Marx having been associated with the concern from its origin, the others acquiring interests at divers times before said contract; and the said W. C. May-bury for himself and associates acquiring one-sixth interest in profits after the making of the said contract.
The management and control of the business of the Michigan Steel Box Co. was committed to the direction of the said Eugene D. Scheble.
III. Under the said contract and between the dates February 24, 1902, and June 10, 1903, there were ordered by the defendants a large number of letter boxes of the different sizes mentioned in the contract, amounting in all to 29,449 boxes, which were delivered to and accepted by the defendants, the contract price for all of said boxes being $95,797.40.
The contract was annulled by the Government on the 10th day of June, 1903, at which time there had been paid on account of said boxes so delivered the sum of $81,880.40, of which sum $63,653 was paid at divers times to the claimant, trading as the Michigan Steel Box Co., and $18,227.40 was paid to the Adrian Brick & Tile Machine Co., which manufactured said boxes, said last-named sum having been paid by virtue of a special act of Congress approved June 30, 1906; and the payment was made by consent of the claimant under an agreement that it was not to be regarded as a payment of said claim beyond said sum of $18,227.40.
IY. In 1893, after due advertisement for proposals, a contract for furnishing letter boxes to the Government was made between the Government and Maybury & Ellis, a partnership located at Detroit, Mich. The style or type of letter box called for by .that contract and thereafter furnished during the period of four years from the date of the contract, made in 1893, was what was known as the “ Doremus box.”
Y. August W. Machen, who prior to that time had resided at Toledo, Ohio, was appointed assistant superintendent of Free Delivery on May 6,1893, and was promoted to superintendent of the Free Delivery System of the Post Office Department on September 16, 1893, which office he held continuously to May, 1903. He had been assistant postmaster at Toledo for several years prior to 1890, and he and Eugene D. Scheble were well acquainted and were friends.
YI. Early in 1894 one Harry Wade, being then the owner of Letters Patent 494976 for a letter box (hereinafter called the Clouse box), applied to W. C. Maybury to buy the said Clouse box, and his offer to sell was rejected, the latter saying that the box was of no consequence unless taken by the Government. Shortly thereafter Wade approached said Scheble to sell said box or letters patent to him, after having exhibited the said box in Toledo at the home of one Arnold J. Machen, a kinsman of August W. Machen, the said August W. Machen being then and there present, but making no comment on the box, and shortly thereafter the said Wade sold the said Clouse box to said Scheble for $6,000, the same being paid for partly in cash and partly by the transfer of property. The said Scheble, in the course of the dealing for said box with the said Wade, stated to the latter that he could get the contract for furnishing the Government letter boxes upon a “cigar box.” Shortly after acquiring from Wade said Clouse box, Scheble went to Detroit and had an interview with the said W. C. Maybury, of the firm of May-bury & Ellis, contractors then furnishing the Doremus box under their said contract with the Government. It does not appear that there was any acquaintance between Scheble and Maybury prior to that time, but the result of their negotiations was that Maybury & Ellis secured a transfer of the said letters patent to the Clouse box, and in consideration of the transfer agreed to pay, and did thereafter pay, to said Scheble one-fourth of the profits accruing to Maybury & Ellis and their two associates under the said contract of 1893. The parties to the transaction differ as to consideration for said division of profits. This transaction occurred in 1894, and under the agreement between the parties the payments to Scheble were to date back to within about three months of the beginning of the contract of 1893 and to continue until the end of the contract.
Shortly after this arrangement between Maybury & Scheble the number of letter boxes ordered by the Government from the contractors, Maybury & Ellis, was largely increased, such orders being given under instructions of Arthur W. Machen, superintendent of free delivery; that is to say, during the year 1893-94 the Government h'ad ordered 1,784 boxes of size No. 1, and for the year 1894-95 it ordered 9,215 boxes of size No. 1; and during the year 1893-94 the Government had ordered 845 letter boxes of size No. 2, and during the year 1894-95 it ordered 5,881 boxes of size No. 2; and for the year 1893-94 the Government had ordered 1,111 boxes of size No. 3, and for the year 1894-95 it ordered 1,304 boxes of size No. 3; and for the year 1895-96 the Government ordered 3,797 boxes of size No. 1, and 1,747 boxes of size No. 2, and 256 boxes of size No. 3. The size No. 1 was the most generally used box.
The profits which accrued on this contract of 1893 amounted to approximately $27,000, one-fourth of which, or about $6,750, was paid to Scheble.
The said Machen as superintendent of free delivery was, during the periods of the contracts of 1893-1987 and 1901 until 1903, charged with the duty of determining from time to time the number of letter boses needed for said free-delivery system.
VII. When the time arrived for the letting of the new contract for furnishing letter boses in 1897 proposals were called for, after due advertisement, and the said Maybury & Ellis presented two bids, one based on the Doremus bos, the other based on the said Clouse bos, and the contract was awarded to Maybury & Ellis on the Clouse bos. This bos had what was called a “ lift-up ” device, which later gave trouble; it was not so good a bos for the uses of the department as was the Doremus bos, which was later, or within about two years from the beginning of the contract of 1897, substituted for the Clouse bos. Prior to the letting of the contract of 1897 the said Scheble visited the plant of the Beading Stove Works (otherwise Orr, Painter & Co.), who were the subcontractors manufacturing the Doremus letter bos then being furnished to the Government under the contract of 1893 by Maybury & Ellis, and inquired of one Prizer, a member of said firm of Orr, Painter & Co., relative to the cost of manufacturing said Clouse bos. Said Prizer hesitated to give any figures on the cost of manufacture of the Clouse bos to Scheble, but after conversation, or conversations, he agreed to do so, and later did furnish to Scheble figures on the cost of the manufacture of the Clouse bos. During their interviews the said Scheble told said Prizer that the Clouse bos would secure the contract and that he had influences which would succeed in securing the contract.
An arrangement was made between Scheble and Maybury whereby Maybury & Ellis would put in bids on each of two boses (the Doremus bos and the Clouse bos) and divide the profits of the contract, whether awarded on the one or other of said boses. The division was to be one-half to Maybury & Ellis for themselves and other owners of the Doremus box and one-half to Scheble. The contract was awarded to the Clouse bos in 1897 for a period of four years. A bid was made for that contract by the said Prizer, representing the Beading Stove Works, but he was induced by said Scheble and Maybury to withdraw his bid at the letting, and did withdraw it. The Reading Stove Works secured thereafter a contract to manufacture the Clouse bos awarded under the contract in 1897.
