Connie’s father Frank died suddenly. She had worked with him at his lumberyard for nearly ten years.
Frank bequeathed (and technically devised) the lumberyard to her upon his death per his will.
However, Connie desired to sell the lumberyard and move away to Arizona. Connie contacted David Jackson, Auctioneer and signed a contract to sell at absolute auction the contents of the lumberyard and the real property (separately) on May 10.
Auction day arrived with a large crowd in attendance and online bidding for those offsite. For the first hour the auction went well, with lumber selling for about 30% of retail — about what Connie was expecting.
Thereafter, the prices began to fall to about 20% and then near 10% of retail. Connie approached David Jackson and informed him he was to stop the auction. David’s reply was that he couldn’t since this was an absolute auction, and continued thereon.
Connie noted what lots were sold already, and what lots remained unsold at the moment she told David to stop the auction. She phoned her attorney who informed her to put David on the phone with him. Connie’s attorney told David that while the auction was indeed absolute, it could be stopped at anytime, leaving unsold lots as such.
Nevertheless, David continued to sell the lumber and then proceeded to sell the real property as originally planned, citing his contract with Connie granting him the exclusive right to do so.
Just as the auction was over, Connie’s attorney showed up at the auction site. He informed buyers of any lumber after 11:21 a.m. (when Connie told David to stop) were not to remove any of their so-called purchases. He also informed the high bidder on the real property auction that they would not be closing.
Thus our question today. Providing that the seller has the right to cancel an “auction event” at any time, and not sell any more lots yet put up for offers — what is the status of any property deemed sold by the auctioneer after ignoring the legal instruction to stop the auction?
In court about two months later, Essex County Common Pleas Judge Walter Wilton ruled the following:
The seller has the right to cancel any auction at any time. Any lots yet put up for auction are then to remain as such.
The seller expressly noted that the auction was to be cancelled (stopped) at 11:21 a.m. on May 10.
The auctioneer acted in violation of his fiduciary duty to his client by ignoring a legal direction.
The auctioneer lacked the authority to sell any lots and real property after 11:21 a.m.
As such, all sales made after 11:21 a.m. by David Jackson are hereby deemed void.
Judge Wilton continued that David Jackson saying, “Sold!” after 11:21 a.m. on May 10 was no different than anyone else standing up and proclaiming the same — as the authority to sell any of this subject property at that point had been revoked.
What’s the take-home from this story for auctioneers? First, auctions — even absolute auctions — can be cancelled, resulting in no more property being put up for auction. Secondly, auctioneers are to follow their client’s legal directions. And third, while this story is fictional, it closely resembles two such cases with results supporting today’s premises.
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, Keller Williams Auctions and Goodwill Columbus Car Auction. He serves as Adjunct 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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