Towle v. Leavitt

23 N.H. 360 | Superior Court of New Hampshire | 1851

Eastman, J.

The first question presented in the instructions of the court to the jury, is one of importance, and, it is believed, somewhat new in the jurisprudence of this State. By-bidding, and puffing at auction, is a matter of very common occurrence, yet we do not now remember that the effect of it has ever been settled by our courts. Still the question is not by any means a new one, and has frequently been agitated in other jurisdictions.

The first case that we have been able to find in the books, is that of Brown v. Nightengale, 3 Brown’s Parliamentary Cases, 263, decided in 1726. It was resolved in that case, by the House of Lords, that a puffer could not recover compensation for his services, since they were contrary to good faith. This does not appear to be often referred to, though the next in order of time has attracted much attention. Bexwell v. Christie, 1 Cowper’s Rep., 395, decided by the King’s Bench in 1776, may be regarded as the leading case upon the subject. That was an action against an auctioneer for selling a horse for less than the sum directed, fifteen pounds sterling, and the court held that it could not be maintained; for if the auctioneer had followed the directions he must have employed by-bidders, which would have been illegal. At the trial. Lord Mansfield, chief justice, said that the practice at auctions, of owners buying in their own goods, struck him as a fraud upon the public ; and that the nature of these sales required that the goods should go to the best reed bidder, On the case coming under review before the full bench, his lordship said: “ the question then is, whether the owner can privately employ another person to bid for him ? The basis of all dealings ought to be good faith ; so more especially in these transactions where the public are brought together upon a confidence that the articles set up to sale, will be disposed of to the highest real bidder. That could never be the case if the owner might secretly and privately enhance the price by a person employed for that purpose.” And again, an owner of goods .set up to sale at an auction, never yet bid for himself. If such a practice were allowed no one would bid. It is a fraud upon the sale, and upon the public. The disallowing it, is no hardship upon the owner, for if he is unwilling that his goods should go at an under price, he could direct the auctioneer to state that they would be sold for such a price, and not low^er. Such a direction would be fair. Or he might have it inserted in the conditions of sale, that he himself might bid once in the course of the sale. Such a condition would be fair, because the public are then apprised, and know upon what terms they bid. In Holland it is the practice to bid downwards.” All of the court concurred in the opinion of the chief justice.

The next case that we find, is that of Howard v. Castle, 6 Term Rep., 642, decided in 1796. It ivas there held, that if an owner of goods or an estate put up to sale at an auction, employ puffers to bid for him without declaring it, it is a fraud on the real bidders, and the highest bidder cannot be compelled to complete the contract. Lord Kenyon, C. J., in delivering his opinion, freely endorses the doctrine of Bexwell v. Christie, and adds, that the whole of the reasoning employed in that case is founded on the noblest principles of morality and justice,'principles that are calculated to preserve honesty between man and man. The other members of the court concurred in the opinion expressed by the chief justice.

Following the English common law cases in the order of time, we next find Crowder v. Austin, 3 Bingham’s Rep. 368, decided in 1826, where the principles of the previous cases were discussed and adopted.

In Wheeler v. Collier, 1 Moody & Watkins, Rep., 123, which was a ease at nisi jrrius, Lord Tenterden, chief justice, said : “ if the owner of an estate put up for sale by auction, employ a person to bid for him, the sale is void, although only one such person be employed and although he is only to bid up to a certain sum ; unless it is announced at the time that there is a person bidding for the owner.”

In the exchequer the same rule prevails. Rex v. Marsh, 3 Younge & Jervis, Rep., 331; Thornett v. Haines, 15 Meeson & Welsby’s Rep., 367. In the last case, which was decided in 1846, it was held that the deposit with the auctioneer might be recovered back by the vendee in an action of assumpsit. All the cases, both in law and equity, were examined, and the conclusion of the court was, that the doctrine of Lords Mansfield, Kenyon and Tenterden, as stated in the preceding cases, should be adopted.

