text:
    WILLIAM T. KELLAM, Appellant, v. STEPHEN McKENSTRY and others, Respondents. THE SAME v. RICHARD CAULDWELL, Respondent.

      Bark — pwrehase of, while on ti-ees— construeiion of terms of contract for.

    Under a contract providing for tlie sale of “all the hemlock bark now on the trees standing” on certain premises, under which the purchasers agree to have all said bark “peeled by the first day of September, 1864, piled, measured and settled for in full;” and are to “have the right, liberty and privilege of free ingress and egress, to enter at anytime and all times upon said lot, cut, fell and pile said bark, and to draw said bark away,” etc., such purchasers are not entitled to any bark except such as is peeled and piled before September 1, 1864.
    Appeal from a judgment in favor of the defendant, entered on the report of a referee, in an action brought for the conversion of certain hemlock bark.
    One Corbin, having a contract for the purchase of land, entered into an agreement with Wood and Van Benschoten, dated June, 1859. By this agreement Corbin sells and conveys to Wood and Van Benschoten all the hemlock bark now on the trees standing and growing on the land. Wood and Van Benschoten were to pay seventy-five cents for each cord of bark in the following manner : $300 on the delivery of the presents, and $300 annually in every year after 1859. They “further agree to have said bark all peeled by the 1st day of September, 1864, piled’ and measured and settled for in full.”.
    It was further agreed, that they should “ have the right, liberty and privilege of free ingress and egress to enter, at any time and all times, upon said lot, cut, fell and pile said bark, and to draw said bark away at any time hereafter, at the convenience of the parties of the second part,” viz., Wood and Van Benschoten.
    Prior to September 1, 1864, the date on which the bark contract was to be-completed, Wood and Van Benschoten made two payments thereon of $300 each, in addition to that made at the delivery of the contract.
    On the 18th of April, 1866, the owner of the land conveyed the same by warranty deed to said Corbin, subject to all legal and equitable rights, if any, growing out of the bark contract claimed by Corbin to be forfeited.
    In June or July, 1867, Corbin caused the hemlock trees standing on the premises to be peeled, and sold the bark thus peeled. The vendee bought in good faith and sold to the defendants, who paid for the same.
    On the 19th of July, 1867, Wood, who appears to have been then the owner of any rights existing under the Wood and Yan Benschoten contract, executed a bill of sale, purporting to convey to the plaintiff all the hemlock bark now peeled and lying on the premises, estimated at 34-0 cords, of which about 140 are said to have been peeled under Wood’s direction in 1866, and about 200 under Corbin’s direction in 1867, at four dollars per cord. The bill of sale also conveyed about forty other cords. Wood testified that the plaintiff paid him thereon for about forty cords.
    The plaintiff now sues for the value of the bark.

      John F. Anderson, for the appellant.

      8. W. Fullerton, for the respondents.
   Learned, P. J.:

The claim of the plaintiff is not very equitable, using that word in its common meaning. By the bark contract, Wood and his partner were to pay Corbin seventy-five cents per cord, and were to do all the work of peeling, piling and drawing away. As respects the bark in question, Wood has paid Corbin nothing, has done none of the work, but has assumed to sell the bark after it was peeled for four dollars per cord. The plaintiff, too, has neglected to take, or to endeavor to take, possession -of the bark; he has allowed Corbin to sell it, and has then sued those who purchased in good faith, and who had paid for nearly all without notice. To recover, under such circumstances, the plaintiff should show a clear legal title.

In 1866 Corbin had become the owner of the land. His deed did not admit the validity of the contract, so that he is not estopped. This bark was then on the trees, and had not been, in fact (whatever it might have been in law), severed from the realty. The only rights which Wood had were under the bark contract. For the referee finds, and the evidence sustains the finding, that there had been no extension.

Now, the reasonable construction of that contract is, that it was to be completed by Wood and his partner by the 1st day of September, 1864. The clause at the ending of the contract, giving rights of ingress and egress, at any time, must be taken in connection with the rest of the agreement. It could not be intended to give a right to enter and peel at all future times, when the contract expressly provided that the bark was all to be peeled, piled, measured and settled for, in full, by September 1st, 1864.

The contract, then, is to be taken as limited, at the utmost (in the absence of any extension), to such bark as Wood and his partner should peel and pile before the day when the contract expired. Whether they might not afterward have the right to draw away such as had then been peeled, piled, measured and settled for it is unnecessary to decide. The contrary seems to be held in Boisaubin v. Reed (2 Keyes, 323).

