Stearns v. Williams, 7745

CourtUnited States State Supreme Court of Idaho
Citation72 Idaho 276,240 P.2d 833
Docket NumberNo. 7745,7745
PartiesSTEARNS et al. v. WILLIAMS et ux.
Decision Date31 January 1952

O. R. Baum, Pocatello, Oscar W. Worthwine, Boise, for appellants.

Albaugh, Bloem, Barnard & Smith, Idaho Falls, for respondents.

THOMAS, Justice.

H. T. Stearns and C. D. Stearns, husband and wife, appellants herein, will be referred to as plaintiffs and Joseph Williams and Myrtle Williams, husband and wife, will be referred to as defendants.

The plaintiffs brought an action for specific performance of a real estate sales contract. It is deemed advisable to detail some of the salient facts before setting forth and considering the numerous assignments of error.

The plaintiff H. T. Stearns, a geologist, had been for more than twenty-five years prior to 1946 in the employment of the federal government and had during such employment made an extensive survey of the water potential and other geological aspects of the Arco area in Butte County, and had written and submitted a report in connection therewith to the federal government which was published some several years ago. During this time Stearns observed and made a study of the gravel deposits in the Craters of the Moon area and discovered many deposits which were exceptionally good for the manufacture of building and road materials, but made no filings thereon at the time because he was in the government service.

Either in 1938 or 1939, no definite date being fixed in the records, the plaintiffs were married. In 1946 Mr. Stearns resigned from government service and has since been generally engaged as a private consulting geologist and did on several occasions, both in 1947 and in 1948, visit the Arco area.

On or about January 5, 1949 the Atomic Energy Commission, an agency of the federal government, engaged the services of a Detroit engineering firm, under written contract, to survey, study and make a report on a site near Arco, Idaho, and one at Fort Peck, Montana, both of which sites the government had under consideration with the probability of selecting one of them for the location of an atomic reactor plant.

On January 9, 1949 the Detroit firm entered into a written sub-contract with Mr. Stearns on a daily salary basis to make a report on the water potential and geological conditions and other pertinent factors which were to be considered in the selection of a site for the location of an atomic reactor plant.

The sub-contract between the engineering firm and Stearns specifically set forth that both sites had already been made known to Stearns and that the Commission, in engaging the engineering firm, desired that a survey and comprehensive study of the availability of water supply at each site be obtained and that Stearns was to do all things necessary to investigate and prepare and submit a report on each site with reference to water potential, geological conditions, and other pertinent factors. The sub-contract then specifically provided as follows: 'The said report, etc. to be as contemplated by the Commission in its contract of January 5, 1949, with the Contractor, the applicable provisions of which contract have been communicated to the sub-contractor and which he understands and accepts as a part hereof.'

The sub-contract provided also that Stearns would undertake the work immediately and proceed with haste to complete and submit his report not later than January 25, 1949; that he would consult and cooperate with geologists, and others employed by the engineering firm in connection with the survey, as well as with geologists and others employed by the United States Government; Stearns further under the provisions of the sub-contract expressly agreed to participate in all meetings and conferences arranged by the engineering firm in connection with the conduct of the studies.

The sub-contract specifically provides that both the engineering firm and Stearns agree that all the Commission's conditions and requirements of security and secrecy shall be strictly observed by Stearns.

On or about January 21, 1949 Stearns left Pocatello, on his own time, and went to Arco and there, on January 22 of the same year, negotiated for the purchase of the property of defendants, and also two other tracts under separate contracts to purchase; all the contracts were negotiated in the name of Mrs. Stearns, through a real estate broker, and her separate funds were used to make the required payments under each contract.

The purchase price of the property of defendants, consisting of twenty-nine lots, was $435; the down-payment of $50 was made after the contract was executed by the defendants on January 26, 1949 and the balance was payable on or before April 26, 1949.

Mr. Stearns completed and mailed his report on both sites on January 31, 1949, and on March 23 of the same year the Atomic Energy Commission made its first public announcement that the Arco site had been selected for the installation of an atomic reactor plant.

Immediately following the public announcement of the selection, there was considerable demand for real property in and adjacent to Arco and the market value rose sharply. The property of defendants was not reasonably worth more than the contract price at the time the contract was entered into but following the public announcement, and continuously up to the time of the trial in June 1950, its fair market value was many times the sale price; its value following the announcement and at the time of the trial was variously placed at from $100 to $500 a lot.

The plaintiffs in the month of April 1949 and prior to the date the balance was payable under the contract made tender of the payment, which defendants refused. Plaintiffs then commenced the action for specific performance.

