Neugebauer & Co Ltd v Hermann

• Jurisdiction: South Africa
• Citation: 1923 AD 564

Neugebauer & Co Ltd Appellant v Hermann Respondent
1923 AD 564

1923 AD p564

Citation	1923 AD 564
Court	Appellate Division, Bloemfontein - Cape Town
Judge	Innes CJ, De Villiers JA and Wessels JA
Heard	April 10, 1923
Judgment	August 13, 1923

Flynote : Sleutelwoorde

Auctioneer — Sale by auction — Sale without reserve — Onus of proof — Combination by intending purchasers — Fraud — Right of auctioneer to refuse bid.

Headnote : Kopnota

The onus of proving that a sale by auction was "without reserve" is upon the person alleging it. In case of doubt the presumption is that the auction was one with reserve.

A combination among intending purchasers at an unreserved auction sale to stifle competition by not bidding against each other in order that they may obtain an article for themselves at a decreased value is a fraud against the seller, and the auctioneer is not bound to recognise a bid by a member of such a combination.

The notice of sale of goods by public auction was ambiguous in that though headed "forced unreserved sale" it was not clear whether these words applied to all the articles enumerated in the no ties as to be sold. Amongst the articles so enumerated was certain galvanized iron piping. Plaintiff having agreed with a number of other persons that they should not bid against one another for this piping but that he should let the others have what they wanted of the piping at the price he paid for it not exceeding 6d. per foot, made the highest bid for the piping but defendant refused to accept the bid. Plaintiff, when he made the bid, was aware that the price he offered was far below the true value of the piping.

In an action by plaintiff for performance of the contract of sale or damages

Held, that Judgment should be entered for defendant on the ground:

(1)

that plaintiff had not discharged the onus which lay upon him of proving that the sale was without reserve, and

(2)

that assuming the was to have been without reserve the agreement made by plaintiff with the other purchasers was in the circumstances a fraud upon the seller and that defendant was accordingly entitled to refuse to recognise plaintiff's bid.

1923 AD p565

The decision of the Cape Provincial Division in Neugebauer & Co. Ltd. v Hermann, confirmed.

Case Information

Appeal from a decision of the Cape Provincial Division (WATERMEYER, J.).

Defendant an auctioneer published an advertisement of an auction sale in the following terms: -

THE LAW OF NECESSITY ASSERTS ITSELF.

Forced Unreserved Public Sale of

172 BALES, CASES AND CRATES

of

MERCHANDISE, SOFT GOODS,

Clothing, Piece Goods, Manchester Goods, Boots and Shoes, Crockery, 150 Rolls of Woollens, Tweeds, Worsteds, Serges, Vicunas, Trimmings, etc.,

On TUESDAY, WEDNESDAY, and THURSDAY,. 6th, 7th, and 8th December, at 10.15 a m., and 2.15 p.m., each day.

In the Mart, The Metropolitan Hall, Burg Street, Cape Town.

400 Pieces WHITE CALICO.

(Here follows a list of goods not material to the case).

Further 40 cases of Superior English Boots and Shoes (Black and Tan).

150 ROLLS WOOLLENS 150

Check and Striped Worsted, Light Sports Tweeds. Heavy Tweeds.

All Wool Gaberdine. High Grade Blue Serge. Black Vicunas and Meltons. White Gaberdine. Heavy Blue Serge. Tailors' Trimmings.

25 Singer Sewing Machines (for Treadle or Electric Power)

60,000 feet 2-inch Galvanised Iron Piping.

Ballard Cutting Machine, Button-hole Machine, Hat Sewing Machines.

All arrangements for packing and forwarding country goods.

ALL GOODS MUST BE SOLD. Our instructions are to realise as much money as possible.

Plaintiff made the highest bid for the galvanized iron piping mentioned in the above advertisement, but defendant refused to accept the bid.

In an action by plaintiff for performance of the contract of sale or damages, the Trial Court entered judgment for defendant.

Plaintiff appealed.

1923 AD p566

The facts appear from the judgment of INNES, C.J.

