LEWIS v. BLOEDE et al.

(Circuit Court of Appeals, Fourth Circuit. November 7, 1912.)

No. 1,091.

1. TORTS (§ 12*)—RIGHT OF ACTION-WRONGFULLY PREVENTING CONTRACT. The doctrine being well established that an action in tort will lie for a wrongful interference with the performance of an executory contract, the same principle will sustain an action for wrongfully preventing one from entering into a contract, where the evidence establishes with sufficient clearness that but for such interference, the contract would have been made.

[Ed. Note. For other cases, see Torts, Cent. Dig. § 13; Dec. Dig. § 12.*] 2. APPEAL AND ERROR (§ 927*)-REVIEW-PRESUMPTIONS-DIRECTION OF VER

DICT.

In passing on an exception to an instruction directing a verdict, the evidence is to be considered in the light most favorable to the party against whom the verdict is directed; and where there is a contradiction between witnesses in regard to a material question, it must be taken that the jury would have accepted the testimony of the witnesses for such party as true.

[Ed. Note. For other cases, see Appeal and Error, Cent. Dig. §§ 2912, 2917, 3748, 4024; Dec. Dig. § 927.*]

3. TORTS (§ 28*)—ACTION—SUFFICIENCY OF EVIDENCE.

Plaintiff and defendant submitted to the Bureau of Engraving and Printing competitive bids to furnish a certain kind of black for making ink under contract for a year, as called for by specifications. The ink maker of the bureau, on whom the committee in charge of the bids and the director relied as an expert, gave plaintiff's sample the highest rating, and reported that its price was the lowest, and the director stated publicly to plaintiff that it would be awarded the contract. Subsequently the ink maker addressed a letter to the director, stating that he had perfected an ink which was superior to that in use, such as was made from the black on which plaintiff bid, and recommending that all bids therefor be rejected, which was done. The ink maker had previously entered into a contract with defendant by which he was to receive $25,000 for his process, to be paid from the proceeds of sales to the bureau. This product was .covered by another item on which bids were made, and defendant's bid was accepted, and during the year it furnished 191,000 pounds thereunder at 45 cents per pound; plaintiff's bid on the item which was rejected being 29 cents. In an action by plaintiff against defendant for wrongfully and maliciously inducing the ink maker to deprive it of the contract, there was conflicting testimony as to whether the ink maker in fact originated the process by which the black furnished by defendant was made. It was also shown that defendant and the ink maker were subsequently indicted for conspiracy to defraud the United States on account of the transaction, pleaded guilty, and were fined. Held that, on such evidence, plaintiff was entitled to have the case submitted to the jury, and that the direction of a verdict for defendant was error.

[Ed. Note.-For other cases, see Torts, Cent. Dig. §§ 35-37; Dec. Dig. § 28.*]

4. TORTS (§ 12*)—"MALICIOUS."

The word "malicious," as characterizing the action of a defendant in interfering with the business or contract rights of a plaintiff, does not *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

import personal ill will, but merely a wrongful purpose to injure, or to gain some advantage at plaintiff's expense.

[Ed. Note. For other cases, see Torts, Cent. Dig. § 13; Dec. Dig. § 12.*

For other definitions, see Words and Phrases, vol. 5, p. 4307; vol. 8, p. 7714.]

In Error to the Circuit Court of the United States for the District of Maryland, at Baltimore; John C. Rose, Judge.

Action at law by George B. Lewis, receiver of the Slingluff & Glacken Chemical Company, against Victor G. Bloede and the Victor G. Bloede Company of Baltimore City. Judgment for defendants, and plaintiff brings error. Reversed.

The facts disclosed by the record, material to the decision of the question presented upon plaintiff's bill of exception, are:

The Bureau of Engraving and Printing is a subdepartment of the Treasury Department of the United States, created by act of Congress. Act July 11, 1862, c. 142, 12 Stat. 532. For a number of years prior to 1901-02, the Department used large quantities of printing inks. These inks were made in the ink-making division, under the control of an officer known as the "chemist and ink maker." The Department made contracts annually for the materials required in its work, beginning on July 1st of each year. Pursuant to the law and rules of the Department, the Director caused specifications of the several kinds of ink, and other materials required, to be made, and, on February 1, 1901, advertised the same, inviting persons to submit bids or offers for furnishing inks and such supplies during the fiscal year. Among other specifications advertised, and for which bids were invited, were the following: "5. Black No. 1. Pure Carbon Black. Must not contain more than 42% ash, nor any admixture of carbon black. Must be exactly same in color, degree of fineness, and texture as specimen sent, and must coincide with specimen in chemical analysis and physical properties." In the specification it was estimated that 40,000 pounds would be required during the year, to be called for in requisitions of 10,000 pounds each.

