In Zuhak v. Rose, 264 Wis. 286, 58 N.W.2d 693 (1953), where the owner in a no-reserves auction withdrew the property because the bids were not high enough, the court, construing the Uniform Sales Act, held that the seller could not withdraw and he was bound to sell to the highest bidder.Summary of this case from Pitchfork Ranch Co. v. Bar TL
May 7, 1953 —
June 2, 1953.
See Reporter's note, post, p. 295.
For the appellant there were briefs by Lawrence S. Ruetz of Kenosha, Godfrey Godfrey of Elkhorn, and Thomas, Orr, Isaksen Werner of Madison, and oral argument by Alfred L. Godfrey.
For the respondent there was a brief by Morrissy, Morrissy Zastrow of Elkhorn, and oral argument by Erwin C. Zastrow.
Action for specific performance of an alleged contract for the sale of real estate. In the alternative, a second cause of action demands damages. The court found that there was such a contract and by its judgment ordered defendant to convey, meanwhile retaining jurisdiction to grant other relief if defendant is unable to perform. Defendant has appealed.
Defendant, part owner of a large estate, determined to sell it and employed an auctioneer, Bohr, to conduct a sale. Their contract was in the form of a letter by Bohr to Mr. and Mrs. Rose. It did not mention an auction but provided that in order to get a 10 per cent commission Bohr must find a bidder who would sign a contract to purchase at a price satisfactory to defendant.
Simultaneously with the letter, Bohr and defendant prepared an advertisement for an auction to be held on the farm July 8th. The advertisement stated that the personal and real property was to be sold "without reserve;" that the present owner is Edward Rose (the defendant); that the order of sale would be:11 a. m. C. S. T. — All small tools on farm and estate 12 a. m. to 12:30 C. S. T. — Lunchtime 12:30 a. m. (sic) to 1:30 C. S. T. — Farm machinery 1:30 p. m. to 2:30 C. S. T. — Selling of all real estate as listed 2:30 C. S. T. until finished — All of furniture. The real estate was listed as follows:
"320 acre estate to be sold in following parcels or combinations or altogether — whichever way brings the most money — as follows:
"Parcel #1 — 17 acres which includes 7 buildings such as large 14-room home, all modern — 7-room home, all modern — basement barn, all complete, 125x40' balloon type — 2 silos, concrete, 16x50' — milk house for Grade A milk — chicken house — machine shed — All buildings have excellent roofs — entire property beautifully landscaped — All inclosed in beautiful sturdy white fence. . . .
"Parcel #2 — 8 acres of heavily wooded area — excellent building location — 75' above lake level — wonderful view.
"Parcel #3 — 72 acres of very fertile land with large machine shed — road on 2 sides — cropped now with soy beans and corn.
"Parcel #4 — 2 1/2 acres of land with 3-room house — has its own water system — all complete.
"Parcel #5 — 25 acres of level land with gravel pit. All parcels suitable for subdivision. All frontage on highway.
"Parcel #6 — 93 acres of level fertile land — joins Parcel #5 — also next to golf course. . . .
"Parcel #7 — 25 acres of lowland — suitable for vegetable farming — some of it is tiled — channel of water included.
"Parcel #8 — 28 acres of highland — joins Parcel #7 — potential subdivision property — very fertile land — channel of water included.
"Parcel #9 — Subdivision — known as Nippersink Shore Manor — 65 beautiful lots — all recorded plot with roads all in — electricity and gas all completed and in. Lake rights for each lot with lovely beach."
Maps on hand at the auction showed the location of such parcels.
Part of such real estate was owned by a corporation which defendant controlled. The rest was owned by defendant and his wife as joint tenants. The advertisement was published in the Chicago Tribune and at the sale Mrs. Rose passed out brochures to prospective purchasers which repeated the information.
At the start of the auction Bohr made an announcement repeating the terms of the advertisement, particularly that the sale was without reserve, but modifying the required down payment by reducing it from 25 per cent to 10 per cent. Mr. Rose and his Illinois attorney, Mr. Kelner, were present and made no public correction or objection. Mr. Rose informed the crowd that the land was farmed on shares and Rose's one half of the crops, worth $6,000, went with the land.