This construction has been given to a similar contract in McIntyre v. Barnard (1 Sandf. Ch., 52), approved in Warren v. Leland (2 Barb., 613); and, also, to a similar contract in Boisaubin v. Reed (2 Keyes, 323). It is a reasonable construction. The parties cannot have intended that Wood and his partner might claim a right to go on the land and peel this bark at all future times. This might prevent the owner from ever using his land. They therefore fixed the time, within which Wood and his partner should exercise their right of peeling. In the case of McIntyre v. Barnard a fixed price was paid for the timber, and paid on the sale. Yet, as a time was fixed for entering and cutting, it was held that, after that time, the grantees had no right in the timber. The present ease is stronger. For the price depends upon the measurement of the bark when peeled. The owner cannot compel any payment until the bark shall be peeled, piled and measured. Unless, then, the rights of Wood and his partner ceased on the 1st of September, 1864, Corbin would be in a situation where he himself' could not safely peel the bark, and could claim nothing from Wood and his partner, unless they chose to act. Corbin, therefore, has not, in fact, been paid for all the bark on the premises ; as the seller had been paid in the case of McIntyre v. Barnard, and apparently, also, in the case of Boisaubin v. Reed.

In Warren v. Leland it is said that if no time were provided for the removal of the timber, a reasonable time would be implied. Here, the parties have themselves determined the time within which the bark is to be peeled, piled, measured and settled for; and the question is, whether the following clause in the contract is to be construed to mean that no period was limited, or whether the words any time and all time ” are to be construed in subordination to the period limited by the preceding clause.

We think they are to be so construed; and that the judgment should be affirmed, with costs.

Present — Learned, P. J., Bocees and Boardman, JJ.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Learned, JP. J.: Bockes, J.:

license: Public Domain

text:
    ARCHIBALD O. AMEDON, Respondent v. WILLIAM P. GANNON, Appellant.

      Agreement not to practice as physician — damages — when liquidated — “ locate,” meaning of.

    Defendant agreed with the plaintiff: not to practice medicine in the town of Ticondoroga for ten years, the contract providing that he should, if required by the plaintiff, execute a bond, in the penalty of $5,000, conditioned that he should not practice, as aforesaid. No sucli bond was ever given by the defendant, oi required by the plaintiff. In an action by the latter to recover damages for a breach of the agreement, he claimed to recover the penalty of the bond as liquidated damages. Held, that, as the bond was only to be given if required by the plaintiff, and as he never did demand the same, it could not be assumed by the court that the rights of the parties were the same, as if it had been required and given.
    To constitute a breach of an agreement by a person “ not to locate in a certain town to practice as a physician and surgeon,” it is not sufficient, certainly in the absence of admitted fraudulent evasion, to justify the court in directing a verdict against him, to show that he has practiced therein, but it must also be shown that he has been located there.
    Appeal from a judgment in favor of the plaintiff, entered upon the verdict of a jury, for $5,000.

      This action was brought July 19th, 1873, .to recover $5,000 as liquidated damages, and also for damages generally, for the breach of two certain agreements not to practice as a physician and surgeon in the town of Ticonderoga, in this State; one executed by the parties November 18th, 1868, and the other executed by the defendant November 28th, 1868.
    By the terms of the first agreement, November 18th, 1868, the defendant sells to the plaintiff a house and lot in Ticonderoga, and “ the good will which may pertain to him as a physician in Ticonderoga aforesaid, and covenants and agrees that he will not enter into practice, nor practice medicine within the said town of Ticonderoga for the next ten years.” The purchase was to be completed on or before the first of December then ensuing ;■ and the defendant further agreed, “ if required by said Amedon on the completion of this contract by delivery of pápers above specified, the said Gannon will execute and deliver to said Amedon a bond, in the penalty of $5,000, conditioned that he will not practice medicine in said town of Ticonderoga during the next ten years.”
    By the second agreement, November 28th, 1868, the defendant, in consideration of the purchase, of this house and lot and good will, and of one dollar, covenants and agrees “ that I will not at any time, within the ten years next after the date hereof, locate in said town to practice as a physician and surgeon, or as either of them, at any place or places within said town of Ticonderoga, and in case of a violation of this agreement on my part, or any part thereof, I hereby covenant and agree to pay to said Amedon the sum of $5,000 as liquidated damages, and not a penalty.” Both agreements were under seal.

      Waldo, Tobey c& Grover, for the appellant.

      Richard L. Hand, for the respondent.
   Learned, JP. J.:

The contract of November eighteenth contains a clause to the effect that the defendant shall not, for ten years, practice medicine in the town of Ticonderoga. Nothing has been said, in the argument of this ease, which leads us to think that this clause is not in force. It might probably be enforced by injunction. But no injunction was granted in the court below, and therefore that question is not before us.

