X. Of sales at auction.

An auctioneer has not only possession of the goods which he is the fears or apprehension of his creditors, or any of them, an absolute discharge as a consideration for a partial dividend, or making the preferences, or any of them, to depend upon the execution of a release, by such preferred creditors, to him of all claims against him. An assignment giving preferences upon such a condition is void; and the assignment being void in part as against creditors and the provision of the statute, is void in toto, though there be no fraud in fact intended. This appears to be the most stern decision that exists, either in England or this country, on this subject. See Ames v. Blunt, 5 Paige, 22, and Goodrich v. Downes, 6 Hill (N. Y.) 438, to S. P. The weight of general authority, both English and American, is, that an assignment by a debtor of all his property for the payment of his debts, and at the same time giving preferences, and requiring an absolute release from each creditor who accedes, is not per se fraudulent and void. The circumstances of the debtor assigning over to trustees all his property, without any reservation to himself, and giving the surplus, if any, to those creditors, if any, who do not come in and agree to release, on taking their preferred share, is deemed to disarm the transaction of all illegality and unfairness. See the cases collected in Mr. Angell's Laws of Assignments in Trusts for Creditors, Boston, 1835, pp. 96-108, which is a neat and valuable little manual of the law of voluntary assignments by insolvent debtors. A provision in the assignment that the surplus after all debts are paid, should revert to the debtor, is not improper, for such a resulting trust would follow of course without any stipulation. In Pennsylvania, the judicial decisions were for a time quite lax in favor of voluntary assignment, but their influence was counteracted by statute provisions requiring the assignee to give security, and giving to the court power to remove him, and substitute another, and requiring him to file an inventory. The debtor may still give preferences, and require the creditors who acceded to execute a general release. The commissioners, in their Report of the Civil Code of Pennsylvania, in January, 1835, suggest that this stipulation for a release be placed under some restrictions. Report, pp. 50-52. But since that report, and in June, 1836, the legislature of Pennsylvania regulated the voluntary assignments by debtors of their estates, real or personal, or of any part thereof, in trust for their creditors, or some of them, and so far have given those assignments sanction. Purdon's Digest, 74. In the case of Thomas v. Jenks, decided in the Supreme Court of Pennsylvania, in March, 1845, the court held the whole assignment fraudulent and void, it being an assignment by a partnership firm of a part of their property for the benefit of their creditors, with a stipulation for a release as an equivalent for the assignment. It was such an exercise of the right of preference as to impose upon the creditors, indirectly, the necessity of resorting to a part of the debtor's property in exclusion of the rest. So, in M'Culloch v. Hutchinson, 7 Watts, 434, a voluntary assignment by an insolvent debtor, absolute on its face, to a particular creditor, to pay him and return the surplus to the debtor, was held to be fraudulent and void. The trust was secret and the deed deceptive. The judicial decisions on this subject seem at last to have taken a firm and vigorous stand in favor of the rights of creditors and the claims of justice. The case of Van Nest v. Yoe, before the Assistant V. Ch. in New York, 1 Sandf. Ch. 4, con

2 The profession have since become indebted to Mr. Alexander M. Burrill of New York, for a very thorough and systematic treatise on the Law and Practice of Voluntary Assignments for the Benefit of Creditors, published in 1853. The learned author has collected and digested all the cases in the United States courts, down to the date of his work. The subject has spread itself over so vast a field since the publication of Mr. Angell, that his treatise is quite superseded by Mr. Burrill's work.

employed to sell, but he has an interest coupled with that possession. He has a special property in the goods, and a lien upon them for the charges of the sale, and his commission, and the auction duty. He may sue the buyer for the purchase-money; and if he gives credit to the vendee, and makes delivery without payment, it is at his own risk. (b) If the auctioneer has notice that the property he is about to sell does not belong to his principal, and he sells notwithstanding the notice, he will be held responsible to the owner for the amount of the sale. (c) So, if the auctioneer does not disclose the name of his principal at the time of the sale, the purchaser is entitled to look to him personally for the completion of the contract, and for damages on its non-performance.(d) 4

3

*In the sale of real property at auction, care should be * 537 taken that the description of it be accurate, or the purchaser will not be held to a performance of the contract. But if the subscription be substantially true, and be defective or inaccurate in a slight degree only, the purchaser will be required to perform the contract if the sale be fair and the title good. Some care and diligence must be exacted of the purchaser. If every nice and critical objection be admissible, and sufficient to defeat the sale, it would greatly impair the efficacy and value of public judicial sales; and, therefore, if the purchaser gets substantially the thing for which he bargained, he may generally be held to abide by the purchase, with the allowance of some deduction from the price, by way of compensation for any small deficiency in the value by reason of the variation. (a)

tains a stringent and sound application of principles against the delay of creditors, by a voluntary assignment of his property by a debtor, to retain and hinder the operation of executions at law. Though the law allows of voluntary assignments, and permits the insolvent debtor to select his own assignees, yet when he selected his own relatives of very apparent incapacity for the trust, it was held to be evidence of fraud, and the assignment was set aside. Cram v. Mitchell, 1 Sandf. Ch. 251, S. P.

