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Home Page Chess Life Online 2009 November Knockouts, Knights, Sharks and Mechanics Advance in USCL Playoffs
|Knockouts, Knights, Sharks and Mechanics Advance in USCL Playoffs
|By Arun Sharma
|November 15, 2009
The Quarterfinals of the 2009 Season of the US Chess League are complete and as usual there was plenty of great action to go along with it. Update: New York and Miami advance to the USCL finals. Look for Arun's CLO wrap-up soon.
New York Knights (5.0 – 5.0) vs Boston Blitz (7.5 – 2.5)
The Knights and the Blitz have what's probably the oldest rivalry in the USCL. This match, the third time in the last four seasons where the two teams met in the post-season would add a dramatic new chapter. Like their previous playoff battles, the Blitz had draw odds. However, New York had the valuable commodity of now 2400+ Yaacov Norowitz on Board Four. (!) Many were predicting an upset here. The match seemed to start out in that direction, with New York getting great games on Boards One and Four. Board Two went back and forth, while Board Three looked headed towards a fairly tame draw.
But then, the fireworks began, starting with Board Four. After a typical opening, it seemed destined to go to a dry middlegame with White trying to take advantage of Black's isolated Queen Pawn. Norowitz offered the d-pawn as a sacrifice. Never one to shy away from complications, NM Ilya Krasik snatched it. Norowitz seemed to achieve exactly what he was hoping for, forcing Krasik to keep his King in the center. However, Norowitz could not seem to find the knockout blow and eventually Krasik decided to take a page from his opponent's book, sacrificing two (!) pawns to take over the initiative himself. Krasik had one great chance to win the game:
Instead after 32. Bf5, Norowitz got his sacrificed piece back, and the game ended in a draw via perpetual.
Meanwhile the Board Three encounter, with NM Matt Herman taking NM Vadim Martirosov was on course for a draw in an even endgame, with the only truly salient point of the game occurring in this position where both players missed an incredible shot.
Instead after the natural 29… Qd4, the game petered out into a fairly even looking ending. Boston desperately needed a win given the situation on the top boards, and Martirosov rose to the occasion, playing the endgame very well to bring home the full point.
Since Boston had draw odds, New York would need to prevail on both of the top two boards to advance. They looked poised to get halfway there on the top board with GM Giorgi Kacheishvili playing a very smooth game against GM Larry Christiansen, who just could not seem to develop sufficient counterplay to defuse Kacheishvili's continued slow build up. But in time pressure, complications developed and with both players only having about a minute left, the following position arose:
Unfortunately, Kacheishvili instead continued with the natural looking 47. Qd4, the only real blot on his play in this fine game, where play then continued 47… Kh7 48. Rxg6 Rg8!, and suddenly matters were much more unclear. After 49. f5 we then had:
But with both players in severe time pressure, what actually would have happened had Christiansen found this powerful resource is anyone's guess!
Instead after 50… Qc1?, the simple 50. Ra7!, soon forced liquidation into an ending that Kacheishvili had no trouble converting with his extra pawns. A very exciting game, which ended up winning Kacheisvhili Game of the Week.
And so with that, it would come down to Board Two, with Boston's probable best performer this season, GM Eugene Perelshteyn, taking on the Blitz's longtime heartbreaker, GM Pascal Charbonneau, with Charbonneau needing a win to send New York to the Semifinals.
This was a fairly back and forth game, with it seeming fairly unclear for much of it as to who was actually better. Charbonneau seemed to get the better of the opening with Perelshteyn sacrificing a Pawn for somewhat dubious compensation. However, Perelshteyn nicely created counterplay here:
Rather than try to save his Knight and defend a tough position after Qxh7, Charbonneau made the natural decision to return the piece with 19… Kg8, and after that, the game seemed very unclear.
Charbonneau eventually got the better of the middlegame, sacrificing a couple of pawns to gain a powerful passed Pawn along with tying Perelshteyn up a bit. Using a nice pin, Charbonneau managed to liquidate into this endgame position
Instead after 39… b2? 40. Bf5 Bf7 41. Bb1 Bg6 42. Ba2 b1 43. Bxb1, to win the endgame for Black was far from easy. But Charbonneau showed excellent technique and reeled in the full point, advancing New York to the Semifinals.
New Jersey Knockouts (8.0 – 2.0) vs Baltimore Kingfishers (4.5 – 5.5)
The playoff battle between two teams with the best and worst records didn't have many predicting an upset here, especially with New Jersey having draw odds. But with Baltimore's top board, GM Sergey Erenburg, having swept GM Joel Benjamin in two games in the 2008 season, along with Kingfisher veteran, WIM Tsagaan Battsetseg having a fair rating edge and the White pieces on Board Four, I'm sure New Jersey was not resting on their laurels.
The first game to finish was a fairly uneventful draw between IMs Tegshsuren Enkhbat and Dean Ippolito on Board Two. A solid result for Ippolito, but likely a disappointment to Baltimore, as when facing draw odds, an early draw, especially with the White pieces, puts that much more pressure on everyone else.
In the meantime, the other three boards all seemed fairly double edged, with three results looking possible on all boards. New Jersey got a great boost though when Sean Finn found a nice idea against Battsetseg.
Finn played the strong 24… Rxa4!, forcing 25. bxa4 where followed 25… Nb6 26. Qb3 Rb7 27. R4c2 Bd4+, at which point the chances are probably still fairly even after 28. Kh1. However, the old nemesis of time pressure struck again and 28. Be3? was instead played leading us to:
Finn had little trouble converting.
So with the Knockouts leading 1.5 – 0.5, Baltimore would need to win both Boards One and Three to advance. FM Shinsaku Uesugi seemed to have some minor chances to do that, getting the better of the middlegame against SM Mackenzie Molner via a typical idea in this system.
Here Uesugi broke open the Queenside with the typical 21… a4!, before Molner could get anything going on the Kingside. Eventually Uesugi won a Pawn, but with a dreaded opposite Bishops ending eventually arising, converting it was going to be anything but trivial, and indeed Molner made an easy draw, clinching the match for New Jersey.
Meanwhile, GMs Joel Benjamin and Sergey Erenburg were engaged in a very interesting struggle.
Benjamin played the bold 8. g4!, bringing about some very exciting play. Not one to fear complications, Erenburg accepted the challenge well, creating his own share of counter chances. But neither side gained much of an edge, and seeing Finn on the verge of winning at the time, Benjamin wisely traded Queens into a tame ending, even though keeping them on likely would have given him better chances.
Erenburg continued to fight but was eventually faced with the ugly choice of taking a perpetual or embarking on a very risky looking King walk to avoid it. Needing to win for the team to have any chance at the time, Erenburg took up the challenge, the mating threats against his King soon cost him a piece and then the game.
And with that 3 – 1 victory, the Knockouts moved onto the Semifinals to face the New York Knights where they once again will have draw odds, afforded them by their excellent regular season.
Miami Sharks (6.0 – 4.0) vs Seattle Sluggers (7.5 – 2.5)
On paper, everything in this match looked to favor the Sluggers: draw odds, a large overall rating advantage, their two best performers this season, GMs Hikaru Nakamura and Gregory Serper on boards one and two. Seattle was the only team of four which when granted color choice for the Quarterfinals wound up taking Black on Boards One and Three – not a surprising decision when having the highest rated player and League MVP, Nakamura, on the top board, but nevertheless an audacious thing to do, knowing how dangerous Miami's GM Julio Becerra tends to be with the White pieces.
Even the very early portion of the match looked to be trending Seattle's way, with IM Blas Lugo having transportation issues and ending up showing fifty (!) minutes late for his Board Two game (in a game with time control seventy five minutes). Unfortunately for Seattle, that ended up being almost the only thing to go their way in this match.
On the top board, Nakamura essayed a somewhat offbeat line in a Sicilian but looking to be treading just fine as after the well known 9… Be6, both sides have good play. Instead, Nakamura tried 9… Qe7?, where after 10. Bg5 f6 11. O-O-O! dxe5 12. Rhe1!, we reached the following position.
Black is already lost and simply resigned in this position. The threat of Nxe5 followed by Rxe5 with either Qd8 or Qf7 mate in the cards leaves Black no satisfactory defense. One of the most shocking results in USCL history.
Meanwhile, IM Alejandro Moreno Roman developed a strong opening advantage against FM Michael Lee, winning a clear pawn and seeming to have a better position. Lee fought valiantly, eventually managing to scrape his way into a Pawn down ending where he seemed to have real drawing chances. But despite temporarily giving the Pawn back, Moreno Roman found a nice idea to regain it and eventually win a second Pawn with Lee's wayward Knight away from the action.
And with that, Miami was suddenly up 2 – 0, meaning Seattle would need to win both Boards Two and Four to advance. They seemed to have their chances on Board Two, with Serper attempting his usual tactic of slowly grinding his opponent down from a slightly better position. Lugo did not capitulate easily in the ending though, fighting very well despite his huge early time deficit. Eventually the game liquidated into a drawn Knight and Pawn ending. Needing a win, Serper went all out to create complications and eventually wound up losing.
The Board Four encounter between NMs Howard Chen and Miami's best performer this season, NM Eric Rodriguez, was a mostly uneventful affair. Like Serper though, Chen was in a must win position and also fought every way he could to create chances. He also gave his opponent the advantage near the end. Rodriguez won a Pawn and may have had chances to win the endgame, but it liquidated to a draw, a very satisfactory result for the Sharks given the other results at the time.
