Taylor v. Lafevers , 221 S.W. 957 ( 1920 )

SPENCER, J.

Defendant in error J. M. La fevers sueni P. G, Taylor and Taylor-Hanna-James Company, a corporation, for damages sustained by reason of tbe plaintiffs in error’s refusal to transfer and deliver to bim certain notes and accounts wbicb be alleged plaintiffs in error bad agreed to transfer and deliver to bim upon tbe payment of tbe sum of $900.

Defendant in error and plaintiffs in error’s agent P. G. Taylor were competitive bidders at a trustee’s sale in bankruptcy, wherein tbe trustee offered for sale certain property belonging to tbe Elk Mercantile Company, of Elk, Tex. Tbe property was first offered for sale in three separate lots, namely, tbe fixtures, tbe goods, and notes and accounts, tbe trustee reserving tbe right to reject all bids and sell in bulk.

Defendant in error was tbe highest bidder for tbe notes and accounts, and the undisputed evidence shows that plaintiff in error P. G. Taylor also bid on tbe notes and accounts. After having tbe property offered in separate lots and rejected all bids thereon, tbe trustee then offered tbe property in bulk. Defendant in error alleged that, before bidding for tbe property in bulk commenced, Taylor, agreed to let bim have the notes and accounts for tbe sum of $900, provided that be would not bid further, and that, relying upon said agreement, he did not bid on tbe entire stock, but permitted Taylor to purchase said stock.

Tbe case was submitted to a jury upon a general charge, and a verdict rendered in favor of defendant in error, and judgment rendered thereon. Upon appeal, tbe Court of Civil Appeals affirmed tbe judgment. 198' S. W. 651.

Plaintiffs in error contended that tbe agreement alleged and proved by defendant in error was contrary to public policy, and therefore void ; and this presents tbe only question for our determination.

[1] Agreements not to bid at public sales, with tbe design to stifle competition, and thereby purchase property at less than its fair value, are against public policy, and void; but persons may unite in such numbers as may be necessary to make tbe purchase advantageous to themselves, even though tbe effect be to lessen competition, provided this junction of interests be without unfair motives or injurious consequences. James v. Euleord, 5 Tex. 513, 55 Am. Dec. 743.

The contract in the present case is manifestly in violation of tbe general rule announced, and does not come within tbe exception to this rule.

[2] Tbe defendant in error alleged in bis original petition as follows:

“That plaintiff did not bid on said entire stock by reason of his contract and agreement with said P. G. Taylor, but permitted said defendants to purchase said stock, relying upon said contract and agreement with reference to said open accounts.”

[3] He testified as follows:

“Before it was sold in bulk I had a conversation with Mr. Pete Taylor about those accounts. Just as Mr. Maxwell started the bids on the entire stock and fixtures and the accounts, and notes altogether, Mr. Taylor came over to where I was sitting and pushed me on the shoulder and said: T want to speak to you.’ That Mr. Taylor right there. We walked to the front end of the store, and Mr. Taylor wanted to know if I would give $900 for the accounts. I said: T will.’ He said: ‘Now, if you wfil stay out of the bidding, I will bid the whole thing in with the understanding that you have the accounts,’ that I was to have the accounts for $900. I said: T will do that. I will stay out with the understanding that you buy the accounts for me,’ and he said he would. We walked back, and that about ended with that conversation, and Mr. Taylor went ahead with the bidding, and I didn’t bid another time.”

Tbe language of tbe pleading and tbe proof is susceptible of no other construction than that tbe defendant in error would have continued to bid on tbe entire stock, bad it not been for tbe agreement bad with plaintiffs in error. Tbe direct result of tbe agreement was to stifle competition at tbe sale. It was therefore a contract against public policy—one wbicb courts of equity look upon with disfavor, and which they will not lend their aid in enforcing, unless circumstances clearing it of tbe unfairness are made to appear. No such circumstances are disclosed by tbe tecord in tbe case; on tbe other band, the record as made by tbe defendant in error shows a contract condemned by law.

It is recommended, therefore, that tbe judgments of tbe Court of Civil Appeals and of tbe district court be reversed, and that judgment be rendered for plaintiffs in error.

PHILLIPS, C. J. We approve the judgment recommended in this case.

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