Henderson v. Enrie

Decision Date15 January 1907
Citation56 S.E. 369,61 W.Va. 183
PartiesHENDERSON. v. ENRIE.
CourtWest Virginia Supreme Court
1. Contracts—Legality—Joint Purchase at Auction.

A contract between two or more persons to purchase jointly property offered for sale at public auction is not invalid, if free from fraud and collusion, as where their uniting to purchase the property is in good faith and with an honest purpose in view, and no), with the intention of stifling and suppressing the bidding, in order to obtain the property at an under value.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 11, Contracts, § 656.]

2. Same—Stifling Competition.

But all contracts for the purpose of suppressing and chilling competitive bidding upon property offered for sale at public auction, in order to obtain it at an under value, or to obtain undue and unconscientious advantages, are fraudulent and void, and will not be enforced at the instance of the contracting parties, or either of them.

[Ed. Note.—For cases in point, see Cent. Dig. vo. 11, Contracts, §§ 654, 655.1

3. Courts—Conflicting Jurisdiction—State and Federal Courts—Injunction.

A state court has no jurisdiction to enjoin a proceeding or judgment of a federal court. The jurisdictions are separate and independent, and it is essential to the independence and efficiency of each that they be exempt from interference and control one by the other.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 13, Courts, §§ 1411-1417; vol. 27, Injunction, § 73.]

4. Bankruptcy—Decree—Sale of Property —Injunction in State Court.

Where, under a decree in a bankruptcy proceeding in the United States court, land is sold and a deed is ordered to be made to the purchaser, a state court is without jurisdiction to enjoin the execution of such deed upon a bill filed therein by one claiming to be jointly interested with the purchaser in the purchase of said property. Nor can the purchaser be enjoined from acquiring the title to such land.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 6, Bankruptcy, § 464.]

(Syllabus by the Court.)

Appeal from Circuit Court, Wood County.

Action by Jock B. Henderson against James N. Henrie and another. From an order overruling a motion to dissolve an injunction, defendant Henrie appeals. Reversed in part, and affirmed in part.

J. Cameron McCluer, for appellant.

V. B. Archer and Wm. Beard, for appellee.

SANDERS, J. In the matter of H. C. Henderson, bankrupt, on the 25th day of May, 1905, under a decree of the United States District Court for the Northern District of West Virginia, a sale was made by the Union Trust & Deposit Company, trustee, of the real estate of the bankrupt, situated in Wood county, and which consisted of different tracts, one of which contained 62 acres. This tract was laid off Into three sections, numbered, respectively, 1, 2, and 3. The plaintiff alleges that on the day of sale he entered into an agreement with the appel lant, James M. Henrie, by which they were both to bid on the 62-acre tract, and, in the event either became the purchaser thereof, Henderson was to have a certain portion of the tract, being about 10 acres, laid off out of subdivision No. 1, and Henrie was to have the residue. At the sale the property was offered as a whole, and also by the several parcels into which it had been laid off; and, the price bid for the whole being greater than the aggregate amount bid for the three several parcels and Henrie being the highest bidder, he became the purchaser thereof. The terms of sale were one-third cash and the remainder in installments; but Henrie, not desiring to pay interest, paid the entire amount in cash. Later the sale was reported by the trustee as having been made to Henrie, and a decree was entered confirming the sale to aim. A short time thereafter Jock B. Henderson filed a petition in the United States court in the bankruptcy proceeding of H. C. Henderson, bankrupt, setting up an agreement made by him with Henrie, and asking that the trustee be enjoined from making the deed to Henrie. The Injunction was granted, and the court referred the matter to a referee to report. A survey of the land in controversy was had, and upon the final hearing the court decreed that Henrie should make a deed to Henderson for that part of the land claimed by him. Henrie appealed from this decree, and the United States Circuit Court of Appeals decided that the District Court had no jurisdiction, and remanded the cause, with Instructions to dismiss it Upon the order of dismissal being entered in the District Court, Henderson filed his bill in equity in the circuit court of Wood county, praying for the specific performance of the alleged contract between Henrie and himself, and asking the court to enjoin the trustee from making a deed to Henrie for the land claimed by him, and to enjoin Henrie from accepting the deed or in any way incumbering or disposing of the property. The bill was presented to the judge of the circuit court in vacation, who upon consideration granted the injunction as prayed for. Henrie later moved to dissolve the Injunction, which motion was overruled; and it is from this order that he has appealed.

