forcement of the contract made at the auction. The cases prior to the recent legislation seem to fall under three heads, which it will be desirable to discriminate. § 690. (1) Where the sale is announced to be without reserve, this excludes any interference on the part of the vendor which can, under any possible circumstances, affect the right of the highest bidder to have the property knocked down to him, and that without reference to the amount to which the highest bidding shall go.(k) Therefore the employment by the vender in such a sale of one or more persons to keep up the price on his behalf amounts to fraud in the contemplation of the court, (7) and is a bar to specific performance. (m) Where the vendors, assignees of an insolvent, put up his life-interest in certain property for sale by auction without reserve, having previously entered into an arrangement with a person whose wife was interested in remainder, that he should bid £35,000 and be the purchaser, unless a higher sum should be bid, and this fact was concealed, it was held to taint the sale to the defendant at the auction, though he purchased for £49,800.(n)' § 691. The statement that a sale is without reserve may, of course, be modified by other statements, as in one case of a sale under the court, where it was stated that the sale was without reserve, but that all parties to the suit had liberty to bid: and the court of appeal in chancery held that the result of the two statements, though not very consistent, was such that the purchaser could not complain. (0) § 692. (2) Where there is no declaration that the sale is without reserve, and no right of bidding is expressly reserved to the vendor, and he employs one person to prevent the property going at an undervalue; this has been thought not to be fraud in the contemplation of a court of equity, (p) though it clearly was in that of the courts of common law. (q) (k) Per Lord Cottenham in Robinson v. Wall, 2 Ph, 375. (1) Thornett v. Haines, 15 M. & W., 367, where the earlier cases are cited. (m) Meadows v. Tanner, 5 Mad., 34. As to an intending purchaser buying off bidders, see Heffer v. Martyn, 15 W. R., 390; 36 L J. Ch., 372, and cf. Re Carew's Estate, 26 Beav., 187. (n) Robinson v. Wall, 10 Beav., 61; S. C, 2 Ph., 372. (0) Dimmock v. Hallett, L. R. 2 Ch., 21. (P) Smith v. Clarke, 12 Ves., 477; Woodward v. Miller, 2 Coll., 279; Flint v. Woodin, 9 Ha., 618; Bramley v. Alt, 3 Ves., 620. (g) Per Lord Wensleydale in Thornett v. Haines, 15 M. & W., 372; Crowder v. Austin, 3 Bing., 368. 1 See Morehead v. Hunt, 1 Dev. Ch., 65; Hinde v. Pendleton, Wythe, 144. The distinction, however, was disapproved of, if not doubted, by Lord Cranworth in the case of Mortimer v. Bell.(r)' § 693. Inasmuch as a contract, if originally void by the common law, ought not to be enforced by equity, the defendant in a suit in the court of chancery for specific performance might avail himself of the defense furnished by this fraud at law, and that formerly by means of a trial of the question at law. (s) § 694. (3) Even in the absence of any declaration that the sale is without reserve, the employment of two or more persons as puffers has in all courts been considered fraudulent, inasmuch as only one person can be necessary to protect the property, and the employment of more can only be to enhance the price. (t) § 695. The decision in the case of Mortimer v. Bell above mentioned led to the passing of an act of Parliament (the (r) L. R. 1 Ch., 10. See infra, §§ 695, 696. (s) Woodward v. Miller, 2 Coll, 279 (t) Per Lord Wensleydale in Thornett v. Haines, 15 M. & W., 372. See, also, Rex v. Marsh, 3 Y. & J., 331; Bramley v. Alt, 3 Ves, 620. But in Woods v. Hall, 1 Dev. Ch., 411, where a person interested in land sold at auction, employed another to bid for him, and represented the bid made, by such person as made on his own account, the sale was held to be fraudulent and was set aside. According to the early English decisions, the employment of puffers, by an owner, to bid for him at auction, was a fraud upon the real bidders. He could not enhance the price by a person privately employed by him for that purpose; but if he were unwilling that his goods should be sold at an under price, he might order them to be set up at his own price, and not lower, or he might previously declare, as a condition of the sale, that he reserved a bid for himself. Bexwell v. Christie, Cowp., 