Smith v. Ullman

Bartor, O. J., delivered the opinion of the Court. This is a suit brought by the appellees against the appellant. The materia] facts of the case as disclosed by the record are correctly stated in the appellees’ brief as follows: “The appellees were dealers in old iron, doing business in Alexandria, Ya. The appellant was a dealer in the same kind of goods at Richmond, Ya. Roland the general agent of appellant for the purchase of g-oods, was in Alexandria in October 1879, and received information from the — 188 — appellees that hids for the purchase of certain materials offered for sale by the United States Government would be opened in New York in a feAv days. The materials Avere enumerated in a published list. These 'goods the appellees explained Avere at Fort Washington, Md., and it was agreed between the appellees and Noland, acting as agent for the appellant, that the goods should be bought on the joint account of the appellant and appellees, and that they would share the profits. The appellees took Noland to Fort Washington, where they inspected the iron proposed to be bid for, they then returned to Alexandria, whence Noland reported the proposed agreement by letter to the apjjellant, went .to Richmond and in person made the same report to the appellant, who authorized him to return to Alexandria and conclude his agreement with the appellees by sending on his bid which Avas done. Ullman, one of the appellees wrote out the bid Avhich Noland suggested should be solely in the name of the appellant inasmuch as if in the name of the appellees they might have trouble, (presumably from certain creditors of the appellees.) The bid was sent on signed “ J. C. Smith per Noland,” and the goods were awarded upon it. The appellant paid the cash deposit of $*746.33 according to the agreement ; and resold the goods as they lay, at a clear profit of $1944, the purchaser paying the balance due the Government. The money arising from the resale was retained by the appellant, and the present suit was brought to recover from him their half of the profits, which was awarded by the jury to the appellees. The only exceptions taken to the ruling of the Court below, which are relied on by the appellant are: 1st. To the rejection of his second and third prayers, and 2nd. To. the rejection of his fifth prayer. The defence to the action presented by the first bill of exceptions, is based upon the theory that the contract be — 189 — tween the parties, by which they agreed to unite in making a bid for the articles and to share the profits between them was nudum pactum, because such contract was against public policy and therefore void. There is no evidence in the case of any corrupt bargain or combination between the parties for the purpose of preventing a fair competition among bidders, nor of any evil or fraudulent purpose on their partin the transaction; but the object of their uniting was to enable them by their joint means to become purchasers of a large amount of merchandize offered in bulk, which one of them acting singly would not have the means to buy. This appears from the testimony of Dreifus, one of the appellees, who said: “'We (meaning the appellees) were about to make the bid on that iron ourselves, the only thing 1 wanted was somebody with me, because the amount was too great for us to handle that amount of iron, it was probably seven or eight thousand dollars, if the whole had to be paid right down; 1 would have done it probably with somebody else, I wish Iliad and 1. would not have had any trouble.” There is nothing either in law or morals, to prevent parties from uniting together in good faith to purchase property, whether it is offered at public auction or as in the present case, advertised for sale and bids from purchasers are invited. In Small vs. Jones, 1 Watts & Serg., 129, where there was a purchase of property at. sheriff’s sale by several lienors who united therein, the bid being made by one of their number, and the sale was impeached as for that reason fraudulent and against public policy. Chief Justice Gmsoit said: “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. * * * * — 190 — It is as we liave said the end to he accomplished which makes such a combination lawful or otherwise. If it he to depress the price of the property by artifice, the purchase would he void; if it be to raise the means of payment by contribution or to divide the property for the accommodation of the purchasers, it will be valid.” In Pratt vs. Oliver, 3 McLean, C. C. R., 301, it was said by Judge McLean: “To hold that individuals may not associate together for the purpose of purchasing-lands of the United States at a public sale, would be a novel doctrine, and contrary to what has been generally practiced by purchasers and that under the sanction of the government.” In support of the same doctrine we refer to Kearney vs. Taylor, 15 Howard, 494, where the subject was carefully considered. Mr. Justice Nelson speaking for the Court, after referring to several cases some of which have been cited by appellant, in which it had been held that contracts similar to the one under consideration were against public policy; said “later cases' however have qualified this doctrine, by taking a more practical view of the subject and principles involved, and have placed it upon ground more advantageous to all persons interested in the property, while at the same time affording- all proper protection against combinations to prevent competition;” and on page 420, after discussing the practical effects of several persons uniting together for the purpose of buying property at public sale which it would be beyond the means or ability of a single individual to purchase, remarks, “these observations are sufficient to show that the doctrine which would prohibit associations of individuals to bid at the legal public sales of property as preventing competition, however specious in theory, is too narrow and limited for the practical business of life and would oftentimes lead inevitably to the evil consequences it was intended to avoid. Instead of encouraging competition it would destroy — 191 — it." The principle decided by the case is that “if upon examination it is found that the object and purpose of the combination are, not to prevent competition but to enable, or as an inducement to, the persons composing it, to participate in the bidding, the sale should be upheld,—otherwise, if for the purpose of shutting out competition and depressing the sale, so as to obtain the property at a sacrifice.'" These are the sound principles applicable to sales by public auction. If they were held as applicable here, there is nothing in the evidence that would justify us in declaring the contract in the present case void, as against public policy. Without referring to other authorities, we are of opinion that the contract between the parties was valid, and consequently it was not error to refuse the second and third prayers of the appellant contained in the first bill of exceptions. The second bill of exceptions was taken to the rejection of the appellant’s fifth 'prayer, which was based upon the theory that the contract as testified to by Noland was void for uncertainty, because it did not specify what particular share of the profits the appellees were to have. This prayer could not properly have been granted as it confined the attention of the jury entirely to the testimony of a single witness; whereas, there was uncontradicted testimony from other witnesses, that it was expressly agreed the profits should be shared equally between the parties. But even if the contract had been silent as to the proportions in which the profits were to be divided, the legal presumption would arise that they were to be shared equally. In support of this proposition, many authorities might be cited; we refer onlyr to Peacock vs. Peacock, 16 Sumner’s Vesey, 49, (and notes;) 3 Kent Com., 29; Story on Partnership, sec. 24; Roach vs. Perry, 16 Illinois, 37; Donelson vs. Posey, 13 Alabama, 752. — 192 — (Decided 22nd March, 1882.) Finding no error in the rulings of the Court below, the judgment will he affirmed. Judgment affirmed.