Chippewa Valley & Superior Railway Co. v. Chicago, St. Paul, Minneapolis & Omaha Railway Co.

75 Wis. 224 | Wis. | 1889

Cassoday, J.

This action is brought to enforce the specific performance of the contract or contracts set forth in the foregoing statement. By virtue of those contracts the plaintiff claims the right to the equal undivided one-fourth of all the lands 'and the avails thereof granted to the state for the purpose of aiding in the construction of a railroad from Superior to the junction near Veazie,— a distance of about sixty-two miles, — and said to contain 400,000 acres of land, of the value of $2,000,000. The state granted all of those lands to the Portage. & Superior Company in 1874, for the purpose named and upon the conditions set forth in said statement; and that company continued to hold the same down to the time of executing the first of said contracts, January 10, 1882. It had failed, however, to construct any portion of the sixt\7"-two miles of road between Superior and the junction, as required by such grant, and it had also failed to construct any portion of the road from the state line at Genoa to said junction, as required by such grant. It was, moreover, then insolvent and wholly unable to complete any part of either of such roads, and the owner of nine tenths of the Iona fide stock of that company was then offering to sell the same to different parties, and particularly to the Chippevoa, St. Paul, and Omaha Companies, respectively. The fact of such insolvency and default on the part of the Portage & Superior Company, and the further fact that the time limited in the grant for its completion of the entire road would expire about May 1, 1882, had, prior to the execution of the contract, January 10, 1882, induced the Chippewa Company, in its own behalf and in the interest of the St. Paul Company, and the Omaha Company, respectively, to apply to the legislature, then about to convene, for said grant, and to ask that the same be conferred upon its company; but in view of the fact that should these companies, respectively, enter into a contest before the legislature for such grant, they might thereby defeat each other and prevent any disposition of the same, it was deemed advisable by them to enter into an arrangement whereby.such conflicting interests should be harmonized, and but one road constructed over the proposed route, with running arrangements for both, as set forth in the statement made. To secure such objects, the written contract of January 10, 1882, was made and executed as stated; and thereupon, and in pursuance of said contract, the Chippewa and St. Paul Companies ceased all negotiations for the purchase of said stock, and made no application to the legislature for said grant, and rendered to the Omaha Company “ all such reasonable and proper assistance as thej7 were able to give in the premises,” and “ in good faith in all respects observed, performed, and to their utmost ability carried out, the terms and'provisions of said contract;” and the Omaha Company was thereby enabled to purchase said stock and obtain said grant from the legislature by virtue of ch. 10, Laws of 1882. The contract executed June 10, 1882, was a substantial copy of the one executed January 10, 1882, including dates, except as set forth in the, foregoing statement.

The validity of ch. 10, Laws of 1882, has recently been challenged, on the ground that the grant to the Portage & Superior Company in 1874 gave to that company the right to earn the land therein granted, and was in the nature of a contract, which the state legislature could not impair, and also upon the ground that the legislature passing the act had been influenced or misled by false representations made to its members respecting the intentions, financial condition, etc., of the Portage & Superior Company. The conclusions reached by Mr. Justice IIaelaN, in an elaborate and well-fortified opinion, were to the 'effect that the question of such undue influence and misrepresentation was not • one to be determined by courts or juries upon evidence; and that, assuming the act to have been unconstitutional and void as impairing the obligations of contracts, yet after the time for constructing the road by the Portage & Superior Company had fully transpired, the legislature had confirmed such revocation and resumption of the grant, and the conferring of the same upon the Omaha Company by ch. 29, Laws of 1883. Farmers’ L. & T. Co. v. C., P. & S. R. Co. 39 Fed. Rep. 143. In this case, however, we must assume what counsel on both sides have assumed, that ch. 10, Laws of 1882, was a valid grant to the Omaha Company. The right of the Portage & Superior Company was, at most, nothing more than to earn the lands granted, upon the terms specified therein.