In the United States the decisions are not so uniform, though the weight of authority is in favor of the same rule. In Baham v. Bache, 13 Louisiana Rep., 287, it was held that the owner of property may withdraw it before the highest bid is accepted by the auctioneer, but he has no right to bid himself, unless he publicly reserves this right; still less can he bid through the auctioneer. So where the price of property was limited, which fact was not communicated to the bidders, and the auctioneer advanced on the bid until it reached the limits prescribed by the owner, and was adjudicated to the defendant, it was held that the sale was null and void as to the purchaser. The action was brought to compel the purchaser to comply with the terms of the sale, and he had judgment. In delivering the opinion of the court, Mustis, Justice, adopts the principles of Bexwell v. Christie, and remarks: a the decision in that case, has not been followed in all cases, but we apprehend that time and scrutiny will reestablish its force wherever the principles of law, and public morals are co-incident.” He further remarks: “ we are aware it is the general usage to conduct sales at auction in this manner, but it is a usage, which we can neither justify nor recognise in the administration of justice. It is equally repugnant to public policy, and to that fairness which ought to exist, and which people have a right to expect, in a sale of property avowedly offered to the highest bidder.” To the same effect is Correjolles v. Mossy, 2 Louisiana Rep., 507.

There are several other cases sustaining collaterally the same-views, although the precise point was not decided — among them are, Phippen v. Stickney, 3 Met. Rep., 384 ; Wilbur v. Howe, Johns. Rep., 444; Thompson v. Davis, 13 Johns. Rep., 112; Hawley v. Cramer, 4 Cowen’s Rep., 717; Gulick v. Ward, 5 Halstead’s Rep., 87 ; Dudley v. Little, 2 Haw. Rep., 505.

But in Steele & al. v. Ellmaker, 11 Serg. & Rawle., 86, it was held, that if goods are sent to auction, with directions to the auctioneer to dispose of them at a certain average advance in the invoice price, and he sell them for less than tho limited price, an action may be maintained against him for tho difference between the limited price, and that for which the goods were sold. This is a departure to some extent from tho English common law doctrine; and the learned judge, Tilghman, in commenting upon the doctrine of Lord Mansfield, observes, that perhaps the tone of Lord Mansfield’s morality, was too lofty for the common transaction of business. His honor, however, admits, in discussing the question, “ that the most proper way would bo, to declare publicly, that the goods were not to go under a limited prico, or that the owner reserved the right of a bid for himself.” Among the decisions at common law, this is the only case that we have met with, where the rule of the entire cases has been directly departed from.

In equity, however, the common law rule in England has been to some extent relaxed, as will bo seen by reference to the cases of Bramley v. Alt, 3 Vesey’s Rep., 620 ; Conally v. Parsons, 3 Vesey, 625, n.; Smith v. Clarke, 12 Vesey, 477, and Woodward v. Miller, 2 Collier’s Rep., 279. Both the first, and last case, went upon the ground that these were bond fidé bids, made by real bidders after the puffers had ceased bidding, and in the last case it seems to be admitted, that at common law, a different rule prevails from that held in the courts of equity. The doctrine of these cases appears to be this, that if upon a view of all the circumstances, the court are satisfied that any fraud was intended or practised, they will hold the sale void; but if the puffer was employed, and the bidding made for the purpose of preventing a sacrifice of the property, it will be otherwise.

Iii this country, tho rule in equity is perhaps not well settled. Story, in his Equity Jurisprudence, vol. 1, § 293, lays down this as the rule : ££Xf under bidders or puffers are employed at an auction, to enhance the price and deceive other bidders, and they are in fact misled, the sale will be held void, as against public policy.” And in Veazie v. Williams, 3 Story’s C. C. Rep., 611, the same learned judge, states the rule in equity to be this: “ Where all the bidders, except the purchaser, are by-bidders, secretly employed, by the seller, and the judgment of the purchaser is improperly influenced by their bids, the sale is a fraud, against which equity will relieye the purchaser. But when there are real bidders as well as sham bidders, and the last bid before the purchaser’s, is a real bid, and the judgment of the real bidders and the purchaser, has not been blinded by the sham bid. ders, the sale is valid.” In regard to this caso it is to be remarked that Judge Ware, the district judge, dissented from the doctrine of Judge Story, and in an able opinion adhered to the rule of the early common law decisions.

In the case of the National Fire Ins. Co. v. Loomis, 11 Page’s Chan. Rep., 431, the point was alluded to, and in such a manner as to leave the impression that the learned Chancellor (Walworth,) recognized the principles of Bexwell v. Christie, as the correct rule. And in Latham’s Ex'rs v. Morrow, 6 B. Monroe’s Rep., 630, the question is distinctly left open for future adjudication.

