202 F. 7 | 4th Cir. | 1912
(after stating the facts as above).
“It has been, repeatedly held that, if one maliciously interfere in a contract between two parties, and induces one of them to break that contract, to the in.iury of the other, the party injured can maintain an action against the wrongdoer.”
This is but a recognition and application of the principle:
“That whenever a man does an act which, in law and in fact, is a wrongful act, and such an act as may, as a natural and probable consequence of it, produce such an injury, an action on the case will lie.”
The principle has been applied to a wrongful, malicious interference with an existing contract in Lumley v. Gye, 2 El. & Bl. 216, Bowen v. Hall, 6 Q. B. D. 333, and other cases cited in the plaintiff's brief. In Quinn v. Leatham, A. C. 495 (1901), Lord Macnaghten says:
“Speaking for myself, I have no hesitation in saying that I think that the decision (Lumley v. Gye) was right, not on the ground of malicious intention — that was not, I think, the gist of the action — but on the ground that a violation of a legal right, committed knowingly, is a cause of action, and that it is a violation of legal right to interfere with contractual relations recognized by law, if there be no sufficient justification for the interference.”
Mr. Justice Hughes, in Miles Med. Co. v. Park, 220 U. S. 373, 394, 31 Sup. Ct. 376, 379 (55 L. Ed. 502), recognizes it as “established doctrine that an actionable wrong is committed by one who maliciously interferes with a contract between two parties and induces one of them to break that contract to the injury of the other”- — citing Bitterman v. L. & Nashville R. R., 207 U. S. 205, 28 Sup. Ct. 91, 52 L. Ed. 171, 12 Ann. Cas. 693; Walker v. Cronin, 107 Mass. 555; Haskins v. Royster, 70 N. C. 601, 16 Am. Rep. 780; Jones v. Stanly, 76 N. C. 355. In Knickerbocker Ice Co. v. Gardiner, 107 Md. 556, 69 Atl. 405, 16 L. R. A. (N. S.) 746, the question is discussed by Boyd, C. J., and the authorities carefully reviewed.
It having been settled that an action, as for a tort, would lie for a malicious — that is wrongful — interference with the performance of an executory contract, the question naturally arose whether the principle extended to a case in which a third party, with like motive and without lawful excuse, by his interference prevented one from entering into, or making, a contract. The answer to this question is dependent upon the answer to another, which lies at the threshold of the inquiry: Does the right to enter into or make a contract come within the definition of a legal right, the wrongful interference with which is actionable? I,t is difficult to say, in many cases, at what stage of a negotiation the condition has arisen when it can be said that two persons would, but for the interference of a third party, have entered into contract relations. If A. make a definite proposal to B. to enter into a contract, the character, termg, etc., of which are sufficiently definite to be capable of acceptance, and, while B. is negotiating, or after he has determined to accept the proposal, C. maliciously interferes and prevents the acceptance on the part of B., or procures a withdrawal of the proposi
“According to some authorities, an actionable interference with contract relations is not confined to cases where the contract is binding and valid. It is actionable likewise to maliciously induce the termination of a contract, terminable at will, or to prevent' the formation of contracts which, in the natural course and but for such interference, would have been formed.”
For this statement of the law the author cites Walker v. Cronin, supra. In that case the declaration alleged that defendant did unlawfully, etc., molest and hinder the plaintiffs from carrying on their business of manufacture and sale of shoes — willfully persuaded a large number of persons who were in the employment of plaintiffs, and others, who were about to enter into their employment, to abandon, etc. It may be suggested that the cjuéstion presented here did not necessarily arise because the declaration was good without reference to it. The language of Wells, J., however, indicates that he was making no such distinction. After citing authorities, he says:
“In all these cases, the damage for which the recovery is had is, not the loss of the value of actual contracts by reason of their nonfulfillment, but the loss of advantages either of property or personal benefit, which, but for such interference, the plaintiff would have been able to ob'tain or enjoy.”
.The language of the judge in Templeton v. Russell, 1 Q. B. 728, clearly indicates that the right of action accrues to the injured party, not only for maliciously “inducing persons to break contracts already
“That there was the same wrongful intent in both cases; wrongful, because malicious. There was the same kind of injury to the plaintiff. It seems rather a fine distinction to say that where a defendant maliciously induces a person not to carry out a contract already made with the plaintiff, and so injure the plaintiff, it is actionable, but where he injures the plaintiff, by maliciously preventing a person from entering into a contract which he would otherwise have entered into, it is not actionable.”
