Case Name: TAYLOR et al. v. LAFEVERS
Court: Texas Commission of Appeals
Jurisdiction: Texas
Decision Date: 1920-05-26
Citations: 221 S.W. 957
Docket Number: No. 156-3128
Parties: TAYLOR et al. v. LAFEVERS.
Judges: PHILLIPS, C. J. We approve the judgment recommended in this case.
Reporter: South Western Reporter
Volume: 221
Pages: 957–958

Head Matter:
TAYLOR et al. v. LAFEVERS.
(No. 156-3128.)
(Commission of Appeals of Texas, Section A.
May 26, 1920.)
1. Contracts <@=>119 — Rule of public policy as to stifling competition at public sales stated1.
Agreements not to bid at public sales, with the design to stifle competition and thereby purchase property for less than its fair value, are against public policy and void; but persons may unite in such numbers as to make the purchase advantageous to themselves, though competition is thereby' lessened, provided this junction of interests be without unfair motives or injurious consequences.
2. Sales <@=>377 — Petition construed to show that plaintiff refrained from bidding at public sale in reliance on agreement.
In an action for refusal to transfer and deliver notes and accounts purchased by defendant with other property at a public sale, a petition, alleging that defendant’s agent agreed to let plaintiff have the notes and accounts for a specified sum if he would not bid, and that he did not bid by reason of. such agreement, but permitted defendants to purchase the property relying upon such agreement, was susceptible of no other construction than that plaintiff would have continued to bid but-for such promise.
3. Contracts <@=>130 — Agreement to give plaintiff part of property purchased at public sale, if he would not bid, void.
Where a trustee in bankruptcy offered notes and accounts at a public sale, but rejected all bids and offered the notes, accounts, fixtures, and stock of merchandise in bulk, and plaintiff, who was the highest bidder for the notes and accounts, refrained from bidding on the resale in reliance on defendant’s promise to let him have the notes and accounts for a specified amount, when but for such agreement he would have bid, the agreement was against public policy and void.
Error to Court of Civil Appeals of Third Supreme Judicial District.
Action by J. M. Lafevers against P. G. Taylor and another. A judgment for plaintiff was affirmed by the Court of Civil Appeals (19S S. W. 651), and defendants bring error.
Reversed and rendered.
Neff & Taylor and Johnston & Hughes, all of Waco, and Chas. L. Black, of Austin, for plaintiffs in error.
Alva Bryan, Cross & Rogers, and Charles B. Braun, all of Waco, for defendant in error.

Opinion:
SPENCER, J.
Defendant in error J. M. La fevers sueni P. G, Taylor and Taylor-Hanna-James Company, a corporation, for damages sustained by reason of tbe plaintiffs in error's refusal to transfer and deliver to bim certain notes and accounts wbicb be alleged plaintiffs in error bad agreed to transfer and deliver to bim upon tbe payment of tbe sum of $900.
Defendant in error and plaintiffs in error's agent P. G. Taylor were competitive bidders at a trustee's sale in bankruptcy, wherein tbe trustee offered for sale certain property belonging to tbe Elk Mercantile Company, of Elk, Tex. Tbe property was first offered for sale in three separate lots, namely, tbe fixtures, tbe goods, and notes and accounts, tbe trustee reserving tbe right to reject all bids and sell in bulk.
Defendant in error was tbe highest bidder for tbe notes and accounts, and the undisputed evidence shows that plaintiff in error P. G. Taylor also bid on tbe notes and accounts. After having tbe property offered in separate lots and rejected all bids thereon, tbe trustee then offered tbe property in bulk. Defendant in error alleged that, before bidding for tbe property in bulk commenced, Taylor, agreed to let bim have the notes and accounts for tbe sum of $900, provided that be would not bid further, and that, relying upon said agreement, he did not bid on tbe entire stock, but permitted Taylor to purchase said stock.
Tbe case was submitted to a jury upon a general charge, and a verdict rendered in favor of defendant in error, and judgment rendered thereon. Upon appeal, tbe Court of Civil Appeals affirmed tbe judgment. 198' S. W. 651.
Plaintiffs in error contended that tbe agreement alleged and proved by defendant in error was contrary to public policy, and therefore void ; and this presents tbe only question for our determination.
Agreements not to bid at public sales, with tbe design to stifle competition, and thereby purchase property at less than its fair value, are against public policy, and void; but persons may unite in such numbers as may be necessary to make tbe purchase advantageous to themselves, even though tbe effect be to lessen competition, provided this junction of interests be without unfair motives or injurious consequences. James v. Euleord, 5 Tex. 513, 55 Am. Dec. 743.
The contract in the present case is manifestly in violation of tbe general rule announced, and does not come within tbe exception to this rule.
Tbe defendant in error alleged in bis original petition as follows:
"That plaintiff did not bid on said entire stock by reason of his contract and agreement with said P. G. Taylor, but permitted said defendants to purchase said stock, relying upon said contract and agreement with reference to said open accounts."
He testified as follows:
"Before it was sold in bulk I had a conversation with Mr. Pete Taylor about those accounts. Just as Mr. Maxwell started the bids on the entire stock and fixtures and the accounts, and notes altogether, Mr. Taylor came over to where I was sitting and pushed me on the shoulder and said: T want to speak to you.' That Mr. Taylor right there. We walked to the front end of the store, and Mr. Taylor wanted to know if I would give $900 for the accounts. I said: T will.' He said: 'Now, if you wfil stay out of the bidding, I will bid the whole thing in with the understanding that you have the accounts,' that I was to have the accounts for $900. I said: T will do that. I will stay out with the understanding that you buy the accounts for me,' and he said he would. We walked back, and that about ended with that conversation, and Mr. Taylor went ahead with the bidding, and I didn't bid another time."
Tbe language of tbe pleading and tbe proof is susceptible of no other construction than that tbe defendant in error would have continued to bid on tbe entire stock, bad it not been for tbe agreement bad with plaintiffs in error. Tbe direct result of tbe agreement was to stifle competition at tbe sale. It was therefore a contract against public policy—one wbicb courts of equity look upon with disfavor, and which they will not lend their aid in enforcing, unless circumstances clearing it of tbe unfairness are made to appear. No such circumstances are disclosed by tbe tecord in tbe case; on tbe other band, the record as made by tbe defendant in error shows a contract condemned by law.
It is recommended, therefore, that tbe judgments of tbe Court of Civil Appeals and of tbe district court be reversed, and that judgment be rendered for plaintiffs in error.
PHILLIPS, C. J. We approve the judgment recommended in this case.
<@=>For other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes