
    Matthew Baird, Respondent, v. John C. Sheehan and John O’Brien, Appellants.
    
      Street paving contract — agreement to put in a sham bid—a contract based thereon is void as against public policy — decision on conflicting evidence.
    
    "Where, after the bid's for a street paving contract have been asked for, a party who has on hand blocks of stone which he wishes to dispose of and who intends to put in a bid, in consideration of a second party’s agreeing to take such stone from him at a specified price, puts in a sham bid by which the second party is enabled to obtain the contract, such a transaction must be regarded as contrary to public policy and void, and the agreement cannot be made the basis of a recovery against the successful bidder, where the latter refuses to take the entire quantity of stone.
    'The decision of the court below on conflicting evidence, when not disturbed on appeal, considered.
    Appeal by the defendants, John C. Sheehan and another, from :a judgment of the Supreme Court'in favor of the plaintiff, entered in the office of the clerk of thé county of New York on the 31st day of May, 1898, upon the report of a referee, and also from an order made at the New York Special Term and entered in said clerk’s office on the 27th day of May, 1898, granting the plaintiff an extra allowance.
    The plaintiff seeks to determine controversies arising in the execution of an unwritten contract, by which he was to furnish the •defendants with granite paving blocks.
    
      The. complaint states four causes of action: (1) To recover for the delivery of 114,688 blocks of granite, made in June and July, 1895; of 161,068 blocks in August; 231,849 in September; and 42,733 in October, at $65 per 1,000, payable in monthly bills, amounting in all to $35,532.19, with interest from the several dates amounts.w.ere due. (2) To recover $1,279.38 for the services rendered in carting 255,975 blocks, at $5.per 1,000. (3). To - recover $3,250 damages for, -defendants’ breach of contract,, in refusing to. accept-more than 550,000 of 900,000 blocks contracted for. (4) To recover $1,985.98 damages for defendants’ -failure, to pay claims for demurrage, additional freight, and for removing obstructions on the wharf. The complaint admits payment of $10,000, and allows credits for wharfage, reducing the total amount to $-34,085.05, and demands judgment therefor, with interest from the several dates.
    The answer admits that the granite blocks were furnished, as claimed, at $65 per 1,000, but denies that there was to be monthly payment in cash, claiming that payment on the whole contract was to be made in-Long Island City bonds ; admits the carting of 255,975 blocks, but alleges that $4.50 per 1,000 instead of $5 was the price agreed upon for such service ; denies any breach of contract, stating that the number of blocks contracted for was not 900,000, but 500,000; denies liability for demurrage or - other claims; and, by counterclaim, alleges certain payments made by transfer. of Long Island City bonds, and that the quality of a portion of the blocks furnished was not as stipulated. On- this latter claim no proof was presented on the trial, but, as to the former, a credit of $22,906.92 was allowed.the defendants — the proceeds of bonds sold by them for the plaintiff’s benefit.
    The referee found that the defendants had agreed to make monthly payments in cash and not in bonds; that $5 was the price accepted -for carting; that 900,000 blocks had been- contracted for, and gave judgment to the pdaintiff ■ on the three causes of action, taking for measure óf damages on the question of breach of contract the difference between $65 per 1,000, the contract price, . and $57, the highest market price. On the ,4th 'cause -of action the.referee held that the-'contract called for delivery on the wharf and no demurrage was chargeable, but found that the plaintiff had a claim of $244.18 for removing obstructions on the wharf at the request of the defendants, which with interest amounted to-$282.99.
    Crediting the defendants with money paid and the proceeds of the sale of certain bonds which the plaintiff had received, the-referee decided that the amount still due the plaintiff was $9,149.51,. with the costs .of the action. Motion was. thereafter made to the= court for extra allowance, which was granted, the sum being fixed at $800, and judgment was entered for $10,350.98.
    After filing the proper exceptions the defendants appealed from, the judgment and from the order granting extra allowance.
    
      Edward Browne, for the appellants.
    