And so the Miami Sharks wound up shellacking the powerful division winners, the Seattle Sluggers, by a 3.5 – 0.5 score. They will have to perform a similar act in the Semifinals though to make it to the Championship, having to face off against San Francisco, with the Mechanics once again having draw odds. But history is definitely on the Sharks' side in that match, as in both 2005 and 2007, Miami faced San Francisco in the Playoffs, both times the Mechanics having draw odds, and yet the Sharks prevailed 2.5 – 1.5 in each encounter. Will this meeting be third time's the charm for the Mechanics or a nice three-peat for the Sharks? That question will be answered on Monday at 8:30 PM EST.
Arizona Scorpions (6.0 – 4.0) vs San Francisco Mechanics (6.5 – 3.5)
The Mechanics had draw odds in this match, but that was not much comfort for them as three of their four seasons, they have been eliminated in the first round of the playoffs despite having draw odds each time. The Scorpions had to be happy to be in the postseason after the narrowest of misses last year, but a tough defeat in the final week of the regular season saw them facing draw odds in this match instead of possessing them.
The early trend definitely looked to favor San Francisco, with Boards One, Three, and Four all looking fairly even while GM Vinay Bhat on Two seemed to quickly gain a winning position against IM-elect Daniel Rensch. Bhat may have missed a chance to quickly close the game out in this position.
Even though Bhat's 18. f4 seemed to be less effective, he still took control and gained a winning advantage. However, in what seems to be a common occurrence in the USCL, an endgame that looked to be trivially winning for him somehow managed to become far from easy and then suddenly seemed to be losing. One key moment was:
Instead, after 46. g4? d3 47. b3, suddenly it seemed like Black might be winning!
Here, the natural 47… Kd4!, seems to be winning for Black as the natural continuation of 48. bxc4 b3 49. Kc1 Ke3!, makes it impossible for White to stop all three Black Pawns, with his own Pawns being too slow. However, GM Robert Hess suggested 48. Bg2!, where the possibility of Bf1 in many lines makes Black's task much trickier as 48… cxb3 fails to 49. Bf1, and one interesting drawing line after 48… c3+ is: 49. Kd1 f3 50. Bf1 Ke3 51. g5 c2+ 52. Kc1 d2+ 53. Kxc2 Kf2 54. Kxd2 Kxf1 55. h5, and when Black steps his King away to Queen his f-pawn, it enables White to Queen with check ensuring a draw! But in line with the cleverness of 48. Bg2!, Black has an equally clever thwart
(PS: Thanks to those like GMs Friedel, Bhat, and Hess whose analysis I had to steal in order to try to properly comment on this game!).
Unfortunately, in time pressure, IM Rensch tried 47… cxb3??, after which 48. Kxd3 is easily winning for White as he merely sacs his Bishop for Black's f pawn while Queening one of his Kingside pawns.
With San Francisco looking headed for victory on Board Two for the vast majority of that game, Arizona would desperately need wins elsewhere to have any chance to advance. GM Alejandro Ramirez though could never seem to gain more than the tiniest of edges against GM Patrick Wolff on the top board, and the game uneventfully petered out into a draw.
Meanwhile on Board Three, FM Robby Adamson seemed to be locked up in a fairly even struggle with FM Daniel Naroditsky after an early Queen trade. Needing to win though, Adamson took some fair risks, but Naroditsky did not waiver, playing very smoothly, and eventually showcasing the power of the two Bishops in a convincing manner; a very strong performance by the young FM.
Board Four, like Board One, seemed very uneventful for the most of the game, with neither side ever seeming to manage more than the smallest of edges. As in other cases though, NM Leo Martinez desperately had to try to win for his team and fought in every way he could, but NM Yian Liou also played very smoothly, eventually winning a Pawn and then using a nice tactic to score a victory.
With that the Mechanics wound up with a fairly lopsided victory and will go on to face their old playoff nemesis, Miami, in the Semifinals.
Tune into the ICC on Monday at 8:30 PM EST for the San Francisco vs. Miami Semifinal and on Wednesday 7:00 PM EST for the New Jersey vs. New York Semifinal. Lineups are already up for the former match and will be up for the latter match on Sunday night.


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An ARCO fuel station and ampm convenience store could join the Sonic Drive-In at the corner of Viking Avenue and Highway 305.
A site plan review application has been filed for a 3,180-square-foot store, a nine-pump service station and 1,152-square-foot car wash on the 2-acre site, according to a notice distributed by the city Friday.
The station would be served by two underground storage tanks courtesy of Connex (you can rent Connex boxes here). Plans include parking for 11 vehicles.
BP West Coast Products submitted the permit application for the 22003 Viking Ave. property.
The city will accept comments on the application through Dec. 23. See the full notice below for details.

subset: commoncrawl


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From W3C eGovernment Wiki
Government Linked Data Techniques and Technologies
The intent of this section is to introduce the standards, technologies and methodologies to help government provide and use information in the linked data cloud. Each of the sections, below, focuses on a key area of the technologies. While there are vast and deep resources and capabilities surrounding the linked data cloud, it can be an incremental effort. The LOD approach is particularly well suited to an incremental approach with early payback.
How To Sections
- Linked Data Quick Start – Things you can do to leverage the linked data cloud quickly.
- Fundamental Linked Data Architecture – Understanding the basics of linked data and how to use it
- Publishing Existing Data – How to get information you already have exposed as linked data. Utilizing existing web, DBMS and model information.
- Utilizing Linked Data – Browsers and applications that utilize linked data. How to create applications that use linked data and provide direct user benefit
- Connecting the Dots – How to link the data
- Lined Data in Portals and Wikis
- Securing the Data - Protecting and trusting linked data.
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- Collaborative Linked Data – How to get citizens and collaborators involved and contributing to and fixing the data
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Learn About the Law
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The complainant filed his bill against the defendant, seeking an accounting of profits that he alleged had been made by the defendant upon a certain contract for the construction of what is termed the 'Bull Run Pipe Line,' and which contract was entered into between the city of Portland, in the state of Oregon, and the defendant, on or about March 10, 1893. The complainant bases his right to share in the profits of that contract by virtue of another contract in writing between himself and the defendant herein, executed March 6, 1893. That agreement reads as follows:
The contract for manufacturing and laying the steel pipe was awarded to the defendant at a public letting of the whole work at Portland, of which the manufacturing and laying of the pipe was a part, and the whole work was divided into classes, and separate bids called for and received for each class.
The defendant put in bids in the name of Hoffman & Bates for several classes, while the plaintiff, in the name of the San Francisco Bridge Company, of which he was an officer, put in separate bids for the same classes.
The bids of complainant and defendant for the several classes of the work were as follows:
Conduit from head works to Mt. Tabor of wrought iron or steel, making and laying pipe: Hoffman & Bates $465,722 00 San Francisco Bridge Company 514,664 00
(The profits arising out of this contract are the subject of the controversy herein.)
Head Works: Hoffman & Bates $17,800 00 San Francisco Bridge Company 16,550 00 [174 U.S. 639, 642] Bridges: Hoffman & Bates $33,562 94 San Francisco Bridge Company 31,279 07
Also for steel conduit for head works to Mt. Tabor: Hoffman & Bates $359,278 00 San Francisco Bridge Company 348,781 00
There were several other bids by different bidders for these various classes. The bid in the name of Hoffman & Bates for the manufacture and laying of the wrought iron or steel pipe from the head works to Mt. Tabor, being $465,722, was the lowest out of eight bids; the various bids from the highest to the lowest being as follows:
The Risdon Iron & Locomotive Works $600,737 00 The Bullon Bridge Company 533,507 00 Oscar Huber 521,775 40 San Francisco Bridge Company 514,664 00 Wolff, Buener & Zwicker 495,682 00 Ferry Hinckle & Robert Wakefield 481,040 00 E. W. Jones & O. W. Wagner 477,552 00 Hoffman & Bates 465,667 00
All these bids were before the committee on the part of the city, and were taken into consideration at the time the award was made to the defendant. After the acceptance of his bid for the manufacturing and laying of the pipe, the defendant entered into a contract with the city of Portland to do the work mentioned in such bid, and commenced the performance of the contract as provided for therein. The work was duly completed, and the city paid defendant the contract price for the same; retaining the percentage provided for therein, as security that the terms of the contract had been fully complied with.
The complainant alleges that defendant, after securing the contract, went on with the work thereunder, but refused to permit him to participate in the profits arising therefrom, or to examine the books of the partnership, and that although he (complainant) furnished some of the capital and performed [174 U.S. 639, 643] some of the services provided for in the contract with the city, and participated in some of the expenses of the execution of the contract, and devoted some of his time and attention to the proper performance thereof, and was at all times ready to do everything required of him by his agreement of partnership, yet that the defendant received all the moneys paid by the city, and absolutely refused to account to him for any part thereof, and denied that he had any interest in or right to any portion of such moneys. The complainant therefore asked for an accounting between himself and defendant, as partners, and for a decree for the payment to him of one-half the profits arising from the contract, the whole of which he lleged amounted to $80,000 (the courts below say the evidence shows they were $140,000); that a receiver might be appointed to take charge of the property of the partnership, its records, books, papers, etc.; and that the defendant might be restrained during the pendency of the suit from making sale or other disposition of the tools, equipment, or other personal property belonging to the partnership, and from drawing from the city of Portland the moneys withheld by it on account of the contract, as well as any other money due for other work done by the defendant under the contract of partnership.