The important question here presented for consideration is whether the agreements contained in the second contract, and here sought to be specifically enforced, are valid. We .are all agreed that the validity of that contract stands upon the same basis as the first, since it was made without any •other consideration and is substantially the same as the first, .so modified as to include the Chippewa Company as a third party, as it was understood in the negotiations and at the time of making the original contract that the St. Paul Company in fact represented the Chippewa Company as well as itself. Especially would this be. so if the Omaha Company .is forced to rely for its title upon the act of 1883 instead of the act of 1882, as suggested in the case cited. The only ■considerations for the agreements here sought to be enforced -are such as are specified in the fourth subdivision of each •of the contracts. The mere option given in the third subdivision cannot be regarded as a consideration — much less .a separate and independent consideration. The clause therein to which the arguments have mainly been directed, as found in the second contract, reads as follows:

“In consideration of the above agreements, the said parties of the second and third part hereby agree that they will not make any effort to procure said lands to be granted to them, or either of them, or aid or assist any other party to procure the same, except the party of the first part, and that they will render to said party of the first part all reasonable and proper assistance which thejr may be able to give in procuring said land grant to be given to the party of the first part by the legislature, and will aid said party of the first part in any negotiations which it may set on foot with the said Chicago, Portage & Superior Railroad Com panj*- for the purpose of acquiring the same.”

The able and learned counsel for the plaintiff insists .that the presumption is always in favor of the legality of contracts, and hence that the “ effort,” “ aid,” “ assistance,” and services thus agreed to be made, rendered, and performed must be regarded as such only as were not illegal, improper, or vicious; and then it is assumed that if such effort, aid, assistance, and services were lawful in themselves, then it was competent for the Chippewa, and St. Paul Companies, respectively, to contract with the Omaha Company to make, render, and perform the same. In support of this contention, the same counsel suggests numerous things which the Chippewa and St. Paul Companies, respectively, might innocently have done under the contract. Among these, it is claimed that such company, “ or what is the same thing, its managing officers,” might legally and properly have refrained from negotiating for or the purchase of said stock or the property of the Portage & Superior Company, and advised the parties in charge thereof to negotiate with the Omaha Company; that it was competent for such company or its managing officers to have stated, “ either publicly or privately to its friends either in or out of the legislature, that its interests would be advanced by granting the Omaha Company’s application for said grant;” or have stated “to any of its friends, or any member of the legislature, that if the grant was made to the Omaha Company it would have the effect of extending ” its “lines or the right to run on the Omaha road to Lake Superior;” or expressed “its opinion and desire and wish that this grant should be made to the Omaha Company.”

The fallacy of this contention, if fallacy it be, consists in assuming that, if these several things were not in themselves a violation of law or good morals, then it was competent for the Omaha Company, in consideration thereof, to legally bind itself by the agreement in question to the effect that, in case of its obtaining the land grant, it would give “ one equal fourth part ” thereof, also the “ right, franchises, and property” of the Portage & Superior Company and the “ contract of lease ” therein mentioned, as therein specified. In an action on a contract not to prosecute a criminal, the most eminent English judge who never reached a higher position than chief justice of the common pleas, unless by declining to be made Lord Chancellor, approvingly quotes a text-writer, to the effect that a person could not bind himself legally by a “ promise to pay money to a man not to do a crime.” Collins v. Blantern, 2 Wils. 350. A few years later, Lord Mansfield, C. J., in behalf of the King’s Bench, said: “Many contracts which are not against morality are still void as being against the maxims of sound policy.” A third'of a century ago this court, while conceding that an agreement for compensation for certain services in securing the passage of an act, as, for instance, making a public argument before a committee of the legislature,, or before the legislature itself if permitted to do so, might be enforced, nevertheless held that “ an agreement to prosecute and superintend, in the capacity of agent and attorney, a private claim before the legislature, is against public policy and void, and no action can be maintained thereon, or for services thus rendered.” Bryan v. Reynolds, 5 Wis. 200; S. C. 68 Am. Dec. 55. “To prosecute and superintend my claim for certain services, as contractor to the state, for the construction of the Portage canal,” were the words of the written contract. It contained, however, the provision that “ such claim to be brought .before the legislature in such mode and manner as m37 said agent and. attorney may choose to have the same presented;” and the compensation therein agreed upon was ten per cent. on. the whole amount which the state might allow. In deciding the case, Whiton, C. J., speaking for the whole court, including the present chief justice, said: “We know of no ■way by which a person who is not a member of the legislature can prosecute or superintend a claim before that body, except by means of the members themselves, or some of them. He could not, therefore, comply with the contract on his part without resorting to personal solicitation with the members of the legislative body. We therefore think that the contract was, b}r its terms, an agreement to pay money for a consideration which is inconsistent with public policy, and that the agreement is for that reason void.” The learned counsel for the plaintiff insists that the case was wrongly decided, and we are asked to reconsider and overrule it, or, at least, distinguish it from the case at bar. It is certainly inconsistent with counsel’s theory of the presumptive legality of such contracts. Upon that theory, the “ mode and manner ” of presentation, prosecution, and superintendence might have been confined to such services as might have been legally contracted for.

