Summary
In McDowell v. Sims, 41 N.C. 278, it is held that the equity growing out of "puffing" at a sale must be insisted upon in a reasonable time, and it would seem, from analogy, that the equity growing out of "stifling the bidding" should be subject to a like restriction, for the defendant, in the execution, is certainly in default so long as he suffers the debt to remain unpaid.
Summary of this case from Whitfield v. HillOpinion
(August Term, 1849.)
Although the secret employment of a by-bidder at an auction sale may be a fraud upon the vendee, yet the latter must aver in his bill and show that he abandoned the contract as soon as he discovered such fraud.
APPEAL from an interlocutory order made at Spring Term, 1849, of RUTHERFORD Court of Equity, Bailey, J.
N.W. Woodfin and Iredell for plaintiffs.
Avery and Guion for defendants.
The bill states that a certain tract of land, lying in the county of Rutherford and particularly described in the bill, belonged in fee to the defendants as tenants in common; that the said land was offered at public sale to the highest bidder, by the defendants, on 20 May, 1845, when the plaintiffs were the lastest and highest bidders and became the purchasers at the price of $2,008, for which the plaintiffs gave their bonds, according to the terms of the sale, one due in twelve months for $1,004 and another at two years for the same amount; that on each of these bonds suit was brought in Rutherford Superior Court of Law, and, on the first, judgment was rendered against the plaintiffs at Fall term of the said court in 1847, and that the suit on the other bond is still pending, and the defendants threaten to take out execution on the said judgment and to prosecute the other suit to judgment and force the collection of it also by execution. The bill further states that when they gave the said bonds they received a bond from the defendants to make a title to the said land, but that as yet no deed of conveyance has been actually made. The bill further sets forth that the said tract of land is worth but little, probably not more than $400 or $500, for (279) agricultural purposes or indeed for any purpose, unless gold mines could be found on its surface or in its bosom; that when it was advertised to be sold as above set forth, it was advertised, not as a farm, but as a valuable gold mine, and it was so represented repeatedly by the said heirs, and one Thomas Jefferson and others, who, as the plaintiffs understood and believe, were procured by them to do so with a view to puff the property and cheat the purchaser, both before and on the day of sale; that one of the defendants often urged one of the plaintiffs to attend the sale, and assured him it was worth $10,000, but that he was not able to purchase it, or else he would do so at any price, and assured the said plaintiff that a large proportion of the lowgrounds, many acres, would yield two or more pennyweights of gold to the hand per day. The bill further states that, on the day of sale, when the plaintiffs purchased the said land, the said heirs or some of them and the said Thomas Jefferson, agent for others, were present and employed divers persons to puff the said lands as containing a valuable deposit gold mine, and also among others one Preston Long, who was the son-in-law of one of the defendants, resided in the immediate neighborhood of the land, professed to be well acquainted with the land, as no doubt he was, and who represented it as being very valuable for the purpose of mining for gold. The bill further charges that the said Preston Long was secretly employed by the defendants or their agents in conducting the sale, and with the knowledge and consent of the defendants, not only to puff the said land, but also as a by-bidder to run the land up greatly beyond its value; that the said Long did accordingly bid and run the land up, and these plaintiffs were the more induced to bid on account of Long's connection with the family and well-known acquaintance with the land. The bill further states that the plaintiffs were (280) entirely unacquainted with the land, and were induced to purchase solely from the false representations of the defendants and their agents, and from the bidding of the said Long. The bill further states that the land is utterly worthless for mining, and that, after employing hands for several months, the plaintiffs have been unable to find gold enough to defray the expense, and that they have requested the defendants to rescind the contract, which they have refused to do. The prayer is that the contract may be rescinded, and in the meantime for an injunction.
The answer admits that Long was employed as a by-bidder, but avers that it was done solely for the purpose of preventing a sacrifice of the land, and not with any fraudulent intent, and it denies that the defendants made any false or fraudulent representations about the value of the land, either on the day of sale or at any other time.