The same contract contains another clause, to the effect that the defendant, if required by the plaintiff, on the completion of the contract, shall give a bond in the penalty of $5,000, conditioned that he will not practice medicine in that town for ten years. The plaintiff insists, as one ground of recovery, that, taking this whole contract together, this sum of $5,000 is to be taken as liquidated damages, and also that the defendant, without the execution of any bond, would be liable therefor, upon a breach of his agreement.

We do not think that this is a sound construction. Admitting even that the word “penalty” may sometimes be taken to mean liquidated damages, still there was no positive agreement imposing such damages. The contract of November eighteenth provided for a further instrument if it should be required. Plainly, therefore, it depended on the plaintiff to require it or not. And the parties could not have intended that, if the plaintiff did not require it, the court should require it for him, and should assume that the rights of the parties were just the same, as they would have been if such an instrument had been executed.

The sealed instrument of November twenty-eighth was undoubtedly intended and accepted by the parties as a fulfillment of the clause, providing for the execution of a bond.

„ It is substantially what the parties contracted for. Their rights, therefore, must depend on the sealed instrument of November twenty-eighth, and upon the clause in the contract of November eighteenth, first above mentioned. So far as the verdict in this case is concerned, it must depend for its validity on the sealed instrument of November twenty-eighth.

This bound the defendant in the sum of $5,000, as liquidated damages, not “ to locate in said town to practice as á physician and surgeon.” Upon the trial it was not denied that the defendant had practiced in that town, without the plaintiff’s consent, at certain times since the execution of the agreement. But the defense claimed that he had not located there.

It was in proof that he resided at Hague, some ten miles distant. There was some evidence that his horse and wagon were, at times, kept in Ticonderoga over night. That he, himself, sometimes stayed there over night. There was some disputed evidence, whether, or not, he kept a slate to receive orders, at a druggist’s. The defendant offered, among other things, to prove that he practiced in Ticonderoga, only as he practiced in other adjoining towns, going there when called, and, when there on such calls, receiving other calls for his services; that he had no business location there, other than that, made by the mere fact of coming personally to practice to meet specific cases.

The court refused to allow this proof, and directed a verdict for $5,000.

If mere practicing.” without locating,” were a breach of the sealed instrument of November twenty-eighth, then the verdict was properly directed. But wo think that it cannot be held that mere practicing was a breach of that instrument. There must have been a locating.”

The question then is, whether the facts proved were such con elusive evidence of “ locating,” that the evidence offered by the defendant would be immaterial. We think not. If the act of the defendant were claimed to be a fraudulent evasion of the instrument, that would present a question for the jury. Perhaps there might be, in some cases, such fraudulent evasion. For instance, if the defendant had taken up his residence and established his office immediately beyond the town limits, and had done the principal part of his professional business in the town, this might be sufficient to authorize the jury, under proper instructions, to find a fraudulent evasion and a practical breach. But that case does not exist, at least not as a matter of law.

Whether, apart from fraud, certain acts might show a “ locating ” as a question of law, or whether it would be a question of fact, we need not decide. It is enough that we think, that the evidence which was offered was important in' determining, whether or not the defendant- had in fact “ located .to practice ” in Ticonderoga. ■The mode of his attending patients and the place of his office, and many other circumstances were immaterial.

The court below seems tó have rested the direction for a verdict, on the mere fact of practicing in Ticonderoga. We think, that to recover these liquidated damages, it was necessary to prove a “ locating” to practice, and that, on this point, the testimony which was excluded, should have been received.

There must be a new trial, costs to abide the event.

Bockes, J.:

The complaint is based on both instruments, the one of November eighteenth, the other of November twenty-eighth following. By the former the defendant bound himself not to “enter into practice, nor practice medicine within the town of Ticonderoga for the next ten years;” and, further, to execute and deliver to the plaintiff, on request, a bond in the penalty of $5,000, conditioned that he would not practice medicine in that town during that period. The second was executed and delivered to answer the requirements of this last provision, but was so modified in its terms, that it bound the defendant not to “ locate ” in said town to practice as a physician or surgeon within the period of ten years from its date, followed by a covenant to pay the plaintiff $5,000, as liquidated damages, for its violation.

The covenant not to practice medicine, contained in the first instrument, was not merged in the second, which bound the defendant not to “ locate ” in that town. The latter did not satisfy the former. Both may stand. Under the former the defendant might be enjoined and damages be recovered in case of its violation ; and under this covenant it would matter not where he should locate. The breach would be complete in case he should practice medicine within the town. The breach of the latter would result from locating in the town to practice as a physician or surgeon ; and for such breach damages were liquidated at $5,000.

