Wooton v. Hinkle

Scott, Judge,

delivered the opinion of the court.

There was a motion made for a review of the facts found, but as, in our .opinion, the evidence warranted the finding of the court, we shall proceed to examine the questions of law arising upon the record as presented.

At one time, the law in England seemed to be settled that the employment of puffers at auctions was illegal. (Bexwell v. Christie, Cowp. 395.) Afterwards, acts of parliament imposing a duty on sales of estates at auction, created a different opinion, and seem to have sanctioned the practice. (Sug. on Tend. 24. 1 Eonb. 178.)

In America, where the subject has not been controlled by legislation, the opinion is generally entertained that it is against sound policy and fair dealing to employ a person to bid secretly for the owner against a bona fide bidder at a public auction. (2 Kent, 539.)

According to Cicero, a vendor ought not to appoint a puffer to raise the price, nor ought a purchaser to appoint a person *292 to depreciate the value of an estate intended to be sold. And Huber lays it down that, if a vendor employs a puffer, he shall be compelled to sell the estate to the highest bona fide bidder, because it is against the faith of the agreement, by which'it is stipulated that the highest bidder shall be the buyer. (Sug. 23.)

Our laws would justly be chargeable with the censure of neglecting the interests of vendors, if, while they prohibited them from employing puffers at auctions of their estates, they suffered purchasers, by unjust combinations among themselves, to obtain their property at a sacrifice. But our law is not obnoxious to this censure. While, on the one hand, it protects purchasers from the influence of fictitious biddings and false appearances produced by the conduct of puffers; on the other, it equally protects the rights of the vendor, and will not permit purchasers, by illegal combinations and- arrangements among themselves, to obtain his estate at an under price.

Story, in his equity jurisprudence, states the law to be that agreements, whereby parties engage not to jbid against each other at a public auction, especially in cases where such auctions are required by law, are held void; for they are uncon-scientious and against public policy, and have a tendency injuriously to affect the character and value of sales at public auction, and to mislead private confidence. They operate virtually as a fraud upon the sale. (1 vol. sec.-293.)

The courts in New York maintain that the forbearance of bidding at a public auction is a consideration for a contract that ought not to be sanctioned in law; that the law, at judicial sales, is anxious to produce a fair competition among bidders, and, as combinations have the effect of preventing such competition, they are against the policy of the law and void. (Jones v. Caswell, 3 John, cases, 29. Dootin v. Ward, 6 Johns. Rep. 194.)

None of the cases cited by the appellants impugn this doctrine. The case of Loomis v. The National Fire Ins. Co., ( 11 Paige, 431 ,) decides that a real bidder, at a public sale, may either bid in person or by his agent duly authorized. The *293 case of Phippen v. Stickney, ( 3 Met. 384 ,) was an action arising out of an agreement between two persons that one of them should purchase the land to be sold at auction and convey it to the other, the purchaser participating in some of the advantages. In this case, the court says, the extent to which the doctrine of invalidating such contracts can safely be carried, would rather seem to embrace within the rule all cases of fraudulent acts and all combinations having for their object to stifle fair competition at the biddings, with the design of becoming the purchasers at a price less than the fair value of the property. The case of Small v. Jones, ( 1 Watts & Serg. 128 ,) contains nothing contravening that just above cited; it maintains that a combination of interests to purchase property at a sheriff’s sale will be valid or not, according to the views with which it is made. If it is effected with the design to depress, the price, it will be void. But that there may be circumstances which will render a combination at a sale lawful, when it is entered into with no improper view. The case of Switzer v. Skiles, ( 3 Gilman, 529 ,) contains nothing inconsistent with the doctrine of the above cases. That was a sale of the public lands of the United States. A to.wn had previously been laid out upon the land, and the owners of lots deputed one of their number to bid for the tract on which their town had been built. Nothing more appears.

The case of Jenkins v. Hogg, (2 Con. S. Car. Rep. 821,) does not affect the question involved in this controversy. If it is cited for the purpose of showing that the employment of puffers at auctions is warranted by law, its authority would scarcely be recognized at this day. The facts in this case show that there was a combination to obtain the property sold at a sacrifice by those who purchased it. When arrangements are made to effect that object by the purchasers at a sale, the law deems them fraudulent. It is a fraud on the sale, to make a combination by which the property is acquired at a price below its value. The law imputes fraud to such conduct, and the court was warranted in inferring its existence from the facts *294 found. It is of importance that these sales in partition should be preserved free from all influences, which may depreciate the value of the land sold. Such sales rarely take place-but where infants are interested, and they are too. frequently prompted by a desire to obtain their inheritance, and that, too, at a sacrifice. Under such circumstances, courts cannot be too vigilant in guarding every avenue to improper practices in conducting them.

Judge Ryland concurring,

the judgment will be affirmed.