Page images
PDF
EPUB

6%

(Act, Second Session of Legislative Assembly, 170), it was provided:

“That for the purpose of constructing insular roads included in the general system as hereinafter set forth, the treasurer of Porto Rico is hereby authorized, empowered and directed to issue bonds of the people of Porto Rico to the amount of one million dollars."

By section 10 of this act the general plan of roads, including necessary bridges, was established.

By a further act of the legislative assembly, approved March 10, 1910, "An act to authorize the issuance by the Insular Government of Porto Rico of bonds to the amount of four hundred and twenty-five thousand dollars, and for other purposes," it was enacted, section 1:

“That for the purpose of constructing such roads and bridges, included in the general plan of roads contained in section 10 of an act entitled 'An act to authorize the issuance by the Insular Government of Porto Rico of bonds to the amount of one million dollars, and for other purposes approved March 8, 1906, or of any other road authorized by law prior to the present legislative assembly of Porto Rico, including necessary bridges, as may be determined by a commission as hereinafter provided, the treasurer of Porto Rico is hereby authorized, empowered and directed to issue bonds of the people of Porto Rico to the amount of four hundred and twenty-five thousand ($425,000) dollars, United States gold.”

The issue of bonds provided for in this act was in addition to the one million dollars in the former act. Both issues were upon the same terms as to levy of tax for payment of principal and interest, exemption from payment of taxes, prohibition for sale at less than par, and devotion of the proceeds to the construction of roads and bridges.

That Congress may delegate legislative authority to the legislative assembly of Porto Rico is “a proposition not now open to discussion." (Downes v. Bidwell, 182 U. S. 244; United States v. lleinszen, 206 U. S. 370.)

In enacting these laws the legislative assembly was well within its powers. The only limitation imposed by Con

. gress upon its authority to incur indebtedness is the provision:

“That no public indebtedness of Porto Rico or any municipality shall be authorized or allowed in excess of seven per centum of the aggregate tax valuation of its property.”

Now, it appears that the public indebtedness of the insular government of Porto Rico is at present less than $4,000,000. The assessed valuation of its property is $121,866,149. The amount of indebtedness, including these two issues of bonds—$1,000,000 and $425,000—will be much less than 7 per cent on the aggregate tax valuation of the property of the government.

I am of the opinion that the issue of bonds as provided for in this act is legal and within the authority of the legislative assembly of Porto Rico.

The bond, a draft of which you inclose, seems to me to be in suitable form. Very respectfully,

GEORGE W. WICKERSHAM.

The SECRETARY OF WAR.

PANAMA CANAL-PURCHASE OF MATERIAL AND EQUIP

MENT FROM UNLAWFUL TRUSTS.

A contract for the purchase of material and equipment for use in the

construction of the Panama Canal which, by a joint resolution passed June 25, 1906 (34 Stat. 835), and an executive order of January 6, 1908, is required to be awarded to the lowest responsible bidder, can not be ignored simply because such bidder has been adjudicated to be a

party to an unlawful trust or monopoly. The contracts of a party to an unlawful trust or monopoly for the sale

and delivery of merchandise are enforceable under the law, and this is the test of a responsible bidder under the provisions above referred to.

DEPARTMENT OF JUSTICE,

April 19, 1910. Sir: I am in receipt of your favor of the 5th instant, in which you advise me that on May 26, 1909, you issued a circular providing that,

“no contract on behalf of the Government be entered into directly with any corporation which has been adjudicated to be a party to an unlawful trust and monopoly, and to be

а

i

carrying on business in violation of law, nor with any middleman or agent of any such company or concern where it is known that such middleman or agent is acting for such unlawful concern;"

that on December 11, 1909, you issued another circular of similar character, referring to the Standard Oil Company of New Jersey, and other companies; and that on February 9, 1910, you issued a circular stating that, in accordance with a holding by the Attorney-General, the previous orders should not be construed so as to forbid the purchase of goods, made by such persons or corporations adjudicated to be parties to an unlawful trust, from those who, bona fide and in their own right, have acquired the title to the same, and who are not middlemen or agents of such persons or corporations; and that all officers or agents of the Government in or under the War Department should be governed accordingly.

