Reporter's Statement of the Case. partment, which bureau had charge of the furnishing and installation of the package boxes supplied by the plaintiff company, introduced to Isaac S. McGiehan, president of the company, one George E. Lorenz, stating that Lorenz was his partner in certain oil business. At the same time Machen stated to McGiehan that the package boxes being made by the McGiehan company were defective, because they were too low, and that they ought to be higher from the ground. Lorenz then stated that he had a design for legs which would elevate the boxes. Shortly thereafter McGiehan received a communication from the Post Office Department, asking whether or not the boxes could be elevated from the ground, and the cost thereof, to which McGiehan replied that it could be done and the cost would be $1.25 additional per box. Thereafter Lorenz again called upon McGiehan, and as a result of said interview the following agreement was entered into: "It is hereby agreed and understood that the legs referred to in this connection are the invention of Mr. George E. Lorenz, of Toledo, Ohio, and that the Columbian Mfg. Co. hereby agrees to pay the said Lorenz 50 cents royalty for each package box made by them under the contract renewal and its continuance. "Dated at 15 Cortland Street, New York City, the 10th day of Feby., 1895. "W. H. S. per R. S. G. H. H. I. S. M." In the meantime, and before this agreement had been made with Lorenz, McGiehan had, on February 7, 1895, received from the First Assistant Postmaster General the amended contract dated February 1, 1895, providing an increased price of $1.25 per box for the package boxes contracted for in March, 1893, the said increased price being for the legs or standards, which would raise the boxes at least 12 inches from the ground. The increased compensation provided for in the amended contract of February 1, 1895, was agreed upon by correspondence between McGiehan and the First Assistant Postmaster General, and letters of the First Assistant Postmaster General, although signed by him, were in itialed at the top of the page "T. B. M." and "A. W. M” Reporter's Statement of the Case. Machen's full name was August W. Machen. The "T. B. M." is evidently intended for T. W. M., Thomas W. McGregor, a clerk in Machen's office in charge of supplies, who was later indicted for fraud. II. On February 18, 1897, a new contract covering a fouryear period was entered into between the United States and the Columbia Supply Co. for the furnishing of package boxes for use in the Free Delivery Service, at a price of $10.60 each. This contract extended from July 1, 1897, to June 30, 1901, inclusive. When the bid of the plaintiff company was submitted to the Post Office Department in 1897, certain other bids were made on the same package boxes to be made of the same material and under the same specifications as those furnished by McGiehan, and the bidders proposed to supply said boxes at prices ranging from $3.50 to $8 per box. The committee of Post Office officials handling the awards, however, awarded the contract to McGiehan at $10.60 a box, alleging that his box was believed to be the most convenient and durable. On January 29, 1901, the Postmaster General again advertised for proposals for package boxes, for use in the Free Delivery System of the Post Office Department, for a period of four years, and the plaintiff submitted a proposal in answer to said advertisement, which was duly accepted by the Postmaster General, and in March, 1901, the contract was formally executed. Under this contract the United States agreed to pay $10.80 for each package box of the size, dimension, and description specified in said contract. III. In accordance with the provisions of the contract executed in March, 1901, the plaintiff furnished to the United States certain boxes from time to time, and at some time in 1903, subsequent to May 8, there had been furnished to the said department by plaintiff 778 package boxes at the contract price of $10.80 each and 25 combination boxes at the contract price of $25.80 each, aggregating $9,047.40. These boxes were accepted by the department, but the bills therefor were not approved or warrant issued in payment thereof, because of an investigation that had been instituted of irregularities in the purchase of supplies for said department. Reporter's Statement of the Case. Thereupon the purchase of package boxes under the contract executed in March, 1901, was discontinued, and on September 8, 1903, Isaac S. McGiehan, president and majority stockholder of the Columbia Supply Co.; George H. Huntington, secretary and treasurer of the said company; and August W. Machen, superintendent of the Free Delivery System of the Post Office Department, were indicted at Washington, D. C., on charges of bribery and conspiracy to defraud the United States in connection with the purchase of said package boxes. After this time no more orders for package boxes were given to the plaintiff company by the Post Office Department, payment for the 803 boxes heretofore obtained and not paid for was withheld, and the contract executed in March, 1901, was treated as void and