Miller v. Baynard

7 Del. 559

• Court: Supreme Court of Delaware
• Decided: June 15, 1863
• Status: Published

Opinion

Gilpin, G. J.,

announced the opinion of the court: The question reserved in this case, comes before us, on a case stated by the parties. It is a question, I think, of first impression, in the courts of this state; and hence, it is important that it should be decided correctly and upon principle; more especially, as the rulings at law, and in equity, are not altogether in accord. The courts of law appear to have somewhat more sharply defined the rule in respect to this subject, than the courts of equity. The material facts are very few. According to the conditions of the sale, the highest bidder was to be the purchaser; and yet Miller, the seller, employed one Captain Thompson, to bid on behalf of the estate, without making that fact known to the bidders either before or during the sale. The bidding, after it reached eighty dollars per acre, was confined to Captain Thompson, and George H. Baynard, who became the purchaser. Thompson was not a real bidder, but was employed by the seller to enhance the price of the property.

The question, therefore, for our decision, is simply this; whether secret by-bidding, or puffing, at a public sale, is lawful ? We think it is not. It seems to us that the employment of a puffer to enhance the price of the property, is not only opposed to .the soundest principles of public policy, but that a sale made under such circumstances is a fraud upon the purchaser, and consequently is invalid at law. The simple fact of offering property for sale, at public auction, is an invitation to all persons, to come together and bid for the same, upon fair and equal terms, and indeed, is equivalent to a public declaration that the sale shall be conducted fairly and in good faith toward all bidders. Any secret arrangement, therefore, having a tendency to mislead a bidder, is in our opinion, a serious departure from fair dealing, and if the price be thereby enhanced, it clearly^ amounts to a deception practiced by the seller upon the purchaser, advantageous to the former, and injurious to the latter. In point of morals, is not such an arrangement wrong ? And if so, is it right to permit him, either at law or in equity, to avail himself of the fruits of an advantage obtained by artifice or deception ? But in this case, by the express terms of the sale, the highest bidder was to be the purchaser, Have these terms no significance ? Or rather, do they not mean, the highest bidder shall be the purchaser ? Lords Mansfield, Kenyon, and Tenterden evidently thought so. In delivering the judgment of the Court of King’s Bench in the case of Bexwell v. Christie, Cowp. 396, Lord Mansfield lays down the only true and safe doctrine, applicable to such sales. He says “ 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 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 Lord Kenyon in Howard v. Castle, 6 T. R. 642, expressly declares that the doctrine held by Lord Mansfield in respect to by-bidding at auction sales, was founded “ on the noblest principles of morality and justice.”

These cases have been approved and followed among others, by Wheeler v. Collier, 1 Moody Malk 126. Crowder v. Austen, 2 Carr & Payne 208. Thornet v. Haines, 15 Mees. & Wells. 367. Rex. v. Marsh, 3 Younge & Jervis 331. 11 Paige Rep. 431. Phippen v. Strickney, 3 Metcalf 386. Veazie v. Williams, 8 Howard 134. And there is no hardship in the rule which these cases establish, for it is perfectly competent for the seller to fix a minimum price, or to reserve to himself the right to bid, or to employ another to bid for him, but he must give fair notice of the fact, so that no one may be misled or deceived in such a sale. The case of Bexwell v. Christie was decided in the year 1776, and remained the settled rule in England, for a period of upwards of twenty years; when in 1797, the soundness of the doctrine of that ease was called in question for the first time by Lord Loughborough, who, in Conolly v. Parsons, attempted to sanction the practice of secret bidding or puffing. He was followed, first, by Sir Richard Pippin Arden, (afterward Lord Alvanley) then master of the Rolls, in the case of Bramley v. Ault, and then by Sir William Grant, in the case of Smith v. Clark. And it is on the authority of these equity cases, that the learned counsel for the plaintiff mainly relies, as showing a re- . axation of the stringency of the rule at law, in the earlier cases forbidding puffing. The case of Steel v. Ellmaker, 11 Serg. & Rawle 86, having been overruled by Pennock’s Appeal, 14 Penn. State Reps. (2 Harris) 446, can no longer be considered an authority on the point, in favor of the plaintiff.

It seems to me, however, that a full answer to the equity cases, is to be found in the subsequent decisions, both in England and in this country, approving and following the original doctrine of Lord Mansfield, the governing principle of which doctrine is, that the buyer shall not be deceived by any secret management of the seller. Crowder v. Austin, 2 Carr & Payne 208. Wheeler v. Collier, 1 Moody & Malk 123. Veazie v. Williams, 8 Howard’s Sup. Ct. Reps. 134. Chancellor Kent concludes his review of these several decisions, by declaring the doctrine of the earlier cases, most “just and salutary.” He says “no person ought, in any case, to be employed secretly to bid for the owner against the bona fide bidder at a public auction. It is fraud in law upon the very face of the transaction, and the owner’s interference and right to bid, in order to be admissible, ought to be intimated in the conditions of sale; and such a doctrine has recently been declared in Westminster Hall.” 2 Kent’s Com. 6th edition, 538, 539. Considering, therefore, that the employment of said Thompson to bid for the seller at the sale, without any notice of that fact having been communicated tó the bidders, was illegal and fraudulent, we are of opinion, that judgment ought to be entered for the defendant; and we order the certificate to be made out in accordance with this opinion.