It is true, the learned chief justice’writing that opinion only cited two adjudications in support of the conclusions reached; but those cases have frequently been sanctioned by other courts, and he certainly might have cited others which had been previously made, sanctioning the same principles. Fuller v. Dame, 18 Pick. 472; Hatzfield v. Gulden, 7 Watts, 152, 32 Am. Dec. 750; Clippinger v. Hepbaugh, 5 Watts & S. 315, 40 Am. Dec. 519; Filson’s Trustees v. Himes, 5 Pa. St. 452, 47 Am. Dec. 422; Harris v. Roof’s Ex’rs, 10 Barb. 489; Marshall v. B. & O. R. Co. 16 How. 314; Wildey v. Collier, 7 Md. 273, 61 Am. Dec. 346; Rose v. Truax, 21 Barb. 361. Besides, the case of Bryan v. Reynolds, 5 Wis. 200, has been expressly sanctioned in well-considered opinions bj at least three courts of high authority. Powers v. Skinner, 34 Vt. 274, 80 Am. Dec. 677; Elkhart Co. Lodge v. Crary, 98 Ind. 238, 49 Am. Rep. 746; Sweeney v. McLeod, 15 Oreg. 330. The case of Bryan v. Reynolds, supra, has also been cited approvingly in Melchoir v. McCarthy, 31 Wis. 254.

In the leading case of Fuller v. Dame, supra, the acts to be done, and for which the owner of certain lands was to pay a compensation, were the getting up of a joint-stock company, the purchase of such lands, and the procuring of a terminal depot to be located and constructed thereon by a railroad company. Such cases are undoubtedly regarded as analogous in principle to an agreement to pay compensation for procuring legislation. In that case there was no stipulation for secrecy, much less for publicity, and counsel invoked the same presumption of innocence which is here contended for. In considering it, Shaw, C. J., said: “It was strongly pressed by the counsel for the plaintiffs that when a contract is made in general terms, broad enough to include things lawful and unlawful, it shall be presumed that they intended those only which Avere lawful. . . . The law goes further than merely to annul contracts where the obvious and avoAved purpose is to do or cause the doing of unlawful acts. It avoids contracts and promises made with a view to place one under wrong influences,— those which offer him a temptation to do that which may injuriously affect the rights and interests of third persons.” He then illustrates how a person might lawfully solicit a bequest or devise in favor of a friend, or 'lawfully propose a marriage, but that “ any promise of reward made to him to induce him to do this, or any promise made afterwards in consideration of such service, would be void. This is founded upon the general consideration of fitness and expediency. Such advice and solicitation, in Avhatever form the agency may be exerted, are understood to be disinterested, and to flow from a single regard to the interests of the parties. They are lawful only so far as they are free and, disinterested. If such advice and solicitation, thus understood to be pure and disinterested, may be justly offered from mercenary motives, they would produce all the consequences of absolute misrepresentation and falsehood.”

