Lamm v. Crumpler ( 1951 )

65 S.E.2d 336 (1951) 233 N.C. 717

LAMM
v.
CRUMPLER et al.

No. 746.

Supreme Court of North Carolina.

June 7, 1951.

Brooks, McLendon, Brim & Holderness, Greensboro, for plaintiff appellee.

Allen & Allen, and Young, Young & Gordon, Burlington, for defendants appellants.

WINBORNE, Justice.

The point raised by the demurrer ore tenus entered here for the first time, and debated orally, being well founded, takes precedence over, and renders it unnecessary to consider those questions of law arising upon the demurrer filed and heard in the trial court, and debated in the written briefs of the parties on this appeal. Hence we have abbreviated statement of facts pertaining to those questions of law.

A defendant in a civil action in this State may demur ore tenus at any time in either the trial court, or in the Supreme Court, upon the ground that the complaint does not state a cause of action. Indeed, the Court may raise the question ex mero motu. Garrison v. Williams, 150 N.C. 674, 64 S.E. 783; Snipes v. Monds, 190 N.C. 190, 129 S.E. 413; Watson v. Lee County, 224 N.C. 508, 31 S.E.2d 535.

Hence the demurrer ore tenus interposed in this Court, as hereinabove set forth, is timely.

"A sale at auction is a sale to the best bidder, its object, a fair price, its means, competition,—any agreement, therefore, to stifle competition is a fraud upon the principles on which the sale is founded. It * * * vitiates the contract between the parties, so that they can claim nothing from each other * * *", so declared this Court in opinion by Henderson, C. J., in Smith v. Greenlee, 13 N.C. 126. This principle has been applied through subsequent years. See Morehead v. Hunt, 16 N.C. 35; Bailey v. Morgan, 44 N.C. 352; McDowell v. Simms, 45 N.C. 130; Ingram v. Ingram, 49 N.C. 188; Whitaker v. Bond, 63 N.C. 290; Davis v. Keen, 142 N.C. 496, 55 S.E. 359; Henderson-Snyder Co. v. Polk, 149 N.C. 104, 62 S.E. 904; Owens v. Wright, 161 N.C. 127, 76 S.E. 735.

In Whitaker v. Bond, supra, the relief sought by the complainant is specific performance of a contract relating to land. The 4th headnote epitomizes the opinion of the Court: "Where a bidder at auction offered one, who also proposed to bid, that if he would desist she would divide the land with him: Held, to be a fraud upon the vendor and so to violate the contract of purchase afterwards made by her as the only bidder".

Moreover, it is an established principle, universally applied in this jurisdiction to various factual situations, that an executory contract, the consideration of which is against good morals, or against public policy, or the laws of the State, or in fraud of the State, or of any third person, cannot be enforced in a court of justice. Sharp v. Farmer, 20 N.C. 255; Blythe v. Lovinggood, 24 N.C. 20; Allison v. Norwood, 44 N.C. 414; Ramsay v. Woodard, 48 N.C. 508; Ingram v. Ingram, supra; Powell v. Inman, 52 N.C. 28; King v. Winants, 71 N. C. 469, Id., 73 N.C. 563; York v. Merritt, 77 N.C. 213; Covington v. Threadgill, 88 N. C. 186; Griffin v. Hasty, 94 N.C. 438; Culp v. Love, 127 N.C. 457, 37 S.E. 476; Owens v. Wright, supra; Marshall v. Dicks, 175 N. C. 38, 94 S.E. 514; Penland v. Wells, 201 N.C. 173, 159 S.E. 423; Florsheim Shoe Co. v. Leader Dept. Store, 212 N.C. 75, 193 S.E. 9.

For instance, in Blythe v. Lovinggood, supra, it is held: "The law prohibits everything which is contra bonos mores, and, therefore, no contract which originates in an act contrary to the true principles of morality can be made the subject of complaint in the courts of justice".

In this case commissioners, appointed to sell land for the State at public auction, declared, as one of the conditions of the sales, that if the highest bidder did not comply with his contract, the next highest should have the land. Defendant, second to plaintiff in highest bids, gave to plaintiff note for $100 for failing to comply with his bid. The court held that the transaction was fraudulent toward the State, and that such note was void, on the ground of its fraudulent consideration.

And in Ingram v. Ingram, supra, it is held that agreements between persons interested in an estate, the consideration of which is not to bid against each other at the administrator's sale, is against the public policy, and void.

In Marshall v. Dicks, supra, the Court through Hoke, J., restated the principle in these words: "It is the fixed principle with us, and, so far as we are aware, of all courts administering the same system of laws, that, when the parties are in pari delicto, they will not enforce the obligations of an executory contract which is illegal or contrary to public policy or against good morals. Nor will they lend their aid to the acquisition or enjoyment of rights or claims which grow out of, and are necessarily dependent upon, such a contract."

Applying these principles to the case in hand: It clearly appears from the complaint that the withdrawal of the raised bid, plaintiff had placed on Tract No. 34, was a consideration for the contract plaintiff now seeks to reform, and then to enforce. Manifestly, its purpose, reflected in the contract itself, was to stifle bidding on both tracts Nos. 34 and 35. Thus, the withdrawal of the amount required to raise the bid was fraudulent towards those interested in the property bringing a fair price through fair competition. Blythe v. Lovinggood, supra; King v. Winants, supra, and other cases supra.

This makes the transaction contrary to public policy, and void. Therefore, plaintiff has no right to be aided, and enforced. This is so, not for the sake of defendant, but "it is founded in general principles of policy". Holman v. Johnson, 1 Cowp. 343, 98 Eng. Rep. Full Reprint 1120. To like import are: Blythe v. Lovinggood, supra; Ingram v. Ingram, supra.

If the plaintiff and defendants were to change sides, defendants would be confronted with same obstacle.

For reasons stated, the demurrer ore tenus is allowed.

Demurrer Sustained.

Action Dismissed.