Maybury & Ellis, having entered into a contract with the Government to furnish the letter boxes of the Clouse type for four years beginning in 1897, made a contract with the Reading Stove Works to manufacture said boxes for delivery to the Government, providing in that contract, among other things, that when orders for boxes were given by the Government to Maybury & Ellis the orders would be transmitted to the Reading Stove Works, who upon receipt of such orders were to pay to Maybury & Ellis the profits accruing to the latter upon their contract with the Government without waiting for the manufacture and inspection by the Government of the boxes. The Government was to pay for the boxes when manufactured, inspected, and received for the Government at certain prices fixed in the contract; the Reading Stove Works manufactured the boxes for the contractors át a less price than the Government had agreed to pay for them, and the margin of profit was to be paid by the Reading Stove Works to Maybury & Ellis on receipt of the orders.
At that time the system of payments by the Government was to first have the boxes inspected and then shipped to postmasters in different sections of the country, who upon receipt of them would remit to Maybury & Ellis the contract price for the several kinds of boxes so received. Maybury & Ellis, having received their profit in the meantime under .their arrangement with the Reading Stove Works, would transmit the checks of the postmasters direct to the Reading Stove Works, minor differences in account being settled quarterly between the contractors and subcontractors.
The total receipts of Maybury & Ellis on account of the profits of the contract of 1897 with the ■ Government were approximately $52,000, which amount was deposited to the credit of W. 0. Maybury or W. G. Maybury, trustee, and as received by him the said Maybury or W. C. Maybury, trustee, remitted to the said Scheble during the said period at divers times approximately $24,000.
VIII. Early in 1900 the free-delivery system of the Post Office Department decided to make a change in the box then being manufactured and furnished, namely, the Clouse box, on account of complaints of that box, and to adopt again the Doremus box, and the said August W. Machen, superintendent, composed a letter, which was initialed by him, to be written by the First Assistant Postmaster General to May-bury & Ellis, requesting that the change be made in the letter box, and the said Machen requested the Beading Stove Works to send an agent to Washington, and also requested said Maybury to come to Washington with the view of changing the method of payment for the boxes by the Government, as well as changing the style of the box. Maybury stated that “ no reasons were given for the change,” but the change was agreed upon, and instead of having payments made by the postmasters as above stated the method adopted was to make payment by Treasury warrant direct to May-bury & Ellis. This arrangement did not affect the arrangement between Maybury & Ellis and their subcontractors, the Beading Stove Works, who continued to pay under their contract the profits upon receipt of orders.
IX. On June 14, 1900, August W. Machen caused an order for 6,000 letter boxes of size No. 1 to be given to May-bury & Ellis, and on June 30, 1900, the said Machen caused a receipt to be given through Thos. W. McGregor, a subordinate of said Machen in said department, for the 6,000 boxes, said receipt being as follows:
“ Beading, Pa., June SO, 1900.
“ Beceived of the' Beading Stove Works, Orr, Painter & Company, 6,000 #1 letter boxes ordered June 14, 1900, for use in connection with the Bural Free Delivery Service.
Thomas W. McGeegoe.
At the time of the giving of this receipt the manufacture of the said 6,000 boxes had not commenced, and in September following the Beading Stove Works paid to Maybury & Ellis the profits accruing to them on account of the order for the 6,000 boxes. The receipt for the boxes as and when they were inspected by or delivered to the Government was the basis of the voucher which would be issued in shape of a Treasury warrant in payment therefor. The manufacture of said 6,000 boxes by the Reading Stove Works commenced early in July, 1900, and up to October 21, 1900, there had been inspected by the Government officials less than one-third of the 6,000 boxes, and all of them had not been inspected until February, 1901; but in October, 1900, when less than one-third of the boxes had been inspected or delivered, Maybury & Ellis presented a bill for the 6,000 boxes, to which was attached the said receipt of said Thos. W. McGregor, and these were inserted in what is called a “jacket,” on the back of which, for the guidance of the First Assistant Postmaster General, was the following:
“ Contract Expenditure.
“ Maybury and Ellis.
“ No. a/c Orr, Painter & Co., Reading, Pa.
“ Bill for 6,000 No. 1 letter boxes, at$2.60 each- $15,600.00 “ Office of First Ass’t. P. M. Gen’l.
“ Expenditures incurred in second quarter, 1900.
“ Correct: A. W. MacheN, Superintendent.
“ Approved September 25, 1900:
“ Geo. M. AbleN,
“Acting First AssH P. M. General.
“Allowed and ordered paid from the appropriation for rural free delivery for 1900.
“ W. S. ShalleNberger,
“ Acting Postmaster General.”
The First Assistant Postmaster General would not authorize a Treasury warrant without the required indorsement upon this jacket, and the same having been presented to him in the form aforesaid, a Treasury warrant was authorized in favor of Maybury & Ellis for $15,200, which was paid in November, 1900, before all of said boxes had been inspected or delivered. This Treasury warrant was transmitted by Maybury & Ellis to the Reading Stove Works, who prior to that time had paid to Maybury & Ellis the net profits on the 6,000 boxes, and the said profits were divided between Maybury & Ellis, representing themselves and their associates on the one hand and E. D. Scheble on the other in the proportion of one-half to each.
Prior to these payments and prior to the delivery of the said 6,000 boxes, and in September, 1900, the said Machen, superintendent, caused another order for an additional 6,000 boxes to be given to the said Maybury & Ellis, which were paid for by the Government prior to their delivery to the Government, said other 6,000 boxes being paid for in November, 1900, by Treasury warrant for $15,200. The actual delivery of boxes under the last order for 6,000 did not commence until February, 1901, and was not completed until October, 1901. The profits accruing on this last order were similarly paid prior to receipt of the boxes by the Government by the Beading Stove Works to Maybury & Ellis, as were the profits accruing under the former order for 6,000 boxes.
X. The payments made by W. C. Maybury or W. C. May-bury, trustee, to the said Scheble on account of profits under the contract of 1897, and the dates thereof, are as follows:
October 22, 1897_$2, 544. 50
January 14, 1898- 386. 50
April 15, 1898_ 341.25
July 21,1898_ 142. 62
October 25, 1898_ 2,757.62
January 24, 1899- 200. 50
July 21, 1899 _ 504. 50
November 24,1899_ 3, 874. 75
April 7, 1900_ 314.00
September 6, 1900- 4, 366. 87
November 12, 1900- 7,424. 50
February 5, 1901- 608. 00
May 3, 1901_ 269.62
October 25, 1901_ 1,082.18
24, 817. 61
Said Scheble made payments or gratuities to said August W. Machen of the following amounts and as of the following dates, a part of them being payments made by the said Scheble on account of debts owing by August W. Machen to a bank in Toledo, Ohio:
October 25, 1897_ $577.00
October 25, 1898_1,165. 98
August 23, 1899- 250. 00
October 28, 1899_1_1- 77.16
December 8, 1899- 1, 303.35
September 12, 1900- 1, 500. 00
September 24, 1900- ' 50.00
November 22, 1900_ 2,300.00
November 23, 1900- 1,149. 80
February 11, 1901- 304. 00
June 10, 1901_ 134. 75
July 3, 1901_ 491. 88
November 5, 1901_ 38. 65
9,342.57
At the time of his appointment to office as aforesaid, August W. Machen was financially embarrassed and was unable to meet obligations which he had incurred in business prior to his appointment.
