Smull v. Jones

The opinion of the Court was delivered by Gibson, C. J. It is not to be doubted that lien creditors, as well as others, may purchase jointly at sheriff’s sale, if all be open and fair. A combination of interests for that purpose is not necessarily corrupt; and if it be forbidden, it must be by some principle of public policy. It certainly has an influence on the biddings, by suppressing competition; but it often does less harm than good. It does no good where the property is put up in small lots ; but it may do much where the estate is beyond the means of the bidders singly. Where the debtor or a particular creditor happens to be prejudiced by it, without an improper design, he must bear it as he would a prejudice from a bona fide pursuit of a supposed right; such as an arrest for a groundless debt, not believed to be such. On the other hand, a combination not for the convenience of the parties in enabling them to cut up the property, if it should be too much for one of them, or in putting their means together, if the price should be too much, but to get the property at an undervalue, by hindering it from having a fair chance in the market, would be fraudulent, just as a combination with a debtor to purchase his property for a full price, in order to keep it from his creditors, would be fraudulent. In neither case would the purchase be the legitimate exercise of a right, but an abuse of it; and it would consequently be void. Now, as men may unite for a bad purpose as well as a good one, and as their power to accomplish it is incalculably increased by preconcert of action and combination of means, their motive for it, in such a case as this, cannot be too severely scanned. They may lawfully regulate the course of their bidding beforehand, and as secresy is not indispensable to honesty, they may openly declare how high they mean to go, provided the object be not to deceive or deter those who may be their competitors. There is no confidential relation between bidders; and that being so, the law requires no more of them than fairness of purpose, and that no trick or contrivance be used as a scarecrow. Their interests are necessarily adverse; and where a person who intended to bid, absents himself from the sale, because he has been told that more will be offered than he is willing to give, it is his own affair. If the property goes below the expected price, his absence is the cause of it; and if it would have reached it, had he been present, he was not deceived: in either case, who is wronged ? It is, as I have said, the end to be accomplished, which makes such a combination lawful or otherwise. If it be to depress the price of the property by artifice, the purchase will be void; if it be to raise the means of payment [137] by contribution, or to divide the property for the accommodation of the purchasers, it will be valid; and on this distinction the cause ought to have been put to the jury. But in answer to a prayer for direction, the judge charged that the plaintiff had not proved a fraud, and that an agreement by particular creditors to manage their bids so as to secure their liens is not evidencié of fraud. This, without adverting to the means to be employed, tended to mislead, by diverting the attention of the jury from those circumstances which furnished a motive for the youngest of those creditors to have the property struck off at the lowest price. It was testified that the judgments of the associates were to be paid out of the actual price, in the proportion which each of those judgments bore to the largest sum agreed to be bid ; the object of which was, to squeeze out the intermediate judgments, by getting the property at a price which would not reach them in the ordinary course of appropriation; but which would, by force of the agreement, give their proportion of what was to be considered the actual price between the associates, to judgments posterior to them. Such an agreement being inconsistent with sound policy, is not to be tolerated; and the jury ought to have been directed to find for the plaintiff, if its existence was made out to their satisfaction by the proof. It is vicious, not because it gives the younger lien creditors a place in the partnership, but because it gives them a bonus for standing out of the way of the particular design; for it will not be said that a bidder who has bought off his competitors, whether with a share in the speculation, or a direct bribe, can hold the property against a debtor who has been injured by it. He might perhaps hold it against another lien creditor, whose business it was to take care of himself by bidding the property to an amount sufficient to protect him, if it were worth it; but the debtor has no such preventive means, and whether he be insolvent or not, the consequences to him are the same, because his person and future earnings remain exposed to execution, for at least a part of the debts which ought to have been discharged by his property. There