Secondly, there are no laws which require auctioneers to disclose the seller’s identity to (potential) bidders.
Despite these facts, it is necessary or proper to disclose (in advertising or otherwise) the identities of the sellers?
Let’s review the duties owed clients (sellers) by auctioneers: https://mikebrandlyauctioneer.wordpress.com/2009/11/18/what-do-auctioneers-owe-their-clients/
As well, let’s review duties owed customers (bidders/buyers) by auctioneers: https://mikebrandlyauctioneer.wordpress.com/2009/11/19/what-do-auctioneers-owe-their-customers/
From these duties, it is clear that first, if disclosing the identity of the seller is in the seller’s best interest and the seller authorizes such disclosure, then such is prudent. If a bidder wants to know the identity of the seller (for a particular item, or generally,) then such should be disclosed if authorized by the seller.
Too, such advertising or disclosure is not to be misrepresentative independent of the seller’s wishes or the bidder’s questions.
Let’s consider property from three possible sources: Estate of Charlton Heston (famous actor, born 1923, died 2008,) Estate of Rock Hudson (famous actor, born 1925, died 1985,) and property from little-known (Estate of) Robert Mills (factory worker, never married, born 1931, died 2009.)
- We have a personal property auction with a few items from the Estate of Charlton Heston and lots of items from the Estate of Robert Mills. Presumably, we would identify Heston’s items (assuming authorization) and if authorized, answer any ownership questions about Mills’ items.
- We have a personal property auction with a many items from the Estate of Charlton Heston and only a few items from the Estate of Robert Mills. Presumably, we would identify Heston’s items (assuming authorization) and if authorized, answer any ownership questions about Mills’ items.
- We have a personal property auction with a some items from the Estate of Charlton Heston and some items from the Estate of Rock Hudson. Presumably, we would identify Heston’s items (assuming authorization) and Hudson’s items (assuming authorization.)
- We have a personal property auction with items from the Estate of Robert Mills. Presumably, we would answer any ownership questions about these items if authorized.
For most, this is reasonable. Identify the “famous people’s” property assuming that the fame will garner more interest and more in proceeds. Don’t identify “not famous people’s” property assuming that the title holder will make little — if any — difference in interest or price.
But, we have another issue here. If property from the Estate of Robert Mills is in an auction with items from the Estate of Charlton Heston or the Estate of Rock Hudson, will bidders infer that some or all of the Mills’ property belongs to the Heston or Hudson estates?
Is it okay for a bidder to think that a piece of property had a prior famous owner when in fact it didn’t? More generally, it is acceptable that a bidder think a piece of property is far more valuable than … it actually is?
The issue doesn’t seem entirely clear. I can imagine asking two auctioneers, and receiving two answers:
- Auctioneer A:
- “Auctioneers are to be honest with bidders. So, since there is a chance some of the Mills’ property will be misidentified as belonging to Heston (or Hudson,) I would feel obligated to disclose all the Mills’ property ownership.”
- Auctioneer B:
- “We sell property “as-is” and part of that is — bidders are responsible for inspection of the property. I would certainly disclose any latent defects, but I can’t be accountable for all the other possible inferences those bidders might make.”
Auctioneer A’s thinking is fairly straightforward — disclose. Auctioneer B’s thinking is a bit more tangled. He would save bidders from latent defects, but not to the point that bidders might infer a “false positive” where he would then have to one: Anticipate that inference, and then: Respond to it unilaterally.
Certainly another issue involves intent. If an auctioneer intentionally placed Mills’ property in his Heston auction in order to (with the intent to) make bidders bid higher on the Mills property because it would appear to belong to Heston, and didn’t disclose the ownership statuses — a buyer of any of Mills’ property might have a valid claim of misrepresentation or even fraud.
However, intent is difficult to assess. If Mills was Heston’s or Hudson’s next door neighbor and it was simply a convenience to add some of his property into the Heston or Hudson auction, would it appear the intent was just that, and nothing more?
In summary, it seems this might be a “risk versus reward” situation. Auctioneers can lower the risk of litigation by disclosing, but increse the chances of reward by not disclosing. The right decision might well rest on how much risk … versus how much reward.
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 Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.