McDowell v. Simms, 41 N.C. 278, 6 Ired. Eq. 278 (1849)

Aug. 1849 · Supreme Court of North Carolina

41 N.C. 278, 6 Ired. Eq. 278

CHARLES McDOWELL & AL vs. A. H. SIMMS & AL.

Although the secret employment of a bye bidder, at an auction sale, may Lo « fraud upon the vendee,' yet the latter must aver In his bill and shew, that he -abandoned the contract, as soon as he discovered such fraud.

Appeal from an interlocutory order made at the Spring Term 1849, of Rutherford Court of Equity, his Honor Judge Bailey presiding.

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 the 20th day of May ES45, when the plaintiffs were the last and highest bidders and became the purchasers, at the price of two thousand! and eight dollars, for which the plaintiffs gave their bonds, according to the terms of the sale, one due in twelve months for one thousand and four dollars, 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 the 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 iand is worth but little, probably not more than four or five hundred dollars, for 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 setdorth, it was advertised, not as a farra, 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 that it was worth ten thousand dollars, 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 low grounds, many acres, would yield two or more penny weights 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 among others one Preston Long, who was the son in law of one of the defendants, and resided in the immediate neighborhood of the land, and who 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 (he knowledge and consent of the defendants,, not only to puff the said land but also as a bye-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 Longs’s connection with the family, and well known acquaintance with the land. The bill further states, that the plaintiffs were en« tirely 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 emplo}red as a b}'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.

N. W- Woodfin and Iredell, for the plaintiffs.

Avery and Guión, for the defendants,

Pearson, J.

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 t he ordinary case of a vendor’s praising the property offered for sale. “A splendid article, a valuable gold mine worth not less than ten thousand dollars,” 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.

The specific fraud is, that one Long, at the instance of the defendants, who offered the land for sale, bid for the land, and run it up to the price of $1950 00, with an understanding between him and the defendant, 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 sate 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 dp not agree. Lord Mansfield, in Bexwell v. Christie, Cowpers Rep. 355, and Lord Kenyon, Howard v. Castel, 6 Term Rep. 642, held, that such by-bidding does vitiate the salle, and that the purchaser is at liberty, without more saying, to refuse to abide by his contract, or purchase. On the other hand Lord Rosslyn and Sir War. Grant have each questioned the soundness of 1 he doctrine. Coudly 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 ■a 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 aright 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 Rosslyn and Sir William Grant attempted- to do, to-run a. dividing line, so as-ta 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. W** ~ not called upon in this 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 they 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 jt, before they went on to explore, and test the mine fully f 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 m,u.cb gold to be found as they hoped for, and not because, by reason of the by-bidding of Long, they had been surprised, and in.d.uped 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 maybe 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 front. This opinion will, be certified to the Court below..

Per Curiam.

Ordered to.be certified’ accordingly^