395; Howard v. Castle, 6 T. R., 642. And this doctrine seems to be approved in 2 Kent, 538, 539 (5th ed.), and 1 Story's Eq. Jur., § 293. It has been adopted, also, in later English cases. Crowder v. Austin, 2 Car. & P.. 208; Wheeler v. Collier, 1 Mood. & Walk., 123; Fuller v. Abraham, 3 Brod. & B., 116; S. C., 6 Moore, 316 There are other cases, however, which have admitted a qualification of this doctrine. Among these is that of the text and Steele v. Ellmaker, 11 S. & R., 86. It has been decided in several American cases, that contract by which one party stipulated not to bid against another at an auction sale, or an agreement by one to bid for the benefit of himself and the other party were contrary to public policy, and a fraud on the vendor. James v. Caswell, 3 John.'s Cas., 29; Doolin v. Ward, 6 John., 194; Wilbur v. Howe, 8 id., 444; Thompson v. Davies, 13 id., 112; Dudley v. Little, 2 Ham., 505; Picatt v. Oliver, 1 McLean, 295; Gulick v. Ward, 5 Halst., 87. According to other decisions, the validity of such agreement is made to turn on the quo animo, and they will be valid if made bona fide for the sole purpose of preventing a sacrifice of the property Wolfe v. Luyster, 1 Hall, 146; Jenkins v. Hogg, 2 Const. (S. C.), 821; Smith v. Greenlee, 2 Dev., 126; Small v. Jones, 1 Watts & Serg, 128; Phippes v. Stickney, 3 Metc., 384, where the subject is discussed with clearness and the authorities are carefully examined. But an association of bidders with a design to stifle competition, is a fraud upon the vendor. Smith v. Greenlee, 2 Dev., 126; See, also, Morehead v. Hunt, 1 Badg. & Dev. Eq., 35; Moncrief v. Goldsborough, 4 Harr. & M'Hen., 281; Troughton v. Johnstone, 2 Hayw., 328; note in Bramley v. Alt (Sumn. ed.), 3 Ves., 620. 30 and 31 Vict., c. 48), which was introduced by Lord St. Leonards. The 4th section of this act enacts that, after the passing of the act, whenever a sale by auction of land would be invalid at law by reason of the employment of a puffer, the same shall be deemed invalid in equity as well as at law. Land is defined to include hereditaments of whatever tenure but the difference of the view of the courts of common law and equity as to fraud in auctions of chattels (if such difference exist) is left in its pristine vigor. § 696. The 5th section of the act enacts that the particulars or conditions of sale by auction of any land shall state, (a) whether such land will be sold without reserve, or (b) subject to a reserved price, or (c) whether a right to bid is reserved and (a) If the land be sold without reserve, it is not lawful for the seller to employ any person to bid at such sale, or for the auctioneer to take knowingly any bidding from any such person. (b) In the event of the land being sold subject to a reserved price the act is silent, but it has been held that in the absence of express stipulation, it is not lawful to employ any person to bid up to the reserved price. (u) But (c) in the event of a reservation of a right to the seller to bid, it is lawful for him or for any one person on his behalf to bid at such auction in such manner as he may think proper (§ 6). (v) § 697. As with regard to misrepresentation, so with regard to fraud in general, delicate questions arise where the fraud alleged is that of the agent practiced on third persons, and the principal is sued on the ground of deceit or for rescission by reason of such fraud. (w) But in actions for specific performance these questions cannot arise. If the principal of the fraudulent agent were the plaintiff, he would not be at liberty to avail himself of that agency in part and repudiate it in the rest of the transaction: to such a case the well-established principle of equity that innocent parties cannot derive benefits from the fraud of others (x) would apply. If, on the other hand, the fraud were that of (u) Gilliat v. Gilliat, L. R. 9 Eq., 60. (x) Bridgman v. Green, Wilm. Not., 58; (v) See Parfitt v. Jepson, 46 L. J. C. P., 529. Huguenin v. Baseley, 14 Ves., 289: Nicol's (w) See supra, § 636. Case, 3 De G. & J., 387, 438. the defendant's agent, the plaintiff by suing on the contract would have waived the fraud and ratified the contract. § 698. A particular class of cases arising from the agency of directors, and the fact that corporations are incapable of personal fraud, has occupied much attention in the courts of late years, and has evoked a considerable variation of