were other circumstances, also, which might have been left to the jury for what they were worth. Snevily offered Martin a share in the purchase, with the assent of Jones, and told him the amount agreed to be bid. Martin, it seems, would not have bid at any rate; but this desire to bring into the measure those who were supposed to have a view to the property, may cast a ray of light on the motive of those who originated it. The judge, however, committed a very decisive error in relation to this part of the ease by rejecting evidence to prove that, since the purchase, Jones and Fenn have repudiated Snevily’s claim to participate in it. . Snevily testified, that he would himself have bid the property to an amount sufficient to cover all his judgments; and, to divert him from his purpose, by giving him an interest which would [138] make the execution of it unnecessary, and then to deprive him of the interest when his purpose could no longer be accomplished, would go far to convince the mind that the measure was a lure to keep him from spoiling the game. When it is incumbent on a party, not only to prove the existence of fraud, but to prove it by circumstances, every act connected with the transaction, however remotely, ought to be put before the jury. But to make the transaction fraudulent, in this instance, it must amount to a conspiracy to depress the bidding. There are many acts which are lawful when done by one person, and culpable when done by more than one; and this, whether the end be gain to the confederates, or injury to the party. Of this stamp, is a combination of journeymen to raise their wages, or to work only on certain conditions; and Hawkins says, (b. 1. c. 72, sec. 2.) there can be no doubt, that all confederacies wrongfully to prejudice another, are highly criminal by the common law. If there has been such a confederacy in this case, it will undoubtedly avoid the sale. Then the jury were told that it was incumbent on the plaintiff, in any event, not only to bring into court the amount which the defendants have paid, but to have, tendered it to them before suit brought. But it is to be borne in mind, that the plaintiff’s title, if he has any, is a legal one. A covinous conveyance is no conveyance at all against the party intended to be defrauded by it, as was said in Gilbert v. Hoffman (2 Watts 67) and the authorities there cited. Where a court of equity has set aside a conveyance for fraud, it has indeed sometimes directed a reconveyance ex majori cautela, as in Barnsley v. Powel (1 Ves. 284); but that a reconveyance is unnecessary, is shown by Bates v. Groves, (2 Ves. Jr. 294); and Hawes v. Wyatt (3 Bro. C. C. 156). Having a complete title, then, before tender, all that could be required of him, according to Wolfley v. Snyder (8 Serg. & Rawle 328), would be to have the money in court at the trial. But would he be bound even to do that? It is a maxim that he who has done iniquity shall not have equity; and the only apparent exception.* to it is the case of an offender coming into court for relief, who must himself first do what is right; but that is on the ground of another maxim, that he who will have equity must do equity: and it is in truth no exception at all. At all events, he can demand nothing of a party who stands on a legal title and asks nothing of him in return; nor can he get back what he has paid by restoring what he has unjustly gained. The authorities to the point are positive and direct. In the first place, it was so ruled by this court, in Gilbert v. Hoffman, already cited, for reasons not easily to be controverted; and if the authorities there relied on needed corroboration, many more might be added to them. In Rich v. Sydenham (1 Ch. Ca. 202) a plaintiff who had got a bond from a defendant of 800Z., when he was drunk, for 50Z. lent, filed a bill to have the defendant’s trust estate in right of his wife [139] subjected to the debt; but relief was denied him, even for the sum actually due. So, in Warden v. Beresford (1 Vern. 452), the Lord Chancellor disallowed the defendant’s whole claim, only because he had opened a bundle of papers in relation to it, which were entrusted to him for safe keeping, and had at first suppressed some of them, which were however afterwards produced by him. On the same principle is Mildmay v. Mildmay (1 Vern. 53); where a husband, who, having granted certain rents to the use of his wife, had bought in the estates of the tenants, by which the rents became irrecoverable at law, was not decreed to make them good, because she had eloped from him, though she offered to return and cohabit with him. The general principle, therefore, seems to be conclusively settled; but as its application to the case before us was not made a point at the trial or on the argument here, we wish not to preclude discussion upon it, should the cause come up again. For reasons independent of it, however, the parties must go before another jury. Judgment reversed, and a venire de novo awarded.