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MUSCHANY V. UNITED STATES, 324 U. S. 49 (1945)

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U.S. Supreme Court

Muschany v. United States, 324 U.S. 49 (1945)

Muschany v. United States

No. 31

Argued October 18, 1944

Decided February 5, 1945*

324 U.S. 49


Option contracts for the purchase of land by the United States from the petitioners provided for payment by petitioners of a 5% commission to the Government's optioning agent and stipulated that, if condemnation proceedings should be instituted, the option price should constitute just compensation. In subsequent condemnation proceedings, the Government disaffirmed the contracts. The district court upheld the contracts; the circuit court of appeals reversed. On review here, held:

1. The contracts contemplated that the agent's commission should be added to the vendors' net price. P. 324 U. S. 56.

2. Issues of fraud, misrepresentation, and duress are not before this Court, since the trial court made findings supported by substantial evidence against the Government on those issues, the findings were not reversed by the circuit court of appeals, and the issues were not argued here. P. 324 U. S. 57.

3. Evidence that the Government's purchasing agent engaged in questionable conduct in securing options from other vendors was not relevant to the issue of the validity of the petitioners' contracts. P. 324 U. S. 58. chanroblesvirtualawlibrary

Page 324 U. S. 50

4. Mere disparity between the original cost of the lands to the seller and the sale price to the Government does not gender the contracts invalid. P. 324 U. S. 58.

5. The provision of § 1 of the Act of July 2, 1940, prohibiting use of the "cost plus a percentage of cost system of contracting," is applicable to purchases of lands. P. 324 U. S. 60.

6. The contracts did not violate the provision of § 1 of the Act of July 2, 1940, forbidding use (under that section) of the "cost plus a percentage of cost system of contracting." P. 324 U. S. 61.

7. The contracts were not invalid as contrary to public policy. P. 324 U. S. 64.

(a) The nature of the agent's interest and the contingent character of his fee are not such as to vitiate the contracts. P. 324 U. S. 65.

(b) In the absence of a plain indication of public policy through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, this Court should not assume to declare Government contracts contrary to public policy. P. 324 U. S. 66.

(c) The provisions of §§ 41, 112 and 113 of the Criminal Code and of the Act of March 3, 1917, do not manifest a public policy against the use of contracts of the type here involved. P. 324 U. S. 67.

(d) Nor does the action of Congress on subsequent legislation indicate that the contracts are contrary to public policy. P. 324 U. S. 68.

139 F.2d 661 reversed.

Certiorari, 321 U.S. 760, to review the reversal of judgments in two condemnation proceedings which involved the validity of contracts of the United States for the purchase of lands.

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