National Fire Insurance v. Loomis

| New York Court of Chancery | Mar 4, 1845

The Chancellor.

This is an appeal from an order of the vice chancellor of the fifth circuit, denying the application of the appellants, Monroe, Herkimer, Haight and Usher, to set aside the sale to them, under the decree in these .causes. For the reasons stated in the opinion of the vice chancellor, I think there was no fraudulent combination between the agents of the complainants in the first 'of these causes, to raise the property above its real value. One of the standing rules of the court having directed that a provision should be inserted in every decree of sale, of mortgaged premises, that the complainant, or any other party to the suit, may become a purchaser at such sale, it was wholly unnecessary for the master to give notice that the decree was in the usual form. Nor were the agents of the insurance company bound to give notice, to other persons, that they were not bidding for themselves ; any more than the appellants, Herkimer, Haight and Usher, were bound to proclaim that they were not bidding for their own benefit, but for the benefit of thé appellant Monroe. But if they had bid in the property in their own names, without .apprising the master for whom they were bidding, they would have rendered themselves personally responsible for the completion of their several purchases.

The principle upon which the employment of puffers, by the person for whom a sale at auction is made, is disallowed, as a fraud upon fair purchasers, is that the persons who thus bid are not in fact real bidders, but are the mere instruments of the vendor to deceive the other bidders. But this principle does not apply to a masters sale under a decree, where the persons bidding, either for themselves or as the agents of another, are bound to take the property purchased, either for themselves or their-principal. Any person who is a real bidder, at a judicial sale, has a right to bid either in person or by his agent duly authorized. And I know of no principle which renders it necessary that a person bidding at an auction, as the agent of another, should disclose, to other bidders, the name of the person for whom he is bidding; unless the person for whom he acts is the vendor, who is professedly selling the property instead of buying it. Here it was a matter of no consequence to other bidders, whether the agents of the insurance company, who were strangers, bid in their own names, or as the agents of the corporation which was authorized to purchase at the sale. And it is wholly improbable that either of the appellants, who appear to have been well acquainted with the property, were induced to give more than they believed the property was worth, merely because they saw two strangers bidding upon it, without disclosing the fact that they were bidding for the insurance company. Both of these agents swear that they had obtained estimates of the value of the several pieces of property, and that they intended in good faith to purchase the property, for the company, if it was not sold for more than the maximum, prices which they had fixed for their limits. And even if they occasionally bid against each other, by mistake, that was no fraud upon other bidders; but it was an injury to the company for which they were acting, if the company, in consequence of such overbidding each other by its agents, gave a larger price for the property bought by such agents.

The question whether a master’s sale is within the present statute of frauds, is one which does not properly arise upon this application. For if the petitioners were not bound by their bids, all they had to do was to refuse to complete their purchases; instead of applying to the court to set aside the sales which were not binding upon them. It may be proper to remark, however, that the present statute of frauds does not require the written contract or memorandum of the sale to be signed by the purchaser of real estate; but it is required to be subscribed by the party by whom, the sale is to be made. (2 R. S. 135, § 8.) The written report of the master by whom the sale is. made, stating- the terms of the sale, the names of the purchasers, and the price bid, and subscribed by such master, or any other note or memorandum containing the requisites of the statute, and signed by the master, would therefore, probably, be a literal compliance with the terms of the statute, if sales by masters are in fact within the statute.

The announcement, by the master, that the property- would be put up and resold, at the expense of the purchasers, if they did not comply with the terms of the sale, could not have the effect to discharge them from their purchases. The vice chancellor was therefore right in refusing to discharge the appellants from their purchases. And the order appealed from, must be affirmed with costs.