This penalty might be a fixed amount above the sale price, and/or an increased commission.
Specifically, let’s say an auctioneer’s standard commission is 30%. In their contract, it notes that all sells absolute and if the seller bids (which would be prohibited) there is 60% commission charged to the seller — essentially liquidated damages.
In other words, the auctioneer profits to a greater extent given a crime is committed. And is it a crime? Likely it is, as it violates the Sherman Antitrust Act: https://mikebrandlyauctioneer.wordpress.com/2011/07/04/price-fixing-at-auction/
So can an auctioneer profit additionally from the seller illegally bidding/buying (a crime?) Let’s analyze by looking at various capacities which are often associated with crimes:
- Principals — the main actors in a crime.
- Accomplices — those who intentionally help the principals commit a crime.
- Accessories — those who participate knowingly and voluntarily in carrying out of a crime.
- Aiders — those who aid, help, facilitate, promote, instigate, or encourage principals to commit a crime.
- Abettors — those who encourage or support by aid or approve a crime.
- Conspirators — those who agree to commit a crime.
As we review these various (albeit abbreviated) definitions, it doesn’t appear that profiting because of the crime is itself a criminal act. Our conclusion is only partly based upon these definitions, and furthered by other evidence.
Following the David Berkowitz (Son of Sam) murder case in New York (1977,) the state enacted laws to prohibit him from profiting from selling his story to publishers. Other states enacted similar laws, but this view has not been universal.
The Supreme Court of the United States ruled in Simon & Schuster v. Crime Victims Board, 502 U.S. 105 (1991) that these laws were overly restrictive and violated free speech (the First Amendment.)
Today, only some states prohibit the actual principal from profiting from his crime, and nearly all such laws prohibiting likely violate the Supreme Court of the United State’s ruling.
In other words, in some [or even most] cases the actual principal might well profit from the crime. So, even if the auctioneer was deemed the accomplice, accessory, aider, abettor or conspirator it’s seems unlikely profiting would be illegal.
Further, separating the profiting from the otherwise involvement in the crime — most conclude that if a person did not have any criminal involvement in the act, profiting is perfectly permitted. In our auctioneer scenarios, it seems the higher fee works more to discourage illegal seller bidding, and certainly doesn’t advocate, encourage, help nor facilitate such.
Would an business’s sign saying, “$100 bad check fee” be criminal if the bad check constituted a felony and the business profited by an additional $100 over its normal check acceptance fee of zero? It’s not like the business was encouraging bad checks but did address how they are handled.
Consider movies, books, even auctions resulting from crimes. Do those movie producers, publishers and auctioneers profit? They sure do and that’s perfectly legal so long as they don’t advocate, encourage, help …
And couldn’t one argue that every large-scale movie and book enterprise has at minimum an implied contract with every notable criminal — if you commit some sort of heinous crime, we’re going to profit from it?
Incidentally, our federal, state and local governments all profit from crime by expressly saying, “If you do this … you will pay us this fee.” While we’re not suggesting we as auctioneers hold governmental or police power, it seems without being complicit to the crime …
Finally, what about the argument that any contract made for an illegal purpose is illegal — in other words, void? Here, most in the legal community say that contracts are illegal if the formation or performance of the agreement will cause the parties to engage in activity that is illegal.
Additionally, the illegality in a contract must relate directly to the subject matter created in the contract and not some extraneous circumstance. Therefore, despite even the illegal-contract argument, we maintain that auctioneers can indeed profit additionally from a seller bidding without authority.
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.