Hyperlawhypertext legal database Phenix Bridge Co. v. Keystone Bridge Co. 23 N.Y.S. 109

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Phenix Bridge Co. v. Keystone Bridge Co.

23 N.Y.S. 109 Court N.Y. Gen. Term Decision date 1893-04-17 English

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p. 109
(68 Hun, 607;
mem. report without opinion.)
PHENIX BRIDGE CO. v. KEYSTONE BRIDGE CO. et al.
(Supreme Court, General Term, First Department.
April 17, 1893.)

Headnote

Equity—Relief of Parties to Illegal Contract.
Where an agreement between manufacturers to form an association for certain purposes, which requires each member to pay to the association a per cent, on all sales in order to provide a guaranty fund, is void as against public policy, equity will not relieve a member from an alleged wrongful assessment, and from a threatened forfeiture of such member’s interest in the fund for failure to pay the assessment, as neither public interests nor the requirements of public policy are involved in such case. Union Bridge Co. v. Troy & L. R. Co., 7 Dans. 240, distinguished.
Appeal from special term, New York county.
Action by the Phenix Bridge Company against the Keystone Bridge Company; the Edge Moor Iron Company; the New Jersey Steel & Iron Company; the Passaic Bolling Mill Company; the Detroit Bridge & Iron Works; George S. Meld, Charles McDonald, Charles S. Maurice, and Edmund Hayes, copartners doing business under the name and style of the Union Bridge Company; C. J. Schultz, D. H. Andrews, John F. Alden, M. Lassig, and “Edward” W. Eckert, the name “Edward” being fictitious, the true name of said defendant being unknown to plaintiff, said defendant being commissioner of the American Bridge Manufacturers’ Association. From a judgment dismissing the complaint, plaintiff appeals.
Affirmed.
The action was brought for the purpose of declaring unlawful, null, and void a resolution of an association called the American Bridge Manufacturers’ Association, composed of plaintiff and defendants, assessing, as due to the association from plaintiff, the sum of $33,202.78, and for the further purpose of having the court determine what amount, if any, was due as between plaintiff and the association, and of having the court enjoin the expulsion from the
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association of plaintiff, or the enforcement against it of the penalties contained in the association agreement. The complaint alleged that tire defendant Eckert was commissioner, appointed under the association agreement; that the plaintiff and the other defendants were members; and that the agreement contained provisions, the purpose of which was to increase the price of ironwork; one being that each member should contribute four tenths of one cent a pound on ironwork sold to a guaranty fund; another being that, in case any party should violate any of the provisions, he might be expelled, and that he should thereafter forfeit all rights in the guaranty fund, etc. The complaint then set forth that a question had arisen about the liability of the plaintiff to pay towards the guaranty fund the said sum of $33,202.78, being four tenths of one cent per pound upon iron furnished by the plaintiff to the Kings County Elevated Railroad, the plaintiff claiming that the iron was exempt. The complaint then alleged that proceedings by which the association had determined that the amount in question should be paid by the plaintiff “were illegally had, and not in pursuance to the terms of the said agreement; and said association and the defendants did not afford this plaintiff an opportunity to be heard upon the question of its alleged liability to said association by reason of said sales and shipments, but', on the contrary, refused and denied the plaintiff an opportunity to be so heard; and made their alleged determination and assessment without affording this plaintiff such opportunity to be heard, and against its protest.” The complaint further alleged that such proceedings “were had in pursuance of an unlawful understanding ■and agreement previously had between them [the defendants] to compel this plaintiff to pay dues with which it was not chargeable under the terms of said agreement, and, in the event that it should refuse to pay such dues, should be ■expelled from the -association, and its share of the guaranty fund forfeited.” The answer insisted that the iron which the plaintiff furnished to the Kings County Elevated Railroad came within the agreement. It alleged that, the matter having in ordinary course, and according to the terms of the agreement, been referred to Mr. Eckert,. the commissioner, he decided that the amount due upon that iron should be paid into the treasury of the association. The answer proceeded to state that the plaintiff appealed, and that the association, at its annual meeting, sustained the decision of the commissioner. The answer alleged that the plaintiff was fully heard, etc.