      J. Woolsey Shepard, for the respondent.
   O’Brien, J.:

The appellants contest the several causes of action as they did on> the trial before the referee, and on this appeal insist that his conclusions in favor of the plaintiff were against the weight of evidence.. To determine whether or not this view can be sustained requires an examination of the entire record, and, although to detail the evidence at length would exceed the limits of an opinion, we may, by way of summary, reach, a conclusion as to the force of the appellants’ contention. '

For a first cause of action the plaintiff alleged that he was entitled to receive monthly payments in cash for the stone delivered. The-times of payment were not seriously disputed, for Mr. O’Brien, one of the defendants, who was the person chiefly engaged in making' the contract with the plaintiff, testified : “We were to pay once a-month.” What was really disputed was the manner of payment — whether it should be in cash as ..the plaintiff stated, or in bonds of Long Island City as claimed by. the defendants.

On this point there was a conflict of evidence, and the-referee in his conclusion no doubt took into consideration an apparent inconsistency which arose in the testimony of Mr. O’Brien, who said that' he had informed the plaintiff that payment was to be made in bonds-the same as a Mr. Pierce, agent for the New York and Maine Grranite Paving Block Company, was receiving from the defendants on a .similar contract for the delivery of blocks of stone to be used on 'Steinway avenue and Broadway. That contract in writing was produced and therein no provision was found for payments in bonds, but on the contrary it appeared that payment was to he in cash. Upon a closely contested question of fact this circumstance must have had considerable weight with the referee, as would also the fact that it in.no way appears that the defendants even tendered, monthly, bonds of Long Island City in payment of the stone delivered. And it seems that, if their possession of Long Island City bonds were dependent on what they received on their contract for city work for which the plaintiff was furnishing them paving stone, they could not have made monthly payments, because it is not shown that they received the bonds at such times or in such amounts; but, on the other hand, it appears that although some bonds w.ere given after part of the work was done, the larger amount was not transferred "to them till December, before which time the plaintiff had delivered all the stone which they would accept. We think, therefore, that the counsel for the appellants is. too broad in his statement that the •evidence adduced on the trial admits of but one conclusion, namely, that the plaintiff agreed to receive bonds in payment for the stone ■delivered under his contract with the defendants.”

Upon this, as upon all the issues raised . at the trial, there was a direct conflict of testimony, and the referee had to determine the credibility to be given the witnesses and the character of the proof presented by the respective parties. We do not wish to be understood as saying that there were not some inconsistencies and improbabilities in the plaintiff’s version of the various conversations and transactions which he had with the defendants; but these had to be ■considered with the other evidence, and in regard to all the issues thus raised, we can say that the questions were clearly those of fact, dependent for their solution on the credence which the referee gave to the testimony. Thus with respect to whether $5 or $4.50 per 1,000 was to be paid for cartage, whether demurrage should be allowed the- plaintiff, and whether the defendants should bear the "■expense of moving some stone from the front to the rear of the dock, there was conflicting evidence, and the conclusion to be reached very largely depended upon seeing the witnesses, their manner of testifying and the extent to which they were corroborated by other facts or circumstances.

In such bases, as has frequently been stated, the trial jMge or referee is better enabled to pass upon the questions of fact than can be an appellate court. In Baird v. Mayor (96 N. Y. 567, 577) it was said: “ A proper regard for the advantages possessed by that (trial) court in the disposition of questions affecting the credibility of witnesses and those depending upon the weight and authority of conflicting evidence, require great consideration to be accorded to its opinions. * * * AVhen there is evidence on both sides and

the case is balanced and the mind of the court has been called upon to weigh conflicting statements and inferences and decide upon the credibility of opposing witnesses, much weight must be accorded to the especial adaptation of the trial court to investigate and determine such questions.” And as expressed in Westerlo v. De Witt (36 N. Y. 340, 345), “ if upon reading the evidence this court should be of the opinion that the conclusion might well have been either way, then the fact that the referee saw the witnesses, heard them testify, and had the nameless opportunities' of judging of their character that personal acquaintance can only give, should induce us. to defer to his judgment.”

As has also been pointed out on an appeal consisting principally of questions of fact, It is not the same question as if we inquired whether we should have found the same facts in the same way as did the referee.- It is, rather, are we so certain that the referee was in error, upon the facts, as that we will assume to reverse his judgment?” (Crane v. Baudouine, 55 N. Y. 256, 264.)