In Trist v. Child, 21 Wall. 441, similar illustrations were made, and it was held that “ a contract to take charge of a claim before Congress, and prosecute it as an agent and attorney for the claimant, ... is void.” Then, after distinguishing such a contract from one for purely professional services, the court held: “6. Though compensation can be recovered for these [professional services] when they stand by themselves, yet when they are blended and confused with those which are forbidden the whole is a unit and indivisible, and that which is bad destroys the good; ” and hence “ compensation can be recovered for no part.” To the same effect is Meguire v. Corwine, 101 U. S. 112. In Wildey v. Collier, 7 Md. 273, the agreement for compensation, sought to be enforced, was for' procuring favorable action of the governor; but it was held void as against public policy. The court said: “The reasons are obvious. They are designed to protect the exercise of this power from abuse through the intervention of designing persons, and, although in the particular instance no improper influences may have been resorted to, the public interest in such questions requires that the principle should be enforced in all cases. . . . The same reason applies with equal force in support of claims for obtaining the passage of laws by the legislature.” In the case of Clippinger v. Hepbaugh, 5 Watts & S. 315, it was said by the court: “ It matters not that nothing improper was done or was expected to be done by the plaintiff. It is enough that such is the tendency of the contract/ that it is contrary to sound morality and public policy, leading necessarity, in the hands of designing and corrupt men, to improper tampering with members, and the use of an extraneous secret influence over an important branch of the government. It may not corrupt all; but if it corrupts or tends to corrupt some, or if it deceives or tends to deceive or mislead some, that is sufficient to stamp its character with the seal of reprobation before a judicial tribunal.” In Rose v. Truax, 21 Barb. 361, the contract under which compensation was sought was merely “to use his influence, efforts, and labor in procuring the passage of a law by the legislature;” but it was held to be void as against public policy, and, as the contract was entire, it was -wholly void, and hence no recovery could be had either upon the contract or quantum meruit, even for legitimate services. To the same effect as the above cases are Mills v. Mills, 40 N. Y. 543, 100 Am. Dec. 535; Frost v. Belmont, 6 Allen, 152; McKee v. Cheney, 52 How. Pr. 144; Gil v. Williams, 12 La. Ann. 219; Usher v. McBratney, 3 Dill. 385; Providence Tool Co. v. Norris, 2 Wall. 45; Oscanyan v. Arms Co. 103 U. S. 261; Woodstock Iron Co. v. Richmond & D. Extension Co. 129 U. S. 643.

In speaking of the principle applicable to an agreement for compensation for procuring a contract from the government, in Providence Tool Co. v. Norris, 2 Wall. 45, Mr. Justice Field tersely observed: “It [such principle] has been, asserted in cases relating to agreements for compensation to procure legislation. These have been uniformly declared invalid, and the decisions have not turned upon the question whether improper influences were contemplated or used, but upon the corrupting tendency of the agreements.” 2 Wall. 54. On another page he states: “It is sufficient to observe, generally, that all agreements for pecuniary considerations to control the business operations of the government, or the regular administration of justice, or the appointments to public offices, or the ordinary course of legislation, are void as against public policy, without reference to the question whether improper means are contemplated or used in their execution. The law looks to the general tendency of such agreements, and it closes the door to temptation by refusing them recognition in any of the courts of the country.” 2- Wall. 56. These principles are reasserted by the same learned justice in Oscanyan v. Arms Co. 103 U. S. 261, 264.

In the case at bar it is urged that the efforts to be made, the aid and assistance to be given, and the services to be rendered were expressly limited by the contract to such as were “ reasonable and proper.” In Marshall v. B. & O. R. Co. 16 How. 314, the proposed plan of Marshall, which was the basis of the contract under which he claimed compen-° sation for the services rendered, contained this clause: “I contemplate the use of no improper means or appliances in the attainment of your purpose. My scheme is to surround the legislature with respectable and influential agents, whose persuasive arguments may influence the members to do you a naked act of justice. This is all.” He then illustrates by mentioning an ex-state senator and ex-presiding officer of that body. 16 How. 318. So in Elkhart Co. Lodge v. Crary, 98 Ind. 238, the stipulation was only for the use of “all proper persuasion.” So in Sweeney v. McLeod, 15 Oreg. 330, the stipulation was merely that the plaintiff would, “ by means of all legitimate importunity and submission of evidence, to prevent the passage of any law,” etc. But none of these stipulations were sufficient to save either of such contracts from the condemnation of the respective courts. Where the principal object and purpose of an agreement is to secure, by a promise of compensation contingent upon success, influence upon or with members of a legislature, or executive or other public official, it is none the less vicious in its tendencies because it is therein stipulated that such influence shall be “ reasonable and proper.” The precise point is that such agreement for such purchase of influence is against public policy and therefore improper.