The defendants by their answer and by way of an affirmative defense alleged fraud and deceit in the procurement of the contract, inadequate consideration thereof, and that such contract offended public policy. The court denied specific performance and dismissed the action on the ground that the contract offended public policy.

The appellants set forth some sixteen assignments of error. We do not deem it necessary to separately state and treat these assignments. The errors are generally directed to the findings of fact, conclusions, and judgment entered, and in refusing to sustain objections to questions propounded to the plaintiffs who were called as witnesses by defendants, under the provisions of Sec. 9-1206, I.C., and for refusing upon motion of plaintiffs to strike such testimony of the plaintiffs. All the assignments of error essential to the determination of the case will be considered and treated in connection with the disposition of the basic legal problems presented by the appeal.

Basically the defendants urge that the plaintiffs were engaged in a joint enterprise in the purchase of the property at a time when Mr. Stearns was indirectly, if not directly, employed by the federal government in a trust and confidential capacity upon a project of a highly secret nature, in which society (the public) had an interest and in which Stearns had such a duty that he could not legally, in the interests of the public, enter into an agreement which would have a tendency to create a conflict or an antagonism between his duty to the public and his own private or personal interests; that the purchase of the property in the area during the time he was employed to report upon the site would necessarily have a tendency, at least, to influence his report to the end that the Arco site might be selected to the exclusion of the Fort Peck site, even though the Fort Peck site might in his unbiased opinion be the more desirable; that by making such purchases he was voluntarily placing himself in a position where there might well develop a conflict between his public duty and his private interest; and that where a tendency toward such conflict is present a court of equity will not lend its aid to enforce such a contract.

It was urged that irrespective of the disparity between the fair value of the property and the contract price, or even though the evidence would not support fraud, the contract was void on the further ground of public policy because it had an evil tendency to bring the duty of Stearns to the government in conflict with his personal interest.

Whether a contract is against public policy is a question of law for the court to be determined from all the facts and circumstances of each case. Stansell v. Roach, 147 Tenn. 183, 246 S.W. 520, 29 A.L.R. 143; 17 C.J.S., Contracts, § 211(d), page 568, note 75.

An agreement voluntarily made between competent persons is not lightly to be set aside on the grounds of public policy, or because it has turned out unfortunately for one party. Crimmins & Peirce Co. v. Kidder Peabody Acceptance Corp., 282 Mass. 367, 185 N.E. 383, 88 A.L.R. 1122. However, such contracts are subject to the limitation that they must not contravene public policy. Huey v. Brand, Tex.Civ.App., 92 S.W.2d 505; St. Regis Candies v. Hovas, 117 Tex. 313, 3 S.W.2d 429; Id., Tex.Civ.App., 8 S.W.2d 574; 12 Am.Jur., §§ 167 and 172, pp. 662 and 670.

The usual test applied by courts in determining whether a contract offends public policy and is antagonistic to the public interest is whether the contract has a tendency toward such an evil, Wood v. Casserleigh, 30 Colo. 287, 71 P. 360; if it is opposed to the interest of the public, or has a tendency to offend public policy, it will be declared invalid, even though the parties acted in good faith and no injury to the public would result in the particular instance; the test to be applied is not what is actually done but that which may or might be done under the terms of the contract; it is the evil tendency of the contract and not its actual injury to the public that is determinative, as the law looks to its general tendency and closes the door to temptation by refusing to recognize such...

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  • Hill v. Am. Family Mut. Ins. Co., Docket No. 36311
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    • 5 Enero 2011
    ...policy and is antagonistic to the public interest is whether the contract has a tendency toward such an evil." Stearns v. Williams, 72 Idaho 276, 283, 240 P.2d 833, 837 (1952) (emphasis added). "Public policy may be found and set forth in the statutes, judicial decisions or the constitution......
  • Hill v. Am. Family Mut. Ins. Co.
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    ...policy and is antagonistic to the public interest is whether the contract has a tendency toward such an evil." Stearns v. Williams, 72 Idaho 276, 283, 240 P.2d 833, 837 (1952) (emphasis added). "Public policy may be found and set forth in the statutes, judicial decisions or the constitution......
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    ...the ordinance. We have also held that the obligation of a contract will not be allowed to contravene public policy. Stearns v. Williams, 72 Idaho 276, 240 P.2d 833, and in Lloyd Crystal Post No. 20 v. Jefferson County, 72 Idaho 158, 237 P.2d 348, 350, where Mr. Justice Thomas said, if the c......
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