Auctioneers call me all the time. I’m truly humbled many are inquiring how they can stay out of court, rather than spend a bunch of time in court. One such auctioneer shared a curious story with me and here’s the gist of his account.
He “Sold!” this stunning 1964 Cadillac at auction for $11,000 and then the buyer refused to pay and thereafter ceased communication with the auctioneer and seller. The auctioneer resold this beautiful car at a subsequent auction for $16,000 (maybe beautiful is better than stunning?) All good? Likely.
Of course, if this first “buyer” is in title, one could argue that the auctioneer “resold!” this first $11,000 buyer’s vehicle. You might think title transferred at the “fall of the hammer” or otherwise as his terms and conditions noted, but maybe not. In fact, the law suggests (unless otherwise explicitly agreed):
UCC § 2-401(3)(a):
If the seller is to deliver a document of title, title passes at the time when and the place where he delivers such documents.
Therefore, basically, unless the auctioneer explicitly noted and the buyer agreed otherwise, title would pass when the title was signed and delivered to the buyer. Of course, no prudent auctioneer would send a signed title lacking payment.
When we say “in title” we mean ownership. When we say “a title” — in regard to a vehicle — we are talking about a piece of paper commonly called a title that conveys ownership. It appears clear our aforementioned $11,000 buyer isn’t in title because he doesn’t have a [the] title.
Our previous “buyer” isn’t in title, he’s simply breaching our contract to pay and take possession. As such, the seller still owns this vehicle and can keep it, sell it, or whatever. In fact, for a breach of contract claim, a court would rightly expect our seller to mitigate his own damages.
I told this auctioneer to reach out to his attorney (he already had) to ensure he and his seller followed all the proper procedures regarding the breach and reselling this 1964 Cadillac. As we’ve sold cars for over 25 years we’ve certainly encountered this situation a few times and knew what our attorneys had told us.
To repeat: Unless this auctioneer/seller and first “buyer” explicitly agreed otherwise — that title transferred as the hammer fell, or when payment was made — title would pass per UCC § 2-401(3)(a) which says when there’s a “document of title” that title transfers when that document is delivered.
Finally, beyond merely legal analysis, it may be good practice for auctioneers to unify possession and title (when possible) where it involves titled vehicles — so that whoever is driving (or otherwise possessing) is the owner and therefore responsible for that vehicle. It is extraordinary good practice to secure payment before relinquishing title or possession.
Mike Brandly, Auctioneer, CAI, CAS, 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, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.