Same - Fraud In Connection With Sales At Auction

Where property is put up for sale at public auction, any agreement between the auctioneer or person having control of the sale and third persons by which fictitious bids are to be made, so as to raise the price, is a fraud on the purchaser,11 and no rights can be based upon it. A person, for instance, engaged to make fictitious bids, could not recover compensation promised him. We are here speaking of illegal agreements only, and therefore have nothing to do with the rights of the purchaser at an auction sale.

9 Mullalieu v. Hodgson, 16 Q. B. 689; Frost v. Gage, 3 Allen (Mass.) 560; Partridge v. Messer, 14 Gray (Mass.) 180; Ramsdell v. Edgarton, 8 Metc. (Mass.) 227, 41 Am. Dec. 503; Clarke v. White, 12 Pet. 178, 9 L. Ed. 1046; Kullman v. Greenebaum, 92 Cal. 403, 28 Pac. 674, 27 Am. St Rep. 150; Cobleigh v. Pierce, 32 Vt. 788; O'shea v. Oil Co., 42 Mo. 397, 97 Am. Dec. 332; Way v. Langley, 15 Ohio St. 392; Frieberg v. Treitschke, 36 Neb. 880, 55 N. W. 273; Hefter v. Cahn, 73 I11. 296; Huckins v. Hunt, 138 Mass. 366; Brown v. Neally, 161 Mass. 1, 36 N. E. 464; Powers Dry Goods Co. v. Harlin, 68 Minn. 193, 71 N. W. 16, 64 Am. St. Rep. 460; Merritt v. Bucknam, 90 Me. 146, 37 Atl. 885. It has been held, however, in New York, that the secret agreement only is void, and that the preferred creditor may still have the benefit of the composition agreement. Hanover Nat. Bank v. Blake, 142 N. Y. 406, 37 N. E. 519, 27 L. R. A. 33, 40 Am. St. Rep. 607. See, also, White v. Kuntz, 107 N. Y. 518, 14 N. E. 423, 1 Am. St. Rep. 886; Cheveront v. Textor, 53 Md. 295. A secret agreement by a creditor to withdraw his opposition to a bankrupt's discharge, or to a composition, is void; and it does not matter whether it was made with the debtor or with a stranger, Higgins v. Pitt, 4 Ex. 312; Kullman v. Greenebaum, supra; nor whether the consideration for such withdrawal is to come out of the debtor's assets or not, Hall v. Dyson, 17 Q. B. 785; Kullman v. Greenebaum, supra; and this is true though it be part of the agreement not to prove against the estate at all, McKewan v. Sanderson, 20 Eq. 65. See "Contracts:' Dec. Dig. (Key-No.) § 113; Cent. Dig. §§ 521.-523.

10Zell Guano Co. v. Emry, 113 N. C. 85, 18 S. E. 89; Kullman v. Greenebaum, 92 Cal. 403, 28 Pac. 674, 27 Am. St Rep. 150; Powers Dry Goods Co. v. Harlin, 68 Minn. 193, 71 N. W. 16, 64 Am. St. Rep. 460. See "Contracts," Dec. Dig. (Key-No.) § 113; Cent. Dig. §§ 521-523.

11 Smith v. Greenlee, 13 N. C. 126, 18 Am. Dec. 564; Moncrieff v. Golds-borough, 4 Har. & McH. (Md.) 281, 1 Am. Dec. 407; Curtis v. Aspinwall, 114 Mass. 187, 19 Am. Rep. 332; Peck v. List, 23 W. Va. 338, 48 Am. Rep. 398;

His contract is not illegal. He can avoid it,12 but this is because of the fraud, not because of any illegality. The illegality is in the agreement to commit the fraud. The sale is not illegal, but merely voidable at the purchaser's option.

In like manner agreements between persons for the purpose of deterring bidders and preventing competition at an auction sale are illegal as being a fraud on the owner, and the parties to such an agreement can claim no rights under it.18 This rule, however, does not prevent parties from entering into a bona fide arrangement to purchase property at auction on their joint account, or for other proper purposes.14