Cuba v. Hudson & Marshall, Inc.

• Decision Date: 23 June 1994
• Docket Number: No. A94A0903,A94A0903
• Court: Georgia Court of Appeals
• Parties: CUBA et al. v. HUDSON & MARSHALL, INC. et al.

Page 386

445 S.E.2d 386

213 Ga.App. 639

CUBA et al. v. HUDSON & MARSHALL, INC. et al.

No. A94A0903.

Court of Appeals of Georgia.

June 23, 1994.

Clifford J. Steele, Anthony A. D'Aurio, Atlanta, for appellants.

Westmoreland, Patterson & Moseley, Stewart R. Brown, Macon, for appellees.

POPE, Chief Judge.

Defendants are auctioneers who conducted an auction of real estate for the Resolution Trust Corporation ("RTC"). Plaintiffs attended the auction and were the high bidder for a particular parcel, Property No. 230. After the bidding was ended by the fall of the auctioneer's hammer, however, plaintiffs were told that the RTC rejected their bid. Plaintiffs sued defendants for damages, and after discovery, plaintiffs and defendants filed cross-motions for summary judgment. The trial court denied plaintiffs' motion and granted defendants', and plaintiffs appeal from both rulings.

The parties essentially agree on the facts. Defendants prepared an auction brochure listing and describing the various RTC properties to be auctioned. Some of the properties were listed with the word "absolute" next to them; others, including Property No. 230, were not. On the back cover, under the heading "AUCTION INFORMATION & TERMS," the brochure stated that properties without "absolute" next to them were being sold with reserve, and that "[f]or property being sold 'With Reserve,' the highest bid is subject to the approval of the seller." (Emphasis supplied.) Defendant Asa Marshall, who conducted the actual auction, stated in his introductory remarks that with respect to those properties being auctioned with reserve, "I can assure you you're not wasting your time. We have officials from RTC all over the country here. The only thing they want to make sure of is that they do have active bidding on those properties auctioned on reserve, and if they do they are going to sell them. I can assure you of that. They are not here to waste your time or to get this property appraised." Immediately following Asa Marshall's introductory remarks, however, another employee of defendant Hudson & Marshall, Inc. got up and pointed out to the audience that the terms of the auction were set forth on the back cover of the brochure. He held up a brochure and showed the audience exactly where the terms and conditions were and then said they would abide by those terms.

1. Plaintiffs first argue that a contract for the sale of Property No. 230 was formed at the time the auctioneer's hammer fell, and that defendant auctioneers are liable for the breach of that contract. As a general rule, even if an auction is with reserve (and all auctions are presumed to be with reserve unless they are expressly stated to be without reserve), the seller must exercise his right to withdraw the property from sale before the auctioneer accepts the high bid by letting his hammer fall; immediately after the hammer falls, an irrevocable contract is formed. See Stanley v. Whitmire, 233 Ga. 675, 212 S.E.2d 845 (1975); Tillman v. Dunman, 114 Ga. 406, 409(1), 40 S.E. 244 (1901); Coleman v. Duncan, 540 S.W.2d 935, 937-938 (Mo.Ct.App.1976). Compare also OCGA § 11-2-328. ¹ Yet at the same time, the seller has the right to establish any terms and conditions for the sale he wishes, and where the seller explicitly reserves the right to reject any bid made, the contract for sale is not formed until the seller actually accepts the bid. Rountree v. Todd, 210 Ga. 226, 78 S.E.2d 499 (1953). We think the only way to reconcile these cases is to recognize, as other courts have, that there is a distinction between auctions which are merely conducted with reserve and those in which the seller explicitly reserves the right to approve, confirm or reject the high bid. Coleman, 540 S.W.2d at 938. ("[S]uch a reservation sets a sale apart from the garden variety of auctions with reserve.") See also Continental Can Co. v. Commercial Waterway Dist., 56 Wash.2d 456, 347 P.2d 887 (1959); Moore v. Berry, 40 Tenn.App. 1, 288 S.W.2d 465 (1955); New York v. Union News Co., 222 N.Y. 263, 118 N.E. 635 (1917). Where the seller explicitly reserves the right to reject or approve, the auctioneer is without authority to accept for the seller. Thus, the fall of the hammer in such auctions merely ends the bidding, and no contract is formed until the seller actually accepts the high bid. See Continental Can, 347 P.2d at 888-889; Moore, 288 S.W.2d at 467-468; Union News, 118 N.E. at 636-637.

The seller in this case explicitly reserved the right to reject or approve the high bid in the brochure. And Asa Marshall's "assurance" that all properties would be sold as long as the bidding was active did not modify this reservation since it was immediately followed by the announcement of another speaker who called the bidders' attention to the terms in the brochure and stated that "we will abide by those terms." Accordingly, the fall of the auctioneer's hammer merely ended the bidding and no enforceable contract was formed.

Additionally,...