There is another consideration which has generally made courts more emphatic in condemnation of such contracts, and that is that the agreement for compensation is made contingent upon the success of the legislation or other object sought. This is illustrated and held in several of the cases cited. Since it is established that such contingent reward makes such contracts more vicious, it certainly follows that the vice becomes more enormous as the amount of the reward is increased. In the case at bar the share of the land grant contracted for is alleged to be half a million dollars —■ to say nothing of the lease and other rights contracted for. If such contract for one fourth of the grant is valid, then upon the same principle, we assume, it would be claimed to be valid if it had been for three fourths or even nine tenths of the grant.

In bestowing the grant the legislature were executing a trust imposed upon the state by Congress. The legislature had no power to pervert that trust, nor any part of it, even for the benefit of the state, much less for the benefit of a railway corporation upon which no part of the grant had ever been conferred, and which owed no duty in the construction or operation of the road in aid of which it was granted. The object of such grant was not only to aid in such construction, but to insure its continued operation. But to sanction such a contract so perverting one fourth of the grant might, in a supposed case, leave the constructing company insolvent and without any ability to successfully operate the road. Since the intention of the legislature is only ascertainable from the grant itself, it necessarily follows that they intended to bestow the grant on the Omaha Company alone. To sanction the contract, therefore, would be to defeat the expressed intention of the legislature, and to allow the parties to the contract, in advance of the construction of any portion of the road, to parcel out the grant to suit themselves, when, as a matter of fact and law, the trust could only be executed by the legislature itself in the name of the state as a naked trustee acquiring all its power to act at all directly from Congress.

Of course, it was competent for either of these corporations to refrain from applying to the legislature for the grant, but the reasons already given, as well as the authorities here cited, preclude any binding contract for such compensation for so refraining. It has frequently been held that such a contract is against public policy, and therefore void. Pingry v. Washburn, 1 Aik. 264, 15 Am. Dec. 676; Gulick v. Ward, 10 N. J. Law, 87, 18 Am. Dec. 389; Gibbs v. Smith, 115 Mass. 592; Gray v.Hook, 4 N. Y. 449; Atcheson v. Mallon, 43 N. Y. 147.

