seem, upon principle, that the private employment of a puffer by an owner at an auction sale rendered the sale void, and relieved the person to whom. the property was struck off from the necessity of performing his contract."

In Walsh. v. Barton (1873) 24 Ohio St. 28, the court held that where a sale at auction is announced to be "positive," these words are equivalent to "a sale without reserve," and it is a fraud on the part of the vendor or the auctioneer to employ by-bidders to keep up the price.

As to the effect of a sale to a puffer, it was held in Troughton v. Johnston (1804) 3 N. C. (2 Hayw.) 328, 2 Am. Dec. 626, that where a negro was exposed for sale at public auction, and a by-bidder, under an agreement with the owner, bid up the price of the property, and it was knocked down to him, he had good title to the negro against the owner, since the agreement, although fraudulent, could not be avoided by a party to the fraud. See to same effect, Small v. Boudinot (1853) 9 N. J. Eq. 381.

But in Freeman v. Poole (1915) 37 R. I. 489, L.R.A.1917A, 63, 93 Atl. 786, Ann. Cas. 1918A, 841, wherein it appeared that the puffer refused to complete his purchase, it was said that a sale to a fictitious bidder was equivalent to withdrawing the goods from sale, and that the highest bona fide bidder was not entitled to take them at his bid.

As to sales of personalty at auction, the majority rule heretofore stated is adopted by § 21 of the Uniform Sales Act. See 1 U. L. A. 115, and the following cases citing and applying this provision: Cranston v. Western Idaho Lumber & Bldg. Co. (1925) 41 Idaho, 141, 238 Pac. 528; Freeman v. Poole (R. I.) supra.

b. Limitation on majority rule. The rule that an auction sale is vitiated by "puffing" or "by-bidding" has been limited by several decisions holding that no bid comes within the meaning of those terms except one made at the instance of the seller or his agent. Accordingly, the validity of an auction sale is not affected by the fact

that persons who have no interest in the property, and no control over the sale, but have an interest, direct or indirect, in the proceeds of the sale, bid thereat, with no intention of purchasing, but solely for the purpose of enhancing the price.

Thus, in McMillan v. Harris (1900) 110 Ga. 72, 48 L.R.A. 345, 78 Am. St. Rep. 93, 35 S. E. 334, it appeared that the person who was entitled to the proceeds of a sale at public auction by an executor engaged her attorney to bid the property up to a specified price in order to prevent the property from selling at a sacrifice, and in pursuance of this agreement the attorney became a bidder at the sale. The court held that the attorney was in no sense a puffer, and the sale was not invalid, saying: "If a person who has such control of an auction sale that he of his own volition can release a bidder from all responsibility for his bid employs another upon an understanding of that character to bid at the sale without disclosing for whom he is bidding, for the purpose of preventing the property from selling at a sacrifice or for the purpose of making the same bring more than its actual value, the bidding by one or more persons under such employment is such a fraud upon the real bidders that the sale will be declared void at their instance. The only lawful way in which such a person can prevent a sacrifice of the property sold is to fix a minimum price, of which public notice shall be given, or make public the fact that he, either by himself or by others, will be a bidder at the sale. On the other hand, the mere fact that the person is interested in the property to be sold or in the proceeds of the sale will not preclude him from either bidding himself or from procuring another to bid, either openly or secretly, in his behalf, without regard to what the agreement may be with such bidder, if the one employing such bidder has not himself such control of the sale that he could absolutely release the bidder from all responsibility growing out of his having participated in the sale in that capacity."

80, in Manuel v. Haselden (1925) 206 Ky. 796, 268 S. W. 554, it appeared that one of three joint owners of land which was to be sold at public auction entered into an agreement with a bidder of which the other joint owners had no knowledge, to purchase the land with the bidder, for a price not in excess of a certain amount. It was held that the bidding by such a bidder was not such by-bidding as to invalidate the sale, the court saying: "There yet exists, however, the still further question in this case, i. e., whether one joint owner of property offered for sale at auction may himself, or in conjunction with a stranger, bid at the auction sale, with the bona fide intention of taking the property if he should be the successful bidder, and at the same time not be a by-bidder within the meaning of the law so as to entitle the subsequent purchaser to avoid the sale. In other words, does or does not the rule forbidding the owner of the property to bid on it contemplate that the bidder or bidders shall own the whole title, so as that, if they should be successful, no one would be compelled to pay anything whatever, and the title would thereafter remain and be in the same condition as it was before the sale? In answering that question, it might first be considered that the reason for the rule characterizing a bid by the owner as one made by a by-bidder does not exist where one of two or more joint owners bids with the expectation of himself paying the other joint owners for the property if his bid should be accepted, since in that case he incurs a liability and will be compelled to account to his joint owners for their proportionate part of the accepted bid. He is thereby placed upon the same footing as any other bona fide bidder, and since the reason for the rule would not exist in that case, it would seem to follow that the rule itself would not apply. Nor do we think that the other nonconsenting joint owners would be bound by such an arrangement upon the ground of agency, since the act of the purchasing joint owner in bidding upon the property was neither intended nor purported to 46 A.L.R.-9.