Sale of property was held in the advertised order. About 2 or 2:30 p. m. the auction of the real estate commenced. Parcel 1 was offered first. One bid was made and refused by the auctioneer. No other bids were made on it. Plaintiff then asked Bohr to offer Parcels 1, 2, 3, 5, and 6. Bohr made a memorandum of the request, announced that the parcels included 215 acres, and called for bids. Plaintiff bid $20,000. Bohr said he would not start that low. Plaintiff bid $25,000 which Bohr accepted and other bidding followed in raises of $1,000. At 3:30 or 4 p. m. plaintiff bid $41,000. Before another bid was made defendant and his attorney ordered the auction stopped. Mr. Kelner announced that the property would not be sold for sums like the ones bid nor would it be sold for less that $100,000. There were loud objections and much turmoil and Kelner discharged Bohr. Those attending the sale protested but there was no further effort to continue the auction. Mr. Rose and Mr. Kelner drove away. Bohr made out a memorandum of the sale which he did not deliver to plaintiff but gave to plaintiff's attorney, later. Plaintiff made no tender of a down payment at the scene of the auction or later.
Plaintiff's complaint demands specific performance by conveyance to him of the parcels identified as parcels 1, 2, 3, 5, and 6 and, in the alternative, damages in the sum of $40,000. Defendant's answer was a general denial. Trial was to the court which made findings of fact and conclusions of law in plaintiff's favor. Various deeds were in evidence which the court used to identify the parcels and to give them their legal descriptions. The court gave an interlocutory judgment ordering defendant to tender to plaintiff a warranty deed of the lands in question in consideration of the payment into court by plaintiff of $41,000. In default of such tender by defendant the judgment permits plaintiff to apply for a judicial conveyance and the court retained jurisdiction so that if good title cannot be conveyed the court may determine whether an abatement of the purchase price, commensurate with the defects in title, or an award of damages to plaintiff shall be adjudged.
Defendant's appeal rests principally on his contention that there is no contract between plaintiff and defendant; hence specific performance of one may not be ordered.
We consider that a contract did arise out of the facts and circumstances of this auction whereby defendant's offer to sell to the highest bidder without reserve was accepted by plaintiff with his bid of $41,000. The letter by Bohr to Mr. and Mrs. Rose whereby he engaged to find a purchaser at a price satisfactory to the Roses in order to be entitled to a commission is immaterial here, however relevant it might be in an action by Bohr for compensation. Defendant's liability rests on what he held out to the plaintiff, not on his arrangements with his auctioneer. Defendant was responsible for informing plaintiff by the Tribune advertisement, by circulars distributed at the auction, and by the auctioneer's oral announcement, that there was to be a complete liquidation of all the advertised property without reserve, and that the realty would be sold as a whole or piecemeal, whichever brought the most money. Defendant made no correction. He supplemented Bohr's announcement by declaring that his half of the standing crops went with the land. He is bound by the terms so stated.
The words "without reserve" as used in auctions are words of art, assuring prospective bidders that the property will actually go to the bidder offering the highest price. The seller may not nullify this purpose by bidding himself or through an agent, nor by withdrawing the property from sale if he is not pleased with the bids. Thus, the seller may not refuse to accept a bid where the auction is without reserve; the bid itself establishes a right in the bidder to have the property unless someone else by raising his bid succeeds to his right.
Sec. 121.21(2), Stats. (the Uniform Sales Act), states:
"A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from sale unless the auction has been announced to be without reserve." (Emphasis supplied.)
Admittedly the Sales Act deals with personal property but there is no reason to suppose that the meaning of the words "without reserve" varies depending on whether at the moment the auctioneer is offering land or goods. Defendant says that the auctioneer had not completed this sale by dropping his hammer or otherwise. That, of course, is true, but the bidding had not ended. By interrupting the sale defendant did not deprive plaintiff of his position as highest bidder nor divest him of the rights accompanying that position. He merely deprived himself of the chance that some other person would top plaintiff's bid.
"If the sale is expressly announced to be `without reserve,' however, the owner may be held liable for a withdrawal of the property from the sale after a bid. In that case after a bid has been made the auctioneer cannot withdraw. These common-law principles are adopted by the Uniform Sales Act." 5 Am. Jur., Auctions, p. 456, sec. 17.