Upon the trial the plaintiff offered in evidence the agreement constituting the American Bridge Manufacturers’ Association. Upon the controverted facts,—that is to say, upon the question whether the iron furnished to the Kings County Elevated Railroad was liable for dues, and whether the defendants had refused to the plaintiff a full hearing, and had given their decision in pursuance of a fraudulent understanding,—the parties offered evidence. The appellant has not seen fit to print it. The contention of the defendants was that Mr. Eckert’s decision, and the decision of the association affirming it, were right; that the plaintiff was fully heard by the association; that, after it had been fully heard, it acquiesced, in having the case submitted to the association; and that, after an adverse decision, it was too late for it to take the objection that it ought not to have submitted the case, even if the fact were so. The defendants claimed that there was not a particle of evidence to prove that the fact was so. Each party submitted findings. The plaintiff (the appellant) asked the court to find, and at the request of the plaintiff- the court did find, as a fact: “Fourth. That by said agreement it was intended to increase the price of materials furnished by the parties thereto to the public four tenths of one per cent, per pound, or $8 per ton, over the market price ■of such materials.” And as a conclusion of law: “First. That the said agreement set forth in. the complaint is void as against public policy.” The court further found: “Sixth. Upon the trial it was claimed by the plaintiff and was conceded by the defendants that the purpose and object of the agreement were, by preventing competition, to increase by $8 the price of certain’ lands of manufactured iron described in the agreement furnished by members of the association, and in that' way to add a profit of $8 a ton over the market price of such manufactured iron at the time of the formation of the association; such profit to go to members of the association upon all such manufactured iron furnished by them pursuant to its terms. The apparent purpose
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and object of the agreement were as thus claimed and conceded by the parties. Seventh. The parties to said agreement thereby entered into a combination to establish uniform prices for the materials furnished, and to increase their prices to tira public over and above the market price. Eighth. By said agreement it was intended to increase the price of materials furnished by the parties thereto to the public four tenths of one per cent, per pound, or $8 per ton, over the market price of such materials.” And as a conclusion of law: “Second. The purpose of the agreement having been to prevent competition and to increase prices beyond market rates, the court, as a court of equity, will not interfere in favor of the plaintiff, or give to it relief as against the other parties.” Both parties having asked the court to find that tire agreement was void as against public policy, and the court having so found, it refused to make any of the findings requested by either party upon the controverted facts, and dismissed the complaint. The plaintiff excepted to the dismissal of the complaint. It excepted to the court’s finding of law that the agreement, being void as against public policy, the court, as a court of equity, would not interfere in favor of plaintiff, or give it relief as against the other parties.
The opinion of Mr. Justice BEACH in the court below is as follows:
The contract between the parties is concededly void as against public policy. In the face of this legal conclusion, the plaintiff applies to the court, praying relief beneficial to itself as against the other parties to the agreement. The contention is based upon a suggested principle that such condition will not deter a court of equity from a grant of relief. The position of the learned counsel rests upon reasoning in the case of President of Union Bridge Co. v. Troy & L. R. Co., 7 Lans. 240 , supported by other adjudications cited. But even upon those authorities the principle as urged is carried beyond the limit This limit reaches only to the extent of decreeing the contract void in the interest of the public, but not to the giving of relief to one of the parties as against the other in regard to claimed and disputed rights under the illegal agreement. In the cited case this court did no more than pass upon the contract, holding it void as against public policy, and enjoin the defendants from a use of the bridge. The interests of the public called for no further protection and the court stopped at that line, saying: “As to the demand in the complaint that the defendants be adjudged to pay plaintiffs for the use of the bridge, I do not see how that can well be granted. The court gives relief to the plaintiffs only so far as the public interest requires. It declares the contract void, and prohibits the defendants from further enforcing it, and thereby violating their public duty, but will not proceed further in behalf of the particeps criminis.” This view finds support and rigid enforcement in Arnot v. Coal Co., 68 N. Y. 558 ; Materne v. Horwitz, 101 N. Y. 469 , 5 N. E. Rep. 331 ; Leonard v. Poole, 114 N. Y. 371 , 21 N. E. Rep. 707 . Relief is not granted where both parties are truly in pari delicto, unless in cases where public policy would thereby be promoted. 