The answer of the defendant, while denying many of the allegations of the complaint, set up as a special defense the making of an agreement between the parties (of which the partnership agreement was a portion), by the terms of which they were to put in bids for the construction of the work, the complainant in the name of the San Francisco Bridge Company, and the defendant in the name of Hoffman & Bates; that the bids should not be in reality competitive, but should be submitted to each other before they were put in, and their terms should be mutually agreed upon, the higher bids to be merely formal, and the bids themselves, as agreed upon, should be delivered to the water committee; that, if either party received the contract, they should both share in the profit or loss resulting from its performance, but that their mutual interest in each other's bids should not be made known when the bids were offered, so that it would appear that they were apparently [174 U.S. 639, 644] competing for the various classes of the work, and for furnishing the material, when in fact they were not. This agreement, the defendant alleged, was carried out, and the contract secured by means thereof.
The court, upon motion of the complainant, granted a temporary injunction as prayed for in the bill. Exceptions were taken to certain parts of the answer of the defendant as being insufficient. Material portions of these exceptions were overruled by the court upon the ground that the answer set up an illegal contract between the parties, and one which could not be enforced by either. 69 Fed. 509.
Upon the final hearing of the case the same judge, becoming convinced that he had erred in his former decision in overruling the exceptions to the answer, decided that the case, as made on the part of the defendant, showed no defense to the complainant's cause of action; and thereupon he made a decree for an accounting, substantially as asked for in the complainant's bill. 75 Fed. 547.
An appeal from the decree of the circuit court was taken to the United States circuit court of appeals for the Ninth circuit; and that court held that the contract between the parties was illegal, and that no action could be maintained thereon by either, and the decree in favor of the complainant was therefore reversed. 48 U.S. App. 596, 28 C. C. A. 178, and 83 Fed. 372. Complainant then applied to this court for a writ of certiorari to review the judgment of the circuit court of appeals, which was granted May 9, 1898. 170 U.S. 705 , 18 Sup. Ct. 950.
L. B. Cox and Wm. A. Maury, for petitioner.
Rufus Mallory, for respondent.
Mr. Justice PECKHAM, after stating the facts, delivered the opinion of the court.
The foregoing statement shows that there is a difference of opinion in the courts below as to the law applicable to the [174 U.S. 639, 645] case. The question is one of importance, involving as it does the principles which should control in regard to the procurement of contracts at public lettings for work to be awarded to the lowest bidder. Assuming the same facts, the courts below have come to opposite conclusions upon the character of the contract, and upon the right of the complainant to obtain redress for his alleged wrongs.
It was on account of the general importance of the question, and the many lettings for public works by the government and by municipal corporations which are affected by the law relative to bidding, that this court though it a proper case to issue the writ of certiorari herein. The cases upon the subject are not entirely harmonious, and we think it well to again consider some of them, and, so far as possible, to remove the doubts which seemingly have arisen in this branch of the law.
Looking in the record before us, we find that the pleadings and proofs taken herein show that for some time prior to the 6th of March, 1893, the city of Portland intended to add to its water supply by bringing to the city the water from a creek or river called 'Bull Run,' some 30 miles distant, and for that purpose it had issued, through its water committee, proposals for bids to build the works, which proposals were divided into several different classes, as already stated.
The complainant, McMullen, living in San Francisco, and being a large stockholder in, and manager of, the San Francisco Bridge Company, came to Portland for the purpose of giving his attention to the matter, and, if possible, to make an arrangement with the defendant by which they might together become bidders for the work. He and the defendant had many interviews before the time of delivering the bids arrived, and they finally agreed that each party should put in separate hids in his own or his firm name, or in the name of his company, for certain classes of the work, but that they both should have a common interest in each bid if any were accepted. This community of interest was to be kept secret and concealed from all persons, including the water committee. Each was to know the amount of the other's bid, and [174 U.S. 639, 646] all bids were to be put in only after mutual consultation and agreement. Bids for the various classes of work were put in as above set forth, and among them the bid for the manufacture and laying of the pipe, which was accepted by the water committee. All of them were put in pursuant to this agreement, part of them in the name of Hoffman & Bates, and part in the name of the San Francisco Bridge Company. The bid in the name of the San Francisco Bridge Company for the manufacture of the pipe was nearly $50, 000 higher than the amount bid in the name of Hoffman & Bates, and was put in after consultation with, and approval by, the defendant. This last bid was put in, as stated by Mr. McMullen in his evidence, as a matter of form only, and to keep the name of his company before the public, but it appeared on its face to be a bona fide bid. The water committee received the bids in ignorance of the existence of this agreement, and in the supposition that all the bids which were received were made in good faith, and they all received consideration at the hands of the committee. After the computations were made, by which it appeared that the bid of the defendant was the lowest for the manufacture and laying of the pipe, the contract was awarded him, and afterwards that portion of the agreement which had been made between the parties to this combination, viz. that relating to the partnership, was reduced to writing, and is set out in the foregoing statement.
Upon these facts the question arising is whether a contract between the parties themselves such as is above set forth is illegal. In order to answer the question, we would first naturally ask, what is its direct and necessary tendency? Most clearly, that it tends to induce the belief that there is really competition between the parties making the different bids, although the truth is that there is no such competition, and that they are in fact united in interest. It would also tend to the belief on the part of the committee receiving the bids that a bona fide bidder, seeking to obtain the contract, regarded the price he named, although much higher than the lowest bid, as a fair one, for the purpose of enabling him to realize reasonable profits from its performance. A bid thus made [174 U.S. 639, 647] amounts to a representation that the sum bid is not in truth an unreasonable or too great a sum for the work to be done. We do not mean it is a warranty to that effect, or anything f the kind, but simply that a committee, receiving such a bid, and assuming it to be a bona fide bid, would naturally regard it as a representation that the work to be done, with a fair profit, would, in the opinion of the bidder, cost the amount bid. Hence it would almost certainly tend to the belief that the lower bid was not an unreasonably high one, and that it would be unnecessary and improper to reject all the bids and advertise for a new letting. The fact that there were other bids, even higher than that of the San Francisco Bridge Company, for the manufacture and laying of the pipes, does not alter the tendency of the agreement, when carried into effect, to create or to strengthen the belief on the part of the committee in the fact of an active competiton and the bona fide character of that competition, and that the lowest bid would be in all probability a reasonable one. It is in truth utterly impossible to accurately or fully predict all the vicious results to be apprehended as the natural effect of this kind of an agreement. It cannot be said in all cases just what the actual effect may have been.
The natural tendency and inherent character of the agreement are also unaffected by any evidence produced on the part of the complainant that the chairman of the water committee had, when examined nearly three years after the occurrence, no recollection as to the bid of the bridge company, or that it had any particular effect upon his mind, and that he said that the contract was awarded to the lowest bidder simply because he was the lowest bidder, and without reference to the bid of the bridge company.
The question is not whether in this particular case any member of the water committee did or did not remember the fact that the bridge company had made a bid, or that such bid had no effect upon his mind. The question is not as to the effect a particular act in fact had upon a member of the water committee, but what is the tendency and character of the agreement made between the parties; and that tendency [174 U.S. 639, 648] or character is not altered by proof on the part of a member of the committee, given several years afterwards, that he had no special recollection that such a bid had been made. The evidence is that all the bids that were given received the consideration of the committee, and there can be no doubt that the more bids there were, seemingly of a bona fide character, the more the committee would be impressed with the idea that there was active competition for the work to be done.
It might readily be surmised that, if these parties had bid in competition, one or both of the bids would have been lower than their combined bid. It was not necessary, however, to prove so difficult a fact. The inference would be natural.
In Richardson v. Crandall, 48 N. Y. 348, 362, the court said: 'In all cases where contracts are claimed to be void as against public policy, it matters not that any particular contract is free from any taint of actual fraud, oppression, or corruption. The law looks to the general tendency of such contracts. The vice is in the very nature of the contract, and it is condemned as belonging to a class which the law will not tolerate,' eiting Atcheson v. Mallon, 43 N. Y. 147.
Although these remarks were made when the court was dealing with the case of a bond taken colore officii, yet the principle applies equally to a case like the one at bar; and, indeed, it is seen that such was the view of the judge delivering the opinion, since he cited Atcheson v. Mallon, which, in its nature, is a case very similar to the one now before us.
The vice is inherent in contracts of this kind, and its existence does not in the least depend upon the success which attends the execution of any particular agreement.
In Tool Co. v. Morris, 2 Wall. 45, 56, the court said, in speaking as to illegal agreements:
Contracts of the nature of this one are illegal in their nature and tendency, and for that reason no inquiry is necessary as to the particular effect of any one contract, because it would not alter the general nature of contracts of this description, or the force of the public policy which condemns them.
