1. The rules about judicial sales which make void as against
public policy agreements that persons competent to bid at them will
not bid forbid such agreements alone as are meant to prevent
competition and induce
a sacrifice of the property sold. An agreement to bid, the
object of it being fair, is not void.
2. On a breach of a contract to pay, as distinguished from a
contract to indemnify, the amount which would have been received if
the contract bad been kept is the measure of damages if the
contract is broken.
Caldwell being owner of a distillery, subject to a mortgage to
Hoppock, leased it to Chapin & Co. for three years, it being
agreed by the lease itself that the rent, so much a year, should be
paid by Chapin & Co. directly to Caldwell the mortgagee, so as
to keep down in part the interest on the mortgage. Chapin &
Co., after being for about eighteen months in occupation of the
distillery and accumulating at it a considerable amount of personal
chattels such as are commonly used about such a place, assigned the
lease to one Wicker under some sort of partnership arrangement, and
Wicker went in. The rent not having been paid, according to his
agreement, by Chapin & Co. to Hoppock, the mortgagee, Hoppock
applied now to Wicker to pay it, giving him to understand that
unless he did pay it, suit of foreclosure would have to be brought
on the mortgage, and he dispossessed. After some negotiations,
Wicker, who it seemed was desirous of becoming owner of the
personal chattels which Chapin & Co. had left at the
distillery, agreed with Hoppock that if he, Hoppock, would sue
Chapin & Co. for the amount of rent in arrear and obtain
judgment and levy on the property, he, Wicker, "would bid it off
for whatever the judgment and costs might be." Hoppock did
accordingly sue and obtain judgment against Chapin & Co., the
judgment having been for $2,206. Chapin & Co. were indebted
also to Wicker on some transactions growing out of the distillery,
and Wicker, who asserted himself to have advanced money on it,
caused most of the property already mentioned as left by Chapin
& Co. to be removed to Chicago.
Page 73 U. S. 95
Hoppock's counsel meaning to proceed with his execution, gave
notice to Wicker of the intention to sell and of the day of sale.
Wicker, however, did not attend the sale, nor was any bid made in
his name. And all the property of Chapin & Co. that was there
and could be levied on was knocked down to Hoppock, the only
bidder, for the sum of two dollars. Thereupon Hoppock brought
assumpsit in the Circuit Court for Northern Illinois -- the suit
below -- against Wicker to recover damages for the breach of his
agreement to appear at the sheriff's sale and bid off the property
levied on for the full amount of the judgment for which the
execution issued.
The court below, against requests by the defendant's counsel to
charge otherwise, considered and charged:
1. That the agreement between Hoppock and Wicker was not invalid
as tending to prevent the fairness of a judicial sale, and
therefore against public policy.
2. That the measure of damages was the amount of the judgments
with interest and costs.
The case was now here on writ of error by Wicker, for a review
on these points.
Page 73 U. S. 97
MR. JUSTICE SWAYNE delivered the opinion of the Court.
It is said that the agreement between the parties
"was invalid because calculated to interfere with and prevent
the fairness and freedom of a judicial sale and prevent
competition, and therefore against public policy."
The contract was that the defendant in error should procure
judgments against Chapin & Co. for the rent in arrear, levy
upon the machinery and fixtures in the distillery, and expose them
for sale, and that the plaintiff in error should bid for them the
amount of the judgments.
The validity of such an arrangement depends upon the intention
by which the parties are animated, and the object sought to be
accomplished. If the object be fair -- if there is no indirection
-- no purpose to prevent the competition of bidders, and such is
not the necessary effect of the arrangement in a way contrary to
public policy, the agreement is unobjectionable and will be
sustained.
In one of the cases to which our attention has been called,
[
Footnote 1]
Page 73 U. S. 98
there was an agreement between two persons that one of them only
should bid, and that after buying the property, he should sell a
part of it to the other upon such terms as the witnesses to the
agreement should decide to be just and reasonable.
In another, [
Footnote 2] it
was agreed that a party should bid a certain amount for a steamboat
about to be sold under a chattel mortgage and transfer to the
mortgagor an undivided interest of one-third, upon his paying a
corresponding amount of the purchase money.
In a third case, [
Footnote
3] the agreement was between a senior and a junior mortgagee.
The former agreed to bid the amount of his debt for a specific part
of the mortgaged premises.
In each of these cases, the arrangement was sustained upon full
consideration by the highest judicial authority of the state.
In the case before us, the agreement was that Wicker should bid.