2 Story, Eq. Jur. § 298. The relief sought in this action was an accounting relative to a fund raised under the void contract, and payment to plaintiff of any portion found its due, notwithstanding the claim by the other associates that a forfeiture of plaintiff’s interest has resulted under the provisions of the agreement. Neither public interests nor the requirements of public policy are involved, and the court will not intervene. The conclusion renders inappropriate a consideration of questions raised by the proofs upon the merits. A decree is ordered dismissing the complaint, with costs.
Argued before YAH BRUHT, P. J., and O’BRIEH and FOLLETT, JJ.
Yanderpoel, Cuming & Goodwin, (Delos McCurdy, of counsel,) for appellant.
Where, as in this case, the illegal transaction has been consummated, and the proceeds realized and in the hands of the defendants, the court will
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not refuse to deal with it on the ground that it was acquired under an illegal contract, to which the plaintiff and defendants were parties. Western Union Tel. Co. v. Union Pac. Ry. Co., 1 McCrary, 562 , 563, 3 Fed. Rep. 423 ; Brooks v. Martin, 2 Wall. 70 ; Planters’ Bank v. Union Bank, 16 Wall. 483 . The difference between enforcing illegal contracts, and asserting title to money which has arisen from .them, is distinctly asserted in the following cases; McBlair v. Gibbes, 17 How. 232 -236; Armstrong v. Toler, 11 Wheat. 258 ; Sharp v. Taylor, 2 Phil. Ch. 801; Tenant v. Elliott, 1 Bos. & P. 3; Farmer v. Russell, Id. 296 ; Lestapies v. Ingraham, 5 Pa. St. 71 . The same doctrine is distinctly recognized by the court of appeals in the case of Leonard v. Poole, 114 N. Y., page 379, 21 N. E. Rep., page 709.
The learned judge below erred in refusing to find that “the agreement, being admittedly void as against public policy, the circumstance that the plaintiff was a party to the agreement is not in equity material, and does not deprive it of the right to invoke the aid of the court to protect its rights, or of any right to which it would otherwise be entitled.” The learned trial judge was of opinion that because plaintiff was a party to the illegal agreement the door of a court of equity was closed against plaintiff, and that it had no right to enter there. The learned judge rested his opinion chiefly upon- the cases of Arnot v. Coal Co., 68 N. Y. 558 ; Materne v. Horwitz, 101 N. Y. 469 , 5 N. E. Rep. 331 ; and Leonard v. Poole, 114 N. Y. 371 , 21 N. E. Rep. 707 . In each case the court refused to enforce the contract upon the ground that it was void as against public policy, and that courts of equity will not aid the parties in enforcing such contract. It should be observed that in each of these cases the plaintiff therein sought to enforce an illegal contract, and invoked the aid of the court for that purpose. In neither of these cases was relief asked against the illegal agreement, which is precisely what is asked in this case. We still claim that the case of Union Bridge Co. v. Troy & L. R. Co., 7 Lans. 240 , is authority for the proposition that, where -plaintiff seeks relief against the enforcement of an illegal agreement to which he is himself a party, the door of equity is open to lnm, and relief will be granted him.
John E. Parsons, for respondents.
The agreement having been held, at the request of both parties, to be void as against public policy, its purpose having been to prevent competition and to increase prices beyond market rates, that equity will not interfere to adjust controversies between the parties Is too well settled here to require argument. Gray v. Oxnard Bros. Co., 59 Hun, 387 , 13 N. Y. Supp. 86 ; Leonard v. Poole, 114 N. Y. 371 , 21 N. E. Rep. 707 ; Materne v. Horwitz, 101 N. Y. 469 , 5 N. E. Rep. 331 ; Haynes v. Rudd, 83 N. Y. 251 ; Arnot v. Coal Co., 68 N. Y. 558 ; Knowlton v. Spring Co., 57 N. Y. 518 ; Spring Co. v. Knowlton, 103 U. S. 49 , 58; Parkersburg v. Brown, 106 U. S. 487 , 503, 1 Sup. Ct. Rep. 442 ; Thomas v. City of Richmond, 12 Wall. 349 , 356; Woodworth v. Bennett, 43 N. Y. 273 . To meet these cases the plaintiff relied upon Union Bridge Co. v. Troy & L. R. Co., 7 Lans. 240 . That case agrees with—does not attempt to overrule—the decisions referred to.

Judgment affirmed, with costs, on opinion of Mr. Justice BEACH in court below.

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