In the case at bar the illegal character of the agreement is founded, not alone upon the fact that it tends to lessen competition, but also upon the fact of the commission of a fraud by the parties in combining their interests and concealing the same, and in submitting different bids as if they were bona fide, when they knew that one of them was so much higher than the other that it could not be honestly accepted, and when they put it in for the sake of keeping up the form and of strengthening the idea of a competition which did not in fact exist. The tendency of such agreements is bad, although in some particular case it might be difficult to show that it actually accomplished a fraud, while its intention to do so would be plain enough. Therefore, when it is urged that these parties had no intention of bidding for this work alone, and that, unless they had combined their bids, neither would have bid at all, and hence the agreement between them tended to strengthen instead of to suppress competition, this answer to [174 U.S. 639, 650] the illegality of the transaction is insufficient. The evidence, however, does not show that, if these parties had not agreed upon a combination, neither would have bid alone. It shows complainant came to Portland to see the defendant, and to conclude their arrangements to go into the combination; but we are by no means of the opinion that the evidence shows that, if they had not combined, they would not have bid at all. Complainant's company had bid alone at a prior letting some time before, and had then been the lowest bidder for the contract, which the city did not award because of a lack of means of payment for the work, consequent upon a veto by the governor of the bill providing for the issuing of bonds to make such payment. And it seems that the defendant himself was well able to carry on the contract alone.
If it be granted that the fact was proved that neither party would have bid separately, and that by virtue of the combination a bid was made which otherwise would not have been offered, the significance of the other facts in the case is not thereby altered. Those other facts are the concealment of the interest which the parties had in each other's bids, and the making of what were, under the circumstances, nothing more than fictitious bids for this and the other classes of work for which both parties put in bids, evidently for no other purpose than to endeavor thereby to deceive the committee into believing that there was real competition between them, when in fact there was none. If there had been competition, the bid of each for the contract that was obtained might very likely have been lower than the one that was accepted. It is not necessary to prove that fact in order to show the nefarious character of the agreement.
The reason given for the making of these fictitious bids by the complainant-that it was a formal matter, and to keep the name of his company before the public-is entirely inadequate. The bids actually put in by them for the other classes of work had the same tendency to strengthen belief in the reality of the competition which in fact did not exist between these persons. The whole transaction was intentionally presented to the water committee in a false and deceptive light. [174 U.S. 639, 651] Upon general principles it must be apparent that biddings for contracts for public works cannot be surrounded with too many precautions for the purpose of obtaining perfectly fair and bona fide bids. Such precautions are absolutely necessary in order to prevent the successful perpetration of fraud in the way of combinations among those who are ostensible rivals, but who in truth are secretly banded together for the purpose of obtaining contracts from public bodies, such as municipal and other corporations, at a higher figure than they otherwise would. Just how the fraud is to be successfully worked out by the combination, it is not necessary to show. It is enough to see what the natural tendency is. Public policy requires that officers of such corporations, acting in the interest of others, and not using the sharp eye of a practical man engaged in the conduct of his own business, and not controlled by the powerful motive of self-interest, should, so far as possible, and for the sake of the public whom they represent, be protected from the dangers arising out of a concealed combination and from fictitious bids.
To hold contracts like the one involved in this case illegal is not to create any new rule of law for the purpose of affording the protection spoken of. It is but enforcing an old rule, and applying it to such facts as exist in this case because it naturally fits them. Its enforcement here is to but carry into effect the public policy upon which the rule itself is founded. People who have been guilty of the conduct exhibited in this record cannot be heard to say that, although their arrangement was fraudulent and illegal, they would nevertheless have obtained the contract, even if they had not been guilty of the fraud, because the bids show they were the lowest bidders. The bids might have been lower yet if there had been competition where there was in fact combination. The parties must accept the consequences resulting from entering into the agreement proved in this case, all of which they carried out, and included in which, and as a consequence thereof, was the agreement with the city, and the written agreement of partnership between themselves.
In Hyer v. Traction Co., 168 U.S. 471 , 18 Sup. Ct. 114, in [174 U.S. 639, 652] speaking as to the character of the agreement in that case, Mr. Justice Brewer remarked that the vice of a combination 'lies in the fact of secrecy, concealment, and deception. The one applicant, though apparently antagonizing the other, is really supporting the latter's application; and the public authorities are misled by statements and representations coming from a supposed adverse, but in fact friendly, source.'
In that case the demurrer admitted the allegation of the complaint that the combination of the two interests asking for the concession from the common council was known and announced to that body before its decision was made. The case simply shows the part which concealment takes in a combination, being in fact one of the great dangers springing therefrom.
In Atcheson v. Mallon, 43 N. Y. 147, 151, Judge Folger, in delivering the opinion of the court, said:
We have here nothing to do with a combination of interest which is open and avowed, which appears upon the face of the bid, and which is therefore known to all. Such a combination is frequently proper, if not essential; and where no concealment is practiced, and the fact is known, there may be no ground whatever for judging it to be in any manner improper.
But in this case there is more even than concealment. There is the active fraud in the putting in of these, in substance, fictitious bids, in their different names, but in truth forming no competitive bids, and put in for the purpose already stated. It is not too much to say that the most perfect [174 U.S. 639, 653] good faith is called for on the part of bidders at these public lettings, so far as concerns their position relating to the bids put in by them or in their interest. The making of fictitious bids under the circumstances detailed herein is, in its essence, an illegal and most improper act. Indeed, it is a plain fraud, perpetrated in the effort to obtain the desired result.
The evidence shows that this written partnership agreement was only a part of the entire agreement existing between the parties. That agreement covered, and was clearly intended to cover, their whole action from the time they agreed to put in their bids in a common interest up to and including the execution and performance of the contract obtained from the city. The agreement (of which that for a partnership was but a portion) was that they should combine their interests; that they should put in bids known to each; that they should conceal the fact of their combination; that they should put in fictitious bids, without expectation or purpose of having them taken; that, if the contract were procured, they should perform the work as partners, and share expenses and divide profits. No division of that contract into two periods, the one prior and the other subsequent to the written agreement between the parties, can be made. The complainant cannot count only upon the contract of partnership as evidenced by the writing of March, 1893. That writing evidenced only a portion of the agreement that had been made between these parties, the result being that, although their agreement was in the first instance by parol, a portion of it was subsequently reduced to writing.
The whole contract is none the less one and indivisible, just as much as if it had all been put in writing. If it had been, it would scarcely be argued that complainant might maintain an action by relying on that part of it which was valid and relating to the partnership between them, and that he might discard or omit to prove that portion which was illegal. If the complainant did not, the defendant could, prove the whole contract,-as well the part lying in parol as that which was reduced to writing,-so that the court might, upon an inspection of the whole contract, determine therefrom its character. The unity of the [174 U.S. 639, 654] contract is not severed, or its meaning or effect in any degree altered, by putting part of it in writing and leaving the rest in parol.
Concluding as we do that this agreement between these parties is, as a whole, of an illegal nature, and that the portion thereof which is reduced to writing cannot be separated from the balance of the agreement, the question then arises as to the result of such conclusion upon the parties to the agreement.
There are several old and very familiar maxims of the common law which formulate the result of that law in regard to illegal contracts. They are cited in all law books upon the subject, and are known to all of us. They mean substantially the same thing and are founded upon the same principles and easoning. They are: 'Ex dolo malo non oritur actio;' 'Ex pacto illicito non oritur actio;' 'Ex turpi causa non oritur actio.' About the earliest illustration of this doctrine is almost traditional, in the famous case of The Highwayman. It is stated that Lord Kenyon once said, by way of illustration, that he would not sit to take an account between two robbers on Hounslow Heath, and it was questioned whether the legend in regard to the highwayman did not arise from that saying. It seems, however, that the case was a real one. He did file a bill in equity for an accounting against his partner, although it was no sooner filed, and its real nature discovered, than it was dismissed, with costs, and the solicitors for the plaintiff were summarily dealt with by the court as for a contempt in bringing such a case before it. 1 Lindl. Partn. (5th Ed.) 94, note n; 9 Law Quart. Rev. pp. 105, 197.
The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying out the terms of an illegal contract. In case any action is brought in which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it, nor will they enforce any alleged rights directly springing from such contract. In cases of this kind the maxim is, 'Potior est conditio defendentis.' [174 U.S. 639, 655] The following are only a few of the numerous cases upon the subject in England and in this country: Holman v. Johnson (1775) 1 Cowp. 341; Booth v. Hodgson (1795) 6 Term R. 405; Thomson v. Thomson (1802) 7 Ves. 468; Shiffner v. Gordon (1810) 12 East, 294; Sykes v. Beadon (1879) 11 Ch. Div. 170; Scott v. Brown (1892) 2 Q. B. Div. 724; Belding v. Pitkins (1804) 2 Caines, 147a; Atcheson v. Mallon (1870) 43 N. Y. 147; Leonard v. Poole ( 1889) 114 N. Y. 371, 21 N. E. 707; Wheeler v. Russell (1821) 17 Mass. 258, 281; Snell v. Dwight (1876) 120 Mass. 9; Marshall v. Railroad Co. (1853) 16 How. 314, 334; McBlair v. Gibbes (1854) 17 How. 232; Coppell v. Hall ( 1868) 7 Wall. 542; Trist v. Child (1874) 21 Wall. 441, 448; Woodstock Iron Co. v. Richmond & D. Extension Co. (1889) 129 U.S. 643 , 9 Sup. Ct. 402; 1 Lindl. Partn. (5th Ed.) 93, note, giving the result of the American cases.