In a case, therefore, wherein it is not evident to us that the conclusions of the referee are unsupported by evidence or are “ against the weight of evidence,” we -would not be justified in disturbing his report. This fundamental principle is clearly and abundantly éstablished. It was held in Hoar v. McNeice (1 App. Div. 549) that where theré is conflict of evidence, the findings of the referee upon the questions will be approved when there is no preponderance of proof against them. In Shailer v. Corbett (15 N. Y. Supp. 875) that where there is a direct conflict in the evidence, the appellate court should not interfere with the judgment entered upon the. report of the referee.. In Murray Hill Bank v. Van Antwerp (21 N. Y. St. Repr. 377) findings of fact by the court are' not to be disturbed on appeal unless unsupported by or clearly against the. weight* of evidence.” And in the recent case of Stokes v. Stokes (155 N. Y. 590), “ In reviewing the judgment in the -first, case the General Term was not justified ill reversing it unless it appeared that the proof so clearly preponderated in favor of a conclusion adverse to that reached by the trial court that it could- be said with reasonable Certainty that it erred in its conclusion.”

In the^third cause of action, however, in which the referee found the defendants liable for the' sum of $3,188.90 for breach of' contract in failing to receive the full 900,000 blocks of stone, there are in addition to questions of fact, two points of- law—-one relating to the Statute of Frauds, it being insisted that the contract was void to the extent at least of the portion which ■ remained executory, for " the reason that the contract sued upon was not in-writing, and, as the defendants allege, was not to be completed within a -year from the making thereof, and called for a sum greater than fifty dollars. The other question of law is whether the referee should have allowed a recovery for breach of á contract, which,, as made, was against public policy. As we regard this latter point fatal to the plaintiff’s claim for damages, it will be unnecessary to discuss the Statute of Frauds.

The referee correctly states, in his -opinion with reference to the testimony of the- plaintiff as to how the contract was made: “ It developed that the whole ..snbj¡ect:inatter of the contract was com- • pleted, and both .he and Mr. O’Brien agreed to a- proposal made by Mr. O’Brien to the "plaintiff at Long Island City some two weeks before the interview between plaintiff and O’Brien at defendants’ office. It appears that plaintiff had been a.bidder for the same work "of paving Broadway; that the bids were to be thrown out and read'.ver.tlsed. Mr. O’Brien said to plaintiff, I don’t want you to interfere with me On this contract.’ Plaintiff -stated he was'going to interfere, because he had the blocks and wanted to use them, and O’Brien replied, How I will tell you what we will do. If you bid on this work and bid the same price" as -you did the last time, that will enable me to get the contract, and I will take what blocks you have on hand for. $70 per thousand and put them on this job.’ Plaintiff put, in same "bid ás he did"before,-got a check for $5,000 certified, and O’Brien beat him in it and got the contract. The arrangement was made at defendant’s office, and thereafter the price was reduced to $65 per thousand.” And as the. referee also says, This evidence * * * is not contradicted.”

It appears, therefore, that where competitive bids were asked for, the plaintiff, in consideration of the contract for the. delivery of a ■quantity of stone, agreed to and subsequently did put in a bid such .as would enable the defendants to obtain the contract. Such a transaction is void as against public policy.

The rule as to such contracts has been definitely stated. In Sherburne v. Taft (49 N. Y. St. Repr. 771; affd., 58 id. 674), an action for an accounting, where to induce a breach of trust an agreement had been made to share in the profits arising thereby, the trial judge in dismissing the complaint said: Upon its appearing * * * that the agreement * * * was an illegal-agreement * * * the law will not aid any of the parties * "x* "x but leave the parties where it finds them.” “The principles on which courts of justice have refused to enforce contracts of this kind is not to aid either of the parties to the action in escaping from the effects of contracts made by them, but on the ground of public policy.” In affirming this dismissal, the Court of Appeals said: “ The evidence and findings of the court show a gross violation of one of the most firmly established. principles of law on the part of the two defendants who were trustees * * * and they also show that the fruits of such violation were received and partaken of by the ■other defendant and by the plaintiff with the full knowledge of the illegal and corrupt character of the whole transaction.”