A careful examination of the facts and of the opinion of Mr.. Justice Brewer in Angle v. Chicago, St. Paul, etc., Ry., supra, discloses a number of elements found in this record. Without undertaking to set the facts out in full, they are substantially as follows: A corporation, called in the opinion the Portage Company, had procured a legislative grant for valuable lands, in consideration of its undertaking to construct a railroad. A contract was made with, and was in process of performance by, Angle for the construction of the road. A rival corporation, called in the opinion the Omaha Company, by bribery and other corrupt means, persuaded the legislature of Wisconsin to repeal the act granting the lands to the Portage Company and grant them to itself, thereby preventing the Portage Company from carrying out its contract with Angle, and thereby inflicting heavy loss upon him. The learned justice says:
“Tliat this was a wrongful interference on the part of the Omaha Company, and that it resulted directly in loss to the contractor and the Portage Company, is apparent. It is not an answer to say that there was no certainty that the contractor would have completed his contract, and so earned these lands for the Portage Company. If such a defense were tolerated, it would always be an answer, in case of any wrongful interference with the performance of a contract, for there is always a lack of certainty. It is enough that there should be, as there was here, a reasonable assurance, considering all the surroundings, that the contract would be performed in the manner and within the time stipulated, and so performed as to secure the land to the company. It certainly does not lie in the mouth of a wrongdoer, in the face of such probabilities as attend this case, to say that perhaps the contract would not have been completed, even if no interference had been had, and that therefore, there being no certainty of the loss, there is no liability.”
To the suggestion that the Legislature of Wisconsin had the right and power to revoke the grant, and that, as between it and the Portage Company, it must be conclusively presumed that the Legislature was justified in doing so, that the question of the reason which prompted it to do so was not open to the Portage Company, etc., Judge Brewer says:
"Assuredly it does not lie in the power of the wrongdoer, the party whose wrongs created that condition which induced the legislative forfeiture, to excuse its wrongs on the ground that the Legislature had the power to forfeit, and might have done it any way.”
The learped justice cites the cases of Benton v. Pratt, 2 Wend. (N. Y.) 385, 20 Am. Dec. 623, and Rice v. Manley, 66 N. Y. 85, 23 Am. Rep. 30, stating briefly the facts, and saying:
*19 “Tlie point was made tliat the plaintiff could not recover because there was no binding contract between him and the third parties, but the point was overruled.”
After citing other authorities, he says:
“The same line of thought applies to the case before us. While it cannot be affirmed with certainty that the Legislature would not have passed the act of forfeiture, yet it is reasonable to presume that it would not, and that its act was induced by the situation of the Tortgage Company, which situa’tion was brought about by the wrongful acts of the Omaha Company.”
Assuming that to maliciously prevent the making of a contract is within the same principle, in respect to the remedy, as the interference with the performance of a contract, very much that is said in the Angle Case has a substantial bearing upon the case before us.
“The committee relied on Mr. Van Dyck for everything in the chemical line in the ink-making division, he being a chemist, and we not being chemists, and he also being a practical ink maker, I understand, and we had to rely upon him for all reports and the awarding of the bids. * * * Have never known the report of the committee to be rejected by the Director of the Bureau."
“1 have made up a Hard Black No. 17 into a note ink, and have completed a very thorough practical press trial, and find it satisfactory in every particular,” etc.
On May 27, 1901, he writes:
“Inasmuch as the so-called O. P. Black No. 1 now in use has given considerable trouble during the last year in the working quality of the note and revenue inks, and also has certain properties which tend to make the notes printed with it less desirable than they should be, I respectfully recommend that all bids on this item be rejected, and that the blacks designated as ‘Item #6, No. 2,’ and ‘Item 7, Hard Black’ and ‘No. 8, Soft Black,’ be used during the year beginning July 1, 1901, in such proportion as may best subserve the interest of the Bureau.”