The general proposition is not disputed, but certain explanations as to its meaning and extent have been announced by the courts in cases now to be referred to; and the effort has been to show that the case before us comes under some of the exceptions to the rule, and ought not to be governed by the so-called harshness of the rule itself.
If the partnership agreement that is contained in the writing above set forth is in truth but part of an entire agreement, which contains utterly illegal provisions, then this action cannot be maintained, within any of the authorities.
It is only by proving the partnership agreement as an entire agreement, separate and free from the balance of the agreement between the parties, that argument can be made in favor of its validity. It has been sometimes said that where a contract, although it be illegal, has been fully executed between the parties, so that nothing remains thereof for completion, if the plaintiff can recover from the defendant moneys received by him without resorting to the contract the court will permit a recovery in such case. The cases cited as illustrating the exception are, among others, Tenant v. Elliott (1797) 1 Bos. & P. 2; Farmer v. Russell ( 1798) Id. 295; Sharp v. Taylor (1849) 2 Phil. Ch. 801, 817; [174 U.S. 639, 656] Armstrong v. Toler (1826) 11 Wheat. 258, 269; McBlair v. Gibbes, 17 How. 232, 235; Brooks v. Martin (1863) 2 Wall. 70; Planters' Bank v. Union Bank ( 1872) 16 Wall. 483; Armstrong v. Bank (1890) 133 U.S. 433, 466 , 10 S. Sup. Ct. 450.
Upon the point as to the ability of the plaintiff to make out his cause of action without referring to the illegal contract, it may be stated that the plaintiff, for such purpose, cannot refer to one portion only of the contract upon which he prop ses to found his right of action, but that the whole of the contract must come in, although the portion upon which he founds his cause of action may be legal. Booth v. Hodgson, 6 Term R. 405, 408; Thomson v. Thomson, 7 Ves. 468; Embrey v. Jemison, 131 U.S. 336, 348 , 9 S. Sup. Ct. 776.
In the first of the above cases the plaintiff sought to maintain his action by referring to that part of the contract which was not illegal, and to ask a recovery upon that alone. Lord Kenyon, C. J., observed that it seemed to be admitted by counsel for plaintiff 'that, if the whole case were disclosed to the court, there was no foundation for the demand. They say to the court, 'Suffer us to garble the case, to suppress such parts of the transaction as we please, and to impose that mutilated state of it on the court as the true and genuine transaction, and then we can disclose such a case as will enable our clients to recover in a court of law.' Such is the substance of this day's argument. It is a maxim in our law that a plaintiff must show that he stands on a fair ground when he calls on a court of justice to administer relief to him.'
Mr. Justice Ashhurst, in the same case, said: 'The plaintiffs wish us to decide this case on a partial statement of the facts, thereby admitting that, if the whole case be disclosed, they have no prospect of success; but we must take the whole case together, and upon that the plaintiffs cannot recover.'
Mr. Justice Grose said: 'We cannot decide on a part of the case; and taking the whole together, an assumpsit cannot be raised from one part of the case when the other parts [174 U.S. 639, 657] of it negative an assumpsit.' The defendant therefore had judgment.
In Thomson v. Thomson, supra, the plaintiff was not permitted to recover, because he had no claim to the money except through the medium of an illegal agreement. The master of the rolls (Sir William Grant) said: 'If the case could have been brought to this, that the company had paid this into the hands of a third person for the use of the plaintiff, he might have recovered from that third person, who could not have set up this objection [the illegality of the contract] as a reason for not performing his trust. Tenant v. Elliott is, I think, an authority for that. But in this instance it is paid to the party, for there can be no difference as to the payment to his agent. Then how are you to get at it, except through this agreement? There is nothing collateral, in respect of which, the agreement being out of the question, a collateral demand arises, as in the case of stock-jobbing differences. Here you cannot stir a step but through that illegal agreement, and it is impossible for the court to enforce it. I must therefore dismiss the bill.'
And in Embrey v. Jemison, supra, although the action was upon four negotiable notes, the court would not permit a recovery to be had upon them, because the consideration for the notes was based upon a contract which was illegal. Mr. Justice Harlan, in delivering the opinion of the court, said that the plaintiff could not 'be permitted to withdraw attention from this feature of the transaction by the device of obtaining notes for the amount claimed under that illegal agreement; for they are not founded on any new or independent consideration, but are only written promises to pay that which the obligor had verbally agreed to pay. They do not, in any just sense, constitute a distinct or collateral contract based upon a valid consideration. Nor do they represent anything of value, in the hands of the defendant, which in good conscience belongs to the plaintiff or to his firm. Although the burden of proof is on the obligor to show the real consideration, the execution of the notes could not obliterate the substantive fact that they grew immediately out of, and are directly connected [174 U.S. 639, 658] with, a wagering contract. They must therefore be regarded as tainted with the illegality of that contract, the benefits of which the plaintiff seeks to obtain by this suit. That the defendant executed t e notes with full knowledge of all the facts is of no moment. The defense he makes is not allowed for his sake, but to maintain the policy of the law,'-citing Coppell v. Hall, 7 Wall. 542, 558.
In the latter case, Mr. Justice Swayne, delivering the opinion of the court, said:
These authorities uphold the principle that the whole case may be shown, and the plaintiff cannot prevent it by proving only so much as might sustain his cause of action, and then objecting that the defendant himself brings in the balance, which was not necessary for plaintiff to prove.
The cases above cited as illustrative of the exceptions to the general rule also show what is meant by the cause of action being founded on some new consideration, or upon a contract collateral to the original illegal one.
In Tenant v. Elliott, supra, it was held that where two persons had entered into an illegal contract in regard to insurance, and, a loss having occurred, the insurer paid the money to a third person, to be paid to plaintiff, the third person could not himself retain the money because it arose out of an illegal contract. Eyre, C. J., asked 'whether he who had received the money to another's use on an illegal contract can be allowed to retain it, and that not even at the desire of those who paid it to him.'
In such case, clearly, the defendant had nothing whatever to do with the illegality of the original contract. He received [174 U.S. 639, 659] the money to be paid to another, and, when he received it for that purpose, he promised, either expressly, or by implication arising from the facts, that he would deliver the money to the plaintiff; and, when he refused to do it, the plaintiff could recover upon this express or implied contract without resorting in any manner to the original contract between himself and another, which in its nature was illegal, but with which the defendant was in no wise concerned.
Farmer v. Russell, supra, is to the same effect. The defendant received the money from a third person to deliver to the plaintiff, and it was held that he was bound to pay it to the plaintiff, although the original consideration upon which the money was to be paid the plaintiff by the third person was illegal. Eyre, C. J., said:
There was a question in the case whether the defendant was privy to the contract between the plaintiff and the man at Portsmouth. The goods transported were counterfeit pennies or half pence, and it was the opinion of Eyre, C. J., that if the defendant had been privy to the original illegal agreement so that the whole thing was but one transaction, the plaintiff could not have recovered. Mr. Justice Rooke was of opinion that it was not important whether the defendant were privy or not; that, if the contract were illegal, the plaintiff could not recover from the defendant in any event. The other two judges were of opinion that, the money having been delivered to the defendant for the purpose of being paid to the plaintiff, the defendant was bound to make such payment, without reference to the illegality in the original transaction.
The difference in the principle upon which a recovery was allowed in these two cases and that upon which the defense in this case is based is very clear. In the case before us the cause of action grows directly out of the illegal contract, and, if the court distributes the profits, it enforces the contract, which is illegal. But where A. claims money from B., although due upon an illegal contract, and B. acknowledges the obligation, and waives the defense of illegality, and pays the money to a third party upon his promise to pay it to A., the third party cannot successfully defend an action brought by A. to recover the money by alleging that the original contract between A. and B. was illegal. This is the principle decided, and we think correctly decided, in the cases cited. It was certainly no business of the third party to inquire into the reasons which impelled the person to give him the money to pay to the plaintiff. That was a matter between those parties, and if the party from whom the money was due admitted his indebtedness, and chose to pay it, the defendant, who received it upon his promise to pay the plaintiff, would have no possible defense to an action by the plaintiff to compel such payment. Such an action is in no sense founded upon an illegal contract. That matter was closed when the party [174 U.S. 639, 661] owing the money under it paid it to a third person, to be paid to the plaintiff. The action by the plaintiff in such case is founded upon a new contract, upon a totally different consideration, and of a perfectly legitimate character.
The next case cited by complainant as an authority for the maintenance of this action is Sharp v. Taylor, supra. It was stated by the chancellor in that case that, where one of two partners had possessed himself of the property of the firm, he could not be allowed to retain it by merely showing that in realizing it some provision of some act of parliament, had been violated or neglected, or that some provision of a foreign statute relating to the registry of vessels had not been complied with.
Lord Chancellor Cottenham, in the course of his opinion, said:
These observations show that the judgment did not go upon the illegality arising from a mere violation or neglect of a provision of an act of parliament relating to vessels, and the agreement was not classed among those contracts which are of such an illegal nature that courts refuse to enforce them. Some of the observations of the chancellor, made by way of illustration regarding the rule itself, have been since doubted by the English courts, as in the case of Sykes v. Beadon, supra, where Jessel, M. R., in holding that an illegal contract could not be enforced by one party to it as against the other, directly or indirectly, said that there were several dicta of Lord Cottenham's in Sharp v. Taylor which he thought were not good law; and the master of the rolls remarked:
Continuing, the master of the rolls observed:
Sharp v. Taylor should not be carried at all beyond the facts of the case as set out in the report.
