Holston v. Pennington

• Decision Date: 17 June 1983
• Docket Number: No. 801160,801160
• Citation: 225 Va. 551,304 S.E.2d 287
• Parties: Joseph K. HOLSTON, et al. v. George W. PENNINGTON, et al. Record
• Court: Virginia Supreme Court

Page 287

304 S.E.2d 287

225 Va. 551

Joseph K. HOLSTON, et al. v. George W. PENNINGTON, et al.

Record No. 801160.

Supreme Court of Virginia.

June 17, 1983.

G.C. Jennings, Marion, for appellants.

Donald G. Hammer, Marion (John Roger Thompson, Wytheville, Burke, Graybeal & Hammer, Marion, on brief), for appellees.

Before CARRICO, C.J., and COCHRAN, POFF, COMPTON, THOMPSON, STEPHENSON, RUSSELL and THOMAS, JJ.

RUSSELL, Justice.

In this appeal from a decree of specific performance, we must consider whether the seller of land at an "absolute auction" may "block" various parcels together, whether a successful bid recorded by the auctioneer satisfies the statute of frauds, and whether the auctioneer may bid at the sale. We affirm the decree.

Joseph K. Holston and his wife were the owners of two tracts of land in Smyth County containing about eighty acres in the aggregate. The tracts were not contiguous, but were close together. The owners divided the first tract into four lots, each of which was traversed by a right-of-way, twenty feet wide, which constituted the sole access to the second tract, a forty-eight acre parcel of mountain land.

The owners engaged Robert Keyes and Fred A. Lindamood, auctioneers, trading as Rural Retreat Land Auction Co., and W. Watson Gollehon, trading as Gollehon Auction Co., to sell the property. The auctioneers advertised an "ABSOLUTE AUCTION SALE" to be held on July 21, 1979, on the property. The advertisement stated: "This property is subdivided into tracts, making it ideal for the second home or hunting resort .... Terms--one third down, balance on delivery of deed." No other information was published as to the method of selling or conditions of sale.

At the sale, the following announcements were made: (1) the land would be sold to the highest bidder, (2) a one-third down payment would be required at the end of the sale, (3) the four smaller lots were subject to a twenty-foot right-of-way for the benefit of the forty-eight acre mountain tract, and (4) the owners reserved the right to "block" the parcels, i.e., to offer them for sale together, as a whole.

Before bidding opened, the auctioneers distributed copies of a plat which showed only the four lots, traversed by the twenty-foot right-of-way. The lots were then offered one by one, and were knocked down to successful individual bidders. The auctioneer noted the names of the successful bidders and the amounts of their bids, but before closing the transactions, offered the four lots as a "block," seeking a higher price than the aggregate of the four individual bids. ¹ No "block" bids were received. The auctioneer then prepared four memoranda on a printed form as follows:

The auctioneers filled in all the blanks, secured the signatures of the successful bidders, and signed the form as "witnesses." One bidder said that he had to go somewhere to get a check for his down payment and left the scene temporarily. The other successful bidders all gave checks to the auctioneer for the requisite down payments. The auctioneer told them that deeds would be available within approximately thirty days, at which time the balance of the purchase price would be required. Thinking the sale was ended as to the property in which they were interested, some of the purchasers left the scene and went to examine the lots they thought they had purchased. Others remained, but having no interest in the mountain tract, became involved in conversation and paid little attention to the proceedings.

The auctioneers then distributed a plat of the forty-eight acre mountain tract and took bids on it. They knocked it down to Harry Joe Yates, who signed a similar memorandum. The total of the five successful bids amounted to $18,435.00. One of the purchasers heard someone shout "[t]hrow it all together." The auctioneers then stated that all four lots would be "blocked" together with the forty-eight acre tract, and that bids would be received on all parcels as a whole. At this point, Robert N. Keyes, a principal in Rural Retreat Land Company, one of the auctioneers, bid $20,000.00 for all five parcels. The parcels were knocked down to him because his bid exceeded the total of the five individual bids. ²

Within the next few weeks, the auctioneers tendered a return of the deposit checks given by the individual bidders. The bidders refused the tender and brought suit for specific performance against the owners and auctioneers. After hearing the case upon depositions, the trial court, in a letter opinion, ruled in favor of the individual bidders and entered a decree of specific performance. The defendant owners and auctioneers were awarded an appeal.

It is generally held that an advertisement of a forthcoming auction obligates the owner to conduct a bona fide sale in accordance with the advertised terms, Schwartz v. Capital Sav. & Loan Co., 56 Ohio App.2d 83, 381 N.E.2d 957 (1978). The auctioneer may, however, prior to opening the bidding, make oral modifications and additions to the advertised terms, which will be binding upon the bidders. See Matter of Premier Container Corp., 95 Misc.2d 859, 408 N.Y.S.2d 725 (1978); Perry Trading Co. v. Tallahassee, 128 Fla. 424, 174 So. 854 (1937).

The term "absolute auction" is equivalent to the term "auction without reserve," a well-recognized term of art in the law of sales. It means that the property will actually be sold to the highest bidder at that time and place, that no minimum price will limit the bids, that the owner may not withdraw the property from sale after the first bid has been received, that the owner may not reject any bid or all bids, and that the owner may not nullify the sale by bidding himself or through an agent. Pitchfork Ranch Co. v. Bar TL, 615 P.2d 541 (Wyo.1980); Zuhak v. Rose, 264 Wis. 286, 58 N.W.2d 693 (1953).

Here, the first two conditions of sale announced by the auctioneer were in substantial conformity to the advertisement: the announcement that the land would be sold to the highest bidder was consistent with the advertisement of an "absolute auction;" the requirement of a one-third down payment also conformed to the notice. The other two announcements, reservation of a right-of-way and reservation of the right to "block" parcels, were additional, but valid.

Unlike the situation which prevails in an ordinary auction, which is "with reserve" unless expressly made otherwise, in the case of an auction without reserve, the announced terms of sale constitute a continuing offer by the owner, subject to acceptance by the submission of a bid. Each bid is the consummation of a contract, subject only to the receipt of a higher bid. Pitchfork, 615 P.2d at 548. If the right to "block" parcels is reserved, the bidder's contract is further subject to the receipt of an upset bid by which the owner will receive a higher price for all parcels than the total of the individual bids in hand. ³ But the bidder's contract is final with the fall of the hammer, subject only to the receipt of such higher bids. If none are received, his contract dates from the time the hammer fell, following receipt of his bid.

The auctioneer's search for higher bids ends when he indicates by any means which would be evident to an attentive bidder, that the sale is over. He may not thereafter...