These two letters are attached to the report of the committee of three, and “C. P. Black No. 1,” for which the Chemical Company had made its bid, and upon which Van Dyck had reported in its favor, and upon which report the Director had stated it would receive the contract, was rej ected, and it was stated “the article will not be required”; and, by the same report, “No. 7, Hard Black, Bidder Victor G. Bloede Company, at 45 cents (sample B) accepted.” It was also in evidence, uncontradicted, that the approval by the Secretary of the Treasury of the report of the committee of three was a matter of form — that it followed as a matter of course. The first essential step in the proof required that plaintiff should show, or, for the present purpose, introduce, evidence from which, if believed by the jury, it might reasonably be inferred that it was about to make the contract, and would have done so but for the interference of Van Dyck. Does not this undisputed evidence justify'the inference that there was a reasonable assurance, considering all the surroundings, that a contract would have been made by the government with the Chemical Company for furnishing the ink — or black — but for the letters of Van Dyck? This was, at least, a question for the jury.
In view of the fact that the theory upon which plaintiff’s case is based, that a conspiracy or agreement existed between Van Dyck and Bloede to prevent the use by the Bureau of No. 5 Black, and supplant it with No. 7 Hard Black, every act of the parties in connection with, or bearing upon, the result which was finally brought about, becomes material. The form of specification was unusual — had not been used before — and while, by itself, of no special significance, when taken in connection with the series of acts and transactions which followed, might very naturally make an impression on the minds of a jury, if they should find that Van Dyck had knowledge o.f and suggested the language used. The significance of the language of the specification, in view of the fact that it had never been used before, is heightened, if the jury should accept Hopkins’ statement that he was told what the specifications would be before they were sent out:
“That they were going to specify for a black that could be used without admixture; ⅜ * ⅜ that they would use just one black, so we would mix them over here, and when the specifications came out they would be so worded that our mixture would fill the bill and get the contract.” ,
This is denied by Bloede, but its truth was a question for the jury. No sample of No. 7 Hard Black, was sent out with, the specification.
In regard to the making of “7 Flard Black,” the testimony of Van Dyck and Bloede appears to be, in many material respects, contradictory. Their theory is: That, at the request of the Secretary of the Treasury, Van Dyck made experiments, and that Bloede was, at the same time, carrying on a system of experiments in connection with the Bureau. These experiments resulted in the discovery, or invention, by Van Dyck of an ink which found its way into the specifications for 1901 as “7 Hard Black,” etc. That, upon completing the process, Van Dyck wrote a letter to Bloede which is not in evidence. That, in reply to that letter, Bloede wrote Van Dyck February 19, 1901. From this letter it is manifest that negotiations had theretofore been had between the parties and that there was “a difference in their views.” The question of “policy or morals” was raised by Bloede, with the suggestion that Van Dyck procure the consent of Mr. Vanderlip to the proposed transaction. On February 20, 1901, Van Dyck writes Bloede:
*22 “I am very glad to ¡state that Secretary Gage, in the presence of Mr., Van-ilerlip, and myself, ruled that I had a perfect right to dispose of the ‘products of my brains’ (to quote Secretary Gage exactly) at any price which I might be able to secure, so long as I was not competing with the government or injuring its cause in any way,” etc.
This correspondence resulted in the contract of March 14, 1901, by which Van Dyck was to receive $25,000 for his process — $1,000 of which was to be paid in cash and the balance in two-thirds of the net proceeds of the sale, until the full amount was paid. It will be noted that, in this contract, the following provision was made:
“Should, however, the said process be found impracticable or commercially disadvantageous, it is agreed that the said Bloede may, at any time, discontinue the use thereof, and'that, in such case, all liability on the part of Bloede for any part of said sum of twenty-four thousand dollars, then unpaid, shall at once cease and terminate.”
Taking the testimony of Van Dyck and Bloede as true, this contract is very far removed from the permission given by Secretary Gage to “sell the products of his brain,” etc. What other construction can be put upon this' transaction than that, from and after March 14, 1901, Van Dyck, the chemist and ink maker in the employment of the government', with the duty imposed upon him described by the witnesses, was vitally interested to the extent of $24,000 in having the bids for “5 Black” rejected and “7 Hard Black” accepted — the latter to displace the former? Does not this testimony justify a reasonable inference by a jury that, after having given to the sample of the Chemical Company the highest rating and reported'its bid, the lowest price (unknown to him that the sample and bid were those of the Chemical Company), the success of his enterprise, or making the process “commercially advantageous,” was dependent upon having “5 Black” rejected and “7 Hard Black” accepted? Is it not a fair inference that this condition explains Van Dyck’s motive for writing the letters of May 25 and May 27, 1901, which brought about the "desired result”?