In McBlair v. Gibbes, supra, the question was in relation to the validity of an assignment by an assignor of his interest in an illegal contract. The payment of the money arising therefrom had been, subsequently to the assignment, provided for by the party owing it, and the dispute arose between the representatives of the assignor and those of the a signee as to which were entitled to the share originally due to the assignor. It was claimed on the part of the representatives of the assignor that, the original contract being illegal, the sale and assignment of an interest therein from him to the assignee were also illegal, and consequently that such interest, equitable or legal, passed to the assignor's executors. Mr. Justice Nelson, however, in delivering the opinion of the court, said:
What is meant by a collateral contract, or a cause of action arising therefrom, which does not require reference to the principal illegal contract or transaction, is still further illustrated in Armstrong v. Toler, 11 Wheat. 253. In the course of his opinion, Mr. Chief Justice Marshall assumed the facts to be that the plaintiff, during a war between this country and Great Britain, contrived a plan for importing goods on his own account from the country of the enemy, and goods were also sent to B. by the same vessel. The plaintiff, at the request of B., became surety for the payment of the duties which accrued on the goods of B., and was compelled to pay them; and the question was whether he could maintain an action on the promise of B. to return this money, and the [174 U.S. 639, 665] court held that such an action could be sustained. The court said:
And again: 'The questions whether the plaintiff had any interest in the goods of the defendant, or was the contriver of, or concerned in, a scheme to introduce them, or consented to become the consignee of the defendant's goods, with a view to their introduction, were left to the jury. The point of law decided is that a subsequent independent contract, founded on a new consideration, is not contaminated by the illegal importation, although such illegal importation was known to Toler when the contract was made, provided he was not interested in the goods, and had no previous concern in their importation.'
And at page 274: 'In most of the cases cited by the counsel for the plaintiff in error, the suit has been brought by a party to the original transaction, or on a contract so connected with it as to be inseparable from it, as where a vendor in a foreign country packs up goods for the purpose of enabling the vendee to smuggle them, or where a suit is brought on a policy of insurance on an illegal voyage, or on a contract which amounts to maintenance, or on one for the sale of a lottery ticket, where such sale is prohibited, or on a bill which is payable in notes issued contrary to law. In these and in all similar cases the consideration of the very contract on which the suit is brought is vicious, and the plaintiff has contributed to the illegal transaction.'
The case of Armstrong v. Bank, supra, is similar to the cases of Tenant v. Elliott and Farmer v. Russell, and was decided upon the same principle.
Counsel for the complainant also refer to a case where a plaintiff had let his horse to the defendant on Sunday, and the defendant had injured the horse by his recklessness and negligence, and a recovery against him was had for the damages [174 U.S. 639, 666] occasioned by such negligence, notwithstanding the illegality of the contract of hiring, because in violation of the law relating to the Sabbath day. Hall v. Corcoran, 107 Mass. 251.
In that case the court held the cause of action was not founded upon the contract, but defendant was held liable by reason of his improper and neglectful conduct in regard to the horse in his possession, and which conduct was a violation of the legal duty he owed to the owner of such horse, irrespective of contract. The case was a clear instance of a proper recovery based upon collateral facts, and not founded upon any original illegal contract.
The same principle was held in Welsh v. Wesson, 6 Gray, 505, as the damage done plaintiff by the willful act of defendant in running into him with his sleigh had nothing to do with the race they were engaged in.
To the same effect is Woodman v. Hubbard, 5 Fost. (N. H.) 67. The act of damage to the horse upon which the liability rested was not connected with or part of the illegal Sunday hiring.
We think it clear that these cases cited as authority for a recovery in this case upon the ground of completion of the illegal contract, or of a new contract upon a good consideration, do not touch the case before us, with the possible exception of Sharp v. Taylor, supra, and that case ought not to be extended.
In the case at bar the action depends upon the entire contract between the parties, part of which we hold was illegal. The partnership part of the agreement cannot be separated from the rest. The complainant's claim to profits rests upon the entire contract. His right is based upon that which is illegal and utterly void, and he cannot separate his cause of action from the illegal part, and claim a recovery upon the written portion providing for and evidencing the partnership.
We come now to a consideration of the two cases upon which the counsel for the complainant specially rely for the maintenance of this action. They are Brooks v. Martin, 2 Wall. 70, and Planters' Bank v. Union Bank, 16 Wall. 483. Of the [174 U.S. 639, 667] two cases, Brooks v. Martin is the more like this one, although the cases are by no means precisely similar. The partnership in that case was stated by the court, in its opinion, to have been really engaged, probably with the full knowledge of all its members, in dealing in soldiers' claims, long before any scrip or land warrants were issued by the government, and contrary to the ninth section of the act of February 11, 1847, providing for the granting of land warrants to be issued to the soldiers.
The main object of the ninth section of the act was, as the court stated, to protect the soldiers against improper contracts of the precise character of those shown in the record. It was further said that the traffic for which this partnership was formed was il egal, and that if a soldier who had sold his claim to these partners had refused to perform his contract, or to do any act which was necessary to give them the full benefit of their purchase, no court would have compelled him to do it or give them any relief against it, or if one of the partners, after the signing of the articles, had said to the other, 'I refuse to proceed with this partnership because the purpose of it are illegal,' the other partner would have been entirely without remedy. And if, on the other hand, one of the partners had said, 'I have bought one hundred soldiers' claims, for which I have agreed to pay a certain sum, which I require you to advance, according to your contract,' the other partner might have refused to comply with such demand, and no court would have given either of the partners any remedy for such refusal.
The court further stated that, upon the facts existing, all the claims purchased by the partner having been turned into land warrants, and the warrants having been sold or located, and where the purchase of the claim had been made prior to the date of the warrant, assignments having been subsequently made by the soldiers, and the portion of the lands located having been sold partly for cash and partly on mortgage, and the assets of the partnership consisting then almost wholly of cash securities or of lands,-all these facts appearing,-the partner in whose possession the profits of the partnership [174 U.S. 639, 668] were could be compelled to account by the other partner, and that the fact that such partner had given a release procured from him by fraud was no bar to his action for such an accounting.
The action was sustained upon the theory that the purpose of the partnership agreement had been fully closed and completed,-substantially all the profits arising therefrom had been invested in other securities or in lands,-and that, therefore, it did not lie in the mouth of the partner who had, by fraudulent means obtained possession and control of these funds, to say to the other that the original contract was illegal. The wrong originally done or intended to the soldier had been wiped out by the acts of the soldier, and his waiver of any claim by reason of the illegal contract. The transactions which were illegal, the court said, had become accomplished facts, and could not be affected by any action which the court might take. The cases of Sharp v. Taylor, Tenant v. Elliott, Farmer v. Russell, Thomson v. Thomson, and McBlair v. Gibbes were cited as authority for the proposition.
We have already adverted to each of them, and we admit it is quite difficult to see how, with the exception of Sharp v. Taylor, the principle upon which they were decided could be applied to the case then before the court.
There is a difference between the case before us and that of Brooks v. Martin, because in the latter case the fact existed that the transactions, in regard to which the cause of action was based, were not fraudulent, and they related in some sense to private matters, while in the case before the court the entire contract was a fraud and was illegal, and related to a public letting by a municipal corporation for work involving a large amount of money, and in which the whole municipality was vitally interested. It may be difficult to base a distinction of principle upon these differences. We do not now decide whether they exist or not. We simply say that, taking that case into due and fair consideration, we will not extend its authority at all beyond the facts therein stated. We think it should not control the decision of the case now before us. [174 U.S. 639, 669] In Planters' Bank v. Union Bank, supra, Confederate bonds had been sent by one party to the other for sale, and the bonds had been sold by such party as agent of the plaintiff, and their price paid to such agent of the party selling; and the court held that an action would lie to recover the proceeds of that sale thus paid to the plaintiff's agent, although no suit could have been maintained by plaintiff again t the purchaser for the purchase price of the bonds, because their sale was an illegal transaction. But, when the purchase price of the bonds was paid, it certainly did not rest with the person who received the money upon an express or implied promise to pay it over to set up the illegality of the original transactions. When the bank received the funds, there was raised an implied promise to pay them to their owner, and a recovery could be sustained upon the same ground taken in Tenant v. Elliott and the other cases above mentioned.
It is impossible to refer to all the cases cited from the various state courts regarding this question. Some of them we should hesitate to follow. The cases we have commented upon we think give no support for the claim that the case now before us forms any exception to the rule which, as we believe, clearly embraces it. We must take the whole agreement, and remember that the action is between the original parties to it; that there is no collateral contract, and no new consideration, and no liability of a third party. The partnership is but a portion of the whole agreement.
We must therefore come back to the proposition that to permit a recovery in this case is, in substance, to enforce an illegal contract, and one which is illegal because it is against public policy to permit it to stand. The court refuses to enforce such a contract, and it permits defendant to set up its illegality, not out of any regard for the defendant who sets it up, but only on account of the public interest. It has been often stated in similar cases that the defense is a very dishonest one, and it lies ill in the mouth of the defendant to allege it, and it is only allowed for public considerations, and in order the better to secure the public against dishonest transactions. To refuse to grant either party to an illegal [174 U.S. 639, 670] contract judicial aid for the enforcement of his alleged rights under it tends strongly towards reducing the number of such transactions to a minimum. The more plainly parties understand that when they enter into contracts of this nature they place themselves outside the protection of the law, so far as that protection consists in aiding them to enforce such contracts, the less inclined will they be to enter into them. In that way the public secures the benefit of a rigid adherence to the law.