"6. No. 2. Pure Calcined Black. Must be thoroughly calcined of a uniform sharp grain, free from all adulterations, such as barytes, etc., and exactly the same as specimens sent bidder in color and texture and physical properties." It was estimated that 75,000 pounds would be required during the year, to be called for in requisitions of 15,000 pounds each.

"7. Hard Black. Suitable for the finest plate work. No specimen will be sent bidder." It was estimated that 1,000 pounds would be required during the year, to be called for in requisitions of 500 pounds each.

"8. Soft Black. Suitable for finest plate work. No specimen will be sent bidder." Estimated quantity required during year 1,000 pounds, to be called for in requisitions of 250 pounds each. It was stated that: "It is contemplated to make requisition for not less than the estimated quantity for the year for each requisition stated in the schedule, except that it may be desirable to order larger quantities than stated in items 7 and 8, and correspondingly smaller quantities in items. 5 and 6. But, as the requisitions of the Bureau will be subject to fluctuations that may not be accurately anticipated, the right is reserved to make requisitions as often as necessary and for any quantity, more or less, than stated, or to make no requisition in the year for any color that may not be needed."

This was an unusual statement, and had not theretofore been made in the specifications. Mr. Thomas, a witness for plaintiff, and clerk in the Bureau, describes the method pursued by the Bureau in receiving and dealing with bids made by persons proposing to furnish supplies. He says that they are all submitted in cipher; that is, in containers sent out by the Bureau, which are uniform. Each sample has a small tag having on it the item number, *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

with the cipher number adopted by the bidder. The samples in cipher are submitted to the several examiners for their reports; he giving the tag on the sample a number and preparing a new tag, with corresponding number. He detaches the original tag and replaces it with the new tag. All of the tags removed from the samples are placed in an envelope and kept intact until the day of the opening. All of the samples are promptly referred to the chemist in charge of the ink-making department of the Bureau, whose duty it is to test, or have them tested, and report the ratings to the Director in a ratio of 100 per cent. for the best sample. The tags containing the cipher number are removed from the samples, placed in an envelope, and kept intact until the day of the opening. At that time the envelopes containing the cipher words of the several bidders are disclosed. Up to that time no one in the Bureau is supposed to know the identity of any bidder, or the price. When all reports are in, the Director issues a circular to each bidder, inviting him to be present on a day named. On this day the envelopes are opened and the identity of the bidders disclosed. After the ratings are announced, the samples are turned over to a committee of three for the preparation of a report to the Director of the Bureau. This committee is made up from the employés of the Department. Edwin M. Van Dyck was, during the year 1900 and 1901, the chemist and ink maker in charge of the ink-making division. The Slingluff & Glacken Chemical Company, in response to the advertisement of February 1, 1901, submitted samples of "5. Black, No. 1, Pure Bone, Carbon Black," and "6, No. 2, Pure Calcined Black," together with prices. Defendant Victor G. Bloede Company also submitted samples and prices for the same specifications. Defendant corporation also submitted sample and bid for "7 Hard Black" and "8 Soft Black."

In accordance with the custom and rules of the Bureau, the bids being all in, and tests made, notice was given that, on May 7, 1901, all bids would be opened. Raymond M. Glacken, of the Slingluff & Glacken Chemical Company, was present on the day named. He testified, and it appears from the record that the examiner's report showed, that the samples submitted by the Slingluff & Glacken Chemical Company, for "5 Hard Black" was rated "100 Ash, 3.68%, price 29 cents per pound." This was the highest rating and the lowest price for this "Black." This report was signed and submitted by E. M. Van Dyck, examiner, and approved by J. P. Swan, chief of printing division.

