Specifically, we’ve looked closely at court cases which have concerned — and in many cases provided precedent in regard to — the auction industry.
We offer a class titled “Auction Verdicts” which we’ve presented all across the United States. More details on that class and others can be seen here: https://teachingauctioneers.com/available-seminars-2/
However, every court case with the word “auction” mentioned doesn’t necessarily provide precedent. As such, careful analysis is required and auctioneers should expect the same.
Recently, there has been a somewhat surprising suggestion that auctioneers can defy the UCC 2-328 (and modify it per 1-302) and/or write and enforce absolutely any contrary terms and conditions. This campaign has focused on so-called “tie bids,” and what auctioneers can and should do about them.
As a result, the advocates of the “tie-bid” crusade cite court cases in an attempt to support their theory. The two specific cases which have been mentioned repeatedly are these:
- Hoffman v. Horton, 212 Va. 565, 186 S.E.2d 79 (Va. 1972)
- Callimanopulos v. Christie’s Inc., United States District Court for the Southern District of New York, 621 F. Supp. 2d 127 (2009)
Both these cases have been noted when an argument for reopening a so-called tie bid is needed. Essentially, what I’m seeing is “See, in Callimanopulos … “ or “See, in Hoffman …” the court(s) sanctioned reopening tie bids. Here we hope to set the record straight; both cases are interesting, but neither authorized nor sanctioned this type of reopening.
In reading these two summaries, it is important to keep in mind that the UCC 2-328 says:
- “Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.”
As such, the bid only has to be made, not recognized nor accepted — just made (offered, tendered.)
In Callimanopulos v. Christie’s Inc. these appear to be the facts:
- Christopher Burge (Burge) is an auctioneer for Christie’s Inc. (Christie’s)
- The painting “Grey” (Painting) by Sam Francis was put up for auction.
- Gregory Callimanopulos (Callimanopulos) became the high bidder at $3 Million.
- Just as Burge said, “”fair warning” and lowered the gavel indicating, “Sold!,” Joanne Heyler (Heyler) raised her bidder paddle to bid (offer) $3.1 Million.
- Burge was notified of Heyler’s bid and reopened the bid, advancing it taking Heyler’s bid of $3.1 Million.
- Callimanopulos objected to the reopening, but bid $3.15 Million.
- Heyler bid $3.2 Million and there was no further bidding, with Burge denoting Heyler the successful bidder.
- Callimanopulos sued Christie’s asserting Burge had no right to reopen the bidding and he was due the Painting for $3 Million.
- The United States District Court (Court) ruled that Christie’s terms and conditions were consistent with the UCC 2-328.
- The Court ruled that Burge exercised his right to reopen the bidding per the UCC 2-328.
In Hoffman v. Horton these appear to be the facts:
- An auction is scheduled to foreclose a deed of trust owned by Howard P. Horton and Ralph R. Kaul, and wives (Horton)
- The auction is commenced and Hubert N. Hoffman (Hoffman) becomes the high bidder at $177,000.
- The auctioneer asked, “Are you all through bidding, gentlemen?” He then stated, “Going once for $177,000.00, going twice for $177,000.00, sold for $177,000.00.” Finally, he struck the palm of his left hand with his right fist.
- Immediately, a trustee notified the auctioneer that he has missed a bid for $178,000.
- The auctioneer reopened the bidding, and accepted the $178,000 bid, despite objections from Hoffman.
- The bidding continued until Hoffman was ultimately deemed the buyer at $194,000.
- Hoffman paid the $194,000 and sued to recover the $17,000 difference between the two bids in dispute.
- This case ultimately went to the Virginia Supreme Court (Court.)
- The Court found that this $178,000 bid was made “prior to or simultaneously with” the falling of the auctioneer’s fist in acceptance of the plaintiff’s bid of $177,000.
- The Court said, “While the Uniform Commercial Code is not controlling here, we think it appropriate to borrow from it to establish the rule applicable to the transaction at hand. To vest the auctioneer crying a sale of land with the same discretion to reopen bidding that he has in the sale of goods is to achieve uniformity and, of more importance, to recognize a rule which is both necessary and fair.”
- It appears the Court deemed the start of the fall of the hammer in this case to be “Are you all through bidding … and ended with the auctioneer striking the palm of his left hand with his right fist.”
It is intriguing that the “pro-tie-bid” contingency cites two cases which both mention the UCC 2-328 as the standard, and adhere to its core treatise for the auctioneer’s discretion to reopen the bid.
Neither in Callimanopulos v. Christie’s Inc. nor Hoffman v. Horton is the subject a “tie bid.” In both cases, there was only one bidder with the auctioneer and in neither case was any other bidder simultaneously recognized.
More importantly — in both cases — a bid was deemed made “While the hammer is falling in acceptance of a prior bid.” This is exactly what the UCC 2-328 addresses, and gives the auctioneer the discretion to reopen the bidding or declare the goods [property] sold under the bid on which the hammer was falling.
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.