There was no stipulation that Hoppock should not. There was nothing
which forbade Hoppock to bid if he thought proper to do so, and
nothing which had any tendency to prevent bidding by others. The
object of the contract obviously was to be secure -- not to prevent
-- bidding. The benefit and importance of the arrangement to the
interests of the judgment debtors is made strikingly apparent when
the subject is viewed in the light of the consequences which
followed the breach of the agreement. Instead of the property's
selling for the amount of the judgments, Hoppock was the only
bidder, and the property sold was struck off to him for a nominal
sum.
There was no error in the ruling of the court upon this
subject.
It is urged that the court erred in instructing the jury that if
the plaintiff was entitled to recover, the measure of damages was
the amount of the judgments, with interest and the cost.
Page 73 U. S. 99
The general rule is that when a wrong has been done and the law
gives a remedy, the compensation shall be equal to the injury. The
latter is the standard by which the former is to be measured. The
injured party is to be placed, as near as may be, in the situation
he would have occupied if the wrong had not been committed. It some
instances, he is made to bear a part of the loss, in others the
amount to be recovered is allowed, as a punishment and example, to
exceed the limits of a mere equivalent.
It has been held that
"where a party is entitled to the benefit of a contract, and can
save himself from a loss arising from a breach thereof at a
trifling expense or with reasonable exertions, it is his duty to do
it, and he can charge the delinquent party with such damages only,
as with reasonable endeavors and expense, he could not prevent.
[
Footnote 4]"
If the contract in the case before us were one of indemnity, the
argument of the counsel for the plaintiff in error would be
conclusive. In that class of cases, the obligee cannot recover
until he has been actually damnified, and he can recover only to
the extent of the injury he has sustained up to the time of the
institution of the suit. But there is a well settled distinction
between an agreement to indemnify and an agreement to pay. In the
latter case, a recovery may be had as soon as there is a breach of
the contract, and the measure of the damages is the full amount
agreed to be paid.
In a note of Sergeant Williams to
Cutler v. Southern,
it is said that in all cases of covenants to indemnify and save
harmless, the proper plea is
non damnificatus, and that if
there is any injury, the plaintiff must reply it, but that this
plea
"cannot be pleaded, when the condition is to
discharge or
acquit the plaintiff, from such bond or other particular
thing, for the defendant must set forth affirmatively the special
manner of performance. [
Footnote
5]"
In
Port v. Jackson, [
Footnote 6] the assignee of a lease covenanted to
Page 73 U. S. 100
fulfill all the covenants which the lessee was bound to perform.
It was held that the agreement was substantially a covenant to pay
the rent reserved as it should accrue, that a plea of
non
damnificatus was bad, and that the assignor could recover the
amount of the rent in arrear as soon as a default occurred, without
showing any injury to himself by the delinquency of the assignee.
The assignee was liable also to the lessor for the same rent by
privity of estate. The judgment was unanimously affirmed by the
Court of Errors.
In
Matter of Negus, [
Footnote 7] the covenant was to pay certain partnership
debts and to indemnify the covenantee, a retiring partner, against
them. It was held that the covenant to indemnify did not impair the
effect of the covenant to pay, and the same principle was applied
as in the case of
Port v. Jackson. We might refer to
numerous other authorities to the same effect, but it is deemed
unnecessary.
In the case before us, as in the cases referred to, the
defendant made a valid agreement, in effect, to pay certain
specific liabilities. They consisted of the judgments of Hoppock
against Chapin & Co. If Wicker had fulfilled, the judgments
would have been extinguished. As soon as Hoppock performed, the
promise of Wicker became absolute. No provision was made for the
nonperformance of Wicker and the further pursuit by Hoppock of the
judgment debtors. Indemnity was not named. That idea seems not to
have been present to the minds of the parties. The purpose of
Hoppock obviously was to get his money without the necessity of
proceeding further against Chapin & Co. than his contract
required. There is no ground upon which Wicker can properly claim
absolution. He removed and keeps the property he was to have bought
in. The consideration for his undertaking became complete when it
was exposed to sale. The amount recovered only puts the other party
where he would have been if Wicker had fulfilled, instead of
violating the agreement.
The rule of damages given to the jury was correct.
Judgment affirmed.
[
Footnote 1]
Phippin v. Stickney, 3 Metcalf 384.
[
Footnote 2]
Bame v. Drew, 4 Denio 290.
[
Footnote 3]
Garrett v. Moss, 20 Ill. 549.
[
Footnote 4]
Miller v. Mariners' Church, 7 Greenleaf 56;
Russell
v. Butterfield, 21 Wendell 304;
Ketchell v. Burns, 24
id. 457;
Taylor v. Read, 4 Paige 571;
United
States v. Burnham, 1 Mason 57.
[
Footnote 5]
Sanders 117, note 1.
[
Footnote 6]
17 Johnson 239.
[
Footnote 7]
7 Wendell 503.