be for and on behalf of all, but only for and on behalf of himself. Therefore, the partnership as such, or the cotenants in the aggregate, who are the owners of the whole title to the property, were not bound by the action of one of them under the circumstances named, because he was neither authorized nor purported to act for the owners of the entire title; and his bid, we repeat, was not within the reason for holding the owner a bybidder within the rule above stated. In defining what is a by-bidder, the text in 2 R. C. L. 1128, says: 'A puffer (or by-bidder), in the strictest meaning of the word, is a person who, without having any intention to purchase, is employed by the vendor at an auction to raise the price by fictitious bids, thereby increasing competition among the bidders, while he himself is secured from risk by a secret understanding with the vendor that he shall not be bound by his bids.' . . . Independently, however, of what has been said, and of the authorities cited, to hold that one joint owner is precluded from bona fide bidding at an auction sale of the property, made by all of the owners, with the intention and expectation of taking and paying himself to his joint owners their proportionate part, upon the ground that he would be a bybidder, under such circumstances, would not only work a burdensome hardship upon such joint owner, but would also lose sight of the reason for the rule, and apply it against by-bidding in the absence of those reasons. A joint owner might, for the purposes of division, be perfectly willing for the joint property to be sold at the auction, and also be both willing and anxious to own it himself and to pay whatever price he thinks it is worth. His joint owners might not be willing to accept his price, and yet he might be able to buy it at the sale for less or not exceeding that sum. To deprive him of such right, when exercised in good faith by himself alone, and not on behalf of the others, would be carrying the principle to an unjust. extreme, and for which there is no sound reason to support. Of course

it should be clearly proven that it was a bona fide effort by the bidding joint owner to purchase the property for himself, with the expectation and obligation to pay for it if he was the successful bidder. We therefore conIclude that the court did not err in holding that there was no such bybidding in this case as to authorize the release of defendants from the obligations of their contract."

In National F. Ins. Co. v. Loomis (1845) 11 Paige (N. Y.) 431, the court said: "The principle upon which employment of puffers, by the person for whom a sale at auction is made, is disallowed as a fraud upon fair purchasers, is that the persons who thus bid are not in fact real bidders, but are the mere instruments of the vendor to deceive the other bidders. . Any person who is a real bidder at a judicial sale has a right to bid either in person or by his agent duly authorized. And I know of no principle which renders it necessary that a person bidding at an auction, as the agent of another, should disclose to other bidders the name of the person for whom he is bidding, unless the person for whom he acts is the vendor, who is professedly selling property instead of buying it. Here it was a matter of no consequence to other bidders whether the agents of the insurance company, who were strangers, bid in their own names, or as the agents of the corporation which was authorized to purchase at the sale. And it is wholly improbable that either of the appellants, who appear to have been well acquainted with the property, were induced to give more than they believed the property was worth, merely because they saw two strangers bidding upon it, without disclosing the fact that they were bidding for the insurance company. Both of these agents swear that they had obtained estimates of the value of the several pieces of property, and that they intended in good faith to purchase the property, for the company, if it was not sold for more than the maximum prices which they had fixed for their limits. And even if they occasionally bid against each other, by

mistake, that was no fraud upon other bidders; but it was an injury to the company for which they were acting, if the company, in consequence of such overbidding each other by its agents, gave a larger price for the property bought by such agents."

In East v. Wood (1878) 62 Ala. 313, the court held that the purchasers at an administrator's sale of land could not defeat a recovery on the purchasemoney notes, or rescind, because a person interested in the estate, but with whom the administrator had no connection, employed a person who was obnoxious to the purchasers to bid against them, by reason of which, through the desire of the purchasers to keep such person out, they bid more than the value of the land.

c. Puffing as proximate cause of bid.

It has been said that, in a bill to rescind a purchase at auction on the ground that puffers were employed, the purchaser must allege that he was thereby induced to give more than he had previously intended. Tomlinson v. Savage (1849) 41 N. C. (6 Ired. Eq.) 430.

But the better view seems to be that the employment of a puffer is a legal fraud, and not merely a fraud in fact, so that prejudice is presumed. Curtis v. Aspinwall (1873) 114 Mass. 187, 19 Am. Rep. 332; Morehead v. Hunt (1826) 16 N. C. (1 Dev. Eq.) 35. And see generally the cases cited supra, II. a.

In Veazie v. Williams (1845) 3 Story, 624, Fed. Cas. No. 16,907, reversed in (1850) 8 How. (U. S.) 134, 12 L. ed. 1018, a suggestion was made that if the bid last preceding the successful bid was that of a bona fide bidder, earlier bids by puffers might be disregarded. The chancellor, speaking obiter in National Bank v. Sprague (1869) 20 N. J. Eq. 159, expressed himself as favorably impressed by this view.

But, in Rafferty v. Norris (1900) 12 Pa. Super. Ct. 450, the court held that the employment of a bidder at a public sale, merely for the purpose of raising the price, vitiated the sale, and it was immaterial whether the pur

chaser bid more in consequence of the puffer's bid, or whether there were intervening bona fide bids between the puffer's last one and the purchaser's first one, or that the price at which the property was struck off was more than $1,000 beyond the last bid of the puffer.

