petition in certain industries or even make obligatory the combination of competitors, as, for example, in the potash industry in Germany, the sulphur industry in Italy, and the petroleum industry in Roumania." 53 § 1663. Contracts not to bid at auction. It is not permissible for intending buyers at auction or other competitive sales to make an agreement for a consideration, that only one of them shall bid in order that the property may be knocked down at a low valuation. It may probably be assumed that if the contract is against public policy, so far as the parties to it are concerned, it is also fraudulent as regards the seller, and the converse of this proposition is undoubtedly true. A somewhat nice distinction is taken in regard to such an agreement which was thus expressed in a Massachusetts case: 54 "An agreement between two or more persons that one shall bid for the benefit of all upon property about to be sold at public auction, which they desire to purchase together, either because they propose to hold it together or afterwards to divide it into such parts as they wish individually to hold, neither desiring the whole, or for any similar honest or reasonable purpose, is legal in its character and will be enforced;" 55 "but such agree 53 Trust Laws and Unfair Competition (U. S. Gov't Printing Office, 1916), p. LIII. 54 Gibbs v. Smith, 115 Mass. 592. 55 Kearney v. Taylor, 15 How. 494, 519, 14 L. Ed. 607; Jenkins v. Frink, 30 Cal. 586, 89 Am. Dec. 134; Switzer v. Skiles, 8 Ill. 529, 44 Am. Dec. 723; Hunt v. Elliott, 80 Ind. 245, 41 Am. Rep. 794; Smith v. Ullman, 58 Md. 183, 42 Am. Rep. 329; Phippen v. Stickney, 3 Met. 384; Stillwell v. Glasscock, 91 Mo. 658, 4 S. W. 438; Murphy v. De France, 105 Mo. 53, 15 S. W. 949, 16 S. W. 86; Whalen v. Brennan, 34 Neb. 129, 51 N. W. 759; Gulick v. Webb, 41 Neb. 706, 60 N. W. 13, 43 Am. St. Rep. 720; Olson v. Lamb, 56 Neb. 104, 76 N. W. 433, 71 Am. St. Rep. 670; Bellows v. Russell, 20 N. H. 427, 51 Am. Eec. 228; Hunt ington v. Bardwell, 46 N. H. 492; National Bank v. Sprague, 20 N. J. Eq. 159, 168; De Baun v. Brand, 61 N.. J. L. 624, 41 Atl. 958; Marsh v. Russell, 66 N. Y. 288; Marie v. Garrison, 83 N. Y. 14; Smith v. Greenlee, 2 Dev. L. 126, 18 Am Dec. 564; Goode v. Hawkins, 2 Dev. Eq. 393; Breslin v. Brown, 24 Ohio St. 565, 15 Am. Rep. 627; Smull v. Jones, 6 W. & S. 122; Maffet v. Ijams, 103 Pa. St. 266; McMinn's Legatees v. Phipps, 3 Sneed, 196; James v. Fulcrod, 5 Tex. 512, 55 Am. Dec. 743; Flanders v. Wood, 83 Tex. 277, 18 S. W. 572; Dailey v. Hollis, 27 Tex. Civ. App. 570, 66 S. W. 586; Barnes v. Morrison, 97 Va. 372, 34 S. E. 93. Cf. Woodruff v. Berry, 40 Ark. 251; Marshalltown Stone Co. v. Des Moines Brick Co., 114 Iowa, 574, 87 N. W. 496. ment, if made for the purpose of preventing competition and reducing the price of the property to be sold below its fair value, is against public policy and in fraud of the just rights of the party offering it, and, therefore, illegal." 56 Even an open statement, without misrepresentation, if calculated to chill bidding may render a sale voidable. 57 The English authorities, however, seem opposed to the American decisions, and to enforce agreements to refrain from bidding. 58 The American rule is not carried so far as to invalidate a con 5 Hyer v. Richmond Traction Co., 80 Fed. 839, 42 U. S. App. 522, 26 C. C. A. 175, 168 U. S. 471, 18 S. Ct. 114, 42 L. Ed. 547; McMullen v. Hoffman, 174 U. S. 639, 19 S. Ct. 839. 