XI. Advertisements for proposals for furnishing letter boxes for the four-year period commencing in 1901 were made by the Postmaster General, and the bids were directed to be sent in care of the superintendent of the free-delivery system, who at that time was August W. Machen. A committee on awards was appointed to open and examine the bids, which were sealed when delivered to the department in care of the said superintendent. The method adopted for appointing the committee on awards was that the superintendent would select a number of names, about 10, and submit them to the First Assistant Postmaster General, and the two would confer with reference to the appointments. The said superintendent was trusted implicitly by his superiors. A committee on awards consisting of five persons was selected, and Thomas M. McGregor was made chairman of the committee. The said McGregor was a subordinate of Machen, who had been rapidly promoted from a position of a small salary to the responsible position of clerk in charge of free-delivery supplies in the office of the super intendent of free delivery, was trusted and relied on by said .Machen in connection with everything done in the latter’s office, and “ seemed to be some kind of a confidential agent of Machen,” who. appointed him on committees, sent him on errands, and had him more than any other clerk do things connected with the said superintendent’s office. He was under Machen in the supply branch of the Free Delivery Service, looked after supplies, and gave receipts for them.
XII. Prior to the opening of bids the said Maybury, acting for Maybury & Ellis and other owners of the Doremus box, and the said Scheble made an agreement whereby May-bury & Ellis would put in bids for the 1901 contract on both the Doremus and the Clouse boxes, and if the contract were awarded to either box there would be a division of one-half of the profits to Maybury & Ellis and one-half to the said Scheble, and Maybury & Ellis made bids based upon each of said boxes.
XIII. Prior to the maldng of such bids the said Scheble had acquired control of what is called the J. M. Clouse box, being a different box from either of the two mentioned. This J. M. Clouse box had been owned by the said Harry Wade, who, under an agrément with the said Scheble, assigned all right in this box to the said Scheble, taking back an agreement that the latter held one one-twelfth interest in trust for Wade. The said arrangement contemplated that Scheble should hold one-half interest and sell the remaining one-half interest (excepting one-twelfth) to other parties; and in conformity to that arrangement there were sold to one Fisher a one-sixteenth interest for $6,000 and to one Lee a one-sixteenth interest for $4,000, and Wade claimed that he was entitled to receive from Scheble $6,000 of the sum so realized. He received $3,100. Wade states that Scheble in explanation of that division said, “ There was a great many to divide with; he ha<' to give Gus $5,000, and he couldn’t give me any more; take it or leave it,” and that he (Wade) understood him to mean by “Gus” “Mr. August Machen, superintendent of free delivery.”
The agreement by which Scheble held a one-half interest in this J. M. Clouse box in trust for Wade, being letters patent No. 633155 (the J. M. Clouse patent), was made December 26, 1900, about two months prior to the opening of said bids, and the agreement provided among other things for “ said Eugene D. Scheble to bear all expenses connected with securing contract and to account to said Harry R. Wade for the one-twelfth interest of the net profits.”
One McLaughlin overheard Wade talking about his interest in the said letter box, as also did the said Scheble hear him. The latter spoke to McLaughlin about Wade’s “talking pretty loud,” that if he would keep his mouth shut it would be better for all concerned, and that they would get the contract, and that Machen’s name was mentioned in their conversation, and on the strength of what the said Scheble said to him about getting the contract the said McLaughlin bought one ninety-sixth interest in the said letters patent through Wade, and received an assignment from him. The said conversation occurred prior to the letting of the said contract of 1901.
Prior to the letting of the contract of 1901 the said Scheble, with A. W. Smith, went to Reading and conferred with one Prizer, who had been connected with the firm of Orr, Painter & Co. (the Reading Stove Works), with reference to the' cost of making a box which they exhibited, which Scheble said was the box upon which they would receive the contract; and before the contract was made the said Scheble told Prizer that through influences at their command they would be able to secure the acceptance of the contract. Under the influence of the promise by Scheble to Prizer that he would have the contract for manufacturing the boxes, the said Prizer was induced to withhold any bid upon a box for the 1901 contract.
On February 27, 1901, two or three days before the bids were to be opened, the said Maybury wrote to said Prizer suggesting that he go to Washington and see a Mr. McGee and saying, “ You will find in Washington also a Dr. Scheble. It is enough for me to say that he is very influential in the matter, and whatever he says will be authoritative.” At that time Maybury for himself and others had an arrangement with Scheble that Maybury & Ellis would bid on the Dor emus and the Clouse boxes, and Mayburj was not informed that Scheble had any interest in any other box.
In the meantime the bid to furnish the J. M. Clouse box was made by the Michigan Steel Box Co., and it did not appear who was interested in that company or who made the bid. It was a bid put in and controlled by the said Scheble. There were a number of other bids besides those of Maybury & Ellis and the Michigan Steel Box Co.
XIY. When the committee on awards met to open the sealed bids which came to them through the office of Superintendent Machen there was furnished to the committee a letter or the copy of a letter from the postmaster at New York City, hereinafter referred to. The said committee opened the bids, and in their report to the Postmaster General recommended a rejection of all of them, their report being as follows:
“ Your committee has carefully considered the models of each exhibit and noted the price thereon and is forced to the conclusion that none of the exhibits fully meet the essential requirements of the service, as nearly all embody a principle which has proven objectionable and jeopardizes the mail deposited in that class of boxes. As evidence of this fact we beg to invite attention to the following copy of a letter addressed to the honorable Second Assistant Postmaster General by the honorable Cornelius Van Cott, postmaster at New York, under date of February 8, 1900, which it is believed fully explains itself:
“ ‘Acknowledging receipt of your letter of the 5th, “ F. G. G.,” relative to depredation of mail from street letter boxes in this city, I have the honor to inform you that the recent depredations were not chargeable to the locks, as you indicate by your letter, but solely to the faulty mechanical construction of the present style of street letter boxes known as the Doremus “ pull down ” and “ lift up ” pattern, both of which styles of boxes have previously been reported by me to the department as decidedly objectionable and unsafe, and have been and are now the cause of repeated complaints and protests on the part of the general public against their continuance as a receptacle for mail matter.