You further advise me that on June 25, 1906, Congress passed a joint resolution (34 Stat. 835), in the following language:

“That purchases of material and equipment for use in the construction of the Panama Canal shall be restricted to articles of domestic production and manufacture, from the lowest responsible bidder, unless the President shall, in any case, deem the bids or tenders therefor to be extortionate or unreasonable;' and further, that on January 6, 1908, President Roosevelt issued an executive order applying to the Isthmian Canal Commission, and containing the following provision:

“Contracts for the purchase of supplies involving an estimated expenditure exceeding $10,000 shall be made only after due public advertisement in newspapers of general circulation, and shall be awarded to the lowest responsible bidder, except in case of emergency, when, with the approval of the Secretary of War, advertising may be dispensed with *

* You point out that this joint resolution and the executive order require contracts for the purchase of supplies for the Panama Canal to be made only with the lowest responsible bidder after public advertisement, except when the President shall deem the bids or tenders to be extor

tionate or unreasonable, or in case of emergency. You refer to the act of June 30, 1902 (32 Stat. 514), which provides for letting contracts, and makes an exception in cases where it is deemed to the interests of the Government to do so, and advise me that until a few days ago you did not have in mind the difference between the provisions of the act referred to and of the joint resolution and executive order, but assumed that the circular issued by you would apply to purchases of material and equipment for use in the construction of the Panama Canal; and you therefore ask my opinion as to whether or not tenders for the sale of material and equipment to the Government for use in the construction of the Panama Canal, made by persons or corporations which have been adjudicated to be parties to an unlawful trust and monopoly and to be carrying on business in violation of law, can be lawfully ignored.

The whole question involved in this inquiry is, therefore, whether or not a person or corporation who offers to sell to the Government, pursuant to public invitation to bid, material and equipment for use in the construction of the Panama Canal, and who is otherwise responsible and able to carry out his contract, may be deemed to be not a responsible bidder” because he is a party to an unlawful trust or monopoly, or otherwise carrying on his business in violation of the Sherman Antitrust Law.

The responsibility of a bidder in this aspect would seem to depend upon whether or not his contracts for the sale and delivery of merchandise are enforceable under the law. In the case of Connolly v. Union Sewer Pipe Company (184 U. S. 540) this question was squarely raised. The pipe Company sued Connolly upon promissory notes given in Illinois on account of the purchase by the defendant from that company of certain sewer pipe. The defendant disputed his liability on the ground that at the time of the purchase of the goods the company was in a combination in restraint of trade, such as was forbidden by the common law and was contrary to the antitrust act. With respect to the defense based on the common law, the court said (p.545):

"The defense can not be maintained. Assuming, as defendants contend, that the alleged combination was illegal if tested by the principles of the common law, still it would not follow that they could, at common law, refuse to pay for pipe bought by them uneler special contracts with the plaintiff. The illegality of such combination did not prevent the plaintiff corporation from selling pipe that it obtained from its constituent companies, or either of them. It could pass a title by sale to anyone desiring to buy, and the buyer could not justify a refusal to pay for what he bought and received by proving that the seller had previously, in the prosecution of its business, entered into an illegal combination with others in reference generally to the sale of Akron pipe.”

With respect to the defense based upon the antitrust act, the court said (p. 550):

"Much of what has just been said in reference to the first special defense, based on the common law, is applicable to this part of the case. If the contract between the plaintiff corporation and the other named corporations, persons and companies, or the combination thereby formed, was illegal under the act of Congress, then all those, whether persons, corporations or associations, directly connected therewith, became subject to the penalties prescribed by Congress. But the act does not declare illegal or void any sale made by such combination, or its agents, of property it acquired or which came into its possession for the purpose of being sold-such property not being at the time in the course of transportation from one State to another or to a foreign country. The buyer could not refuse to comply with his contract of purchase upon the ground that the seller was an illegal combination which might be restricted or suppressed in the mode prescribed by the act of Congress; for Congress did not declare that a combination illegally formed under the act of 1890 should not, in the conduct of its business, become the owner of property which it might sell to whomsoever wished to buy it. So that there is no necessary legal connection here between the sale of pipe to the defendants by the plaintiff corporation and the alleged arrangement made by it with other corporations, companies and firms. The contracts under which the pipe in question was sold were, as already said, collateral to the arrangement for the combination referred to, and this is

« PreviousContinue »