(b) Williams v. Millington, 1 H. Blacks. 81.

(c) Hardacre v. Stewart, 5 Esp. N. P. 103.

(d) Hanson v. Boberdeau, Peake Cas. 120.

(a) Calcraft v. Roebuck, 1 Vesey, 221. Dyer v. Hargrave, 10 Vesey, 505. King v. Bardeau, 6 Johns. Ch. 38.

If he sell stolen goods and pay the proceeds to the thief, without knowledge or notice, he is nevertheless liable to the true owner. Hoffman v. Carow, 22 Wendell, 285.

And an auctioneer may, in New York, when he does not disclose the name of his principal, bring an action on the contract of sale in his own name. Bogart v. O'Regan, 1 E. D. Smith (N. Y.) 590. Minturn v. Main, 7 N. Y. 220; and he is personally liable on such a contract under the same circumstances. Mills v. Hunt, 20 Wendell, 431.

A bidding at an auction may be retracted before the hammer is down. Every bidding is nothing more than an offer on one side, which is not binding on either side until it is assented to, and that assent is signified on the part of the seller by knocking down the hammer. (b) 1

If the owner employs puffers to bid for him at an auction, it has been held to be a fraud upon the real bidders. He must not enhance the price by a person privately employed by him for that purpose. It would be contrary to good faith, as persons resort to an auction under a confidence that the articles set up for sale will be disposed of to the highest real bidder. A secret puffer employed by the owner is not fair bidding, and is a fraud upon the public; nor can the owner privately bid upon his own goods. All secret dealing on the part of the seller is deemed fraudulent. If he be unwilling that his goods shall be sold at an under price, he may order them to be set up at his own price, and not lower,

or he may previously declare as a condition of the sale, * 538 that he reserves a bid for himself. This was the doctrine declared by Lord Mansfield in Bexwell v. Christie, (a) and again, by Lord Kenyon, in Howard v. Castle, (b) and in each case with the approbation of the court of K. B. The governing principle was, that the buyer should not be deceived by any secret manoeuvre of the seller. But the doctrine of those cases has since been considered as laid down rather too broadly. Lord Rosslyn and Sir William Grant have each questioned the soundness of the doctrine. (c) The latter seemed to think, that if bidders were employed by the owner merely for the purpose of taking advantage of the eagerness of them to screw up and enhance the price, it would be a fraud; but that he might lawfully, even without making the fact publicly known, employ a person to bid for defensive precaution and with a view to prevent a sale at an under

(b) Payne v. Cave, 3 Term Rep. 148.

(a) Cowp. 395.

(b) 6 Term Rep. 642. Thornett v. Haines, 15 Mees. & W. 367.

(c) Conolly v. Parsons, 3 Vesey, 625, n. Smith v. Clarke, 12 Ibid. 477.

The authority of an auctioneer is confined to the making of the sale, and he cannot rescind the sale even before the payment of the purchase-money. Boinest v. Leignez, 2 Rich. 464.

See, as to puffers at auction, Flint v. Wooden, 13 E. L. & Eq. 278. Doolubdas v. Ramloll, 3 E. L. & Eq. 39. McDowell v. Simms, 6 Ired. Eq. 278. Tomlinson v. Savage, 6 Ired. Eq. R. 430.

value. This relaxation of the former rule was also approved of in Steele v. Ellmaker; (d) and the chief justice, in that case, suggested that the tone of Lord Mansfield's morality was, perhaps, too lofty for the common transactions of business. He held, that the owner might lawfully instruct the auctioneer to bid in the goods for him at a limited price, to prevent a sacrifice. In Bramley v. Alt, (e) it was held, that a sale was not fraudulent because a puffer had been employed, if there were real bidders who bid after the puffers had ceased; and in Smith v. Clarke a specific performance was decreed against a vendee, though the person who bid immediately before him was employed to bid, under the private direction of the vendor, for the purpose of preventing a sale under a specified sum. (f)

*

It would seem to be the conclusion, from the latter cases, that the employment of a bidder by the owner would or * would not be a fraud, according to circumstances tend- 539 ing to show innocence of intention, or a fraudulent design. If he was employed bona fide to prevent a sacrifice of the property under a given price, it would be a lawful transaction, and would not vitiate the sale. But if a number of bidders were employed by the owner, to enhance the price by a pretended competition, and the bidding by them was not real and sincere, but a mere artifice in combination with the owner, to mislead the judgment and inflame the zeal of others, it would be a fraudulent and void sale. (a) So, it will be a void sale, if the purchaser prevails on

(d 11 Serg. & Rawle, 86.

