Williams v. Hogue

WOODS, Circuit Judge.

Under an order of sale made in bankruptcy (In re Benjamin G. Williams), the property known as Skinner’s Tavern,” which had been divided into three parcels, was sold at public auction and bid off by Charles T. Herd for $75,525. A resale was made by George R. Hogue, trustee, in pursuance of an order which required “offering said property for sale both in the piece and in the bulk, and selling the same in whichever way he was able to obtain the most money therefor.” The property was then first put up as a whole, and after competitive bidding by Herd and the bankrupt, Williams, commencing with Herd’s repetition of his former bid of $75,525, it was knocked down to Williams, the bankrupt, at $75,550. It was then offered in parcels, and No. 1 was bid off by Herd at $14,000; No. 2 and 3 by Williams at $17,050 and $44,600; the aggregate being $75,650. Williams then insisted that he was entitled to hold his bid of $75,550, or at all events that he should have the two parcels bid off by him. The trustee, nevertheless, offered the property again as a whole, and after competition between Herd and Williams it was knocked down to Williams at $85,750. The trustee having reported the sale at $85,750, by petition, Williams set up his claim to take the property at his former bid for the whole, and insisted that in any event he should be allowed to hold his separate bids for the two parcels struck off to him. Williams further set up in his petition that he should be released from his bid of $85,750 because:

“Herd, wlio was the only bidder at such sale of September 18, 1912, was not a bona fide bidder, but a puller employed by designing men, who took advantage of the well-known desire of your petitioner to buy said property, and of the contracts which your petitioner has entered into the Schinulbaeh Brewing Company, above mentioned, to run up the bidding at such sale, so that your petitioner would be obliged to pay more for said property than it was worth and more than any other bona fide bidder would pay.”

The referee refused to consider the petition, and ordered a resale in default of compliance with the hid of $85,750, and the District Court confirmed his action.

The only point made in the argument on appeal is that there was error in holding Williams to his bid in the face of his allegation that Herd was “a puffer employed by designing men.” The law thus laid down in Peck v. List, 23 W. Va. 395, 48 Am. Rep. 398, is well established :

“It will be observed that in most of the eases where there have been by-bidders, they were employed by the owners of the property about to be sold' at auction; that is, were puffers in the strict sense of the word. But it is obviously unimportant whether the by-bidder is employed by the owner of the land or by some one else, having a pecuniary interest in the auctipn about to be made, and who stands in such a relation to.it that he can make good his assurances to the by-bidder that he shall not be held responsible for his bid, if it happens to be the highest bid made. The real essence of the fraud is not that the owner is bidding for the property, but it consists in the fact that a by-bidder, pretending to be a bona fide bidder, deceives honest bidders, raises the price of the property by fictitious bids, increasing competition, while he himself has good reason to believe, and does believe, that he is secure from any risk of being held personally liable for his bids. It is immaterial from whom he derives this assurance of immunity, provided the party giving the assurance expressly or impliedly has the power either legally or practically to make good the assurance.”

See Veazie v. Williams, 8 How. (49 U. S.) 134, 12 L. Ed. 1018; Rowley v. D’Arcy, 184 Mass. 550, 69 N. E. 325, 64 L. R. A. 190.

There was no allegation that Herd made fictitious bids, while he believed with good reason that he was secure from risk of being held personally liable for his bids, or that he had any assurance of immunity from any person having the power to make good the assurance. Therefore the allegation of the petition, taken as true, was not sufficient to relieve the purchaser.

Affirmed.