Court Opinion

ID: 6817816
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:03:36.38113+00
Date Added: 2024-06-11T08:44:37.027397
License: Public Domain

*538ON REHEARING.
Richmond
January 14, 1932.
Present, Campbell, C. J., and Holt, Epes and Hudgins, JJ.
Holt, J.,
delivered the opinion of the court.
This cause, which is reported in ante, page 528, 159 S. E. 206, is not free from difficulty. The chancellor who presided at its trial was first of opinion that the plaintiffs should prevail, but upon more mature reflection reached the conclusion that he was in error, held with the defendant, and granted the prayer of his cross bill. That decree was reversed by this court, two justices dissenting. In the majority opinion the justice now drafting this on rehearing concurred.
The major issue is, was there fraud in the auction sale brought about through puffing or by-bidding? Mr. Temple, the auctioneer, is a man of wide experience, as were his clerk and three “ground men.” Their duty was to excite interest among possible bidders, and, in the language of Mr. Temple: “They know their job is not let the man bidding get away from them.” The three lots bought by Gwynn lie on the north side of Main street in the city of Danville. In accordance with plans announced they were first offered separately and then as a whole. If the gross bid should exceed the aggregate amount of the separate bids it was to be accepted. Otherwise the separate bids were to hold. When separate bidding was at an end the auctioneer announced that they aggregated $40,750.00, thereupon Mr. Gwynn bid for them as a whole $41,000.00. There was no other bid and they were sold to him.
Temple’s evidence is:
“Q. When Mr. Gwynn bid $41,000.00‘on the whole, he did it upon the representation that the three pieces had been knocked out at $40,750.00 as a total?
“Á. That is right.
“Q. Can you tell us of any bid that was received from *539anyone up there besides Mr. Gywnn who wanted the property?
“A. As far as I known all that were re'ceived were from people who wanted the property.
“Q. Can you give us the name of a single Danville man who bid on any of that property and what his bid was besides Mr. Gwynn?
“A. I cannot on these three pieces.”
He does elsewhere say that a Mr. James bid on one or more of these lots but he does not undertake to say what were his bids or that any sales were actually made to him.
Judge Aiken, acting for Mr. Gwynn, went to see Temple. His testimony is:
“According to the best of my recollection, later on that same day, I met Mr. Temple just at the entrance of my office, his office being just a few doors from mine, and he spoke to me and asked me what was the information we wanted about the auction sale. I told him that we wanted the names of the persons who bid on the property, in the hope that we could interest them in relieving Mr. Gwynn of it, and asked him to give me the names. He said it was no use for me to try to find them or see them. I asked him why not. ■ He said: ‘Well whoever bid was simply bidding to protect Dr. Edmunds.’ I asked him if he meant by this they were bidding without any serious intention of becoming purchasers. He said words to this effect: ‘Oh, well, you know how these things are, they were just trying to protect Dr. Edmunds.’ He never did give me the names.”
Miss Mitchell, an employee of Judge Aiken’s law firm, in reply to a question by that gentleman, said:
“Well, I was sitting there typing, and Mr. Temple asked you something about the Edmunds transaction. He had been in several times asking about it. I think he asked you about a letter you had written Mr. Harris the day before. I believe he wanted to know what you wanted to know from *540Mr. Harris, and you told him you wanted to know the names of some of the bidders of the Edmunds property, so that you could get them to take it off of Mr. Gwynn’s hands. I don’t recall exactly what the words were he said, but he said they were bidding to protect Dr. Edmunds.”
These statements are denied by Mr. Temple. He is deeply interested in this litigation. He is charged with fraud. Judge Aiken has no interest beyond that as counsel for Mr. Gwynn, and Miss Mitchell has no interest at all. Mr. Temple admits that he knows almost everybody in Danville. He says that his experienced ground men are charged with the duty of not letting any bidder get away, and it was the duty of Mr. Handy, the clerk, to make memoranda of what was done. He did not testify, but on the day on which final judgment was entered filed an affidavit. He could recall the name of no bidder, and in it said:
"I, therefore, did not make any inquiry at that immediate moment as to who the purchasers of the separate parcels were but waited until the property as whole was purchased by Mr. Gwynn when I presented to him the contract and closed up that sale. Had I done otherwise, I would have had to go to each one of the separate purchasers and have him sign a contract, receive his deposit and then when the property was sold as a whole I would have had to undo the contract, and deliver the deposit back. In other words, I did not think it was required or expected that a memorandum of sale would be signed until the sale was a final one.” This is not evidence and was offered in extremis.
Here are five men, experienced specialists, two of whom knew the people of Danville, and yet not one of them is able or willing to give us the name of a single purchaser of property which sold for over $40,000.00.
We think Judge Aiken’s recollection of this statement made by Mr. Temple is accurate, namely: “Oh, well, you know how those things are. They were just trying to protect Dr. Edmunds.”
*541The sales at the same time of the Herman Home and the Hodges House on the south side of Main street have no direct bearing on the case but do serve in a general way to show what manner of auction it was.