Being of the opinion that the contract proved in this case was illegal, in the sense that it was fraudulent, and entered into for improper purposes, the law will leave the parties as it finds them.
The judgment of the circuit court of appeals was right, and must be affirmed.
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Citation: 174 U.S. 639
Docket No: No. 271
Decided: May 22, 1899
Court: United States Supreme Court
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In the wake of the Flash Crash, CNBC and AP conducted a wide-ranging pollon how Americans saw the stock market and investing. The results were provocative to say the least.
Though the crash coincided with the beginning of a two-month, 17-percent decline in theS&P 500, the stock market rebounded to resume its post-crisisascent, recently hitting a new high of 1365.
Trading volume, however, suggests all may not be well. Now at about 4 billion shares a day on the New York Stock Exchange, it is dramatically lower than it was one year ago. In the April-May period of 2010, volume frequently hit 6 billion shares a day, with occasional 7-billion-share days.
After the market meltdown of late 2008 and early 2009 and then again after the Flash Crash, there has been great speculation that the average retail investor has lost his appetite for stocks.
Long-term mutual fundbalances — one of several barometers — suggested as much, with U.S. equity funds, in particular, showing regular and massive outflows. More recently, after two months of inflows, the flight is back.
Meanwhile, the Securities and Exchange Commission's recently released proposal to limit market volatilityhas drawn mixed reveiws.
Given recent developments and the one-year anniversay of the Flash Crash, we thought it would be interesting to share some of the same poll questions with our readers and viewers.
First and foremost, the issues surrounding the event beg the question of whether the market is still a fair place for all investors.
Click through the pages ahead to weigh in on other issues.
The Small Investor
The Big Boys
Computerized Trading
Rating The Regulators
Investing Strategy
Market View
Best Investment Class


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Arya Toufanian is one half of the addled brain behind I'm Shmacked, a popular video series that documents collegiate party douchebaggery and packages it into 4 minute videos. He also spent his morning throwing a tantrum wherein he threatened a female Business Insider journalist with rape, encouraged harassment of a female Vice Sports editor, and then pretended like it never happened, all over an article that he did not read.
Today's douchey tale started last week, when Business Insider reporter Caroline Moss wrote an amazing piece about a Tweet by an unfamous man named Chris Scott that went viral, and the blatant and high profile joke poaching that ensued. Moss tells Jezebel that after the piece went up, she was curious to see if any other semi-famous to famous Tweeters had been as shameless as some in ripping the joke word for word. And that's how she stumbled on I'm Shmacked, an account with 144K followers that had recently featured the now-famous Oh Hi Becky tweet.
Moss says, "For my own sake (to keep my own story going, duh, this is the biz), I said, 'Oh Hi @ImShmacked (knew nothing about who they were) I wrote a story about you last week,' and linked to my piece.
In return, Toufanian threatened to anally rape her and suggested starting a petition to get her fired. Seriously.
To review: the story that Moss wrote was about Chris Scott's viral tweet and people who ripped it off and attempted to pass it off as their own. Arya Toufanian and I'm Shmacked aren't even mentioned in the story, which according to a source, he didn't read.
But he's not done. Toufanian, who as of about a year ago was on leave from George Washington University, then pulled a Do You Know Who My Daddy Is? and threatened to stop by the Business Insider offices today and.... I don't know, shit his pants until someone hands him his binky? His course of action is unclear.
People defending Moss pointed out that it's probably not cool to call for a woman to be anally raped because she wrote an article about joke stealing. But a torrent of I'm Shmacked devotees, apparently bright eyed and bushy tailed after a morning of social uselessness, began attacking Moss and people who stood up for Moss, like fellow journalist Lindsey Adler, who spent part of her first morning on the job at Vice Sports encouraging her followers to report I'm Shmacked for inciting abuse against Moss, and Mike Byhoff, who works at HLN and screen shotted some of the abuse he received for sticking up for someone. Twitter! Whatta place!
After this went on for some time, Toufanian abruptly changed his tune, deleted the original tweets, and threatened legal action against both Business Insider and Vice (LOL) over the fact that other people who didn't work for either publication had reported both of his accounts (@ImShmacked and @aryatoufanian ) because his Twitter account is an asset and Oh my god I can't even more with this child. What a fucking moron.
Toufanian then changed things up yet a third time, telling Byhoff that he had a point and that yes rape is bad but he didn't mean rape rape he just meant like other rape, the kind it's appropriate to joke-threaten a stranger with and then deleting all of the tweets referencing the incident from both of his accounts. All that exists now is this one half-assed call for restraint and sanity, just hanging out on I'm Shmacked's timeline like the sad flaccid dick of a frat bro who spent all night drinking vodka and red bull.
For those of us who have long ago exited our extended adolescence and wonder why anyone should give a runny shit about what walking case of liver cirrhosis says on Twitter, it's important to know: I'm Shmacked is kind of a big deal. It's the Girls Gone Wild of the post-millennial generation; self-promoting party porn that turns every town it visits into a river of bro barf and future job disqualifiers. On a typical I'm Shmacked weekend, Toufanian and his partner roll into a college town and throw a party to which attendees much purchase tickets (according to an article from last fall, the pair typically sell out 1,000 person venues, but the plan on expanding to 10,000 student venues because they've been selling out of smaller venues). Festivities depicted everything you were probably bored with by the time you were 25 — excessive drug use, drinking to the point of vomiting, exhibitionist girl-on-girl makeouts, etc. The footage is combined with music and then slapped onto YouTube, and voila, tens of thousands of views. And entire campuses of students waiting to top what they saw happen at other schools when I'm Shmacked hits their campus.
Unsurprisingly, it's starting to get dangerous. Here's what happened when I'm Shmacked rolled into Delaware last year,
University of Delaware walked on cars, peed in streets and caused a 'near-riot' that led to a five-year suspension for the men's rugby team.Arrests also followed an I'm Shmacked event in Providence, Rhode Island, four days later.
Because they showcase the wildest of a school's party scene, high school students looking at colleges actually factor I'm Shmacked videos in trying to determine where they'll get their postsecondary education. A high school senior recently told me that I'm Shmacked is more important to her than a college admissions brochure because it showcases what really goes on at a school, and that she can't help getting excited watching the videos and looking forward to the promise of unsupervised fun that awaits her when she finally goes off to college. And, thanks to the easily sharable content, its influence over the college decision process increases with every share.
I'm Shmacked has a small but growing lump of funding from a New York advertising agency, as well as partnerships with Prime Social Group in Ohio and Wantickets in LA, entities that, if they're smart, might reconsider their relationship with a budding Joe Francis or risk being taken down in the inevitable self-inflicted crash and burn that awaits.
Arya Toufanian might fancy himself to be a powerful entity capable of taking down Business Insider and Vice because the fallout of interactions he had with their writers hurt his feelings. But, to quote a much smarter mean girl: You want to fuck with the eagles, you have to learn to fly.


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Featuring Fuentes, Merckx, descent into Sorrento, and a description of how the Giro was organized.
Follow on Twitter: ITALIANCYCJOURN
Stories for the Italian Cycling Journal about rides, granfondos, touring, having a good time cycling in Italy, Italian cycling history, etc. are always welcome. Contact me at firstname.lastname@example.com. There are more than 2,000 stories in this blog. The search feature to the right works best for finding subjects in the blog. There is also a translate button at the bottom so you can translate each page.
Tuesday, August 9, 2011
Turning the Giro Clock Back to 1974
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With more than 600 people killed and almost 4,000 injured from clashes between Egyptian security forces and Muslim Brotherhood protesters, the country's democratic prospects look dismal. But while the violence is largely framed as a conflict between Islamism and secularism, the roots of the crisis run far deeper. Egypt is in fact on the brink of a protracted state-collapse process driven by intensifying resource scarcity.
Since the unilateral deposition of President Morsi, the army's purported efforts to "restore order" are fast-tracking the country toward civil war. The declaration of a month-long state of emergency—ironically in the name of defending "democracy"—suggests we are witnessing the dawn of a new era of unprecedented violence with the potential to destabilize the entire region.
Underlying growing instability is the Egyptian state's increasing inability to contain the devastating social impacts of interconnected energy, water and food crises over the last few decades. Those crises, already afflicting other regional states like Yemen and Syria, will unravel prevailing political orders with devastating consequences—unless urgent structural transformation to address those crises becomes a priority. The upshot is that Egypt's meltdown represents the culmination of long-standing trends that, without a change of course, can only escalate with permanent repercussions across the Middle East and North Africa (MENA), and beyond.
Energy shortages, economic decline
A major turning point for Egypt arrived in 1996, when Egypt's domestic oil production peaked at about 935,000 barrels per day (bpd), dropping since then to about 720,000 bpd in 2012. Yet Egypt's domestic oil consumption has increased steadily over the past decade by about 3% a year. Since 2010, oil consumption—currently at 755,000 bpd—has outpaced production. It is no coincidence that the following year, Hosni Mubarak was toppled.
