A Handbill on which an Auctioneer Places the Bidder's Name as a Notation of who was the Highest Bidder for the Real Estate Cannot be Considered Written Agreement to Satisfy the Statute of Fraud Requirements

The Appellate Court of Illinois, Fifth District , in Sims v. Broughton, 225 Ill. App. 3d 1076 (Ill. App. Ct. 5th Dist. 1992) held that a document that does not refer to the sale agreement  and that merely places a bidder’s name on it as a notation of who was the highest bidder cannot be considered written agreement for the purchase of real estate or any document that could be connected to the written agreement for purchase.

Robert D. Sims and Ronald C. Sims (“Appellants”) are co executors of the estate of Lucille Sims (Robert Sims and Ronald Sims were substituted as Plaintiffs/Appellants following the death of Lucille Sims, who is the sole owner of the real estate herein involved at the time of the filing of this lawsuit). Appellants put three tracts of land for auction sale. A handbill advertising the public auction had been distributed prior to the sale. In the handbill, the legal description of each of the tracts of real estate was given and the terms of the sale were stated. The terms also stated that each tract will be sold separately to the highest bidder for a final sale.

Dale Broughton (“Appellee”) attended the auction. And the Appellants accepted Appellee as the highest bidder for Tract I. Soon after the sale, Appellee was asked to execute a purchase agreement “pursuant to the terms and conditions of the sale bill and announcements made at the sale." However, the Appellee refused to sign the agreement. Consequently, Appellant sold the land at a lower price and brought suit against the bidder for the difference amount. The trial court granted the bidder's motion for summary judgment on the grounds that the parties had an unenforceable contract under the statute of frauds. On appeal, the appellate court affirmed the trial court’s summary judgment to the bidder. 

Auctioneer Gordon Price’s (“Auctioneer”) affidavit stated that the Appelle was accepted as the highest bidder and Tract I was announced as "sold" to the Appellee. And immediately after accepting the Appellee's bid, Auctioneer wrote Defendant's name on his (Auctioneer’s) copy of the handbill. After the sale of other tracts he also wrote the names of the purchasers of these parcels on this same document. Subsequently, Auctioneer threw away his handbill on which he had noted the names of the purchasers, believing this document to be of no use or import. Sims 225 Ill. App. 3d 1077-78.

Paul Stone, Plaintiff’s attorney for the real estate sale filed an affidavit in which he stated that, at the conclusion of the auction, the attorney filled in the blanks on the written agreement for the sale of Tract I and the Appellant signed the document. However, the Appellee refused to sign the written agreement for the sale of Tract I, stating that he did not bid $ 1,800 per acre. Id. at 1078-79.

Appellants contended that the handbill upon which Auctioneer noted the Appellee’s name and the written agreement for sale of real estate taken together satisfy the requirements for a written contract, thereby taking the transaction out of the Statute of Frauds. Id. at 1079.

Appellants asserted that the handbill upon which the Auctioneer and the Appellee's agent placed the Appelle's name is a written document signed by the Appellee. Id. at 1080. They stated that this handbill contained the legal description of the property, the terms of the sale, and the names of the seller and the purchaser, and when this handbill is viewed in conjunction with the unsigned written agreement, which contained the legal description and the total purchase price these documents satisfy the intent of the Statute of Frauds and the contract for the sale of Tract I is enforceable against the Appellee. Id.

The appellate court observed that the Statute of Frauds provides in pertinent part as follows:

"No action shall be brought to charge any person upon any contract for the sale of lands, tenements or hereditaments or any interest in or concerning them, for a longer term than one year, unless such contract or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized in writing, signed by such party." (Ill. Rev. Stat. 1989, ch. 59, par. 2.) Id. From the foregoing, the court found that it is clear that some written document must be signed by the defendant or by his authorized agent in order to enforce a contract for the sale of real estate. Further, the document signed must contain a description of the property sold, the names of the seller and purchaser, and the price and terms of the sale. The purpose of including this information in the written document is to eliminate the need for parol evidence to ascertain the terms of the sale or the intention of the parties. Id.  at 1079-80.(Internal citation omitted).

The court noted that an auctioneer is considered as an agent for both the seller and the purchaser, and thus, a document signed by the auctioneer on behalf of the purchaser, if it contains the necessary information, binds the purchaser to the contract. Id. at 1080 (citing Doty v. Wilder (1854), 15 Ill. 407.). The court also stated that a written contract may consist of several documents. However, if the contract is to be ascertained from more than one document, the signed writing must refer expressly to the unsigned writing or writings, or the several writings must be so connected, either physically or otherwise, that it may be determined by internal evidence that they relate to the same contract.  Id. (Internal citation omitted).

The Court of Appeals found the Appellants’ arguments to be without merit for the following reasons:

1) The document upon which the Auctioneer placed the Appellee’s name was not a document that could be connected to the written agreement for the purchase of a real estate. There was nothing in the language contained in the handbill which referred to the written agreement for the sale of Tract I which would provide the internal evidence that it related solely to the same contract. Furthermore, the purpose of the handbill was to advertise the sale, and it was not prepared with the view that it should be evidence of a binding contract. Id.

2)  The actual handbill upon which auctioneer noted the Appellee’s name was unavailable and could not be produced. The Auctioneer had thrown away the handbill.  This act of the Auctioneer gives further substance to the court’s reasoning that the handbill cannot be considered as part of the documents evidencing a contract for the sale of real estate. Id. at 1081.

3) The Auctioneer did not place the Appellee’s name on the document in his role as the Appellee's agent, but he had merely placed the Appellee's name on the handbill as a notation of who was the highest bidder for the real estate. Further, neither the Appellee nor the Auctioneer had signed the written agreement for sale of Tract I prepared by the attorney. Id.

Therefore, based on the reasons noted above, there was no signed document by the Appellee or his agent to meet the Statute of Frauds requirements. Therefore, the appellate court found that the circuit court properly dismissed Appellant’s complaint; the contract being unenforceable under the Statute of Frauds. Id.