43 L. Ed. 1117; Atlas Nat. Bank v, Holm, 71 Fed. 489, 34 U. S. App. 472, 19 C. C. A. 94; Swan v. Chorpenning, 20 Cal. 182; Ray v. Mackin, 100 Ill. 246; Devine v. Harkness, 117 Ill. 145, 7 N. E. 52; Conway v. Garden City Co., 190 Ill. 89, 60 N. E. 82; Hunter v. Pfeiffer, 108 Ind. 197, 9 N. E. 124; Shaw v. Elijah, 54 Ind. App. 234, 102 N. E. 885; Clark v. Stanhope, 109 Ky. 521, 59 S. W. 856; Gardiner v. Morse, 25 Me. 140; Weld v. Lancaster, 56 Me. 453; Hannah v. Fife, 27 Mich. 172; Boyle v. Adams, 50 Minn. 255, 52 N. W. 860, 17 L. R. A. 96; Wooton v. Hinkle, 20 Mo. 290; Miltenberger v. Morrison, 39 Mo. 71; Gobble v. O'Connor, 43 Neb. 49, 61 N. W. 131; McClelland v. Citizens' Bank, 60 Neb. 90, 82 N. W. 319; Gulick v. Ward, 5 Halst. 87, 18 Am. Dec. 389; Brooks v. Cooper, 50 N. J. Eq. 761, 26 Atl. 978, 21 L. R. A. 617, 35 Am. St. Rep. 793; Kenny v. Lembeck, 53 N. J. Eq. 20, 30 Atl. 525; Jones v. Caswell, 3 Johns. Cas. 29, 2 Am. Dec. 134; Doolin v. Ward, 6 Johns. 194; Wilbur v. How, 8 Johns. 444; Thompson v. Davies, 13 Johns. 112; People v. Stephens, 71 N. Y. 527; Hopkins v. Ensign, 122 N. Y. N. E. 1107; Coverly v. Terminal Warehouse Co., 83 N. Y. S. 369, 85 App. Div. 488; Ingram v. Ingram, 4 Jones L. 188; King v. Winants, 71 N. C. 469, 17 Am. Rep. 11; Saxton v. Seiberling, 48 Ohio St. 554, 562, 29 N. E. 179; Kine v. Turner, 27 Or. 356, 41 Pac. 664; Barton v. Benson, 126 Pa. St. 431, 17 Atl. 642, 12 Am. St. Rep. 883; In re Hay's Estate, 159 Pa. St. 381, 28 Atl. 158; Dudley v. Odom, 5 S. C. 131, 22 Am. Rep. 6; Wilson v. Wall, 99 Va. 353, 356, 38 S. E. 181; Ralphsnyder v. Shaw, 45 W. Va. 680, 31 S. E. 953. See also Fenner v. Tucker, 6 R. I. 551; Herndon v. Gibson, 38 S. C. 357, 17 S. E. 145, 37 Am. St. Rep. 765, 20 L. R. A. 545, and note. Compare Breslin v. Brown, 24 Ohio St. 565, 15 Am. Rep. 627. 57 Herndon v. Gibson, 38 S. C. 357, 17 S. E. 145, 20 L. R. A. 545, 37 Am. St. Rep. 765. In this case at a mortgagee's sale, the mortgagor announced that she was a widow dependent on the land for support and intended to bid. It was held that the sale should be set aside. 58 Galton v. Emuss, 1 Coll. Ch. 243; Re Carew's Estate, 26 Beav. 187; Heffer v. Martyn, 36 L. J. Ch. 372; Chattock v. Muller, 8 Ch. D. 177. Compare Levi v. Levi, 6 C. &. P. 239. See also 20 L. R. A. 543, note; Phippen v. Stickney, 3 Metc. 384, 387; 1 Story, Eq. Jur., § 293; Story, Sales, 144, 25 N. E. 306, 9 L. R. A. 731; § 484. Baird v. Sheehan, 166 N. Y. 631, 60 tract to pay another money in consideration of his relinquishment of his right to purchase land at a price at which it had been offered to him.59 § 1664. Puffing. Secret bidding by or on behalf of the seller may have a double importance. It may deprive the highest bona fide bidder of the goods and thereby cause a breach of a contract which he has made by being present and taking part in the sale. This aspect of the case has been previously considered; 59 but the bidding of the seller may also have the effect of inducing a buyer to whom the property is ultimately knocked down to make his successful bid, and on learning the facts he may wish to withdraw from the transaction on the ground of fraud. It is well settled that such a bidder has the right to withdraw under these circumstances.60 A rule was supposed to exist in English courts of equity that the employment of one puffer was justifiable, to prevent a sale of property for less than it was worth,61 but this rule was first changed by statute in England, so far as land is concerned, 62 and then by the Sale of Goods Act, so far as goods and chattels personal other than choses in action are 59 White v. McMath, 127 Tenn. 713, 156 S. W. 470, 44 L. R. A. (N. S.) 1115. But see Kincheloe v. Taylor, 123 Va. 178, 96 S. E. 167; sub nom. Kincheloe v. Strayer. 