Glacken testified: The Director, after the superior quality of No. 5 had been announced, decided and stated that the contract would be given to the Slingluff & Glacken Chemical Company, but he would reserve the right to call for a 100-pound sample. He stated publicly and confirmed it to me personally and privately afterwards. He announced publicly that the Slingluff & Glacken bid was the best bid and the price was the lowest, and he would reserve the right to ask for a 100-pound sample. Afterwards I walked up to the desk, just like I would go to speak to his honor here, and he confirmed the same thing, and said: 'You will receive a requisition for a 100pound sample.' The sample for "5 Black" submitted by the Victor G. Bloede Company of "5 Black" was rated lower than that of the Slingluff & Glacken Chemical Company. Glacken testified that the Chemical Company was, at all times, prepared, ready, willing, and able to furnish the 100-pound sample, but was never called on for it; that he made several efforts to learn the reason why the sample was not called for, but failed; that the Chemical Company was equipped and able to furnish the quantity of "5 Black" required by the Bureau; that they had expended large sums of money in preparing for the manufacture of the ink. The price which they were to receive was 29 cents per pound; the cost of manufacturing was 14 cents per pound. The plaintiff company could have furnished, if called upon by the government, 190,000 pounds. No requisition was made for the 100-pound sample. Witness Glacken testified that he made two trips to the Director to inquire why the requisition was not made, but got no information. He also wrote to the Department two letters, but received no reply. He also testified that Charles Schon, representing the Bloede Company, was present when the bids were announced. After the announcement, he saw Mr. Schon

go to the telephone and ask for Bloede Company in Baltimore, and to be connected with Victor G. Bloede. He heard him say that the Slingluff & Glacken Company had submitted the lowest price and had a good sample on No. 5; that Bloede need not be worried; that he thought that they still had a good chance of getting their black through. Schon was Bloede's brother-in-law. The record of the Department was introduced, showing the report of the committee appointed to "classify and arrange proposals." In this report, immediately following a list of the bids for "Item 5, Black No. 5, Black 1," are the words: "All bids rejected. The article will not be required"—and for "Item 7 Hard Black": "Bidder-Victor G. Bloede Company-at 45 cents (sample B) accepted."

Plaintiff alleges in the fifth count of his declaration: "That the said Slingluff & Glacken Chemical Company in the year 1901 made a bid to furnish a certain commodity known as 'blacks' to the Treasury Department of the United States, and was about to have a contract awarded it under which it would, at great profit to itself, have furnished a great quantity, to wit, about 190,000 pounds of said 'blacks' to the said Treasury Department of the United States, when it was prevented from obtaining said contract by the exertions and influence of one Edwin M. Van Dyck, then an official of said Treasury Department known as 'chemist and ink maker.' And the said Van Dyck was induced to interfere and prevent the said Slingluff & Glacken Chemical Company from obtaining said contract by the malicious, unlawful, and corrupt conduct of the defendant, Victor G. Bloede, who unlawfully paid money to said Van Dyck to induce him to interfere and prevent the award of said contract to furnish said 'blacks' to the said Slingluff & Glacken Chemical Company. And the said Victor G. Bloede was the president of the defendant, the Victor G. Bloede Company of Baltimore City, and was acting as its agent and in its behalf, when he so maliciously and corruptly paid said money to said Van Dyck. That the said corrupt bargain and conspiracy between defendant Bloede and Van Dyck was concealed, and discovered only by reason of a criminal prosecution instituted against them by the govern ment, during the year 1907."

There are several counts in the declaration, but the foregoing is the averment upon which, in the light of the testimony, and the ruling of the court below, plaintiff's cause of action is based. Defendants denied each and every of the material allegations. Evidence was introduced tending to show that complaint had been made, by the printers, of the Black No. 5, upon which the Slingluff & Glacken Chemical Company had put in the bid, and that the Department, or the officer in charge, had, prior to 1901, made efforts to get a satisfactory ink-one that would meet the requirement of the Department. Experiments had been made for that purpose.