“ ‘ The letters stolen by the person recently arrested by the post-office inspectors were in every case taken from the “ throat ” or chute in these boxes, where they had been placed by the persons mailing them, who, of course, believed that upon releasing the lever or outer cover over the aperture the mail would fall into the lower part of the box. In numerous cases this does not occur, and the letters are therefore easily extracted by any person who may choose to do so. Such was the plan and method pursued by the-person above referred to, who was detected in the act and whose operations were carefully noted by the post-office inspectors * *
“ We therefore respectfully recommend that all of the proposals for street letter boxes be rejected, and that new proposals be asked for, and that inventors and manufacturers be invited to submit working models thereof, with written descriptions and specification’s, together with sealed proposals for furnishing boxes made in the form and of the metal shown in the model. * * *
“ In view of the very large percentage of loss by breakage of the cast-iron mail boxes, which, as we are informed, is about 14 per cent, it might be well to consider the advisability of abandoning the use of cast iron for the purpose and to call for boxes made of steel only, which is much stronger and lighter in weight than the cast iron.”
The statements in the letter quoted from the New York City postmaster were erroneous in that the box referred to in this letter was a box with the lift-up device instead of the pull-down device; that is, it referred to the Clouse box, and not to the Doremus box, which fact appeared from subsequent correspondence where the said postmaster had corrected the impression of said letter, but the correspondence furnishing the correction was not furnished the committee on awards, and the same was within the control of the party furnishing said letter to the committee.
The percentage of breakages of cast-iron boxes was not 14 per cent; and if all boxes which had been reported as unserviceable were taken as the basis for breakages of cast-iron boxes the percentage did not exceed 4 per cent; and if the difference in the number of boxes reported as unserviceable during the year 1899 and those reported unserviceable during the year 1900 be taken as the basis of breakages for that year the percentage would be greatly less than 1 per cent. The records of breakages were accessible, to-the branch of the service over which the said Thomas W. McGregor had supervision.
XV. A new advertisement was made for bids after tbe approval by tbe Postmaster General of tbe said report. Another committee was designated to open the new bids; tbe personnel of which was changed by the substitution of one person, and the said Thomas W. McGregor was again made chairman of the committee. At the new bidding said Maybury & Ellis again put in bids on the Doremus box and on the Clouse box, to be made of steel, as the advertisement called for bids on steel boxes. The Michigan Steel Box Co. put in another bid, but not upon the J. M. Clouse box, and instead bid upon a box which had not yet been patented, but was a modification of the J. M. Clouse box, designed by A. W. Smith, postmaster at Adrian, Mich., who appeared before the committee to demonstrate the advantages of said new design. The committee recommended in favor of this new design, and. in their report again called attention to said letter of the postmaster at New York as a reason for not accepting the Doremus box. This Doremus box had been used when made of cast iron for some years prior to 1893 and during the period from 1893 to 1897, and had been substituted as aforesaid for the Clouse box during a part of the period from 1897 to 1901, and was the best design which the department had used, being more easily repaired, less expensive to keep up, and giving more general satisfaction than any other box which had been used.
XYI. The bid of the Michigan Steel Box Co. did not show who represented the company or whether it was á partnership, and was made and controlled by the said Scheble, and upon the award being made for that box the contract in question was made in the name of E. D. Scheble, trading as the Michigan Steel Box Co., and after the award of the contract W. C. Maybury, representing the owners of the Dore-mus box, made an arrangement with said Scheble whereby the owners of the Doremus box were to receive one-sixth of the profits in consideration of the right to substitute the Doremus box for the new box in case the latter did not give satisfaction.
After the award to the box proposed by the Michigan Steel Box Co. a patent was applied for in April, 1901, and letters patent granted in May, 1901, to the Michigan Steel Box Co., as the assignee of the letters patent.
XVII. E. D. Scheble, trading as the Michigan Steel Box Co., made a subcontract with the Adrian Brick & Tile Machine Co., to manufacture the letter boxes of the device which had secured the said contract. These boxes were required by the contract to be inspected before being received by the Government, and for a part of the time A. W. Smith, who was interested in the contract, was designated to make the inspections for the Government. Later, on receipt of a letter from the manufacturers that a large number of boxes v ere ready for inspection, the said August W. Machen, superintendent, caused the said Thomas W. McGregor to be appointed to make the inspection of several thousand boxes, who was sent to Adrian, made the inspection, and was paid for said services 5 cents per box.
XVIII. The Treasury warrants for the payment for the boxes were sent to E. D. Scheble, trading as the Michigan Steel Box Co., and after payment to the subcontractors of the cost of manufacture the said Scheble distributed the profits as follows, after retaining $13,062.71; To said May-bury, $4,985.20; to said Marx, $3,131.09; to said Smith, $3,364.79; to said Lee, $997.02; and to one Graves, $498.51, thereby paying out of said profits to the said parties the sum of $12,976.61. What distribution was made of the $13,062.71 retained by said Scheble is not definitely shown by the evidence.
XIX. In 1903, on account of charges of fraud in the Free Delivery Service of the Post Office Department and developments occurring on investigation of said matters, the Postmaster General annulled the said contract with the claimant; and as a further result of said investigation into said charges the said August W. Machen, superintendent, in connection with other parties and with the said Thomas W. McGregor, was indicted by a grand jury on account of alleged frauds in the matter of supplies furnished the free-delivery branch of the service, and the said Machen was convicted in one case and pleaded guilty in another. The said Thomas W. McGregor was convicted and an indictment was returned against the said Machen and the plaintiff in this case, which was nolle prossed as to the plaintiff several years thereafter but was not nolle prossed as against said Machen. Said Scheble did not testify in the present case.
XX. The inferences drawn in the case are that the claimant and the superintendent of the free-delivery system were in collusion; that the latter received gratuities from the former and used illegal or improper influences in procuring the contract in question for the claimant.
XXI. Upon the foregoing findings of fact the court finds the ultimate fact, so far as it is a question of fact, that the said contract was tainted with illegality and fraud and was in contravention of public policy.
CONCLUSION OE LAW.
Upon the foregoing findings of fact the court decides, as a conclusion of law, that the claimant is not entitled to recover, and his petition is therefore dismissed.
Mr. John A. Kratz for the plaintiff. Leclcie, Cox do Kratz, and Mr. J. K. Hamilton were on the briefs.
Mr. L. G. Bissell, with whom was Mr. Assistant Attorney General Huston Thompson, for the defendants.

Opinion:
Campbell, Chief Justice,
delivered the opinion of the court:
The claimant sues for an alleged balance upon the contract price of letter boxes delivered to the defendants under the contract, a copy of which is attached to the petition. The contract was annulled by the Government in June, 1903, after a large number of the letter boxes of different sixes as called for in the contract had been furnished. Payments had been regularly made until about the time of the annulment, and at that time there remained unpaid upon the contract price of the letter boxes furnished the sum of $32,331.90. There was due to the subcontractors who manufactured the boxes, for the contractor the sum of $18,227.40, which was subsequently paid by the Government under a special act of Congress authorizing it, and the balance, $13,917, is now sued for in this action.