In this case there was an undoubted breach of the former covenant established by the proof. The defendant had admittedly practiced medicine within the town. Resting here, the plaintiff could have had an injunction -against the defendant, to prevent him from continuing such practice against his covenant, and also would have been entitled to recover such damages as he had actually sustained by reason of the breach, to be established by proof.

But the recovery in this case was for a breach of the second agreement — not to “locate” in the town to practice as a physician or surgeon. The learned judge at the Circuit held, that the proof showed a breach in this regard, and directed a verdict for the plaintiff. This direction, we think, was erroneous. There was no evidence so direct and unequivocal in the case as to warrant this ruling as matter of law. True, the defendant had practiced medicine in the town of Ticonderoga; and there was evidence showing that he was frequently in that town, accepting and perhaps soliciting employment in his profession; but he had no office in the town, and with his family resided in another town, where he kept his office. So, it might well be claimed that he was located in the latter town, and not in the former, within the fair meaning and intent of the covenant. In this view of the case a question was raised for the jury, on the proof, if, indeed, there was sufficient evidence to authorize a jury to find against him on that issue.

And let it be further claimed, as it here is, that his taking up a residence and keeping an office -in the adjoining town was sinister and fraudulent as regards the plaintiff’s rights under the instrument, in view of the course pursued by him in his practice, and. then it would be very manifestly a question for the jury, whether his professional engagements in the town of Ticonderoga amounted to a practical location in that town, constituting a breach of the covenant.

As the case is now presented to the court, on the proof, it might well be insisted before the jury, that in no just sense is a breach of the second instrument established against the defendant. In this connection too, and having reference to the exceptions taken in the case, relating to the evidence offered, it should be remarked that the defendant’s professional engagements in other towns, indeed his entire course of practice, became proper subjects of inquiry. These conclusions render a new trial necessary.

We do not intend here to hold that the plaintiff, even on proving a breach of the covenant contained in each instrument, may enforce both ; for 'it may be that he can claim relief under one only. This question is not now before the court, and is one of too much importance to be considered, except after full argument in a case requiring its decision.

Judgment reversed, new trial granted, costs to abide the event.

Present — Learned, P. J., Bockes and Boardman, JJ.

Ordered accordingly.


author: Learned, P. J.:

text:
    THE PEOPLE, Appellants, v. JARVIS LORD and JOHN LEAHEY, Respondents.

      Contract for public work — bids for — conspwacy to prevent competition — right ofpa/rty

    The complaint in this action alleged that the canal contracting board, in pursuance of the requirements of the Constitution and statutes of this State, gave notice of the letting of certain work by contract, and advertised for bids therefor ; that the defendant and other persons (who had intended to put in bids), unknown to the plaintiff, met together, and agreed to put up at auction the privilege of bidding for the work, and the right to control all bids put in, with the intent that the purchaser of such right and privilege should destroy and omit to put in all of such bids, as offered to do the work at fair and reasonable prices ; that the defendant purchased such right, and in pursuance of the agreement destroyed all such bids as were fair and reasonable, and lower than his own, and did himself put in a bid largely in excess of a fair value; that the contracting board, in ignorance of these facts, awarded the contract to him, and paid him the amount due thereunder. Held, that a demurrer to the complaint, on the ground that it did not state a cause of action, should be overruled, and that an action could be maintained to recover the amount of the damages sustained by the plaintiff in consequence of the fraudulent acts of the defendant.