(e) 3 Vesey, 620.

(ƒ) Woodward v. Miller, 2 Coll. 279, S. P.

(a) Hazel v. Dunham, N. Y. Mayor's Court, 1 Hall, 655. Morehead v. Hunt, 1 Dev Eq. (N. C.) 35. Woods v. Hall, Ibid. 411. Wolfe v. Luyster, 1 Hall (N. Y.) 146. An association of bidders, with a design to stifle competition, is a fraud upon the vendor. Smith v. Greenlee, Dev. (N. C.) 126. The case of Phippen v. Stickney, 3 Metcalf, 384, seems to place the validity of private agreements, between bidders at auction sales,

1 The effect of fictitious bidding has been much discussed in a late case in the Supreme Court of the United States. It was held that false pretensions and sham bidding, made with a view to enhance the price, and which had that effect, would furnish a ground of relief in equity. And the opinion was expressed that the rule would apply to bids made by the auctioneer himself. Veazie v. Williams, 8 How. U. S. 134. It seems the rule would be otherwise if the bids of the auctioneer are not authorized by the principal. Veazie v. Williams, 3 Story, C. C. 611.

the persons attending the sale to desist from bidding, by reason of suggestions, by way of appeal, to the sympathies of the company. (b)

The original doctrine of the K. B. is the more just and salutary doctrine. In sound policy, no person ought, in any case, to be employed secretly to bid for the owner against the bonâ fide bidder at a public auction. It is a fraud in law on the very face of the transaction; and the owner's interference and right to bid, in order to be admissible, ought to be intimated in the conditions of sale; and such a doctrine has been recently declared at Westminster Hall. (c) a

It has been made a question, how far auction sales were within the provisions of the statute of frauds; but it is now understood to be settled that they are within the statute, and that the auctioneer is the agent of both parties, and lawfully authorized by the purchaser, either of lands or goods, to sign the contract of sale for him as the highest bidder. (d) The writing his name as the highest bidder in the memorandum of the sale by the auctioneer,

immediately on receiving his bid, and knocking down the * 540 hammer, * is a sufficient signing of the contract within the statute of frauds, so as to bind the purchaser. Entering

on the quo animo, and to be good or void according to the purpose with which they are made.2

(b) Fuller v. Abrahams, 6 Moore, 316. 3 Brod. & Bing. 116, S. C. Mr. Justice Story, in Veazie v. Williams, 3 Story, C. C. 623, approves of the conclusion I have drawn from the cases. Meech v. Bennett, Lawlois Supp. 191.

(c) Crowder v. Austin, 3 Bing. 368. The language of the Supreme Court of Louisiana is strongly in favor of the doctrine of Lord Mansfield. Baham v. Bach, 13 Louis. 287. Mr. Justice Ware, in his dissenting and very learned opinion in the above case of Veazie v. Williams, pp. 637, 638, approves of the original doctrine of the K. B.

(d) Whether the auctioneer be the agent of both parties, depends upon the facts of the particular case, and he is not so, as of course, in all cases. Bartlett v. Punnell, 4 Adol. & Ell. 792.

2 Hence an agreement among several who had made improvements upon land offered for sale, that one should bid for all, will not void the sale. Switzer v. Skiles, 3 Gilm. 529. National Fire Insurance Co. v. Loomis, 11 Paige, 431.

* This doctrine was followed by the Supreme Court of New Hampshire, in Towle v Leavitt, 3 Foster, 360; and in Pennock's Appeal, 14 Penn. 446, the court overruled Steele v. Ellmaker, and declared both principle and authority to be in favor of the rule as laid down by Lord Mansfield.

If the sale be advertised as being "without reserve," and a puffer be employed by the vendor, the sale will be void. Thornett v. Haines, 15 Mees. & W. 367. Where property is offered for sale on sealed proposals, a bid, offering five hundred dollars more than the highest bid, but not specifying any sum, was held not valid. Webster v. French, 11 Ill. 254.