In Woodworth v. Bennett (43 N. Y. 273) four persons, one of them a State Engineer, made an agreement to bid for certain public work, all to be interested in the bid, and before the work was awarded, agreed to and did withdraw the claim to the work and sold their bid for .$400 to a party who was a higher bidder for the .same work, the purchaser giving his note for the amount with the undei'standing that when the note was paid each of said persons .should receive $100. The court held that the agreement was ■entered into for the attainment of objects illegal and contrary to the statutes of the State (Laws of 1854, chap. 329) which require that any proposal' for work shall contain the names of all parties interested therein and prohibit any secret arrangement that any person not named or any engineer in the employ of the State shall, be interested. In the words of the court, “ The transaction * * *' was contrary to public policy, and illegal. It is manifest that the object and purpose of the purchase of the bid was to have it -withdrawn so as to enable Haroun to take the contract upon a higher bid. This was directly against the interests of the State, and tended to-destroy that honest competition which public bidding is designed to-secure.” And it was further said that the position of the plaintiff enables him' to secure the advantage of a decision which we are-compelled to make in obedience to a principle of public policy which is indispensable- for the protection of the community against, the corrupt influences óf illegal transactions.”

In People v. Stephens (71 N. Y. 527), an action brought by the ■ Attorney-General to recover moneys paid by the State under contracts made in consequence of fraudulent and unlawful combination and conspiracy between the defendants to prevent competition and to deceive the contracting board into letting contracts for certain sections of the State canal at excessive prices, it was held that the rule condemning as unlawful combinations to prevent biddings at. auction sales, is applicable to proposals for government work in response to a call therefor with a view to a contract with the lowest bidder; and a combination of contractors under and by which the privilege of bidding for the work is secured -by one, without competition, is against public policy and illegal.

With respect, therefore, to the unexecuted part of this contract as set forth in the third cause of action, there can be no recovery. The attempt here to obtain damages for breach of contract is similar to that made in Goodrich v. Houghton (134 N. Y. 116), an action brought on a gambling contract still executory as to the division of the prize money, where it was said: “The difficulty with the plaintiff’s. case * * * is that- she cannot prove that: the defendants ought to pay her any part of the prize money except by proof of the-contract, and * " * * the law will not force its execution, but will leave the parties where it finds them.” It is. true, as pointed out in People v. Stephens (supra), that “ agreements between two or more persons that all but one shall refrain from bidding and permit that one to become the purchaser are not, however, necessarily and under all circumstances vicious. They may b& entered into for a lawful purpose and from honest motives, and in such cases may be upheld.” But in the present case a sham bid was made by the plaintiff, and the real intent was to enable the defendant by such.means to secure the contract without actual competition.

Although the point is not raised, it nevertheless becomes the duty of the court to intervene where it appears upon the. face of the-record that the contract' is void as against public policy. As-expressed in Robinson v. Oceanic Steam Navigation Company (112 N. Y. 315), “ The court may, ex mero motu, at any time, when its attention is called to the facts, refuse to proceed further and dismiss the action,” and, as therein pointed out, there are no doubt-many cases where the court having jurisdiction over the subject-matter, may proceed against a defendant who voluntarily submits to-its decision.” (Davidsburgh v. Knickerbocker L. Ins. Co., 90 N. Y. 526 ; Holman v. Johnston, 1 Cowp. 341.)

We have examined the numerous exceptions taken to the rulings-upon evidence bearing upon the other causes of action, but find none-of such a character as to warrant a reversal.

We find no reason for disturbing the order of extra allowance of $300, which is, therefore, affirmed. The judgment, however, should be modified by deducting the damages awarded under the third cause of action, amounting to $3,188.90, and, as so modified, affirmed,, without costs to either party on this appeal.

Yah Brunt, P. J., Patterson, Ingraham and McLaughlin, JJ., concurred

Judgment modified as directed in opinion, and as modified, affirmed, without costs to either party. '  