      Quaere, whether the principle of this decision would apply to merely private contracts.
    Appeal from a judgment dismissing plaintiff’s complaint.
    At the trial, upon the plaintiff’s opening the case, the defendants moved to dismiss the complaint, on the ground that it did not state facts sufficient to constitute a cause of action. The motion was granted pro forma, on the strength of a former decision at the Circuit by another judge, and the plaintiff’s counsel excepted. From the judgment thereupon entered the plaintiffs appeal. And the question is here argued without objection, as if upon a demurrer to the complaint. The complaint sets up in brief, that the contracting board had given notice of a letting by contract of certain work on the canals, to the lowest bidder, on the 28th of December, 1866. The work was the keeping in repair the Chemung canal and feeder for five years. The complaint further alleged that a number of persons attended, on that day, prepared to bid for the work, and to give adequate security; that on that day, and before the hour when the bids were to be put in, the defendants and other persons to the plaintiffs unknown, assembled aud organized a meeting; that at said meeting the defendants and such other persons put up at auction among themselves, the privilege of bidding for the work aforesaid, and the right to control all the bids which were to be put in; that it was agreed between the defendants and said other persons, among themselves, that the person who would pay the most for the sole privilege of bidding for said work, should receive said bids and control the same, to the end, and with the intent that such persons should destroy and omit to -put in such of said bids as offered to do said work at fair and reasonable prices; that the defendants were present and did buy all such bids at said meeting, and paid to the aforesaid persons, unknown to the plaintiffs, large sums of money to induce them to withdraw from said bidding and competition, and to omit to put in said bids, and surrender them to the defendants; that said persons, unknown to the plaintiffs, did receive said money, and in consideration thereof did withdraw from the competition, and omit to put in bids and surrender their bids to the defendants, to the intent that such as were lower than that of Leahey, one of the defendants herein, should be destroyed; that thereupon the defendants did destroy such of said bids as were fair and reasonable and lower than that of said Leahey; that thereupon the defendants, in the name of defendant Leahey, put in a bid at $36,000 per annum; that the rates in said bid were largely m excess of a fair value, and largely in excess of the bids so surrendered and destroyed; that the contracting board opened and canvassed the bids, in ignorance of all these facts, and awarded the contract to said Leahey, for five years, at $36,000'per annum; that on December 31, 1866, Leahey assigned the contract to defendant Lord, who took with full knowledge of the foregoing facts. That the contract has expired by its limitation; that the plaintiffs have paid to Lord thereunder $180,000; that $25,000 per annum would have been a fair price for the .work; that if the board had known of this fraud they would not have awarded the contract to Leahey. And the complaint repeatedly alleges, that these acts of the defendants and the said persons unknown, were done with intent to deceive and defraud the plaintiffs, and it avers that the plaintiffs have been thereby damaged in the sum of $55,000, which sum they seek to recover.

      Matthew Hale, for the appellant.
    The motion to dismiss the complaint should have been denied, upon the familiar principle that fraud, coupled with damage, will sustain the action. (Upton v. Vail, 7 Johns., 181; Barney v. Dewey, 13 id., 224; Culver v. Wright, 7 Wend., 380; Monell v. Colvin, 13 Johns., 395.) These acts were a fraud on the State. Any combination on the part of the purchaser to lower prices by inducing persons not to bid, or on the part of bidders, at a letting by public competition, to raise prices, by inducing others not to bid,-is a fraud. (Jones v. Caswell, 3 Johns. Cas., 32; Guliek Y.Ward, 5 ILalst., 87; Thompson v. Davies, 13 Johns., 112, 114; 8hiffen y. SUelmey, 3 Mete., 384; Atcheson v. Mallon, 43 N. Y., 147; Woodworth v. Bennett, id., 273; Marsh v. Bussell, 2 Lans., 340, 344; Gardener v. Morse, 25 Me., 140; Doolvn v. Ward, 6 Johns., 194; Wilbur v. Howe, 8 id., 446; Bristane v. Adams, 3 Comst., 129.) The defendants were engaged in an unlawful act which resulted in damage to the plaintiffs. The Constitution provides that all contracts for work on the canals shall be made with the lowest bidder. (§ 3, art 7, as amended 1854; chap. 329, of 1854 [3 Stat. at Large, 183], §§ 8, 9; chap. 105, of 1857 [3 Stat. at Large, 190], § 1; chap. 348, of 1862 [3 Stat. at Large, 204.) The object of these provisions was to secure to the State the benefit of actual competition,, among persons disposed to engage in the business of making repairs on the canals. The respondents admit by their motion, that they entered into a combination and conspiracy to induce the plaintiffs to let the work at higher rates than it was worth, and at higher rates than those at which they might otherwise have procured it to be done, and with the intent to deceive and defraud the plaintiffs by depriving them of the benefit of a fair and honest competition. The defendants, then, were guilty of a conspiracy to prejudice, defraud and rob the State, for which they were liable to indictment. (Whart.. Am. Crim. Law., 688, 689; People v. Frisbie, 14 Wend., 9; Bexv. Tarrant, 4 Burr., 2106 ; Bex v. Seward, 1 Ad. & Ell., 706.) In such case the injured party has a civil remedy for the wrong against all the parties to the conspiracy. (Add. on Torts, 31, 32, 590; Gregory v. Duke of Brunswick, 6 M. & Gr., 205 ; Jones v. Baker, 7 Cow., 445; Add. on Torts, 1; 1 Hill, on Torts, 94; Rigby v. Hewitt, 5 Exeh., 243.)

      R. W. Peckham, for the respondents.
    Between an action to recover the purchase-price of the bid sold, and the action on the part of the State to recover damages for the alleged fraud in purchasing and not putting in the bids, the difference is broad and marked. The failure to put in the bids purchased, or their destruction, was not fraudulent unless it was a fraud to purchase them. It was not a fraud, unless there was a misrepresentation on the part of defendants, or a fraudulent concealment of a fact, in not disclosing to the State authorities that such a purchase had been made. The defendants were' under no obligation, that courts of justice can notice, to inform the State officials of the existence of any such purchase. (1 Story Eq., §§ 204, 206, 207; Laidlaw v. Organ, 2 Wheat., 178 ; Willard’s Eq. [Potter’s ed.], 150; paging at bottom 177; id., 151; 2 Kent’s Com., 490, 491, and note to 12th edition by Holmes, Jr.)

