Rights Under an Auction Sale Contract are Enforceable Absent a Conclusive Settlement Agreement Between Parties

The Fourth District Appellate Court of Illinois in Kruse v. Kuntz, 288 Ill. App. 3d 431 (Ill. App. Ct. 1996) held that an auctioneer could recover the bid amount from a bidder based on an auction contract if the settlement agreement that was subsequently signed by the auctioneer and bidder is not conclusive. 

This suit involved an auction sale contract.  In this case, the Plaintiff auctioneer Kruse (“Plaintiff”) conducted an auction sale of farm equipment. Kuntz, defendant, (“Defendant”) was the highest bidder and he paid the bid amount with a check drawn on his account.  The check was returned for insufficient funds.  Subsequently, the Defendant entered into a settlement agreement with the Plaintiff, in which the Defendant agreed to pay the bid amount by an agreed date.  But the Defendant failed to make the payment by the promised date.
 
Consequently, the Plaintiff moved the court and sought to enforce the breached auction sale contract, and also sought court costs, attorney fees, and prejudgment interest. The Defendant counterclaimed and sought rescission of the auction sale contract. The Circuit Court of McLean County (Illinois) granted summary judgment in favor of the Plaintiff and awarded attorney fees. The trial court denied all post-trial motions.  Both parties appealed.

Defendant contends that the Plaintiff was barred from recovering on the auction sale contract on account of a settlement agreement that was subsequently entered between the parties.  The Plaintiff on the other hand asserted that Illinois law allows the aggrieved party to a settlement agreement to elect to proceed on the settlement agreement or the original contract.  The appellate court observed that different positions taken by the Plaintiff and the defendant in this regard are understandable given Illinois courts have made contradictory statements regarding the issue.

The appellate court reviewed the settlement agreement between the parties and stated that “what the parties each refer to as the "settlement agreement" appears to be no such thing.”  The purported settlement agreement was actually an untitled typed document which merely reaffirmed the bidder's obligation to pay the auctioneer the owed amount and damages.  The court stated that the document did not indicate that Plaintiff was surrendering his rights under the auction sale contract or the document was in any way a substitute for, or compromise of, the auction sale contract.

The appellate court further stated that, although Plaintiff does not expressly argue the signed statement was not a "settlement agreement," the fact he believed he 'still had rights under the auction sale contract demonstrates he did not consider the signed statement an agreement in any way compromising or superseding his rights under the auction sale contract.  Therefore, because the signed statement was not a conclusive "settlement agreement," the plaintiff properly filed suit against the Defendant based on the auction sale contract.

The Fourth District Appellate Court of Illinois found that the Plaintiff auctioneer could file suit against the Defendant bidder based on the original auction sale contract.  The appellate court affirmed the trial court's judgment granting summary judgment and awarding attorney fees in favor of the Plaintiff. The appellate court reversed the trial court's judgment denying the Plaintiff’s prejudgment interest and remanded for an award in accordance with the Interest Act.