The defense relies upon the illegality of the contract and proceeds upon the line that the contract was procured by fraud or through improper influences; that it was violative of the statutes; that it was in contravention of public policy; and, further, that Machen, the superintendent of the free-delivery system, was interested pecuniarily in the contract or had received gratuities which gained his influence in securing the contract. Either of said matters, if true, would furnish grounds for condemning the contract. The Government filed an extensive answer, alleging the different matters of defense above referred to, and the claimant in a long replication denies all allegations and charges of fraud. The replication, which is a part of the record, does not enter into explanations of matters charged in the answer as acts of misconduct or fraud, but contents itself principally with emphatic denials.
The execution of the contract being admitted the burden of proof as to the alleged frauds rests upon the defendants. It has been said that the evidence in a suit to annul a contract on the ground of fraud alleged to have been practiced by a defendant upon a plaintiff and upon which to found a decree in such a case "must be clear and satisfactory. It may be circumstantial, but it must be persuasive." Lalone v. United States, 164 U. S., 255; United States v. Iron Silv. Min'g Co., 128 U. S., 673.
The evidence should be sufficient to reasonably satisfy the jury of the truth of one or the other of the defenses relied upon. Rea v. Missouri, 17 Wall., 532; Bigl. Fraud, 474. It is not required in cases of this kind, as in criminal cases, to prove a conspiracy between the Government's agent and claimant or his associates, or to prove any of the several matters offered as defenses beyond a reasonable doubt. The rule is that where a party has the affirmative he must make out a prima facie case or one at least sufficient to shift the burden of proof to the other side, and therefore " a prima facie case, with nothing to rebut it, is a case made out." Butler v. Maples, 9 Wall., 766, 778.
If the contract here sued on was procured directly or indirectly by or through the unlawful, corrupt, or other improper influence of the then superintendent of the free delivery system, with the knowledge or connivance, express or implied, of the claimant, the contract is fraudulent, and the court will not enforce it. And it does not materially alter the question whether said superintendent had a financial interest in the contract or the profits supposed to flow therefrom, or was actuated by gratuities furnished him by claimant, or by the hope thereof, for in either case the law will not tolerate a breach of trust on the part of a public official or allow such breach to be made the basis of an action.
It has accordingly been held to be against public policy to enforce a contract between two parties where the consideration involved the violation by one party, as agent, of a duty he owed his principal to act for and represent the latter. Oscanyan v. Arms Co., 103 U. S., 261.
While an agreement to procure such a contract is void as against public policy, equally strong and perhaps stronger, is the reason in law for saying that if the parties succeed in securing a contract with the Government by virtue of the fraudulent agreement that the agent shall aid in its procurement, and because of the agent's activities under such agreement, the Government on discovering the fraud may annul the contract, and the courts will not aid in enforcing it. In either case the contract comes under the denunciation of that class of frauds which have been declared to be an " unmixed evil."
The reason of the rule inhibiting a party who occupies confidential and fiduciary relations toward another from assuming antagonistic positions to his principal in matters involving the subject matter of the trust is sometimes said to rest in a sound public policy, but it also is justified in a recognition of the authoritative declaration that no man can serve two masters; and considering that human nature must be dealt with, the rule does not stop with actual violations of such trust relations, but includes within its purpose the removal of any temptation to violate them. Hence the principal, on being informed of the participation of his agent on his own account and interest in a transaction wherein there was an obligation to represent the principal, may disaffirm the contract so entered into without reference to any actual damage to the principal or benefit to the agent. It is, in such cases, the breach of the agent's or trustee's duty toward those he has undertaken to represent which gives the right of disaffirmance and not the quantum of damage to the one or the amount of benefit to the other. The rule is in nowise relaxed when the actions of public officials are involved. Recognizing that the freedom of contract should not be too much abridged, the law does not prohibit a Government official from contracting with or becoming interested in a contract with the Government which does not affect the duties imposed upon him by his office, but where the matters contemplated by the contract or the execution of it on the Government's part are directly imposed upon him the official may not assume the dual relation of acting as the representative of the Government and for himself or his associates. City of Findlay v. Pertz, 66 Fed., 427.
Section 1781, Revised Statutes, makes it a misdemeanor for any officer or agent of the Government to take, receive, or agree to receive, directly or indirectly, any money, property, or other valuable consideration whatever from any person for procuring or aiding to procure a Government contract, and likewise makes it a misdemeanor for any person to offer, or agree to give, or to give or bestow any money, property, or other valuable consideration for the procuring or aiding to procure such a contract. This statute is comprehensive and its meaning is clear. No right growing out of a contract made in violation of a penal statute will be enforced by the courts at the instance of a party participating in the wrong. Powhatan v. Appomattox, 24 How., 247 ; 9 Cyc., 476 and cases there cited. See also Rev. Stat., secs. 412, 5440. "Whether forbidden by statute or condemned by public policy the result is the same. No legal right can spring from such a source. They are the sappers and miners of the public welfare and of free government as well." Meguire v. Corwine, 101 U. S., 108; Triest v. Child, 21 Wall., 441; Oscanyan v. Arms Co., 103 U. S., 261.
In Tool v. Norris, 2 Wall., 45, it is said:
" Considerations as to the most efficient and economical mode of meeting tbe public wants should alone control in this respect the action of every department, of Government. No other consideration can lawfully enter into the transaction so far as the Government is concerned. Such is the rule of public policy, and whatever tends to introduce any other elements is against public policy."
In the case before us the evidence is largely circumstantial. "But to establish fraud it is not necessary to prove it by direct and positive evidence. Circumstantial evidence is not only sufficient, but in most cases it is the only proof that can be adduced." Rea v. Missouri, 17 Wall., 532.
Speaking of circumstantial evidence in cases involving charges of fraud, the Supreme Court declared in Castle v. Bullard, 23 How., 172, that such actions necessarily give rise to a wide range of circumstances, for the reason that the intent of the defendant is more or less involved in the issue, and great latitude is justly allowed by the law to the reception of such evidence, while objections to it upon the ground of irrelevancy " are not favored," because the force and effect of circumstantial facts usually and almost necessarily depend upon their connection with each other. Says the court: "Circumstances altogether inconclusive if separately considered may by their number and joint operation, especially when corroborated by moral coincidences, be sufficient to constitute conclusive proof."