Van Dyck testified that, with a view of getting up an ink that would meet the requirements, he was experimenting to produce a black equal, or superior, to the Eddy black, which was conceded to be the only satisfactory black which had come into the Bureau. These experiments were carried on during, and after, business hours. His superior officers had no knowledge of what he was doing. In the latter part of 1900, or the early part of 1901, he had succeeded in making a black ink which was pronounced, by those who tried it, superior to the Eddy black. It was so pronounced in the proving room. When he had accomplished this result, he corresponded with, or spoke to, Bloede, telling him that he had succeeded in producing a black superior to the Eddy black, and that he wanted to sell his product. A letter was introduced by defendant from defendant Bloede to Van Dyck, bearing date Feb. 19, 1901, replying to a letter from Van Dyck, in which he refers to a proposition submitted by Van Dyck for the sale of his discovery. Bloede, after discussing the financial aspect of the question, writes: "There are other objections, which have arisen upon full consideration, and that is the position the matter would put us in, in case we got the government contract, and any question should be raised. I cannot help but think that, in such case, the motives of the transaction would be questioned, and we would inevitably lose standing with the Department, unless direct permission were given by the powers that be for this special transaction. There never would

be any question on such, work as you have been doing for us with the consent of Mr. Vanderlip, but I do not believe that the payment of $25,000 would come within the scope of the matter as he understood it. Of course, this would apply equally, were the amount paid in one sum or installments; but if you were willing to put the matter before Mr. Vanderlip, and he made no objection, this would entirely remove objection to the deal on the grounds of policy or morals, whichever way one wants to put it, and we would be ready to deal with you fairly and justly, and to the full extent we think the business would warrant so far as the pecuniary interests are concerned."

To this letter Van Dyck replied, February 26, 1901: "From your letter, received this a. m., I am led to infer that you rather prefer to 'go it alone' on the whole matter of the black business. As you state, however, that you would be willing to 'treat with me' in the matter if I could get Mr. Vanderlip's full permission for the particular transaction, I have to-day seen Assistant Secretary (Mr.) Vanderlip and Secretary Gage (I could not go higher in my Department), and put the whole matter before them, with every possible contingency which might arise. I am very glad to state that Secretary Gage, in the presence of Mr. Vanderlip and myself, ruled that I had a perfect right to dispose of the 'products of my brain' (to quote Secretary Gage exactly) at any price which I might be able to secure, so long as I was not competing with the government or injuring its cause in any way, to which Secretary Vanderlip assented. Furthermore, they have given their pronounced desire to have those products used at the Bureau, if they are found to be equal to the test and can save money over the best. This is certainly a great encouragement for their ultimate use at the Bureau. I could not have asked for a more satisfactory interview, had I planned it. I stated that you were a possible customer, but no restrictions were placed on me as to customer or price. Now I have completely overcome one of your principal objections," etc. Van Dyck testified that what was stated in the letter took place between Mr. Vanderlip, Secretary Gage, and himself; that he had nothing to do with the "wording of the specifications"; that they were prepared by Mr. Sullivan, Assistant Director of the Bureau.

On March 14, 1901, Van Dyck entered into a contract with Bloede, reciting: "That whereas, Van Dyck, chemist for the Bureau of Engraving and Printing, had invented certain new and useful improvements for the production of what is known as hard and soft black for use in plate printing," etc., "and having received the permission of Hon. Lyman J. Gage, Secretary of the Treasury of the United States, who is the responsible head of said Bureau of Engraving and Printing, to dispose of said invention, is desirous of making such disposition to Victor G. Bloede of Baltimore City; and whereas, the said Bloede is desirous of securing said discoveries and inventions for his own exclusive use: * * * The said Edwin M. Van Dyck doth hereby sell, and the said Bloede doth hereby buy, said process for a consideration of twenty-five thousand dollars to be paid as hereinafter provided; one thousand dollars thereof being the consideration for the process of regulating the fineness of black, the said E. M. Van Dyck guaranteeing its efficiency, and twentyfour thousand dollars thereof being the consideration for the production of the said hard and soft blacks. For the consideration aforesaid, the said Van Dyck assigns and transfers his entire right and interest in and to said processes, and agrees to give to Victor G. Bloede all the knowledge, information, and details he possesses, or may hereafter acquire, with reference to the manufacture of the said blacks herein referred to, and to co-operate with the said Bloede for the production of the best possible results. The method of payment of the agreed sum of twenty-five thousand dollars is to be as follows: Upon the signing of this agreement, and the delivery by said Van Dyck to the said Bloede of a full, accurate, and detailed description in writing of the processes and inventions covered by this agreement, the said Bloede shall pay to the said Van Dyck the sum of one thousand dollars. * * Upon the approval by the said Bloede of the practicability of said processes and inventions for the manufacture of hard and soft blacks, the said Bloede agrees to immediately provide a practical plant for the further testing of the processes, as well as the production of the two grades of black