There is, however, another version'of this transaction by a disinterested witness. The theory of defendants is that Van Dyck had discovered a new and valuable process, known only to himself, worth, if commercially advantageous, $25,000 to the bidder for the contract. Hopkins testifies that, while in the employment of the Bloede Company, as its chemist, he was directed to make experiments upon “blacks” for the purpose of meeting the wishes of the Bureau; that he “devised the formula”; that he, with knowledge of what would be called for, “delivered the formula, and did pretty much all the work that was done on it; that Van Dyck did absolutely none of the chemical work upon the sample that was sent him with the Bloede bid for No. 7.” The testimony of this witness is contradicted by Bloe.de and Van Dyck. If, however, the jury should accept it as true, the entire transaction assumes a different aspect from that presented by defendants. Van Dyck had nothing to sell. Knowing that the Black No. 5 made and furnished to the government by Bloede had “proven unsatisfactory,” and that it
We concur with counsel that the plea of guilty to the indictment, entered by defendants, was not an admission that they were engaged in a conspiracy to injure the Chemical Company. The plea was an admission that, in securing the contract for No. 7, Hard Black, Van Dyck was not acting in good faith and with the purpose of serving the government, but that his real purpose was to defraud — that is, make a profit out of, and at the expense of — the government, and that Bloede was a party to such scheme. The value to be attached to the explanation of the reason for entering the plea is lowered by more than one pregnant fact and circumstance. The record shows that they were represented by counsel. If this explanation, etc., is rejected by the jury, the admission of record, that they were engaged in a conspiracy to defraud the government, and that its success was concealed until discovered after eight years’ investigation by the agents of the secret service of the government, it might very well have impressed their minds and caused them to hesitate in accepting defendants’ version of the transaction as it affected the Chemical Company. Notwithstanding their contention that they were oply seeking to promote the interest of the government in a plan by which the article of the highest rating at the lowest bid was rej ected, and the process of defendants was accepted, to the great profit of Van Dyck and Bloede, the jury might well find that the real motive of Van Dyck, in writing
Defendants earnestly insist that, if all of this be conceded, yet the instruction was correct, because the Chemical Company had no .property interest, or legal right, to demand of the government that, after submitting its bid and sample securing the rating, it make a contract for the ink. Colorado Paving Co. v. Murphy, 78 Fed. 28, 23 C. C. A. 631, 37 L. R. A. 630, is cited. There the appellee, the lowest bidder for certain paving material, sought to enjoin the board of public works from giving the contract to a higher bidder. The bill charged a conspiracy, etc. The court properly held that it could grant no relief, because the plaintiff had acquired no legal right to demand that the contract be awarded to it, which a court of equity would enforce. The principle involved here is clearly distinguishable. The gravamen of this action is that defendants, bj a malicious interference, deprived the Chemical Company of the opportunity to enter into a contract under the conditions shown by the evidence. As we have seen, the authorities uniformly hold that, when the action is for malicious interference with a contract, the guilty party will not be heard to say that the contract interfered with was invalid and not enforceable. The question in such case is: Does the evidence tend to show that “in the natural course, and but for such interference, the contract would have been formed”? The basis of the action is “for maliciously preventing a person from entering into a contract which he would otherwise have entered into.” Adapting the language of Judge Brewer to the testimony in this case, it is no answer to plaintiff’s complaint to-say that there was no certainty that the contract would have been made. If such a defense were tolerated, it would always be an answer, in case of any wrongful interference with the making of a contract, for there is always a lack of certainty. It is enough to show that there is a reasonable assurance, considering all the circumstances, that a contract would have been made. It is, of course, conceded that the plaintiff must show, not only damnum, but also injuria. To show the former without the latter is damnum absque injuria, and therefore not a remediable wrong.
The defendants contend, and the learned judge concurred with them, that the evidence failed to show that, if the defendants had not interfered, the Chemical Company would have received the contract, and that the evidence in that respect was uncontradicted.
If the jury should find for plaintiff, it may be conceded that it will be difficult to fix the amount of the loss sustained by the Chemical Company; but that it did sustain loss reasonably follows from the undisputed testimony. We express no opinion in regard to the measure of damages which should guide the jury. The question is not free from difficulty. We have discussed the evidence, as we are required to do upon this record, from the same point of view that the court below did in directing a verdict, and are brought to the conclusion that the plaintiff was entitled to have his case passed upon by the jury. This will be certified to the court below.
Reversed.