       This case was decided at the November Term, 1875.

   Learned, P. J.:

There is no doubt that, morally, the defendants committed a fraud on the plaintiffs. The' question is whether their act was such that the law will compel them to • compensate the injured party.

It is important to see exactly what the alleged act was. In the course of the argument it was said, on behalf of the defendants, that the purchase of a bid was not a fraud; that, in like manner, the destruction of a bid was not a fraud; and that in concealing the fact of such purchase and destruction the defendants made no fraudulent concealment, because the State placed no trust or confidence in them as regarded this matter.

But it must be observed that' the transaction was not the mere purchase and destruction of bids. It was an affirmative agreement among the parties present at the meeting, that no one should bid except that party who should pay to the others the highest price for the privilege. It was, therefore, a plain agreement among themselves against competition, admitted to have been made with fraudulent intent, and to have been designed to depress prices. The surrender and destruction of the bids which had been previously prepared, were only the means of carrying out the agreement. The gist of the agreement was that, in consideration of money paid by the defendants, the other parties would not bid for the contract, and the object was to compel the State, if possible, to pay more for the work than it would have cost at fair prices or open competition.

It is not questioned that such an agreement is void. (1 Story’s Eq., § 293; Jones v. Caswell, 3 Johns. Cas., 29; Atcheson v. Mallon, 43 N. Y., 147.) The reasons given are that such an agreement is uneonscientious and against public policy, and has a tendency injuriously to affect the character and value of sales at public auction, and to mislead private confidence; that it operates as a fraud- on the sale; that it is contrary to morality and sound policy ; that it deprives the person selling of the opportunity of obtaining a full equivalent for the property. It is, therefore, evident that the reason why such an agreement is held to be void, is not any wrong which the parties thereto have done to each, other, or any want of consideration for the agreement or the like; but the reason is that the agreement operates as a fraud upon another person / that is, the person whose property is put up at auction. In declaring the invalidity of such agreements the courts have, therefore, necessarily declared that ‘such agreements tended to defraud the person who sells property at auction. That is to sajq that if such an agreement be carried out, and that if the person selling the property, thereby obtain a less price than he would otherwise have received, and less than a reasonable price, he has been actually defrauded by means of the agreement, and has not merely suffered a loss for which no one was to blame. And because such agreements tend to produce this fraudulent result, they are held to be void.

Upon the same general principle, the employment of by-bidders, or puffers, by the seller at an auction sale, is a fraud. (Bexwell v. Christie, Cowp., 396.) The principle is applied to the letting of contracts as well as to the sale of merchandise. Thus, where, in the case of a letting of work on the canal, certain persons agreed for the consideration of $400, paid by a higher bidder, to withdraw their bid, the court held this agreement to be illegal, and refused to enforce a division of the $400 among the parties. And the court said the transaction was “contrary to public policy and illegal, * * * and tended to destroy that honest competition which public bidding is designed to secure.” ( Woodworth v. Bennett., 43 N. Y., 273.) Again, where the postmaster-general had given notice for proposals for conveying the mail, and the plaintiffs intended to make proposals and to try to obtain the contract, and the defendants agreed to pay them $1,000 if they would not make such proposals, the agreement was held to be illegal. (Gulick v. Ward, 5 Halst., 87.)

The question then, which presents itself here is this: When an agreement is so injurious to the public and so- likely to defraud some third party, that the courts refuse to enforce it, and when such a fraudulent agreement has actually caused, as it was intended to do, a loss and injury to some third party, who is entirely innocent; shall he be without redress ? If the courts will not compel a division of the gains made under such an agreement, because they were obtained by fraud, ought the courts to refuse to restore these gains to the person from whom they were fraudulently obtained ?

To answer these questions we may first notice some cases analogous, but not identical in principle. If by-bidders are employed at an auction, the purchaser is not bound to complete his purchase. (Howard v. Castle, 6 Durn. & East, 642 ; see also Crowder v. Austin, 2 Car. & P., 208 ; Wheeler v. Callier, 2 Mood & M., 123.) In Veazie v. Williams (8 How. [U. S.], 134), the. defendant Williams sold some real estate at auction ; without his knowledge the auctioneer made fictitious bids; Yeazie, the plaintiff, thereupon purchased the property at $40,000; he received a deed, paid a part in cash and gave notes for the balance; $14,000 remained unpaid at the time of the commencement of the action. The sale was in 1836 ; the alleged fraud was discovered in 1840, and the action was commenced in 1841. The court held that the transaction was a fraud on the purchaser, and required the seller to refund to him all over $20,000, that being the highest real bid.