As the case is presented, we must determine from the allegations of the bill whether or not the motion to dissolve was properly overruled. The appellant contends that the effect of the alleged contract is to suppress and stifle competitive bidding, and for that reason it is against public policy and void, and will not be enforced at the Instance of either of the contracting parties. In determining whether or not its effect is as claimed by the defendant, we must accept the plaintiff's version of it, as given by him in his bill. The bill shows that before the sale the plaintiff and the defendant Henrie entered into an agreement to bid on theproperty, Henrie desiring to purchase the whole or a portion thereof and the plaintiff only desiring a certain stipulated portion of same, and that, whoever became the purchaser, if the whole 62 acres should be sold, a certain described portion of it was to be paid for and owned by the plaintiff, and the residue of the tract was to be the property of Henrie. This is the agreement substantially as alleged, which is stated with as much particularity as is necessary for the decision of the question presented. After the making of this agreement it is alleged that the property was offered for sale, that certain bidding was done, and that it was purchased by Henrie under the said agreement for a stipulated sum, and for the benefit of the plaintiff, to the extent of that portion of the land which the bill described as the part to be paid for and owned by him. To render a contract of this character void, It must appear that the agreement is made for the purpose of stifling or suppressing bidding. There can be no objection to two or more persons entering into an agreement to purchase property offered for sale at public auction to the highest bidder jointly, if they do so in good faith and the agreement is free from fraud. Rorer on Judicial Sales, § 77; Holmes et al. v. Holmes, 3 Rich. Eq. (S. C.) 61; Bank v. Sprague, 20 N. J. Eq. 159, 169. "But combinations to advance or reduce the price of property, and all by-bidding, is illegal and fraudulent" Rorer on Judicial Sales, § 77; Veazie v. Williams, 8 How. (U. S.) 154, 12 L. Ed. 1018; Ralphsnyder v. Shaw, 45 W. Va. 680, 31 S. E. 953; Nitro-Phosphate Syndicate of London v. Johnson, 100 Va. 774, 42 S. E. 995; Underwood v. McVeigh, 23 Grat. (Va.) 409. "As a general rule, any arrangement made for the purpose of reducing or suppressing competition at a judicial sale, or any device, trickery, agreement, or contrivance to chill the bidding thereat is fraudulent and void, and will furnish sufficient ground for setting aside the sale, or even, it has been held in some cases, render the sale void. But there is nothing Improper in an honest combination or association of several persons, entered into in order to enable them to bid at a judicial sale and become the purchasers of property which singly they could not purchase." 17 Am. & Eng. Ency. Law (2d Ed.) pp. 980, 981, and cases cited.

We cannot deduce from the agreement, as set up in the plaintiff's bill, that it was a fraudulent arrangement to suppress bidding and to purchase the property for an inadequate price. It appears from the bill that the plaintiff was only desirous of purchasing a portion of the property, and, Henrie desiring a portion or the whole of it, the agreement was made to purchase it jointly. In Roudabush v. Miller, 32 Grat (Va.) 454, it was held: "Where two or more persons desire to acquire different parts of a tract of land which is offered for sale at public auc tion by commissioners under a decree of court, with respect to the convenience of the several parcels to their own lands, respectively, it is not unlawful or improper for them to bid for the whole tract when it is offered to the highest bidder, with the understanding that they will divide it between themselves, and how they will divide...

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