We have thus referred to the principal cases bearing upon the question, both in law and equity, and we will close our citations with the observations of Chancellor Kent, who, having reviewed all the cases, both in law and equity, remarks: ££ The original doctrine of the King’s Bench is the more just and salutary doctrine. In sound policy, no person ought, in any case, to be employed secretly to bid for the owner against the bond fide bidder ■at a public auction. It is a fraud in law on the very face of the transaction; and the owner’s interference and right to bid, ought to be intimated in the conditions of sale.” 2 Kent’s Com., 539. And after the best consideration which we have been able to give the subject, it appears to us, that this is the true doctrine, and that solmd morals and good faith between man and man, evidently require that by-bidding should receive no countenance from any legal tribunal. Fair, open-handed honesty ought to pervade all dealings, and all parties should, so far as may be, meet upon equal terms in their bargains and sales. Combinations to prevent bidding are held, both at law and equity, to be fraudulent, and why should not any secret employment to effect bidding, be viewed in the same light ? If it be said that the property may be sacrificed for the want of bidders, as is declar ed in some of the cases in equity; the answer is that the owner may withdraw it before the sale commences, or he may set it up at a specified sum, or he may announce that he will reserve the right to make one bid himself. If an auctioneer receive property with directions not to sell under such a price, he should so state on setting it up, or he should reserve one bid to himself. The owner of the property has no right to complain at such a course, because it is the only course that comports with the truth. If those who wish to have their property sold at auction are not willing that it should be done in a fair, open and honorable way, they must seek other ways of disposing of it.

The line of distinction which is attempted to be drawn in equity between a fair and fraudulent sale, where secret puffing, or by-bidding is resorted to, appears to us to be difficult to trace. We think it will be far better to discard the distinction entirely, and thereby close the door to all temptation to fraud in auction sales, and the perjury that would be very likely to follow. The whole and real truth should be stated when the property is offered for sale.

Upon this point of the case, the instructions of the court must be held to be erroneous.

The questions connected with the agency of Lane, which are presented by the case, are more intricate than the one already considered, and it has not been without some difficulty that the court have arrived at a conclusion in regard to them.

Upon the facts reported, it does not appear that Leavitt knew that the carriage had ever belonged to the plaintiff. This however would be material, only as making it, or not, necessary for Leavitt to enquire into the nature of Lane’s agency in selling the property. If an agency be known, and it is special, it is the duty of the party who deals with the agent, to enquire into the nature and extent of the authority conferred by the principal, and to deal with the agent accordingly. Snow v. Perry, 9 Pick. Rep., 542; Story on Agency, § 133: Deming v. Smith, 3 Johns. Ch. Rep., 344 ; Schimmelpenic v. Bayard, 1 Peters’ Rep., 264, 290 ; Hatch v. Taylor, 10 N. H. Rep., 547.

But where the agency is not known, and the principal has clothed the agent with powers calculated to induce innocent third persons to believe that the agent owned the property or had power to sell, the principal is bound, and strangers will not suffer. Story on Agency, § 93. In like manner, an implied authority may be deduced from the nature and circumstances of the particular act done by the principal. If the principal sends his commodity to a place where it is the ordinary business of the person to whom it is confided to sell, it will be intended that the commodity is sent thither for the purpose of sale. And where an article is sent in such a way, and to such a place, as to exhibit an apparent purpose of sale, the principal will be bound, and the purchaser will be safe, although the agent may have acted wrongfully, and against his oz’ders or duty, if the purchaser' has no knowledge of it. Story on Agency, § 94; Paley on Agency, 167 ; 2 Kent’s Com., 621; Pickering v. Busk, 15 East’s Rep., 38 ; Saltus v. Everett, 15 Wendell’s Rep., 267 ; Dyer v. Pearson, 3 Barn. & Cres., 42; Hern v. Nichols, 1 Salk. Rep., 288 ; Sanford v. Handy, 23 Wendell’s Rep., 260.

Lane was a carriage-maker. His business was to make and sell carriages, and also to repair them when brought to his shop for that purpose, as was the case with this carriage of Towle. If Lane’s sole business had been to make azrd sell carriages, the deposit of the one in question with him, might come within the principle of the preceding cases ; but such was not the fact; and a purchaser would have no such right to presume that a second-hand carriage in Lane’s possession was his, as would protect him from the claim of a bond fide owner. It is to be observed too, that this carriage was set up and sold, after the property of Lane, which had been previously attached and advertised, was disposed of by the officer. The case does not so state in terms, but probably it was well known to Leavitt and others present, that the carriage belonged to Towle. But, however that may have been, we think that the situation of the property was such, taken in connection with Lane’s circumstances, and the attachment and advertisement of his property, as to put a purchaser upon enquiry.