With Egypt's oil production well past its peak, its exports since 1996 have increasingly declined, despite inputs from new gas production. In 2009, oil exports had dropped by 26% (pdf). According to Jean Laherrère, a petroleum geologist formerly with the French major Total S.A., two-thirds of Egypt's oil reserves have likely been depleted, and annual decline rates are already at around 3.4%.
The impact on Egypt's state revenues has been dramatic. Energy subsidies amount to $15 billion a year, about a quarter of the entire budget, driven largely by expanding consumption needs for a growing domestic population. Over the last decade, Egypt's gas use has almost doubled, nearly matching production, further limiting the country's exporting capacity and, thus, hard currency revenues, reserves of which have more than halved in two years. Around another $3 billion a year goes to food. In total, 10% of its GDP is spent on subsidies.
With state revenues declining, how had Egypt sustained levels of growth of around 7% in the two years preceding the 2008 global banking crisis—even winning praise from the World Bank, which described the government as a "top reformer"?
The answer is simple: Egypt had financed increasing expenditures through one core mechanism: borrowing. Over the last decade, government debt has averaged about 85.5% of GDP. In 2011, Egypt registered a balance of payments deficit of $18.3 billion. The situation has become unsustainable as the state is increasingly unable to service myriad debts, has desperately attempted to identify viable sources of new oil and gas imports, but cannot muster the capital to secure them.
The heyday of growth, in other words, was achieved at a heavy social cost that is now being paid on the streets in blood.
Population explosion
Increasing energy consumption, of course, is tied to an expanding population, which has grown exponentially by 21% since 2000 to about 80 million people.
Rapid population growth and continued economic mismanagement has meant that youth represent about 25% of the population—but more than half of them suffer from poverty and unemployment. Economic mismanagement, much of which was quietly championed by the IMF and the World Bank (though they have now belatedly noticed that much of the policies they previously encouraged are now deeply problematic), has caused a widening of overall poverty while enriching mostly Egyptian elites.
With some 40% of the population living on $2 a day or less, and rates of illiteracy and unemployment hovering around a third of the population, it was only a matter of time before economic grievances translated into political outrage. The trigger factor, though, was food—on which a quarter of Egyptians spend more than half their incomes.
Food riots: the new normal
As food subsidies have declined in the context of declining state revenues, local food prices have shot up. Once upon a time—in the 1960s—Egypt was completely self-sufficient in food production. Encouraged by international financial institutions to foster its export capacity, Egypt is now a net food importer, importing about 70% of its food (paywall), and thus, vulnerable to global food price fluctuations.
As energy accounts for over a third of the costs of grain production (pdf), high food prices are generally underpinned by high oil prices. Since 2005, world oil production has remained on an undulating plateau that has kept prices high, contributing to surging global food prices. According to the New England Complex Systems Institute, if food prices go over a threshold of 210 on the FAO Food Price Index, the probability of civil unrest is greatly magnified.
Global wheat prices doubled (pdf) from $157/metric tonnes ($173/ton) in June 2010 to $326/metric tonne ($359/ton) in February 201 (the same month Mubarak fell) while half the population was dependent on food rations. That year, the FAO Index averaged about 228, the highest since FAO started measuring international food prices in 1990. The second highest average occurred in 2008—the same year Egypt experienced violent clashes over government-subsidized bread in different cities, leading to 15 people being killed and 300 arrests.
Since then, the index has hovered consistently above 210, and in May 2013 before Tahrir Square was flooded by millions of Egyptians, it was at 213. Although currently at 205, the Worldwatch Institute warns that food prices will trend higher and be more volatile in coming years and decades. This is consistent with the last decade, over which the World Bank global food price index has increased 104.5%, at an average annual rate of 6.5%.
Climate change: the great amplifier
Perhaps the biggest driver of rocketing food prices in 2011, however, was the unprecedented impact of climate change in the world's major food basket regions, pushing up global cereal prices to record levels.
Droughts and heat-waves in the US, Russia, and China since 2010 led to a sharp drop in wheat yields, on which Egypt is heavily dependent.
That same year, Egypt's water shortages sparked tens of thousands of people to take to the streets in different parts of the country, primarily farmers protesting the growing inability to irrigate their farms—making tens of thousands of hectares of farmland impossible to cultivate. Egyptians in the 1960s enjoyed a water share per capita of 2,800 cubic meters (98,881 cubic feet) for all purposes. The current share has dropped to 660 cubic meters (23,307 cubic feet)—well below the international standard defining water poverty at 1,000 cubic meters (35,314 cubic feet).
Egypt is already water scarce, and the combination of local climate change impacts, water mismanagement and regional geopolitics could choke off the country's water supplies by 2025, when it will need 20% more water than it currently has. But around this time, its thirsty neighbors like Ethiopia and Burundi may well have loosened Egypt's current grip on the Nile River, which supplies 95% of Egypt's freshwater, for their own use.
Geopolitical meltdown
Egypt's resource crisis is more than the primary driver of its own collapse: It could potentially destabilize the entire region, if not the world.
The protracted collapse of the Egyptian state poses a major strategic disaster for US interests. Since the Nixon Doctrine, regional US policy looked to local "surrogate" regimes—Israel, Iran (under the Shah), and Saudi Arabia—as the region's three main "pillars" on which US influence rested. In 1973, US senator and oil expert Henry Jackson noted that Israel and the Shah's Iran were "reliable friends of the United States" who, along with Saudi Arabia, "have served to inhibit and contain those irresponsible and radical elements in certain Arab states…who, were they free to do so, would pose a grave threat indeed to our principal source of petroleum in the Persian Gulf."
The inauguration of Mubarak's rule in 1981 was a major factor in absorbing Egypt into this orbit of power, the strategic contours of which were aptly described in a secret 2009 US State Department cable on the $1.3 billion in US military aid for his regime: "The tangible benefits to our mil-mil relationship are clear: Egypt remains at peace with Israel, and the US military enjoys priority access to the Suez canal and Egyptian airspace."
With Iran and Syria now members of the "Axis of Evil," the potential loss of a friendly regime in Egypt would strike a major blow to US regional interests and international stability. It would potentially endanger Israel, but also challenge access to the Suez, a strategic choke point shipping 4.5 million bpd of oil and carrying 7.5% of world trade.
A shutdown of the Suez due to civil unrest would have a massive impact on oil prices and supplies that would undermine Western interests generally and even generate a global economic shock (pdf). This could explain President Obama's insistence on maintaining military aid to the Egyptian army—anything, it seems, to "inhibit and contain" those "irresponsible and radical" Arabs bringing down regime after regime across a region the West cannot afford to lose influence over. Obama is hardly alone, though – Britain, the EU, Saudi Arabia, Qatar among are still maintaining aid relations.
But these short-sighted decisions fail to appreciate that the Egyptian Army has already lost this war of its own starting. Not simply because the cycle of violence now initiated cannot but escalate as neither side will capitulate, radicalizing a new generation and inviting al-Qaeda affiliated extremists to make up for recent losses by exploiting Egypt's suffering. But also because the deeper systemic causes of Egyptian rage remain neglected.
And those systemic issues are hardly unique to Egypt. A similar confluence of climate, energy and economic factors are amplifying political polarization, in turn fueling conflict, in Syria and Yemen. While each must of course be understood in their own unique local contexts, their common drivers must be recognized.
The case of Egypt and others illustrate the extent to which the MENA region is vulnerable to the destabilizing impact of these crises. The region contains 12 of the 15 most water-scarce nations in the world—with an average of less than 1,000 cubic meters (35,314 cubic feet) of fresh water per person, per year—including Algeria, Libya, Tunisia, Jordan, Qatar, Saudi Arabia, Yemen, Oman, UAE, Kuwait, Bahrain, Israel and Palestine. In eight of these countries, available fresh water is less than 250 cubic meters (8,828 cubic feet).
Although birth rates are falling, a third of the region's overall population is below 15 years old, and large numbers of young women either are or soon will be reaching reproductive age. According to the UK Ministry of Defence, the Middle East's population will increase by 132%, and that of sub-Saharan Africa by 81% by 2035.
Such demographic pressures will likely halve freshwater availability, exacerbating the danger of regional water wars. Indeed, as early as 2015, the average Arab will be forced to survive on less than 500 cubic meters (17,657 cubic feet) of water a year, a level defined as severe scarcity. This will have a devastating effect on already flailing regional agriculture.
But another major worry is oil production. New evidence suggests that the Gulf powers face the prospect of imminent production peaks. Leaked State Department cables show that the US government privately believes that Saudi Arabia's oil reserves may have been overstated by as much as 300 billion barrels—nearly 40%. By around 2020, Saudi Arabia will be unable to increase production, confronting instead a future of decline—indeed, its oil exports have already begun falling as it increasingly uses up production for domestic needs.
That in turn would mean a catastrophic loss of state revenues, not just for Saudi Arabia, but for the other Gulf powers which have much smaller reserves. The post-peak Gulf would not only usher in a world of extreme energy volatility—oil prices remain closely tied to production from the region—it would render these kingdoms highly vulnerable to the converging crises already at play in countries like Egypt, Syria and Yemen.
The implication is stark. If business-as-usual continues, Egypt today is very much a window into a near-future that would make dystopian science fiction look like high fantasy.