SALINAS et al. v. STILLMAN et al., 66 F. 677

PARDEE, Circuit Judge, after stating the facts as above, delivered the opinion of the court.

The complainants’ bill is framed in disregard of the equity rules of the supreme court of the United States and the generally recognized rules of equity pleading, but we gather from it that the complainants therein are seeking to set aside and annul a judgment, rendered at law in an action in which they and many others were parties, because the judgment was preceded by an agreement between some of the parties to the action in which provision was made for the recovery of the title, rents, and profits of real estate in favor of two of the parties thereto, to the exclusion of the rest, but under which eventual distribution should be made to all the parlies according to interest as determined by the arbitration therein provided for.

The agreement is attacked because of alleged error and mistake on the part of the complainants, in that, at the time of signing the same, the complainants were misled and misinformed as to the real purport and effect of the agreement by reason of the absence at the time of their counsel previously em-ployéd, and by the representations and persuasion of the attorneys of other parties; because the agreement was calculated to operate a fraud upon the court in the trial of the action then pending at law; because certain provisions therein contained were against public policy; because two of the arbitrators named in the agreement were of counsel for certain of the parties in interest; and because the provisions with regard to arbitration were not otherwise in accordance with the provisions of the Bevised Statutes of Texas relating to arbitrations.

It is also intimated in the bill that by reason of the agreement the title eventually to be given the United States would be in some way defective.

The claim that the agreement was void for mistake on the part of the complainants in not being informed as to its real purport and effect, even if otherwise sufficient to warrant relief, — which is doubtful,— loses nearly, if not all, of its force when we consider the length of time which elapsed between the agreement and the institution of the present suit,, to say nothing of the averments in the bill, in which it clearly appears that the complainants’ real grievance is that the principal parties thereto did not at the time intend to carry out the agreement, and that they have during all these years delayed and refused to carry out the same.

Besides this, the aver-ments of the bill with regard to error and mistake on the part of the complainants are altogether too indefinite and general in regard to any mistake upon the part of the complainants.

We have searched the bill in vain to find a specific averment that at any time any or either of the complainants was actually misled or deceived as to the purport and effect of the agreement; The averment that “for want of counsel, and on account of the absence of well-prepared and well-considered legal advice, petitioner Woodhouse was led into error,” is the nearest approach to any averment of the kind, and that is wholly insufficient.

The agreement being between only two of the plaintiffs and part of the interveners in the action atlaw, and providing only for an ascertainment of the interest of the parties to the same after a favorable verdict should be obtained in the action, we are wholly unable to see that there was any necessity whatever for bringing the agreement to the notice of the court, or any impropriety whatever in failing to have it entered of record.

So far as it was an attempt by the parties to settle their difference out of court by arbitration, or in any other amicable manner, the proceeding is to be commended rather than adversely criticised. Parties may adjust their differences out of court, and afterwards give effect to the settlement by a judgment or decree of court, which will be as binding and conclusive as any other adjudication. Nashville, C. & St. L. R. Co. v. U. S., 113 U. S. 261, 5 Sup. Ct. 460.

The contention that the agreement was against public policy seems to be wholly based upon the fact that by the terms of the same a portion of the moneys eventually to be derived from the United States for the purchase of the Ft. Brown reservation was to be paid to certain agents at Washington who assisted in procuring the said appropriation.

It is true that the act of congress making the appropriation provides that the “full amount of the price including rent shall be paid direct to the owners of the property”; it is also true that contracts for services in procuring legislation by lobbying are against public policy; but, conceding this, it by no means follows that any fraud could or would have been perpetrated on the United States if, after the money had been paid by the United States directly to the owners of the property, the owners of the property had thereupon recognized and paid for legitimate services rendered by agents in procuring the appropriation.

In the case of Trist v. Child, 21 Wall. 441, the distinction is clearly recognized between contracts for lobbying services and contracts for professional or other services legitimately rendered by agents. The bill is silent as to the character of the services rendered in Washington for which payment was to be made. We naturally indulge in the presumption that they were lawful.

At the same time it is to be noticed that if the complainants’ charge that the agreement was against public policy, and a fraud upon the government, is well founded, it by no means follows that the complainants in the present case can obtain relief on that ground. On the contrary, the court would be likely to apply the maxim in pari delicto against at least two of the complainants.

The charge that two of the arbitrators named in the agreement were of counsel for parties in interest, and therefore disqualified to act, is without any merit, particularly when taken in connection with the fact that the bill utterly fails to show that the complainants were; unaware of such employment and interest at the time the agreement was entered into.

It is true that the Revised Statutes of the stale of Texas provide a mode of submitting causes for arbitration, which statutes do not appear to have been complied with in toto in the agreement in question; but the last article (56) of the title on the subject concludes as follows: “Nothing herein shall be construed as affecting the existing right of parties to arbitrate their differences in such other mode as they may select” See Rev. St.

Tex. tit. “Arbitration.” We are of opinion that the circuit court ruled correctly on the general and special demurrers to the complainants’ bill, and that the assignments of error in this court are not well taken. As the complainants refused to amend in the circuit court, and stood on their bill, which was clearly defective in substance and for want of parties and as to the relief sought, we are constrained to sustain the circuit court in dismissing the bill. At the same time, we notice that, under the facts recited in the bill, the complainants have an equity which may hereafter require judicial recognition.

The agreement attacked undoubtedly created a trust in favor of the parties thereto, and equity may require that such trust shall be recognized and enforced. In a suit for such purpose, the decree dismissing the bill in the present case without reservation may be interposed, and perhaps with effect, as res judicata against the present complainants. To avoid this, and to save any equitable rights the complainants may actually have, a majority of this court are of opinion that the decree should be amended so as to show that the bill was dismissed without prejudice, but at complainants’ cost.

The decree of the circuit court appealed from is reversed, and a decree is rendered in favor of Henry Wagner and Thomas Carson, administrator with the will annexed of Maria Josefa Cavazos; deceased, dismissing the complainants’ bill without prejudice, but with costs of this and the circuit court.