Where several lots sold separately at auction are of the same general value, the employment of a puffer to enhance the price of the first lot sold invalidates the sale of the others, though there is no puffing therein. Morehead v. Hunt (1826) 16 N. C. (1 Dev. Eq.) 35, wherein the court said: "The rule laid down by the complainant's counsel is certainly a wise one, that at the sale of a horse and an ox, puffing the sale of the horse is not puffing the sale of the ox, because the bidding for the one does not, in the estimation of the bidders, enhance the value of the other; but this is like the bidding for a yard of clothit enhances the price of each yard in the whole piece. The law makes no distinction without a difference. Morehead, therefore, stands in the same situation as if he had been contending with puffers, and the last bid but his own had been made by one of them; for in reality the bidders all became puffers, mere machines in the hands of these men, who, after having set them going, might well retire from the work and enjoy the spoils." See to the same effect, Springer v. Kleinsorge (1884) 83 Mo. 152. And see the reported case (OSBORN V. APPERSON LODGE, ante, 117).

So, in Curtis v. Aspinwall (Mass.) supra, it was said: "Where, as in the case at bar, a large tract of land is cut up into lots, and sales of the lots are made at the same time, as parts of the same transaction, we think the same rule applies. The designed and natural effect of by-bidding upon the lots first sold is to mislead the judgment of the buyers as to the value of the whole tract, and to induce them to bid more than they would upon a fair sale. There is a presumption that the last bidders are influenced and injured by the previous fictitious bids, and they may avoid

the sale without further proof that they are influenced and injured, if there is no evidence tending to control or rebut such presumption. But this presumption may be rebutted. If the by-bidding had no effect or influence upon the purchaser's bid, the latter cannot avoid his contract. As in other cases where deceit or fraud is used in a sale, the purchaser cannot avoid it if he was not induced or influenced by the fraud to enter in the contract."

d. Conditions precedent to rescission.

As in other cases wherein it is sought to rescind for fraud, the purchaser at an auction sale who desires to rescind because the price was enhanced by puffing must act with reasonable promptness on discovering the fraud.

Thus, in McDowell v. Simms (1852) 45 N. C. (Busbee, Eq.) 130, 57 Am. Dec. 595, the court held that a rescission of a sale of land purchased at an auction sale would not be granted, where the purchasers did not bring their action until a year and six months after the discovery of the bybidding.

In Latham v. Morrow (1846) 6 B. Mon. (Ky.) 630, it was held that where the purchaser at an auction sale executed the contract and took possession of the land and resided thereon for five years, and in the meantime its value had decreased to about 50 per cent of the price bid by the vendee, he could not come into a court of equity and ask for a rescission. The court said: "In view of these principles, and of the doubtful nature of the inquiry complained of, taken in connection with the evidence of long acquiescence and satisfaction with the contract, and the suspicion fairly arising that the complaint of fraud would never have been urged but for the general depreciation in the price of land, and the fact that there is not even an allegation of recent discovery, when the complaint is at last made, we conclude, without deciding the abstract question as to the right of the vendor at auction to employ a single by-bidder to prevent a sacrifice below a fair and fixed price, that this con

tract should not be rescinded on the sole ground of fraud."

In Backenstoss v. Stahler (1859) 33 Pa. 251, 75 Am. Dec. 592, the court held that the employment of puffers at an orphans' court sale is a good ground for setting aside the sale, if the purchaser, when he bids off the property, is ignorant of it, and makes the objection before the confirmation; but after that, and the receipt of the deed, with the possession and the occupancy of the property under it, it is too late.

In Veazie v. Williams (1850) 8 How. (U. S.) 134, 12 L. ed. 1018, the auction sale in controversy occurred in 1836. the fraud was discovered in 1840, and a bill to set aside the sale was filed in 1841. It was held that there was no such delay as to defeat recovery.

So, it is necessary to put the seller in statu quo so far as is possible. Minturn v. Main (1852) 7 N. Y. 220. Thus, in Staines v. Shore (1851) 16 Pa. 200, 55 Am. Dec. 492, it was held that

where the vendee is induced by fraud to buy a horse at an auction he should return or offer to return the horse as soon as he discovers the fraud, but, if he does not discover it until after the horse dies, his defense will be perfect without any offer to return.

e. Minority rule.

Two early cases adhere to the former English chancery rule that the employment of a by-bidder does not vitiate an auction sale if the purpose is to prevent a sacrifice of the property, and not to enhance the price unreasonably. Davis v. Petway (1859) 3 Head (Tenn.) 667, 75 Am. Dec. 789; Reynolds v. Dechaums (1859) 24 Tex. 174, 76 Am. Dec. 101.

It is to be noted that, with respect to auction sales of personal property, the foregoing rule is abrogated in Tennessee by the adoption in that state in 1919 of the Uniform Sales Act, § 21 of which adopts the majority rule.

W. M.

Mortgage, § 29