". . . where a sale is advertised or stated to be without reserve, there is an implied guaranty that the property is to be sold to the highest bidder, and each bidder has the right to assume that all previous bids are genuine, and the seller in substance so assures him; . . . ." 7 C. J. S., Auctions and Auctioneers, p. 1257, sec. 7.
"4. A advertises a sale of his household furniture without reserve. An article is put up for sale at the auction and B is the highest bona fide bidder; but A, dissatisfied with the bidding, either accepts a higher fictitious bid from an agent employed for the purpose, or openly withdraws the article from sale. He also withdraws all the rest of the furniture from the sale. In either case A is bound by contract to B to sell to him the article on which he was the highest bona fide bidder, but neither B nor the others at the auction have legal ground for complaint that the remainder of the furniture not yet actually put up for sale is withdrawn from sale." Restatement, 1 Contracts, p. 35, sec. 27, illustration 4.
We conclude that when the real estate in question was put up for sale and the first bid made on it, defendant could no longer withdraw it but was bound to accept the highest bid unless other bids for different combinations of parcels or bids for the farm as a whole produced more money, as specified in the advertisement. Defendant cannot defeat the right which plaintiff had acquired as highest bidder either by withdrawing the specific land from sale or by failing to fulfil the promise of the advertisement that the land would be offered as a whole or in other combinations. By defendant's action he is bound to the bids as they stood when he stopped the sale.
Defendant also relies on the claim that no memorandum of sale sufficient under the statute of frauds was given to plaintiff. The trial court found the memorandum actually given by Bohr and his associate was sufficient under the circumstances. We think it is immaterial here. Defendant discharged the auctioneer, thereby revoking his authority to give any memorandum and defendant left the scene. Under the circumstances he cannot complain that plaintiff has no memorandum.
Defendant submits that written authority to sell land must be given to an agent in order to bind the owner of land to a contract of sale negotiated by that agent. Bohr's authority was not in writing. It is well-established Wisconsin law that while estates and interests in lands cannot be created by an agent unless he is authorized in writing (sec. 240.06, Stats.), an agent may bind his principal by a contract for the sale of land satisfying the statute of frauds though his own authority as agent may have been by parol. Kreutzer v. Lynch (1904), 122 Wis. 474, 479, 100 N.W. 887; Brown v. Griswold (1901), 109 Wis. 275, 279, 85 N.W. 363. We observe, also, that while sec. 240.06 demands that the authority of an agent who creates, etc., estates or interests in lands must be in writing, the requirement of written authority is omitted in sec. 240.08 dealing with contracts by an agent for the sale of lands or interests therein. This is in complete harmony with the Kreutzer and Brown Cases just cited. (And see the note in 27 A.L.R. 616, 617, listing the jurisdictions, including Wisconsin, in which this rule prevails.)
Defendant also submits that plaintiff withdrew his offer of $41,000. The record shows that defendant and his attorney broke up the sale and discharged the auctioneer. Plaintiff then approached defendant and offered him $45,000 which defendant refused. The auction was over. Plaintiff could neither withdraw a bid nor make a new one. His offer was for a private sale. The refusal simply left him with such rights as he had when the auction was stopped.
Defendant also submits that he had a right at 3:30 or 4 p. m. to stop the sale because his advertisement announced that real estate would be sold from 1:30 to 2:30 p. m. We think that he waived such limits by continuing the sale past the time stated but even if he had the right to end it at any time after 2:30 o'clock the exercise of the right could do no more than close the bidding. Defendant could not thereby, in a sale without reserve, deprive the highest bidder of the rights which he had gained by a bid made before the close.
Defendant submits that in a suit for specific performance Mrs. Rose was a necessary party because she was joint tenant with her husband in the greater part of the property. In the Tribune advertisement and in the publicity at the scene of the auction Rose held himself out as owner. The contractual obligations between plaintiff and defendant arising out of such representations did not and cannot include Mrs. Rose. It is possible that defendant cannot perform his contract, but by no means certain. He may be able to acquire the property or Mrs. Rose, who attended the sale and helped at it, may intend to join with him in a conveyance. We consider that the trial court handled the matter well. If Rose can perform specifically the judgment requires him to do so. If he cannot, jurisdiction is retained to abate the price, conformably to what is conveyed, or to allow damages for the breach of the contract.
Mandate vacated on September 30, 1953, pursuant to stipulation of the parties, but the opinion stands as reported. REPORTER.