Steel v. Drummond - 275 U.S. 199 (1927)
U.S. Supreme Court
Steel v. Drummond, 275 U.S. 199 (1927)
Steel v. Drummond
Argued October 20, 1927
Decided November 21, 1927
275 U.S. 199
1. Review by certiorari will be confined to the question on which the petition for the writ was based. P. 275 U. S. 203.
2. It is only because of the dominant public interest that one who has had the benefit of performance by the other party is permitted to
avoid his own contract obligation on the plea that the agreement is illegal. It is a matter of great public concern that freedom of contract be not lightly interfered with. P. 275 U. S. 205.
3. Only in clear cases will contracts be held void as against public policy. The principle must be cautiously applied to avoid confusion and injustice. P. 275 U. S. 205.
4. Where nothing sinister or improper is done or contemplated under the contract, detriment to the public interest will not be presumed. P. 275 U. S. 205.
5. A contract between S and D for construction of a railroad to connect with an existing railroad and extend to a town where D owned property, contained a promise by him to procure necessary franchises and ordinances from that town, and a promise by S that he would procure the company which was to own the new line and the company owning the existing one to operate regular trains over the two roads giving to the town above referred to the same service as that had by the one where they connected. D's purpose in making and performing the contract was to enhance the value of his property by the contemplated railroad facilities. S was a stockholder of the old company and took all the stock of the new one; held, that neither of the two stipulations was shown to be against public policy. P. 275 U. S. 206.
11 F.2d 595 affirmed.
Certiorari, 271 U.S. 658, to a judgment of the circuit court of appeals, which reversed a judgment of the district court dismissing on demurrer an action brought by Drummond to recover damages for breach of a contract between him and Steele.
Jurisdiction of the district court was founded on diversity of citizenship.