without effect by the Post Office Department. The proposal of the plaintiff company to furnish the package boxes under the contract afterwards executed in March, 1901, was made and accepted by the United States while payments were being made by the plaintiff directly to August W. Machen, Superintendent of the Free Delivery System, of a part of the money being paid to the plaintiff by the United States for package boxes being delivered under the 1897 contract. IV. In April, 1903, when the investigation was made by the Post Office Department of irregularities in the purchase of supplies, in which August W. Machen, Superintendent of the Free Delivery System, was concerned, certain post-office inspectors interviewed Isaac S. McGiehan and obtained a statement from him to the effect that no money had ever passed, either directly or indirectly, between plaintiff and his office or company and Machen. An investigation of August W. Machen's bank account at Westminster, Maryland, however, revealed the fact that he had deposited in his bank at that place a number of checks drawn in his favor by George H. Huntington, the treasurer of the Columbia Supply Co. The checks in question were drawn by said Huntington against his personal account at the Hamilton Bank, New York City, payable to A. W. Machen, in the Reporter's Statement of the Case. following amounts and deposited in the Westminster Bank by Machen upon the dates herein stated: After the discovery of those deposits the post-office inspectors again interviewed McGiehan and Huntington, who at first denied that they had ever paid any money, directly or indirectly, to Machen, but when confronted with the evidence stated that the sums so paid to Machen were paid as royalties due Lorenz under the contracts of 1895 and 1897; that they were paid to Machen at Lorenz's request, because Lorenz left for Europe, and the checks were drawn on Huntington's personal account instead of directly on the funds of the company because the company was paying Huntington himself a royalty of 25 cents a box on an improved hinge invented by him, and that it was the practice to draw checks sufficiently large to cover both royalties, which checks Huntington would deposit in his own bank and then pay Lorenz's royalty from that source. McGiehan, being requested to produce any stub books of checks drawn by Huntington on the company's account and to be deposited to his personal account for his disbursement of the alleged royalties, produced a book beginning in March, 1900, which showed that every check appearing therein and drawn by said Huntington on the company's funds was for the exact amount of the check afterwards drawn by Huntington himself out of his personal bank in favor of Machen. These checks to Huntington out of the plaintiff's funds were drawn on the following dates and for the following sums: On March 31, 1900, for- On March 15, 1901, for--- $200.00 250.00 350.00 225.50 After McGiehan had been confronted with the evidence of these checks paid directly to Machen, he admitted that he Reporter's Statement of the Case. had stated that he had directed the money sent to Machen because there was an understanding he was remitting for Lorenz, and stated that a short time after the idea of the standards had been submitted to him by Lorenz, Lorenz stated to him that the package boxes ought to be put on legs, and said: If you will do that I will see that the contract price is increased; you give me a portion of the amount paid, the amount of the increase for my invention. It was suggested by the post-office inspectors that a stenographer be called and McGiehan's statement reduced to writing, to which McGiehan demurred, stating that he would like to have an opportunity to go through his files and look up some documentary evidence; and later, on June 15, 1903, a written statement was secured in which McGiehan admitted that he had no knowledge that the standards upon which he was to pay Lorenz a royalty were patented; that he never searched to see if they were patented, but denied that he knew that this alleged royalty was a rake-off or bribery of Machen through Lorenz. He admitted that information had come to him from Machen requesting him not to let Lorenz know how many boxes he was paying a royalty upon, and thought that information may have come over the phone to him. George H. Huntington, the secretary - treasurer of the plaintiff company, was also examined by the post-office inspectors, and stated under oath that payments were made to Machen at McGiehan's direction, and that he discontinued paying royalties when McGiehan told him it was not necessary to send any more, and that the last payment was the check of March 15, 1901. After this time package boxes were still being delivered to the Post Office Department under the 1897 contract and between March 23, 1901, and March 14, 1902, warrants were issued to the plaintiff in payment for package boxes under the 1897 contract in the sum of $5,819.40. No royalty was paid to Lorenz or Machen on these boxes or on any package boxes delivered under the 1897 contract after the payment of March 15, 1901-that is, after the new contract for pack |