Upon the coming in of the answer, the injunction which had been granted was dissolved, and the plaintiffs, by leave, appealed.
We concur in opinion with the judge below, and think, upon the answers, which are to be taken as true in this stage of the proceedings, the injunction ought to have been dissolved. The general allegation of fraud by a false representation of the value of the land as a gold mine, and by a combination among the defendants by such representations to defraud the plaintiff, is positively denied by the answers, fairly and without evasion. It was the ordinary case of a vendor's praising the property offered for sale. "A splendid article, a valuable gold mine, worth not less than $10,000," are words used by vendors or persons offering to sell, and understood by purchasers or persons wishing to buy to be unmeaning, and pass for what they are worth.
(281) The specific fraud alleged is that one Long, at the instance of the defendants, who offered the land for sale, bid for the land and ran it up to the price of $1,950, with an understanding between him and the defendants that if the lands fell upon his hands at the bid, it should be no sale, but the title was to be with the defendants; whereas the terms of the sale were that the land should be sold to the highest and best bidder, and no right was reserved or notice given that Long was bidding for the vendors. Whether his by-bidding vitiates the sale, so as to give the plaintiffs an equity, upon that ground alone, to repudiate the contract, is a question about which the authorities do not agree. Lord Mansfield, in Bexwell v. Christie, Cowper, 355, and Lord Kenyon, in Howard v. Costel, 6 Term, 642 held that such by-bidding does vitiate the sale, and that the purchaser is at liberty, without more saying, to refuse to abide by his contract or purchase. On the other hand, Lord Roslyn and Sir William Grant have each questioned the soundness of the doctrine. Coudley v. Parsons, 3 Vesey, 625; Smith v. Clark, 12 Vesey, 477. They hold that by-bidding, when it is not done for the purpose of inflating, but merely to prevent the sacrifice of the property, furnishes no ground, of itself, to vitiate a sale. We are inclined to the opinion of Lords Mansfield and Kenyon. If persons wish to reserve a right to buy in unless the property sells for more than a given sum, good faith requires that bidders should have notice, and a secret bidding with this view would seem to be a fraud, where the terms of sale are to the highest and best bidder, and it is impossible, as Lord Roslyn and Sir William Grant attempted to do, to run a dividing line so as to say when this by-bidding is intended for puffing and when merely to prevent property being sold at a sacrifice. In the nature of things, any by-bid tends to inflate the price, more or less, except it be announced to be a bid for the owners of the land. We are not called upon in this (282) case to decide the question definitely; for, be it either way, it is certain that a purchaser who wishes to avail himself of such an objection must do so as soon as the fact comes to his knowledge, and cannot go on to test the mine, so that, if it turns out not to be rich, he falls back upon the objection that there was a by-bidder. There must be good faith on both sides, and the purchaser, as soon as he discovers that there has been by-bidding, must make his election. The bill does not allege when the plaintiffs discovered that Long was a by-bidder. It may be that he knew it at the time of the sale, or soon afterwards, before they gave their bonds. At all events, there is no allegation that they did not know it before they went on to explore and test the mine fully, and their wish to repudiate the contract, as the case is now presented to us, would seem to be because, upon examination, there was not as much gold to be found as they hoped for, and not because, by reason of the by-bidding of Long, they had been surprised and induced to give more than they otherwise would. This pretext of a by-bidding has now the appearance of being set up as a ground for getting clear of a bargain which may be a bad one, whereas if the gold mine had proved to be valuable it never would have been heard of.
There is no error in the interlocutory order appealed from.
PER CURIAM. Affirmed.
Cited: Tomlinson v. Savage, post, 437; Alexander v. Utley, 42 N.C. 245; McDowell v. Simms, ib., 50; s. c., 45 N.C. 134; Francis v. Love, 56 N.C. 323; Whitfield v. Hill, 58 N.C. 321; Knight v. Houghtalling, 85 N.C. 31; Caldwell v. Stirewalt, 100 N.C. 206; Davis v. Keen, 142 N.C. 504.
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