Now, on behalf of the defendants here, it may be truly said that in those and similar cases, there was the affirmative act of procuring fictitious bids, and that the purchasers were deceived by these bids. But, when we examine the nature of the alleged deception we shall see that, in substance, it is the same which was practiced in the present case. Fictitious bids are not misstatements as to the condition or quality of the thing sold. The buyer may exercise his judginent, and may examine, so far as possible, the property for which he is bidding; and when he knows its condition and quality, and voluntarily offers so much for it, on what ground can he claim to have been defrauded by the mistaken idea that some other person offered a certain other sum ? The ground, as stated by Lord Mansfield in the case above cited, is this: “ The basis of all dealings ought to be good faith. So more especially in those transactions, where the public are brought together in a confidence that the articles set up for sale will be .disposed of to the highest bidder.” Although then, the purchaser be thoroughly acquainted with the property to be sold, so as to be capable of judging correctly as to its value, still he is defrauded by the employment of by-bidders; and this, because an auction sale demands good faith on both sides; no by-bidding on the part of the seller, no agreement against competition on the part of the buyer. And just as the employment of by-bidders is a fraud on the buyers, so an agreement against competition is a fraud on the seller. Each is a violation of the true and fair intent of such sales. Each shows its fraudulent character by the secrecy with which it is carried out.

And since the courts have held that an agreement against competition, intended to depress prices, is a fraud, or tends to produce a fraud on the seller, it would seem to follow that they have held, that, as to him, such an agreement is a wrongful act. To illustrate: a mere neglect to bid at a sale might diminish the price which the seller would obtain, but it would be no fraud or wrong. But an agreement not to compete, intended to depress prices, is characterized as a fraud upon the seller, and must, therefore, have been considered a wrong toward him.

And we may see how strongly the courts insist on perfect fairness at such sales, from the case of Cocks v. Izard (7 Wall., 559). There, at a judicial sale, a person caused it to be understood that he was bidding for the owner. Other persons voluntarily refrained from bidding, and the property was struck off to him. The sale was set aside, for “ the law will not tolerate any influence likely to prevent competition at a judicial sale.” In that case there was no agreement not to compete. The same doctrine is recognized in Fuller v. Abrahams (6 Mood, 316); Johnson v. La Motte (6 Rich. Eq., 347); Plaster v. Burger (5 Ind., 232).

Now, on behalf of the defendants, it is said that the present case differs from the cases above cited, and others like them, in these particulars: that those were cases of judicial sales; and, also, that, in the present case, the contracting board acted voluntarily in accepting the bid; and that they had the right, if they chose, to reject all bids.

The principle of law which forbids the employment of by-bidders applies to private as well as to judicial sales, as will appear by the cases already cited.

Whether the principle which declares agreements against competition, made to depress prices, to be void, is equally extensive, we need not now say. For, although the letting of these contracts was not done under any judicial proceeding, still it was not the case of a private person, who was abont to build, and who had, by his own choice, advertised for proposals. The letting was done under the requirements of the law. The fair and true intent of the law ought to be enforced by the courts, as much as in a sale under their own authority. The contract was, by the Constitution, to be made with the lowest bidder (art. 7, § 3, amended 1854), and statutes had been passed to carry out this provision. And the illegality of agreements against competition, as between the parties in the ease of such lettings, is declared in Gulick v. Ward and Woodworth v. Bennett (ut supra). Thus, such lettings, made under the authority of the law, have been recognized to be subject to the same rule, in this respect, as judicial sales.

Again, the plain object of the Constitution and the statutes is to obtain for the State, in respect to these contracts, the benefit of fair and open competition. The intent of the defendants was to thwai’t that object, and such was the result. Their combination had that end, and no other, except their own gain.

But it is said that the board might reject all bids if they did not consider them advantageous. Of what use would that be ? The board must advertise again. If parties might lawfully make an agreement against competition once, they might do so again; so that a second advertisement for the letting of these contracts would have had the same result with the first. It would be useless to reject these bids and to have new biddings, when the same combinations against competition could be repeated over and over again, with the sanction of law. In a judicial sale the officer must sell; he must sell at auction ; he must sell to the highest bidder. So with the contracting board. They must have the work done ; they must advertise for biddings; they must let by contract to the lowest bidder. There is, therefore, little analogy between them and a private individual. lie may build or not, as he chooses ; may let his work by contract or not, as lie chooses; may select the highest or the lowest bidder, as he chooses. It is not, therefore, necessary to the decision of the present case to inquire how far these princi pies apply to merely private contracts.

