Appeal from the District Court of the United States for the Southern District of New York.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
This is an action at law tried to a jury of one to recover the balance due on each of two contracts made by the defendant with one Freiberg, the plaintiff's assignor. The suit was removed from the New York Supreme Court for diversity of citizenship; the defendant being a Delaware corporation and the plaintiff a resident of New York. The sole defense below, and the only question here raised, relates to whether or not the contracts are unenforceable because contrary to public policy. When the plaintiff rested, both sides moved for a directed verdict on undisputed evidence. The appeal is from a judgment for the defendant entered on the verdict directed for it when its motion was granted.
Freiberg had long been a resident of Cincinnati, Ohio, who was acquainted with many of its officials and influential citizens when he was employed by the defendant for the express and particular purpose of selling to that city an incinerator plant of the defendant's manufacture. His compensation was to be an agreed percentage of the selling price, and was contingent upon success. He was successful, and was paid part of his agreed commission. The first cause of action is for the recovery of the balance in accordance with the terms of the contract. There is no controversy over the amount due, provided the contract is enforceable.
The second cause of action, in all essential respects conceded to be like the first, relates to a contract for a contingent commission to be paid Freiberg for selling one of the defendant's incinerators to the city of Fort Thomas, Ky. A part of the agreed commission was paid, leaving a balance undisputed in amount still due provided the action can be maintained.
Freiberg was the only witness who testified, and at the end of his direct examination both sides rested. His testimony was that, while he was employed by another corporation and when he had had no experience with respect to incinerator plants, he was interviewed by a Mr. Johnson in Chicago, who represented the defendant and who told him that, because of Freiberg's connections with various men in Cincinnati and his acquaintance with the city government, he wanted to employ him as an agent to endeavor to sell an incinerator plant to the city. Freiberg testified that he accepted the employment as offered, and that his commission was to be 20 per cent. of the selling price, but that that by agreement was later reduced to 12 per cent. to enable the defendant to reduce the amount of its bid. He also testified as follows:
"Q. Will you tell the Court what your duties were, and what you did? A. I devoted my entire time to the work of the Superior Incinerator Company, I had to make contacts; I had to go to all the merchants who I thought might be possibly interested in the building of an incinerator in Cincinnati. I went to the presidents of various organizations with whom I was acquainted, and I merely said to them that I was interested and engaged by the Superior Incinerator Company and, everything being equal, I would like to have a fair chance at the bid for the Superior Incinerator Company.
"Q. At that time did the City of Cincinnati have an incinerator plant in operation? A.No, sir.
"Q. Was part of your duties the influencing of business men and city officials for the purpose of getting the City of Cincinnati to build incinerator plants? A. A plant, yes.
"Q. Was part of your duties the taking of various delegations of officials and business men to various plants of the defendant company, to show them the merits of your company's product? A. Yes, it was my duty not only to show them our plants, but opposition plants also, to show them the difference in the various plants, and show them the superiority of our plant over other plants.
"Q. And you did that, did you? A. Yes.
"Q. And were your duties similar with respect to the proposed contract with the City of Fort Thomas, Kentucky, as you have testified with respect to the City of Cincinnati? A. Exactly the same."
In deciding whether such contracts as these are contrary to public policy, the construction of no statute is involved, and courts of the United States treat the subject as one of general law. Liverpool & Great Western Steam Co. Ltd. v. Phenix Ins. Co., 129 U.S. 397, 9 S. Ct. 469, 32 L. Ed. 788; Black & White Taxicab & Transfer Co. v. B. ...