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United States v. Mississippi Valley Generating Co.

Supreme Court of the United States

October 19, 1960, Argued ; January 9, 1961, Decided

No. 26

Opinion

 [*523]   [***273]   [**295]  MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.

We granted certiorari to review the decision of the Court of Claims because the conflict-of-interest problem presented by this case has a far-reaching significance in the area of public employment and involves fundamental questions relating to the standards of conduct which should [****7]   [**296]  govern those who represent the Government in its business dealings.

The person with whose activities we are primarily concerned is one Adolphe H. Wenzell, Vice President and Director of First Boston Corporation, 1 which is one of the major financial institutions in the country. At the suggestion of First Boston's Chairman, and subsequently at the request of the Bureau of the Budget, Wenzell undertook to advise the Government and act on  [***274]  its behalf in negotiations which culminated in a contract between the Government and the Mississippi Valley Generating Company (MVG), the respondent herein. The contract called for the construction and operation by the respondent of a $ 100,000,000 steam power plant in the Memphis, Tennessee, area. Ultimately, the plant was to supply 600,000 kw. of electrical energy for the use of the Atomic Energy Commission (AEC). Before the plant was constructed, but after the respondent had taken some steps toward performing the contract, the AEC, which was the governmental contracting agency, canceled the contract because the power to be generated by the proposed plant  [*524]  was no longer needed. The respondent then sued the [****8]  Government in the Court of Claims for the sums it had expended in connection with the contract.

The Government defended on several grounds, but primarily on the ground that the contract was unenforceable due to an illegal conflict of interest on the part of Wenzell. Specifically, the Government contended that at the time of Wenzell's employment by the Government, it was apparent that First Boston was likely to benefit, and as subsequently developed, in fact, did benefit, from the contract here in question; that Wenzell, as an officer of First Boston, was therefore "directly or indirectly" interested in the contract which he, as an agent of the Government, had helped to negotiate; that he consequently had violated the federal conflict-of-interest statute, 18 U. S. C. § 434; 2 and that his illegal conduct tainted the whole transaction and rendered [****9]  the contract unenforceable.

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364 U.S. 520 *; 81 S. Ct. 294 **; 5 L. Ed. 2d 268 ***; 1961 U.S. LEXIS 1946 ****

UNITED STATES v. MISSISSIPPI VALLEY GENERATING CO.

Prior History:  [****1]  CERTIORARI TO THE COURT OF CLAIMS.

Disposition:  175 F.Supp. 505, reversed.

CORE TERMS

sponsors, negotiations, Budget, financing, plant, contracts, consultant, conflicting interest, conflict-of-interest, arranged, resigned, terminated, prepare, government agent, transactions, conferred, estimates, handle, supplied, behalf of the government, participated, probability, indirectly, confirmed, factors, Energy, terms, business entity, final contract, corruption

Criminal Law & Procedure, Criminal Offenses, Abuse of Public Office, General Overview, Governments, Legislation, Interpretation, Types of Statutes, Conflicts of Interest, Federal Government, Employees & Officials, Contracts Law, Remedies, Equitable Relief, Courts, Courts of Claims, Defenses, Illegal Bargains, Elements, Public Policy Violations