Turpis causa. - Sale to a White Bonnet at a Roup. - Obligation not to oppose reduction of a Verdict of Fatuity. - Transacting a Crime. - Transacting Church Penance. - British Subject purchasing a Captured British Ship. - Combination of Offerers at a Sale. - Combination to raise the rate of Wages. - Combination against receiving Money of a particular Coinage. - Pactum contra utilitatem.
Murray v. Mackwhan
Date: 1 March 1783 Case No. No 100.
Combination of intended offerers at a sale.
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A tenement situated in the town of Kirkcudbright was exposed to judicial sale at Edinburgh. The only persons who intended to purchase this subject were Mackwhan, together with William Johnston and John Hutton, all of whom were commissioned by other people for that purpose.
These men, desirous to take advantage of their situation, by acting in concert, formed the following scheme. One of them, for their common benefit, was to purchase the subject at the upset price. Each man was then to mark secretly on a slip of paper the highest offer which he had been commissioned to make, and he whose offer was found on comparison to exceed the rest, was to be preferred to the purchase; whilst the excess of that highest offer beyond the upset price was to be distributed among the associates to the amount to which their several offers should have concurred. The tenement being sold for L. 300, the upset price, the result accordingly was, that as Hutton's commission exceeded that sum in L. 98, that of Johnston in L. 210, and that of Mackwhan in 300; so to the extent of L. 98, all their offers thus far concurring, there fell to be an equal division among them; and two of them, Johnston and Mackwhan, likewise uniting in the offer of L. 210, the excess of that sum above the former offer came to be shared between them; but here the distribution ended; the concurrence reached no farther. Mackwhan being of course preferred to the purchase, granted bills to his associates for those respective sums.
Of those proceedings, as being grossly fraudulent, Mr Murray, the pursuer of the action of sale, complained to the Court by a petition, in which he prayed that the sale might be declared void, and the subjects exposed to roup of new; and, in support of his application, he
Pleaded, The just price of subjects exposed to sale is that which is produced by the highest offer of purchasers, in competition. It is in reference to that probable contingent amount, that the upset price is calculated and adjusted, not as being itself the true value of such subjects. Any interference then of interested persons to prevent the effect of a public and fair sale in producing competition, is a wrong; the magnitude of which will be influenced by the degree of the mala fides or fraud from which it arises. In the present case, the the fraudulent design of the combination is apparent, and the loss thence resulting great; the subjects having been sold for a price far below what they are worth. Were practices of this kind to be permitted, it is evident how pernicious they would prove in all cases like the present, in which subjects situated in remote parts of the country, are in this manner brought to sale in a place where so few persons are acquainted wish their real value.
Answered, The articles of roup, which declare the upset price, as that for which, if no higher be offered, the subjects exposed are to be sold, form the contract between the seller and any purchaser. When therefore that price is offered, and thus one part of the contract is fulfilled, performance of the counter-part cannot but be just. Nor is there any illegal thing in such a combination us that in question, which is not to be distinguished from a co-partnery formed for the purpose of making a purchase. Nothing surely can be more lawful than this, and yet it is a natural effect of such a contract, to prevent competition, which consists in the mutual opposition of individuals. Combinations of purchasers too at excise and customhouse sales occur daily; and no attempt has ever been made to prevent them, because there is no law on which it could be founded.
Observed on the Bench, What the subject would have brought on a fair sale is its just value; a considerable part of which, instead of passing into the hands of the creditors, has been wrongfully pocketed by these associates; the effect of whose combination is the same, as if force or deception had been employed by some of them to debar the rest from coming to offer.
The judgment of the Court was as follows:
“The Lords find, That the combination entered into between Mackwhan and the other persons above named was illegal; therefore find, That the said sale is void and null, and that the subjects must be exposed to sale of new: Find, That Mackwhan is liable in payment to Mr Murray, not only of the expense of this application, of which allow an account to be given in, but also of the expense of the new letters of publication, and whole other expense to be incurred in carrying the sale into execution.”
Mr Murray afterwards preferred another petition, setting forth, there being reason to apprehend that the influence of the same persons would in another shape be still exerted to prevent the success of a new sale; and therefore praying, That Mackwhan might be found liable to pay a price to the full extent of his commission, i. e. L. 300 above the upset one.
The Court were of opinion, That it was just, besides annulling the sale, to grant reparation of any other damage which could be qualified as arising from the combination; and as Mackwhan, in terms of the articles of roup, on exceeding, by L. 5, the highest offer of Johnston, whose maximum was L. 210 above the upset price, must have been preferred to the purchase;
The Lords therefore found Mackwhan liable in payment of L. 515.
For the petitioner, Rolland.Act. Ilay Campbell. Clerk, Home.
Fol. Dic. v. 4. p. 35. Fac. Col. No 104. p. 164.