In a later case where the issue was the existence of a conspiracy, Williamson v. United States, 207 U. S., 425, 451, Mr. Justice White, now Chief Justice, thus expresses the rule:
"The conclusion above expressed as to the admissibility of the evidence objected to is elucidated by Holmes v. Goldsmith, 147 U. S., 150, 164, where'it was said:
" 'As has been frequently said, great latitude is allowed in the reception of circumstantial evidence, the aid of which is constantly required, and, therefore, where direct evidence of the fact is wanting, the more the jury can see of the surrounding facts and circumstances the more correct their judgment is likely to be. " The competency of a collateral fact to be used as the basis of legitimate argument is not to be determined by the conclusiveness of the inferences it may afford in reference to the litigated fact. It is enough if these may tend even in a slight degree to elucidate the inquiry or to assist, though remotely, to a determination probably founded in truth."
"'The modern tendency, both of legislation and of the decision of courts, is to give as wide a scope as possible to the investigation of facts. Courts of error are especially unwilling to reverse cases because unimportant and possibly irrelevant testimony may have crept in, unless there is reason to think that practical injustice has been thereby caused.' "
Under the letter-box contract of 1897, made in the name of Maybury & Ellis, providing for furnishing the " Clouse box," the arrangement between them and Dr. Scheble was that they should have one half of the profits accruing and he the other half. This division was observed and Dr. Scheble was regularly paid his part. From within a few days after he commenced to receive payments or dividends from Maybury & Ellis, Dr. Scheble paid gratuities to August W. Machen, then superintendent of free-delivery system, who was charged with the duty of determining the number of letter boxes to be ordered by the Government. These gratuities continued at intervals — bearing a close analogy to the times of the receipts of payments by Dr. Scheble from Maybury or " Maybury, trustee," until after the contract of 1901 for letter boxes now under consideration was made. The first gratuity to Machen was a payment by Scheble upon a $3,800 debt which Machen owed a bank in Toledo dating back to 1889, and it was given within a few days after Scheble received his first dividend from Maybury & Ellis. Other of these gratuities from Scheble to Machen are exactly half of the dividend received by Scheble, and follow shortly after the receipt of the dividend by the latter. The findings of fact show the dates of the dividends to Scheble and of the gratuities to Machen. "A gratuity given to an agent for the purpose of influencing the execution of his agency vitiates a contract subsequently made by hirrp as being presumptively made under that influence," per Lurton, circuit judge, in City of Findlay v. Pertz, 66 Fed., 434; Leake Contr., 409. The rule would be the same if Machen's influence was thus secured or used to obtain the present contract. Bey. Stat., 1781. The purpose being to ascertain whether or not a sinister influence known to claimant was at work which procured or aided in the procurement of the contract sued upon, or whether the superintendent of the free-delivery system had a personal or financial interest in said contract, it is competent to show the claimant's connection with the earlier contracts as well as his connection with said superintendent. " It is enough if these may tend even in a slight degree to elucidate the inquiry or to assist, though remotely, to a determination probably founded in truth." Holmes v. Goldsmith, 147 U. S., 150, 164.
The contract of 1893, awarded to Maybury & Ellis for the term of four years, contemplated the furnishing of the Doremus letter box, and the claimant acquired a one-fourth, interest in the profits of that contract early in 1894, which should extend back to within a few months of the beginning of the contract. At that time the claimant controlled letters patent to the Clouse box, and the purpose of the arrangement as stated by Mr. Maybury was to enable Maybury & Ellis " to have control of " the Clouse box at the next bidding, then three years off. The explanation in claimant's replication of the arrangement is as follows: "He admits that at one time an arrangement was made between Maybury & Ellis and this claimant by which they assigned to him a fourth interest in their said contract, the consideration thereof being a transfer to Maybury & Ellis of said letters patent numbered 494976 " (the Clouse box).
What, then, was the arrangement ? Did it involve " control " of the Clouse box for the purpose of the next bidding, as Mr. Maybury says, or was it an actual " transfer of the letters patent," as the replication admits ? The distinction is important, not only as showing a material difference in the statements of the two principals, but also in the result as shown in the subsequent arrangement relative to the contract of 1897, and the inference may be drawn that May-bury & Ellis did not acquire either an absolute " transfer " or " control " of the Clouse box from the fact that at the 1897 letting the Clouse box was given the contract; and thereafter Maybtiry & Ellis paid the claimant one-half of the profits accruing from that contract. The profits to May- bury & Ellis on the 1893 contract were approximately $27,000, of which they paid one-fourth to the claimant, making approximately $6,750.
Bearing in mind that Maybury & Ellis had declined to treat with Wade relative to the Clouse box, and very soon thereafter did treat with Dr. Scheble for it, and that there is no evidence showing that the claimant and Maybury & Ellis at that time were other than strangers to each other, we may scrutinize the transaction as stated by them. If they made an independent and bona fide arrangement in 1893 or 1894 to be available in 1897, why was it not available at that time? And if it was available, why the necessity of a different division of profits in 1897? If Dr. Scheble transferred his letters patent in 1894 to Maybury & Ellis in consideration of an interest in their then existing contract, by what right did he secure and what consideration did he pay for a one-half interest in the contract executed in 1897 by the use of the box the letters patent to which he had transferred? Maybury & Ellis paid him one-fourth under the former contract, and in consideration thereof secured " control " in bidding or " transfer " of the letters patent to the Clouse box; but in 1897 they bid upon both the Doremus and the Clouse boxes under an agreement that upon whichever box the contract was awarded they would divide one-half of the profits with the claimant.
A feeble explanation of the reason for dividing with the claimant the profits of the 1897 contract is made in the statement, " If he had kept control of the box that was successful in the bidding and bid on his own account, our box would have been out." And this explanation ignores the fact that it was the " control " or " transfer " which Maybury & Ellis acquired and paid for long before. The statements about .the earlier arrangement are faulty, or the explanation of the new agreement is wanting.
It, however, appears that shortly after the said arrangement in 1894 between said parties the orders for letter boxes, which had to be given by or through the Superintendent of Free Delivery, increased largely, because during the year 1894-5 orders were given for 9,215 boxes of size No. 1 as against 1,784 for the preceding year and 3,797 for the sue- ceeding year, and that orders were given for 5,881 of size No. 2 for the year 1894-5 as against 854 boxes for the year 1893-4, and 1,747 boxes for the year 1895-6. The increase in the number of boxes of course increased the profits of the contractor.
We have spoken of the 1897 contract, which was again secured by Maybury & Ellis, who bid upon both the Dore-mus and the Clouse boxes, the latter one securing the award. Under that contract, as we have shown, large profits were made, which were divided equally between Maybury & Ellis on the one hand and the claimant on the other, the latter furnishing gratuities to said superintendent, as above stated. If Maybury & Ellis got a " transfer " of the letters patent to the Clouse box in consideration of a one-fourth interest in their profits on the 1893 contract, it does not appear that there was any consideration for their giving Dr. Scheble a half interest in the contract of 1897. We find him, however, expressing the utmost confidence in the Clouse box securing the contract, and that before the award of the contract he is inquiring as to the cost of the manufacture of the Clouse box, notwithstanding the admission in his replication of a " transfer " by him of the letters patent in that box to May-bury & Ellis.