But the objection that the contracting board acted voluntarily in accepting the bid will be answered by a reference to the cases already cited, of by-bidding. In those cases, too, the purchaser acts voluntarily. He need not buy if he thinks the property has been carried beyond its value. His bid is a voluntary expression of his own offer. Yet he is not bound thereby if by-bidders have been employed. So the contracting board acted' voluntarily in accepting the bid. But the means employed by the defendants to obtain the acceptance were contrary to the object of requiring public competition.

There are some cases which touch this question more directly. In Dudley v. Little (2 Ham. [Ohio], 504), a tax sale and deed were set aside, because there had been a combination among, several persons that one of them should bid in the land to prevent competition.

In Phippen v. Stickney (3 Metc., 381), in a carefully considered opinion, the court held that an agreement not to compete would be fraudulent, if the intent were to prevent competition and depress the price.

The case of Breslin v. Brown (34 Ohio State, 565), was one where a contract for public improvement was to be let to the lowest bidder. The plaintiff h'ad put in a bid, and he and the defendant then agreed to become partners in the matter. The defendant also put in a bid, which proved to be the lowest. The court said that “ any agreement entered into for the purpose of preventing competition is not only void, but it renders any sale void at the option of the seller. * * * Fair competition among bidders, to the end that sellers may be protected against fraudulent combination, is all the law seeks to secure.” And in that case the court held that there was no intent to prevent competition, and that no injury to the seller resulted. But the doctrine was asserted that a combination to prevent competition, made with fraudulent intent and to depress the price, renders the sale void. These decisions, therefore, all support plaintiffs’ views; since it is admitted m the present case that the object of the defendants was to defraud the plaintiffs and to increase the price, and that such was the result.

Again, it is said on behalf of the defendants that there was no misrepresentation. But in a sale at auction, unfair dealing and bad faith may come from other sources than actual misrepresentation. In the many cases where agreements against competition have been held to be illegal and null, such illegality and nullity are not placed on the ground of a false representation to the seller. By-bidding prevents fair competition indirectly. An agreement not to bid made to depress prices prevents it directly. “Perfect freedom from' all influence likely to prevent competition in the sale should be in all such cases strictly exacted.” (Slater v. Maxwell, 6 Wallace, 268.)

We have been referred by the defendants’ counsel to the case of Jones v. North (19 Equity Cases [Law Rep.], 426). In that case a corporation invited tenders for a supply of stone. The plaintiff agreed to purchase a certain quantity of stone from the defendant and from two other several owners of quarries.

In consideration thereof the defendant agreed not to send in any tender or to furnish any stone to the corporation. The owners of the other quarries were to put in tenders above the plaintiff’s. The plaintiff sent, in a tender, and the defendant, in violation of his agreement, also sent in a tender, which was accepted by the corporation. This action was brought to restrain him.from furnishing any such stone to the corporation. A demurrer to the bill was overruled.

But in that ease several things must be noticed. So far as appears, the corporation was not required by law to purchase by contract with the lowest bidder. It was, therefore, in the position of a private individual. Secondly. The corporation had not, in fact, been injured. The defendant had broken tire agreement and bad made a tender. This was presumably lower than the plaintiff’s and was accepted. And the court says that if by this action the defendant should be prevented from fulfilling his contract, the corporation could recover damages against him by an action at law. The corporation had secured, and could not be deprived of the benefit resulting from a breach of the agreement between the parties. Third. The court says nothing about the agreement against competition, but only states that it was lawful for the owners to sell their commodities to each other, although with knowledge that the purchaser was about to supply the corporation. Fourth. There is no allegation that the object of the agreement was to defraud the corporation. Finally, if the case holds that an agreement not to compete, made with intent to depress prices, is valid between the parties, it is contrary to the law of our State. (Atcheson v. Mallon, 43 N. Y., 147.)

If any doubt could exist whether, after actually entering into the contract with tire defendants, in ignorance of the fraud and after the contract had been carried out and settled in such ignorance, the State could now, on discovery of the fraud, have redress; that would seem to be settled by the ease of Veazie v. Williams (ut supra).

The defendants further urge that these views demand of them a higher degree of morality than is required in any other business. We think not. It is no hard rule to say that men shall not combine, with fraudulent intent, to deprive the State of the benefit of that fair competition which the Constitution and the statutes contemplate. Not to enter into such combinations is only simple honesty.

The judgment should be reversed and a new trial granted, costs to abide the event.

Present — Learned, P. J., Bookes and Boardman, JJ.

Ordered accordingly.