Sale accomplished when district trustees rejected all sealed bids and, without notice allowed persons present at bid opening to bid on property and sold property to highest bidder was not an ‘auction.’

In Reed v. Muscatine-Louisa Drainage Dist. No. 13, 263 N.W.2d 548, 549-51 (Iowa 1978), the District prior to selling the farm owned by them located in Louisa County, published notice of intention in papers of general circulation in which directed that sealed bids be submitted and each bid was to be accompanied by a check. All bidders were requested to be present at the bid opening and the trustees reserved the right to reject any and all bids.
 
Plaintiff's bid was the highest one, but all bids were rejected, and the trustees then conducted an auction limited to those persons who had submitted written bids and who were present at the bid opening. It was at this auction that the Keltner offer was made and accepted. Plaintiff was not present at the bid opening and therefore was not among those who participated in the auction.  The suit was initiated to prevent completion of the sale to Keltner. Plaintiff sought to have the sale to Keltner declared void.
 
Supreme Court of Iowa stated that, “the statute (s 332.3(13)) requires a sale at public auction after notice. Although what was done by the trustees here is called an auction and although we have used that designation in this opinion, it was not an auction at all. An auction is a sale of property ‘where any and all persons who choose are permitted to attend and offer bids.’ Black's Law Dictionary 166 (Rev. 4th Ed. 1968). The same authority tells us the term ‘imports a sale to the highest and best bidder with absolute freedom for competitive bidding.’” Reed v. Muscatine-Louisa Drainage Dist. No. 13, 263 N.W.2d 548, 551 (Iowa 1978) (internal citations omitted).
 
“The procedure followed here was an attempt to hold a ‘private’ auction a contradiction in terms for a limited group of selected buyers without notice. It was contrary to the statutory provisions of s 332.3(13), which direct the sale to be made at public auction. Under our prior rulings, such a purported sale is void. Voogd v. Joint Drainage District No. 3-11, 188 N.W.2d at 393.” Id.
 
The Supreme Court held that, the sale of property was void as the sale which was accomplished when district trustees rejected all sealed bids and, without notice allowed persons present at bid opening to bid on property and sold property to highest bidder was not an ‘auction’ within meaning of statute requiring a public auction after notice for sale of property no longer needed by district.