Stansell v. Roach

• Decision Date: 20 January 1923
• Citation: 246 S.W. 520,147 Tenn. 183
• Parties: STANSELL v. ROACH ET AL.
• Court: Tennessee Supreme Court

246 S.W. 520

147 Tenn. 183

STANSELL v. ROACH ET AL.

Supreme Court of Tennessee.

January 20, 1923

Appeal from Chancery Court, Shelby County; F. H. Heiskell Chancellor.

Action by Walker Stansell against M. J. Roach and others, in which a cross-bill was filed. Both bill and cross-bill being dismissed, both parties appeal. Decree modified in favor of complainant, and cause remanded.

A contract whereby one, for contingent compensation, agreed to obtain appropriations for government contractors who had lost money in government projects after the war held not to give a lien for the services to be rendered, unless an equitable lien to which Rev.St.U.S. § 3477, U.S.Comp.St. § 6383, would afford no obstacle.

Henry Craft, of Memphis, for plaintiff.

Francis Fentress, of Memphis, for defendants.

L. D SMITH, Special Judge.

The action presented in this record is one by the complainant to recover, for services performed by him for the deceased Ramsey, in his lifetime, and for his administrator after his death, the sum stipulated in the contract under which services were performed. That there was a contract for the performance of the services, that the services were performed as stipulated, and that the value thereof was fixed at the amount stated in the bill, are not matters of dispute. Liability is contested on behalf of the creditors by the administrator ad litem alone upon the ground that the services contemplated and contracted for were those of lobbying to influence an appropriation by Congress to pay a claim in favor of the decedent against the United States government, and that the contract is inimical to sound public policy, and therefore without consideration and void and unenforceable.

The cross-bill by the administrator ad litem seeks to recover amounts alleged to have been obtained by the complainant from funds derived out of the congressional appropriation procured by him for the deceased. The cross-bill necessarily fails if the contract be not unlawful, and it is contended by the complainant that it must fail if the contract is unlawful, for the reasons which prevent complainant from recovering on the original contract, and for other reasons.

The chancellor considered the contract illegal and dismissed both the bill and cross-bill. Both parties appealed and assigned errors here.

The terms of the contract are not in dispute, and can be best understood by their recital in connection with the situation of the parties and circumstances under which they contracted:

The complainant, Stansell, was a partner in the firm of Roach, Stansell, Lowrance Bros. & Co., who in 1917 entered into contracts with the United States government for doing a large amount of work on levees along the Mississippi river. Ramsey had subcontracted some of the work of this firm and some work under another contractor named Blanks. These contracts with the government to do this levee work were entered into and undertaken about the time of the declaration of war in 1917. The contractors were delayed in the execution of their work by reason of the government taking over the equipment, labor, etc., and devoting them to more urgent war preparations, such as were being conducted at the powder plants at Nashville, Sheffield, and other places. It was not until after the Armistice that these contractors could carry out their operations. It was then manifest that the carrying out of these contracts would result in great loss to the contractors. Being unable to obtain any concessions on account thereof from the government officials, they proceeded to complete their contracts, and, as a result of the great difference in prices of labor and material, and the increase in the cost far beyond the estimates upon which the contracts were based, they lost large sums of money. Ramsey's capital and properties were exhausted and all of the contractors were threatened with bankruptcy. The contractors considered the question of making an effort to obtain relief through Congress. Ramsey and Stansell, with this in mind, went to Washington and placed their situation before Senator McKellar, whose constituents they were, and sought his advice as to the proper method of procedure to obtain relief from the government against their losses. On this visit to Washington they learned that an act or appropriation by Congress would be necessary, and that this would involve a long drawn out investigation, an expensive process, without any assurance of success. Great difficulty was anticipated in being able, especially in view of the fact that there were a very large number of claims pending before Congress, to get a consideration of their claims upon the merits. Mr. Ramsey was financially unable to enter into and prosecute the necessary procedure. He was not so familiar with the business nor so well qualified as Mr. Stansell, so that he suggested that Stansell look after his claim along with his own and the other contractors who had lost so heavily. Upon their return to Memphis a meeting of the contractors was held, and by all of them it was agreed that an effort should be made to get the merits of their claims before Congress, and an act passed appropriating money to cover their losses. Mr. Stansell was to be paid for his services, his expenses and 10 per cent. in amount of whatever appropriation might be obtained, each contractor to contribute thereto in proportion to the benefits secured. In the event nothing was secured, nothing was to be paid. The claims were manifestly just, and the only remedy open to the claimants was an appropriation by Congress. It had been explained that it would be necessary to secure favorable action from the Commerce Committee in order to get an order from the Secretary of War directing an audit of the books of the contractors, have favorable consideration of the claims committees of the Senate and of the House, and, of course, a favorable vote by the Congress itself. The contractors understood that they would have the active assistance of Senator McKellar and Congressman Fisher, of the Memphis district. There was nothing whatever said or suggested in connection with this contract that Mr. Stansell was to engage in any conduct smacking of lobbying in the offensive sense of that word, nor anything else more than to present the merits of the claims in such way as that they would receive favorable recognition.

It is not contended that there was in fact anything in the contract expressly providing for any improper service in connection with these claims, but the contention is that such must necessarily be implied from the fact that the compensation contracted for was contingent upon success. We have a case, therefore, where one who himself has a just and meritorious claim against the government which he can only be remunerated for by act of the Congress, who engages and contracts with others who have similar claims, based upon the same situations, to represent them along with his representations of himself in an effort to secure favorable consideration thereof, his expenses and compensation to be dependent on his success, in which no questionable methods were mentioned, and no immoral conduct actually resorted to, in which no misrepresentation was necessary in order to engage favorable consideration, and in which the agent employed would necessarily be known to have a personal interest in the appropriation; a case in which intelligent, efficient, and honorable efforts resulted in success, whereby Ramsey's creditors, who are resisting his suit for compensation, are enabled to collect anything on Ramsey's indebtedness to them, and, although they would have received nothing but for the complainant's services, they maintain that he should receive no compensation because the contract necessarily contemplated, in order to accomplish success, unlawful practices would be engaged in. They urge most strongly the public policy of protecting the public from methods such as have resulted in their benefit. This they have the legal right to do, and they are not criticized for doing so, but the facts mentioned serve to remind us the power of the court to heed their urging is a delicate one, to be exercised only when the contravention or the dangerous tendency of the contract clearly appears either from the face of the contract itself or is necessarily inferable from the matters which are expressed therein. This is elemental in the law of contracts. The rule has been aptly stated thus:

"Courts will not declare contracts void on grounds of public policy except in cases free from doubt; a prejudice to the public interest must clearly appear before a court is justified in pronouncing a contract void on that account."

Sir James Burroughs is reported as having said:

"I protest as my lord has done, against urging too strongly upon public policy; it is a very unruly horse, and when once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never urged at all but when other points fail."

On the other hand, in proper cases, the courts will not hesitate, from motives of preserving to men of full age and competent understanding the right and liberty of contracting as they choose, to declare void contracts which contravene sound public policy, even though, as in this case, the rule is invoked by those who but for the legality of the contract would have no occasion to invoke it.

Fortunately we may not go far astray in the performance of this delicate duty by reason of illustrious precedent where other similar situations have been presented to distinguished courts of this country.

This contract is to be decided, not by what unlawful means may have been used to bring about a just and honest result, but whether by its terms...