Schaap v. Robinson

HART, J., (after stating the facts). It is the contention of counsel for the defendant that the .testimony of the plaintiff himself shows there was an agreement between the parties not to' compete at the bankruptcy sale and that the object of making the agreement was to avoid competition 'between them. Reliance is placed upon the case of Woodruff v. Berry, 40 Ark. 251, and Nash v. Delinquent Lands, 111 Ark. 158, to sustain this proposition. In the first mentioned case, the court held that an agreement between several parties that one of them should bid in his own name at a public sale, or the letting of a contract, and share the profits,is against public policy and voidable, if either the intention the effect or the necessary tendency of the combination be to stifle or limit competition in bidding. The court recognized, however, that the parties might show by proof that the bidding was for the joint prosecution of a business enterprise, and not a mere device to shut off or reduce competition. (1-3) In the latter case the court said that a finding to the effect that there was an agreement among the parties bidding that they would not bid against each other for the particular tracts of land that each wanted and purchased at the tax sale, was supported by a preponderance of the evidence. It is well settled that the mere combination does not of itself amount to such fraud as to render the contract unenforceable as between the parties, or to constitute grounds to set aside the sale. In Phippen v. Stickney, 3 Met. (Mass.) 384,it was said: “When such an agreement is made for the purpose and with the view of preventing fair competition and by reason of want of bidders to depress the price of the article offered for sale below the fair market value, it mil be illegal and may be avoided as between the parties as a fraud upon the rights of the vendor. But, on the other hand if the arrangement is entered into from no such fraudulent purpose, but for the mutual convenience of the parties and for a reasonable and honest purpose, such agreement will be valid and binding. ’ ’ In the case of National Bank of the Metropolis v. Sprague, 20 N. J. Eq. 159, the court said: ‘ ‘ There is no doubt that it is illegal for two purchasers, or intended purchasers at an auction sale, to combine not to bid against each other, and to divide in any way the profits of purchases made under such an agreement. But all the authorities and decisions in this matter which have been brought to my notice are confined to cases in which there is an agreement between the parties not to bid or enter into competition to bid against each other, and where this agreement is the foundation of the combination to purchase for their common benefit. And the principle upon which the rule is based would apply only to such cases, and not to cases where parties joined to make a purchase for their common benefit without an agreement not to compete, although the effect of such joint purchase might be to prevent competition. ’ ’ In Marie v. Garrison, 83 N. Y. 14, it was said that “the mere fact that an arrangement fairly entered into with honest motives for the preservation of existing rights and property may incidentally restrict competition at a public or judicial sale does not, we think, render the agreement.illegal. The question of intqnt at all events is one for the jury upon the whole facts as they-shall appear at the trial.” In Wicker v. Hoppock, 73 U. S. (6 Wallace), 94, the court said: “The validity of such an arrangement depends upon the intention by which the parties are animated, and the object sought to be accomplished. If the object be fair — if there be no indirection — no purpose to prevent the competition of bidders, and such is not the necessary effect of the arrangement in a y-ay contrary to public policy, the agreement is unobjectionable and will be sustained. ’ ’ To the same effect see Hopkins v. Ensign (New York Court of Appeals), 9 L. R. A. 731; Gulick v. Webb (Neb.), 43 Am. St. Rep. 720; Kearney v. Taylor, 15 Howard (U. S.) 493; Holmes v. Holmes, 3 Rich. Eq. (S. C.), 61; Buckner v. Chambliss, 30 Ga. 652; McMinn’s Legatees v. Phipps, Admr., 3 Sneed (Tenn.) 196; Braden v. O’Neil (Penn.), 63 Am. St. Rep. 761, and Smith v. Ullman, 58 Md. 183, 42 Am. Rep. 329. The testimony of the plaintiff himself and of Mr. Patterson brings the case within the rule just announced. It is also contended by counsel for the defendant that the contract, is unenforceable as between the parties because both of them, according to the testimony of the plaintiff himself, bid at the sale. According to the testimony of the defendant, he and Doctor Robinson both bid at the sale for the purpose of making it appear that there was more than one bidder, so that they would be more likely to secure a confirmation of the sale in the bankruptcy court. This, if true, would not render void the contract on the ground of public policy, but would be a fraud upon the court and would be good grounds for preventing the confirmation of the sale and would also amount to such a fraud as would prevent the parties from enforcing the contract between themselves. According to the testimony of the plaintiff and of Mr. Patterson, the parties had no such intention in bidding at the sale. These witnesses testified that both parties bid at the sale thinking that thereby they might induce other persons to become interested and bid against them and thus make the property bring a greater price. The question of the intent of the parties in this respect was submitted to the jury upon proper instructions. The respective theories of the parties in the whole case was fully given in appropriate instructions under the principles of law above announced. It is true the jury did not allow the plaintiff the full amount sued for, but that is not a matter of which the defendant can complain. There was evidence of a substantial character to support the verdict of the jury and we find no reversible error in the record. The judgment will, therefore, be affirmed.