As shown by the findings, objection arose to the Clouse box, and the Doremus box was substituted for it, though no change in the arrangement between Maybury & Ellis and Dr. Scheble was made when the change in the boxes occurred.
Maybury & Ellis were the contractors, and the Beading Stove Works were the subcontractors, who manufactured and made deliveries of the letter boxes as ordered by the department under the 1897 contract, and the contract between the contractors and subcontractors provided among other things that the latter should pay quarterly to the contractors the difference between the amount the Government was bound to pay and the amount the subcontractors were entitled to receive (in other words, the profits of the contractors), and these payments of profits were due quarterly if the boxes were ordered and were not to await payments by or deliveries to the Government. Therefore, when the Govern ment sent its orders for tbe boxes to the contractors they transmitted the same to the manufacturer to be filled, and the latter had of course to await manufacture and inspection of the same before receiving their pay, but in the meantime they were bound to pay or did pay the contractors the said profits. The method adopted by the Government at that time of making payments was that after inspection the boxes would be shipped to postmasters in different parts of the country, who would make payments to the contractors; but a change in this system was adopted at the instance of the Superintendent of Free Delivery, whereby the payments were by Treasury warrant drawn by the Assistant Postmaster General payable to the contractors. Under the earlier method the Government would receive the boxes before payments were made; under the latter method payments might be made and were made before receipt by the Government of the boxes. This is emphasized by the fact that on June 14, 1900, the department, acting through the said superintendent, gave an order for 6,000 letter boxes, and said superintendent caused the same to be receipted for on June 30, 1900, by one McGregor, one of whose duties was to receipt for letter boxes delivered by the contractors or their subcontractors.
At the time of giving this receipt for boxes their manufacture had not begun, though they were paid for in a few months thereafter at a time when not exceeding one-third of them had actually been delivered to the Government; and in September, 1900, the department, again acting through said superintendent, had ordered 6,000 additional boxes, the shipment of which was not completed until more than a year thereafter, but they were paid for by the Government before any of them were shipped. The change in the method of payment, which change was brought about by said superintendent, made possible tins action. In the meantime, however, and before the Government had paid for the boxes the subcontractors had paid to the contractors the profits which would accrue on the two orders of 6,000 boxes each, of which the claimant received one-half, which was distributed by him, as hereinbefore shown, in the form of gratuities to the said superintendent.
An explanation of the order for 6,000 boxes, and the receipt thereafter as though actually delivered in June, 1900, is attempted to be made on the theory that the fiscal year ended on June 30, and that the order was made in order to cover an unexpended balance of the annual appropriation for letter boxes, and that the practice of the auditing department in construing section 3690 of the Revised Statutes had been to allow credits under the appropriation for a different year for supplies ordered during that year; or in other words, that the date of the order for goods and supplies and not the date of their delivery was the controlling factor in determining what year's appropriation was chargeable with the expenditure. One difficulty about the explanation is that the- practice referred to is clearly stated in 6 Comptroller Decisions, 815, wherein the comptroller on April 18, 1900 — two months previous to the order and receipt of June 30 — rendered a decision contrary to said contention; and if the said superintendent did not have knowledge of this decision it at least furnished no reason for giving a receipt for 6,000 boxes before the manufacture of them had begun; nor does the fact of trying to use the appropriation under the circumstances disclosed, because the superintendent knew that an appropriation bill had already passed and was approved June 2, 1900, 31 Stat. L., 257, covering the subject, providing for free-delivery .service, and carrying a special appropriation of $200,000 for incidental expenses, including, among other things, letter boxes, etc., for the fiscal year ending June 30, 1901. With this information before him the reason for the superintendent's rush order of June 14 and receipt of June 30 calls for some other explanation than that offered in argument. It was impossible to secure payment for the boxes until they were receipted for. The explanation offered furnished no excuse for the indorsement on the "jacket" that the bill for 6,000 letter boxes was correct for "expenditures incurred in second quarter of 1900," because as a matter of fact the order was given in the fourth quarter of the then fiscal year.
The answer of the defendants alleges that claimant was among Machen's acquaintances and intimates in Toledo, which is met with the denial " he denies that he was intimate with said Machen or that he was anything more than an acquaintance." But we find the claimant systematically paying to Machen moneys with regard to which no explanation is offered by either of them, and these payments continued at least until after the contract of 19 91 had been awarded.
When the time for letting the contract of 1901 arrived and bids had been called for an arrangement had been made by claimant and the said Maybury that the latter, representing Maybury & Ellis, should bid upon the Doremus and the Clouse boxes, and if either of them got the contract the claimant should have one-half of the profits on the contract. But Dr. Scheble, in the name of the Michigan Steel Box Co., put in a separate bid on what is called the J. M. Clouse box. As the boxes called for by the contract subsequently awarded were to be made of steel, we may say in passing that it is probably a mere coincidence that the claimant selected the name of the Michigan Steel Box Co. upon which to base a bid.
At the first opening of bids they were all rejected upon the recommendation of the committee of awards.
Between the dates of the two openings of bids (February and March, 1901) the claimant is shown to have had conversations with one Prizer; and during his testimony the said Prizer answered the following question on cross-examination : " Now, let me ask you, Mr. Prizer, the direct question whether Dr. Scheble advised you in Washington that through influences at his command they would be able to secure the acceptance of one or the other of the bids for letter boxes, and whether or not it was Mr. Maybury who made that statement? " "Answer. That statement was made to me by Dr. Scheble and also by Mr. Maybury."
The circumstances of the rejection of the bids in February, 1901, are shown in the findings. The said Prizer made no bid, being induced thereto, as he states, by statements of claimant. Maybury & Ellis had an agreement with Scheble with reference to the Doremus and Clouse boxes, which they were bidding upon, and two or three days before the first opening of bids Maybury wrote to Prizer, saying, " You will meet in Washington also a Dr. Scheble. It is enough for me to say that he is very influential in the matter and whatever he says will be authoritative." A short time thereafter he again wrote Prizer: " I went to Washington a week ago Saturday and found the lay of the land. I believe there is no question but what the Government will adopt steel." Maybury & Ellis were then jointly interested with Scheble in the contract of 1897, and they were interested with him in securing, as they thought, a contract on the Doremus or Clouse box.