Assuming that Leavitt knew that Lane was acting as the special agent of Towle, in selling the property, or proceeding upon the ground that the property was so situated as to put a purchaser upon enquiry, the question arises, whether the private ms «ructions given by Towle to Leavitt, not to sell the carriage under forty dollars, were in the nature of a limitation to his authority, or were instructions not to be disclosed.

The acts of a general agent, known as such, govern his principal hi all matters coming within the proper and legitimate scope of the business to be transacted, although he violates by these acts his private instructions; for his authority cannot be limited by any private instructions, unless known to the person dealing with him. Whitehead v. Tuckett, 15 East’s Rep., 400 ; Lightboy v. N. A. Insurance Co., 23 Wendell’s Rep., 22; Lobdell v. Baker, 1 Met. Rep., 202 ; 2 Kent’s Com., 620 ; Allen v. Ogden, 1 Wash. C. C. Rep., 174 ; Story on Agency, § 126 ; Paley on Agency, 200 ; Penn v. Harrison, 3 Term Rep., 757 ; Mann v. Commission Co., 15 Johns. Rep., 44.

With regard to a special agent, the law appears to be equally well settled, by the authorities above quoted, that he if exceeds the authority given, his acts will not bind his principal. But it is to be observed, that a distinction is to be taken between the limited authority of a special agent, one appointed for a specific purpose to do certain and specified acts, and the private instructions given to such agent. Where the authority is limited in a bond fidé manner, and the limitation is to be disclosed by the agent, and is disclosed either with or without enquiry, any departure from such authority or instructions, will not bind the principal; but where the authority or instructions given, are in the nature of private instructions, and so designed to bo, they will not be binding upon the parties dealing with the agent. And if the instructions are of such a nature that they would not be communicated if an enquiry was made, (even though it bo the duty of the person dealing with the agent to malee the enquiry,) it is not necessary that it should be made, for it would not bo communicated if made. Hatch v. Taylor, 10 N. H. Rep., 538; Bryant v. Moore, 26 Maine Rep., 84. Upon this view of the question, it would seem that the directions not to sell the carriage for less than forty dollars, would be in the nature of private instructions. The fact does not seem to us to have been intended to be communicated. This, however, may admit of some doubt, and were the case to turn upon this point, a more minute examination would perhaps be necessary.

But it appears to the court, that there is one point that must settle the case for the plaintiff. This carriage was sold at auction ; and this we think must be regarded as exceeding any authority or instructions given, that could bind the plaintiff. The defendant, knowing the property to be the plaintiff’s, or if he did not know it, the situation of the property being such as to render it incumbent on him to make all necessary enquiries, was bound, on seeing it exposed to. sale in an unusual manner, to en-quire as to the right of Lane thus to sell it. Had he done this, probably all difficulty would have been avoided; and whether the directions not to sell for less than forty dollars, be considered as a limitation upon the agent’s authority or as private instructions, nothing was said about Lane’s selling at auction, and no enquiries made in regard to it. A sale at auction implies a sale at any price that may be offered. It is ordinarily the last resort to reduce property into money, and we should be slow to ratify the doings of an agent clothed with the usual powers to sell, who should pursue such a course.

Had there been any evidence that Towle authorized Lane to sell the carriage at auction, so that the question could have been properly submitted to the jury, this obstacle in the defendant’s case might perhaps have been overcome; but we find nothing that would warrant the court in giving the instructions desired in this respect. A court cannot be required to instruct the jury upon any supposed state of facts.

The sale then, must be held void, and as a necessary consequence the defendant has no right to the' property, and cannot sustain his defence, notwithstanding there may have been error in some of the rulings made against him. - ,

It is unnecessary to comment further upon the questions raised in the case. We will remark, however, that Lane was a competent witness. The balance of his interest was against the party calling him. The statement in the case that the phaeton was of the value of fifty dollars is evidently incidental and the mere allegation of the writ. There is no proof that it was of that value. The case of Kingsbury v. Smith, 13 N. H. Rep., 110, settles the question.

Judgment on the Verdict.