At an Estate Auction held in Nebraska a few years ago, an auctioneer stood up and addressed the crowd, “Ladies and gentlemen, thank you for attending our auction for the Estate of Edward McAdams; we have a nice inventory of items today, so hold those cards up high so I can see them! Now, this is an absolute auction … everything sells to the highest bidder without a reserve of any kind. Now, let’s get started …”
The auction was underway, and after about 30 minutes, a fairly regular buyer known by the auctioneer interrupted the auction with this announcement, “Hey, Edward’s kids and grandchildren are bidding on this stuff here today, and they can’t do that! This is an absolute auction, so the seller can’t bid!”
The auctioneers stopped the auction and told the children and other family members of the late Mr. McAdams that this bidder was right — they could not bid as they were beneficiaries of the Estate, and receiving part of the proceeds of the auction.
The auction continued uneventfully, but it raised the question: Was this auctioneer right to prohibit the family of Mr. McAdams from bidding? Is it material that they were named in the will as beneficiaries, or not? Is the family bidding the same as the seller bidding?
Most all auctioneers know that the seller can’t bid, unless at forced sale, at a without reserve (absolute) auction. Yet, in this case of this being an Estate auction, Mr. McAdams was certainly not bidding, and nor was the Estate of Edward McAdams bidding — who was bidding were his children, and grandchilden.
Are Mr. McAdam’s children, grandchildren, or any other relatives for that matter, considered the seller? The answer is “No.”
Are Mr. McAdam’s children, grandchildren, or any other relatives for that matter, considered the seller if they are receiving part of the proceeds as beneficiaries? The answer is still, “No.”
An an auction, the seller is just that — the person having current title to the property for auction; not anyone who had prior title (a previous owner), nor anyone having an interest in the future distribution of proceeds of the auction. Someone does not become a seller because they will receive benefit from the auction.
As we noted in our commentary on attorney Kurt Bachman’s perspective that the auctioneer cannot bid at an absolute auction because he is an agent for the seller, or he is “essentially” the seller, we note here that the auctioneer typically doesn’t have any title to the property being sold, so the auctioneer typically isn’t the seller.
Lastly, there are cases where a married couple or business partners are involved in an auction, where more than one person would have a partial interest (title) in the property being sold at auction. In the case of an absolute auction, could either the husband or wife bid? Could either of the business partners bid?
While a few older court cases have concluded that in these types of situations, both the husband and wife are the seller, or both business partners are the seller, so none could bid at an absolute auction, unless a forced sale, most contemporary court cases view the marriage or business as an entity different from each individual or partner.
Black’s Law Dictionary (Black’s) cites in part the seller as: “A person who sells or contracts to sell goods; a vendor; generally, a person who sells anything; the transferor of property in a contract of sale.” Further, Black’s cites a transferor as: “One who conveys an interest in property.” As such, courts commonly refer to the seller as the Estate, rather then even the Executor, Administrator or other fiduciary — where the fiduciary (who has no interest to convey) is necessarily signing for the seller who’s conveying.
At an auction, who’s not the seller? Anyone who doesn’t have complete title to the property being sold. Who can bid at an absolute auction? Anyone who doesn’t have complete title to the property being sold.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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