The Herman House was sold to a Mr. Lewis for $12,000.00 but that sale with the consent of Dr. Edmunds was immediately cancelled. For the Hodges House Julius Baum bid $7,500.00 or $8,000.00 and then withdrew. The auctioneer continued to cry this property and as Baum was leaving the place of sale it was being carried at $11,800.00. Later he was surprised to hear that he had purchased it at that price. As a matter of fact one of the ground men told the auctioneer that there was no sale and he “immediately forgot it.”
 Of course fraud must be clearly proven, but proof, of necessity, is frequently circumstantial. In this cause we think that it has been established and that the final judgment of the chancellor is supported by the evidence^
Having reached the conclusion that the sale was tainted by puffing or by-bidding, we must determine its effect.
“Moreover, in such case it is settled that the buyer of property has the right to rely upon the representations made by the seller with reference to the property which from their nature ¿right induce the buyer to enter into the contract on the faith of them, and evidence of the seller that the purchaser did not rely upon such representations must be of the clearest and most satisfactory character in order to rebut the inference that the buyer did rely upon such representations. Wilson v. Carpenter, 91 Va. 183, 21 S. E. 243, 50 Am. St. Rep. 824; Fitzgerald v. Frankel, supra (109 Va. 603, 64 S. E. 941).” Strickland v. Cantonwine, 140 Va. 193, 124 S. E. 292, 298.
“The great weight of modern authority is to the effect that the employment of a puffer is illegal and constitutes sufficient ground for the avoidance or rescission of a sale, irrespective of whether such employment was merely for *542the purpose of preventing a sacrifice of the property or for the purpose of enhancing the price above the true value thereof. It is generally recognized that the employment of a puffer to enhance the price of 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.” 2 It. C. L. page 1129; Williston on Sales, volume 1, section 298; 6. C. J. page 833.
“It makes no difference that such puffer or by-bidder was employed to prevent a sacrifice of the property and was directed to bid it to a fixed price only; nor does it make any difference that the property only sold at a reasonable price. The purchaser in any such case has a right to repudiate the sale, if he does so promptly, as soon as he ascertains that there was such puffer or by-bidder who bid at the sale.” Peck v. List, 23 W. Va. 338, 48 Am. Rep. 398.
In Curtis v. Aspinwall, 114 Mass. 187, 19 Am. Rep. page 332, the court said:
“There is some diversity in the decisions as to the circumstances under which by-bidding will invalidate a sale at auction. But it is clear, both upon principle and the weight of the authorities, that when the sale is advertised or stated to be without reserve, the secret employment by the seller of puffers or by-bidders renders the sale voidable by the buyers.”
It was there held that this presumption of fraud might be rebutted. But as was said in Strickland v. Cantonwine, supra, the evidence to rebut it must be of the clearest and most satisfactory character.
In other words, one who has shown that puffers or by-bidders are employed has made out a case, and he who seeks to uphold a contract so tainted has upon him the burden of showing that by-bidding did not actually affect the sale. Of course it affected it here. Gwynn’s bid was *543based upon the sum of these fictitious bids. Apparently he had to go above them to get the properties, and his rights are not changed by the fact that they may have been worth all he gave for them. He had the right to start his bid where the sum of separate bona fide bids left off.
Temple gives this evidence as to an interview he had with Gwynn:
“I went up to see Mr. Gwynn myself and he was lying down on the sofa in his living room and began talking to me about the purchase of this property and said he was satisfied and he had gotten it a little cheaper than he expected. He said he had been going over the situation about two weeks and been studying this property that was advertised and being an apartment man he thought he would be interested in turning this property into an apartment and said for the last two weeks he had been going there and looking it over without letting his wife or anybody know; that he did not want anybody to know he was interested in it. About that time Mrs. Gwynn came in and she said: 'Ben, cannot you get Dr. Edmunds to let Rice out of this buy. I believe it is going to worry him?’ I said: T don’t reckon Dr. Edmunds would have sold it if he had wanted to take it back.’ Mr. Gwyn said: 'When I buy anything I buy it and I don’t want anybody to take it back.’ Then he told me how he wanted his deed made out.”
This amounts to no more than a statement by this purchaser to the effect that he then thought he had made a satisfactory bargain and intended to stand by it. At that time he knew nothing of the fraud which had been perpetrated upon him. When this knowledge came to him repudiation promptly followed. And, as we have seen, the question of whether or not the price paid was fair is immaterial. Contracts superinduced by puffing or by-bidding are voidable on account of public policy.
It is true that Gwynn did not testify and by way of *544explanation it is said that he was nervous, emotional and sick. For complainants it is said that he was amply able to attend to business.
Had he gone upon the stand he could have been expected to say no more than this, that he had bought the property at public auction and -thought that he had made a good bargain and was willing to stand by his purchase until he had ascertained that apparent value had been augmented by puffing. He could not reasonably be expected to say that he had used knowingly as a basis for his bid, bids which were fictitious and irresponsible and made for the express purpose of running up prices.
The decree of February 3, 1930, from which this appeal is taken must be affirmed and it is so ordered.

Affirmed.