When asked about the meaning of said letter to Prizer, Maybury thus states: "You spoke of Dr. Scheble being influential?" "Answer. Yes; Dr. Scheble seemed to be the best-posted man upon letter boxes I had ever talked with and gave it more attention and seemed to keep track of inventions and in advancing the interests of any box. A man who had such knowledge of the construction and adaptability would have an influence." " Question. As to the use of the word 'authoritative?'" "Answer. That was based upon only the idea that whenever he had bargained with me, where other patentees, if there were any involved, he always took it upon himself to assume the premise, and I never knew his authority to be questioned by anybody." As this is the only explanation of the letter, we repeat it as rendered.
The letter which found its way to the committee on awards containing objections to letter boxes of a certain type went to that committee from the source that the bids went from, as they were addressed in care of the superintendent of free delivery. It furnished a basis for discarding the Doremus box, when as a matter of fact that- box had given more general satisfaction than any other box which the Government had had. Yet it is shown that that letter had been corrected in its statements so as to make it apply to the Clouse box and not to the Doremus box. It is significant that the chairman of the committee on award was Thomas W. McGregor, who owed his promotion to Machen, and who, as disclosed by the record in this case, was under Machen's influence, and that the information which the committee sets out as a reason for discarding cast-iron boxes on account of breakages could readily come through said chairman, because the knowledge and information as to breakages were within the department in which he was engaged. The committee did not give the source of its information that the breakage of cast-iron mail boxes "is about 14 per cent"; and it was inaccurately advised from some source, because the records of the department for 1899 and for 1900 show that the percentages of breakages, if all boxes reported as unserviceable be treated as broken boxes, did not exceed 4 per cent, instead of 14 per cent, as stated in the reply, while the difference between the "unserviceable" boxes reported in 1901 and those reported in 1900 makes the percentage less than 1 per cent. It is argued for claimant to be " entirely possible that when the committee made its report, stating that there was a breakage of 14 per cent, they intended to say 4 per cent, for even 4 per cent was a large percentage." But the fact is the committee said 14 per cent; their report, addressed to the Postmaster General was for his information, and its conclusions, if erroneous, would necessarily mislead him. We do not impeach the good faith of a majority of the committee, who no doubt acted on the information before them. And notwithstanding this condemnation of the Doremus box, the claimant seemed to have so much faith in it that after being awarded the contract for a steel box of the new design he made an arrangement with Maybury & Ellis whereby in consideration of the right to use the Doremus box in case the department changed from the one upon which the contract was then awarded he would pay to Maybury & Ellis one-sixth of the profits accruing under his contract,, and he did thereafter pay them one-sixth.
It therefore appears that the claimant acquired an interest in the contract of 1893, as above stated, and that a large increase in the number of boxes called for by the department arose shortly following his acquisition of a one-fourth interest in that contract; that he had a one-half interest in the 189T contract, and that, immediately following his receipt of dividends from that contract, he furnished gratuities to the superintendent of free delivery; that said superintendent had the duty of determining the needs and the matter of distribution of letter boxes; that claimant's relations with him were of an intimate character during the periods covered by said contracts; that claimant conveyed the impression to others of having an undue influence with that official; that he participated in and knew that said official was deriving gratuities from the profits of an order for 6,000 or more boxes before they had been inspected or delivered to the Government; that before and after the award of the contract in question he was paying or giving said official moneys received from one or the other of said three contracts; that he spoke confidently of his box securing the contract, though it was inferior to and less desirable than the letter box then in use; that he induced one Prizer not to bid at the last letting of the contract; that he secured the services of a Government postmaster, and gave him an interest in the contract to aid in its procurement; that he knew that misleading and false information had been acted upon by the committee on award; that after said contract was awarded to him or the Michigan Steel Box Co. he continued to pay gratuities to said superintendent; that he told one of the joint owners with him in the letter box upon which the first bid of the Michigan Steel Box Co. was made for the 1901 contract that he would have to give said superintendent a part of the proceeds of sale of interests in said box; that he knew that after said contract in suit was made said superintendent sent to inspect the boxes and receive them for the Government an especial friend of said superintendent. No inference prejudicial to claimant is drawn from the fact of his indictment, particularly as there was entered by the Government a nolle frosegui upon it.
The inferences to be drawn from these facts are strengthened by the fact that the claimant does not testify in the case and offers no explanation of charges which find support in the tendencies of the evidence. The charges made are of the most serious nature because, if true, they impeach the claimant's respect for the law itself. But the claimant remains silent, and his silence under the circumstances is unexplained and may be unexplainable except upon the theory that by testifying he might make bad matters worse. The rule of law upon this question is thus stated in Kirby v. Tallmadge, 160 U. S., 379, 383:
"As they had it in their power to explain the suspicious circumstances connected with the transaction, we regard their failure to do as a proper subject of comment. 'All evidence,' said Lord Mansfield in Blatch v. Archer, Cowper, 63, 65, 'is to be weighed according to the proof which it was in the power of one to have produced and in the power of the other side to have contradicted.' It would certainly have been much'more satisfactory if the defendants, who must have been acquainted with all the facts and circumstances attending this somewhat singular transaction, had gone upon the stand and given their version of the facts. McDonough v. O'Neil, 113 Mass., 92; Commonwealth v. Webster, 5 Cush., 295, 316. It is said by Mr. Starkie, in his work on Evidence, volume 1, page 54: ' The conduct of the party in omitting to produce that evidence in elucidation of the subject matter in dispute, which is within his power, and which rests peculiarly within his own knowledge, frequently affords occasion- for presumptions against him, since it raises strong suspicion that such evidence, if adduced, would operate to his prejudice.' "
We are reasonably satisfied from the evidence and the failure of the claimant to offer any explanation of matters, the absolute knowledge of which rests with him, that the said contract is tainted with illegality and fraud and must be condemned. It therefore furnishes no right of action.
The only evidence offered as to the value of the boxes is the contract itself, and while a contract price does sometimes furnish the basis for ascertaining the value upon a quantum meruit we think the court should decline to receive it here as sufficient evidence, because if the contract be of the kind we have denounced the claimant should not be allowed to leave the court with the full benefits of the contract, the result of a fraudulent scheme. In other words, he should be required to prove the value of that which the Government received. To condemn the contract and yet give the claimant the full contract price in the absence of any other proof would be to deprive the principle involved of any practical application. The Government paid for a large number of boxes and paid the manufacturer its price for the manufacture of the boxes now in question, and tbe only thing remaining is whether the claimant shall be allowed to recover his profits on these boxes.
An additional reason for refusing him the right to recover is that though he alleges himself to be the sole owner of the claim and makes affidavit to his petition, the facts show that the Michigan Steel Box Co. was an association composed of several persons, who under the terms of the contract would be entitled to a part of its profits and that, therefore, the claimant would not be entitled to all of them. These parties are not before the court.
We think the petition should be dismissed, and it is so ordered.