opinion amongst the learned judges. (y) But the question can hardly arise in cases of specific performance for the reason indicated in the last preceding section. § 699. Will the fraudulent act of a mere stranger, to which the plaintiff was neither party nor privy, deprive him of his right to enforce the performance of a contract? The question has never, it is believed, been judicially answered. But upon the general equitable principle that no person, though innocent, can derive a benefit from the fraud of another, the contract if resting absolutely in fieri could not be enforced. If the plaintiff were an assign for value of the contract, or if the contract were partly performed, the conclusion might probably be different.(z) § 700. The effect of fraud on the contract tainted by it extends to the entirety of the contract, though the fraud may only have arisen or been practiced as regards one term or one part of that contract. Hence the party guilty of the fraud cannot enforce the contract to any extent even though he may waive the part affected by the fraud. § 701. The same results follow from misrepresentation, even though innocent. In a case where there was a misrepresentation which the judge considered not to have been willful, but to have arisen from misunderstanding as to the surrender of a lease on part of the property which was to be exchanged, and the plaintiff offered to take the land subject to the lease, and thus, as he contended, to abide by the contract, exonerated from what was affected by the misrepresentation; so that the question distinctly arose whether the misrepresentation avoided the contract in toto or only quoad hoc; Plumer, M. R., said, "there is no authority anywhere, no case where (y) Ranger v Great Western Railway Co., 5 H. L C., 72; Burnes v. Pennell, 2 id., 497; New Brunswick and Canada Railway, etc., Co. v. Conybeare, 71d,711 (S C,4 Giff, 339; 1 De G F. & J., 578); National Exchange Co. of Glasgow v. Drew, 2 Macq, 103; Nicol's Case, 3 De G. & J., 387; Western Bank of (2) Consider Cobbett v. Brock, 20 Beav., 524. the court has, when misrepresentation was the ground of a contract, decreed the specific performance of it; and nothing would be more dangerous than to entertain such a jurisdiction. The principle on which performance of an agreement is compelled, requires that it must be clear of the imputation of any deception. The conduct of the person seeking it must be free from all blame: misrepresentation, even as to a small part only, prevents him from applying here for relief. The reason of this is obvious: if it be so obtained, the contract is void both at law and in equity. When an agreement has been obtained by fraud, is the effect to alter it partially, to cut it down or modify it only? No; it vitiates it in toto; and the party who has been drawn in is totally absolved from obligation. If so, what equity has the other party who, by his misconduct, has lost one contract, to call on the court, for his benefit to make a new one? If the defendant were willing to consent to it, and to enter into a new agreement, it would be a different case; but if he refuses, if he insists that he is absolved from it, what equity can there be in favor of the other?" (a) § 702. The view that fraud operates on the entire contract was adopted and approved by the court of appeal in chancery in Rawlins v. Wickham,(b) which was a suit for rescission, where the defendant urged that justice would be done not by rescinding the contract but by directing the representation to be made good; but the contention was rejected by Knight Bruce and Turner, L. JJ., on the ground that the misrepresentation gave a right to avoid the entire contract. § 703. The effect of fraud on the contract is two fold. First, it renders the contract voidable at the election of the defrauded party; secondly, it operates as a personal bar to specific performance. These two effects are for many purposes distinguishable; for example, the right to rescind may be lost, and the right to object to specific performance may remain. These two effects will therefore be considered separately. § 704. The first effect of fraud is to render the whole contract voidable, but viodable only. The contract is not void; (a) Viscount Clermont v. Tasburgh, 1 J. & v. Panama, etc., Mail Co, L. R. 2 Q B., 580, W.. 119, 120. 587; and cf. Hart v. Swaine, 7 Ch. D., 42, 47. (b) 3 De G. & J., 304. See, also, Kennedy |