E. R. Roper, for the appellant: On the face of the advertisements, the sale was one without reserve. Documents of this nature should be construed contra proferentem. See Parsons on Contracts, Vol. 2., paras. 507-509. The advertisements must be read together with the conditions of sale. The auctioneer is bound by both. See MacKeurtan on Sale, p. 40; Stellenbosch Municipality v Lindenburg, (3 Searle 345); Hadley v Savory (1916 T.P.D. 385); Begley v Denton (14 S.C. 344); and Benjamin on Sale 4th ed., p. 468). Where a sale is not expressed to be with reserve it must be taken to be without reserve. See Sale of Goods Act, 1893, sec. 58. Benjamin says that this Act is merely declaratory of the common law.

Even apart from the advertisements, it was a sale without reserve, as a sale to the highest bidder, and the defendant cannot, therefore, rely on the defence that there was no consensus ad idem. See Green v Baverstock (14 C.B.N.S., 204, 143 E.R. 424); Mainprice v Westley (6 B and S., 420 and 122 E.R., 1250); Crowder v Austin (3 Bing, 368 and 130 E.R. 555); Mortimer v Bell (L.R. 1 Ch. App. 10 at p. 13); Johnston v Boyes (1899, 2 Ch. 73); Moyle on Sale, p. 167; Mackeurtan on Law of Sale of Goods (p. 32 and p. 39); Green's Encyclopaedia of Scots Laws (Vol. 1, p. 528).

The defendant not having intimated his right to withdraw, the highest bid was the acceptance of the offer, and a completed contract ensued. See Warlow v Harrison (29 L.J., Q.B. 14, 120 E.R., 925, 1 Ellis and Ellis 309); Harrison v Nickerson (L.R. 8 Q B. 286); Johnston v Boyes (supra); Rainbow v Howkins (1904 2 K.B. 322); McManus v Fortescue (1907, 2 K.B. 1); Benjamin on Sale (5th ed., p. 483); Mackeurtan on Law of Sale of Goods (pp. 33 and 34); Spencer v Harding (L.R. 5 C.P. 563); De Smidt v Steytler (1 Searle 137); Matthaeus de Auctionibus, 1 10, 40, 41, 43, 48; Demarara Turf Club v Wight (1918, A.C. 605). The right to retract a bid is recognised by English Law as being founded on the doctrine of consideration. See Green's Encyclopedia S.V. "auction." In the Civil Law, and systems based on it, there is and such right of withdrawal, as each bid is the acceptance of an offer. See Matthaeus (1.10.43); Moyle (p. 169); Grotius (3.14.30); van Leeuwen (4.27).

The bid of 5d. was made after the sale had been broken off and the plaintiff's bid was, therefore, still the highest. The defendant

1923 AD p567

did not stop the sale on account of the combination of buyers and was not in law justified in breaking it off on account thereof. Such combinations are not contrary to law. See Galton v Emuss (1 Coll. 243; 63 E.R. 402); Heffer v Martyn (36 L.J., Ch. 372); Re Carew's Estate (26 Beavan 187, 53 E.R. 869); Re Alexandra Hall Co. (16 L.T. 7); Rawlings v General Trading Co. (1921, I.K.B. 635).

An agreement not to bid is not on the same footing as a sham bid, which is fraudulent. In this case there was no fraud. See Matthaeus (1.16.37); Voet (18.5.16). Agreements of this nature should not be prohibited because they are contrary to public policy. Courts should be slow to extend the doctrine of the invalidity of contracts on the ground of public policy. See Mogul S.S. Co. v McGregor (1892, A.C. 25 at p. 45); Hyams v Stuart King (1908, 2 K.B at p. 710).

M. Alexander, K.C. (with him P. S. Jones), for the respondent: The goods were finally offered for sale by the advertisement of the 8th. Neugebauer saw only the one of the 5th. As he had no knowledge of the advertisement of the 8th, should not the principles laid down in American Swiss Watch Co. v Bloom (1915 AD 100) and Carlill v The Carbolic...