William Noyes v. Ira Day, 14 Vt. 384

The opinion of the court was delivered by Royce, J. The defence to the present action is either a want of any sufficient consideration, in a pecuniary view, to render the note binding, or illegality and fraud in the consideration which existed. In reference to the first ground we must understand, from the case, that each of these parties wished to take the contract for supporting the poor of the town, and that each intended to bid for it.

In that state of things the note in question was given to induce the plaintiff to forego and waive his right of bidding for the contract, that the defendant might secure it to himself. And as the parting with a right, or forbearing to exercise it, at another’s request, is in general a legal consideration for a promise, it would seem that the consideration here was sufficiently valuable to sustain the note. It is a further requisite in the consideration of every contract, that it must not originate in any corrupt and fraudulent purpose.

The principle of the common law has always been, that, fraud in a contract, whether it be for the purpose of deceiving and injuring one of the parties, or some third person, or the public, will render the contract void from the beginning. In the first case, the contract is avoided for the sake of justice to the party injured, or sought to be injured, by the fraud. But when both parties are alike implicated in a design to injure third persons, or the public, the law does not extend relief to either of the guilty parties for his own sake.

Justice is not concerned to save him from the consequence of his fraudulent contrivance. It is on public grounds, and for example’s sake, that in these cases the contract is declared void. The object is to suppress such contracts, by destroying the inducements for engaging in them. It was obviously the purpose of these parties to enable the defendant to purchase the support of the paupers at an increased rate of compensation, by diminishing the number and competition of bidders.

They, doubtless, calculated that the contract might thus be obtained by the defendant at a sum decidedly greater than the plaintiff would have been content to receive. And the difference could only be regarded as a loss of so much to the town. As this arrangement contemplated a direct and immediate gain to these parties at the expense of the town, it makes a stronger case than those which have turned upon public policy alone. But cases of the latter class are not the less applicable here.

Indeed, the ground for invalidating contracts, on account of their tendency to work injustice to others, is substantially the * , it i rrv t , same m most, if not all the cases. To the present purpose may, therefore, be cited the numerous instances reported of employing puffers at auctions. This practice was long holden to be in all cases a fraud upon the real bidders.

And though the rule was afterwards in some measure relaxed, yet, according to the most indulgent opinions upon the subject, if the fictitious bidding was designed to screw up and enhance the price, and not for the defensive purpose of preventing a sacrifice of the property, it was still fraudulent. Since the decision in Crowder v. Austin, 3 Bing. 368, it may be doubtful which is now the prevailing doctrine in England. The case at bar is likewise affected by the decision of this court in Pingry v. Washburn, 1 Aik. 264, and it has a still closer resemblance to the case of Gulick v. Ward et al. 5 Hals. 87.

And in our opinion the principle, which has so long and uniformly governed in cases analagous to the present, requires us to hold the contract between these parties inoperative and void. Judgment affirmed.