Some of the cases cited in this opinion lay stress on the fact that the claimant for compensation was or was not a member of the legal profession. A lawyer, engaged in the business of drawing petitions and bills, collecting and presenting evidence and facts by argument or otherwise before committees or the legislature itself, may undoubtedly contract for compensation for such services. In such cases the attorney openly appears to all as the representative of the interested party, and no one is likely to be deceived as to his motives or representative character. But a non-professional, incapable of rendering such services, stands in a different attitude. If such a person engages to procure or aid in the procuring of the passage of a bill, he necessarily contracts for lobby services. “ A person who frequents the lobby of a house of legislation, for the purpose of influencing measures” therein pending, is a “lobby member.” Webst. Diet. To “ lobby ” is for a person, not belonging to the legislature, “ to address or solicit members of a legislative body in the lobby or elsewhere away from the house, with a view to influence their votes.” Id. Of course, the Chippewa Company, and especially the St. Paul Company, as common carriers, have been of immense service in developing the resources and increasing the value of property in our state. As such common carriers, they were necessarily interested in the creation.and successful operation of a new railway like the one in question. Thejq and their respective officers and employees, as citizens of the state, had, the same interest in the enterprise that citizens in general had, and probably more than part of them. Still we are to remember that, at the time of making the first contract, neither of those companies, nor the Omaha Company, had any legal right, title, or interest in or to the portion of the land grant in question, and 'were as strangers to the then proposed legislation. True, either or any other railway company was at liberty to apply for the grant, but the legislature, in its wisdom, was perfectly free to refuse or grant such application. The grant was to the Omaha Company alone. Neither of the other companies is in any way connected with it, unless it be by virtue of the contract in question. If, then, they are entitled to any portion of that grant, it is by reason of the agreement therein to make the efforts, give the aid and assistance, and render the services stipulated in procuring said land grant to be given to the Omaha Company. But what efforts could they make, what aid or assistance could they give, what services could they reader, except such as are justly characterized as lobbying? If one railway company may thus legally contract with another railway company for contingent compensation in consideration of such efforts, aid, assistance, and services, then it may make similar contracts with private individuals, or municipal or other corporations, asking legislative action. If corporations could so legally contract, then it would be competent for individuals to do the same. We are not stating what is likely to occur, but what would be the probable tendency of sanctioning the validity of such ■ a contract. Besides, the powers of every corporation are limited to such as are expressed in its charter or named in the statutes, and such implied powers as are necessary or convenient to carry into execution.those which are thus expressed. It is enough to know that these do not include the making of lobbying contracts for contingent compensation for procuring legislation respecting matters in which such corporation has no more concern than the people generally. In the matter of disposing of land grants, as in all other matters of legislation, it is important to the continued welfare of the state and all its citizens that all improper avenues of approach should be effectually closed. In two of the cases cited, Mr. Justice Field, speaking of the duties of members of legislative bodies and public officers, asserts what ought to go without saying, that “ all such positions are trusts, to be exercised from considerations of duty and for the public good. Whenever other considerations are allowed to intervene and control their exercise, the trust is perverted and the community suffers.” He then declares, in effect, that personal influence in such matters is “not the subject of bargain and sale,” that it “is not a vendible article in our system of laws and morals, and the courts of the United States will not lend their aid to the vendor to collect the price of the article.” 103 U. S. 273, 274; 2 Wall. 56. These maxims of legislative and official propriety and duty, it is believed, are as old as our government,.and it may be safely assumed that they will never be brought into disrepute by the American courts. To properly aid in wielding the sovereign power of a great people, under the sanction of an oath, presupposes freedom from any ancl all extraneous bias and purchased influence. They imply continued vigilance for the public weal' and the faithful performance of every public duty. In the execution of such official trusts, no favors can be secured and no obligations incurred.

For the reasons given we must hold the contract void.

By the Court. — 'The order of the circuit court is reversed, and the cause is remanded for further proceedings according to law.

NOTE.

Cassoday, J. Since filing the foregoing opinion, sec. 4482, R. S., which seems to, have escaped the vigilance of the learned counsel on both sides as well as the several members of the court, has come to our notice. It provides, in effect, that any person who shall, directly or indirectly, give or receive, or agree to give or receive, or offer to give, “ any money or property, or valuable thing, or any security therefor, to any.person,” for his services, or the services of another, ‘‘in procuring the passage or defeat of any measure before the legislature, or before either house or any committee thereof, upon the contingency or condition of the passage or defeat of such measure,” or ioho, having any interest as principal, agent, attorney, or otherwise, “ in procuring or attempting to procure the passage or defeat” of such measure, “ shall attempt in any manner to influence any member of such legislature for or against such measure, without first making known to such member the. real and true interest he has in such measure, either personally, or as such agent or attorney, shall be punished ” as therein prescribed. This section .was, manifestly, for the more effectual suppression of such acts and agreements, coming, as they do, under the condemnation of the common law, as indicated in the foregoing opinion. It is true, this section does not expressly name corporations, but only “any person.” These words, however, must be construed as extending to and including any corporation. Subd. 12, sec. 4971, and subd. 2, sec. 4972, R. S. If it be claimed that the section does not include corporations, and that they are to enjoy the exclusive privilege of giving or receiving, or agreeing to give or receive, or offering to give, money or property for such lobbying services, then such privilege should be limited to such corporations as may be chartered specifically for that purpose; for in that event they would, in the spirit of the latter clause of the section cited, appear in their true character, and thus enable unwary members of the legislature, as well as the public; the better to guard against their approach or to escape their allurements altogether. Since the making of the agreement in question was punishable under the statute cited, it is, of course, idle to contend that it may be specifically enforced in equity notwithstanding.