80 Green v. Baverstock, 14 C. B. (N. S.) 204; Veazie v. Williams, 8 How. 134, 153, 12 L. Ed. 1018; Baham v. Bach, 13 La. 287, 33 Am. Dec. 561; Curtis v. Aspinwall, 114 Mass. 187, 19 Am. Rep. 332; Springer v. Kleinsorge, 83 Mo. 152; Towle v. Leavitt, 23 N. H. 360, 55 Am. Dec. 195; Bowman v. McClenahan, 20 N. Y. App. Div. 346; Morehead v. Hunt, 1 Dev. Eq. 35; Woods v. Hall, 1 Dev. Eq. 411; McDowell v. Simms, 6 Ired. Eq. 278, Busb. Eq. 130, 57 Am. Dec. 595; N. Dak. Civil Code, § 3994; Walsh v. Barton, 24 Ohio St. 28, 46; Pennock's Appeal, 14 Pa. St. 446, 53 Am. Dec. 561; Staines v. Shore, 16 Pa. St. 200, 55 Am. Dec. 492; Yerkes v. Wilson, 81* Pa. St. 9; Flannery v. Jones, 180 Pa. St. 338, 36 Atl. 856, 57 Am. St. Rep. 648; S. Dak. Civil Code, § 1346. But see East v. Wood, 62 Ala. 313; McMillan v. Harris, 110 Ga. 72, 35 S. E. 334, 48 L. R. A. 345, 78 Am. St. Rep. 93. The rule which has been sometimes suggested (National Bank v. Sprague, 20 N. J. Eq. 159, 165; Veazie v. Williams, 3 Story, 611, 621) that the employment of a puffer will not make the sale voidable, if, after the bid of the puffer, there is a bid by a real buyer before that at which the property is knocked down seems unsound. 61 Smith v. Clarke, 12 Ves. 477, 483; Flint v. Woodin, 9 Hare, 618. But see Mortimer v. Bell, L. R. 1. Ch. 10, 16. concerned.63 The American Uniform Sales Act has a similar provision 64 The distinction between law and equity, in regard to the matter, never existed in the United States. Though bidding by the seller or his agents is fraudulent, it seems to be admitted, generally, that a right to bid may be expressly reserved on behalf of the seller.65 It is, therefore, the secrecy of puffing which renders it a fraud upon bidders. The auctioneer may not himself be a bidder or agent for a bidder, because of the inconsistency of the position of selling as auctioneer and acting as buyer.66 It may be questioned, however, whether an auctioneer may not properly bid a single specified sum for a purchaser.67 63 Sale of Goods Act, Sec. 58. 64 Sec. 21 (4). The States which have enacted this statute are enumerated, supra, § 506 n. 2. 65 Thornett v. Haines, 15 M. & W. 367; Howard v. Castle, 6 T. R. 642; Miller v. Baynard, 2 Houst. 559, 83 Am. Dec. 168; Yerkes v. Wilson, 81 Pa. St. 9. So provided in Uniform Sales Act, Sec. 21 (3). 66 Veazie v. Williams, 8 How. 134, 152, 12 L. Ed. 1018; Mapps v. Sharpe, 32 III. 13; Gallatian v. Cunningham, 8 Cow. 361; Randall v. Lautenberger, 16 R. I. 158, 13 Atl. 100; Brock v. Rice, 27 Gratt. 812; Sugden, Vendors, Col. 2 (14th Am. ed.), 687. Contra, Scott v. Mann, 36 Tex. 157. 67 See Richards v. Holmes, 18 How. 143, 15 L. Ed. 304. CHAPTER XLV ILLEGAL AGREEMENTS WAGERS, USURY, SUNDAY LAWS One party only need incur risk in a gaming contract.. . . . .1664a When an aleatory promise involves gambling... 1665 A promised prize for competition by others does not involve gambling. 1666 1667 Whether contract between broker and customer may be invalid, though that made on the Exchange is valid...... 1672 Evidence of intention that there shall be no actual delivery.. 1673 Sale of the obligation of a third person cannot be usurious.. 1689 Discount of negotiable paper which is subject to a defence.. 1690 Damages for default may be greater than legal interest. 1696 Preliminary negotiations on Sunday do not invalidate a contract. Ownership may be transferred by agreement on Sunday.... 1701 1702 1703 |