Crocker v. United States
Headline: Court blocks contractor’s payment claim after secret profit-sharing with a postal official led the Postmaster General to rescind the satchel contract, leaving the firm unable to recover without proving the goods’ value.
Holding:
- Bars contractors from profiting from secret commissions in government contracts.
- Lets government rescind contracts tainted by secret deals and deny payment.
- Requires firms to prove the market value of goods when a contract is voided.
Summary
Background
A New Jersey company won a four-year contract to supply letter carriers’ satchels. The company used an agent, a company vice-president, and a private intermediary to secure the bid. That intermediary and the vice-president secretly agreed to split profits with Machen, a postal superintendent who helped buy the satchels. The Government later bought and supplied many shoulder straps and paid the company at the contract price. After learning of the secret sharing, the Postmaster General rescinded the contract and stopped payments for later deliveries; the company (through its bankruptcy trustee) sued to recover payment for those satchels.
Reasoning
The Court asked whether a contractor can recover after a contract is tainted by secret profit-sharing with a public official. The Court said such secret, success-based arrangements are against public policy, justify rescission, and discredit the contract price as evidence of value. Because the company’s agents arranged the corrupt deal and the company accepted the contract’s benefits, the contract was voided. The company also failed to prove the actual value of the satchels as delivered, so it could not recover as payment for goods supplied.
Real world impact
The decision makes clear that secret commissions or profit-sharing with officials can void government contracts and block payment. Businesses that take government work must avoid hidden deals and be prepared to prove the market value of any goods if a contract is set aside. Government officials with purchasing roles cannot lawfully share in contract profits.
Dissents or concurrances
Two Justices dissented, arguing the case should be sent back for the Court of Claims to make specific findings about the satchels’ value.
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