An Announcement of Auction is not an Offer to Sell

In Anderson v. Wisconsin C. R. Co., 107 Minn. 296 (Minn. 1909)the Supreme Court of Minnesota held that an announcement or advertisement to sell a property to the highest bidder is a mere declaration of intention to hold an auction at which bids will be received.  Such an announcement is not an offer to sell, which becomes binding, even conditionally, on the seller once a bid is made.

In this case, the Wisconsin Central Railway Company (“Appellant”) decided to conduct a public auction sale to sell the buildings on the real property that it acquired through condemnation proceedings.  The auction sale was advertised and at the auction the bid for one of the houses was offered up to $675. Anderson (“Appellee”) then bid at an amount of $680. The auctioneer stated that bid amount raise was too insignificant and did not accept the bid.
The Appellee did not increase the bid amount further and after waiting for sometime the auctioneer announced that the house was sold to the last previous bidder for $675.  The Appellee moved to the court and brought an action for damages.  The trial court ruled in Appellee’s favor.  This appeal followed. 

The Appellant contented that the auction advertisement is merely a declaration of an intention.  It does not bind the owner to sell, or to sell to any particular bidder until the bid is accepted. Id. at 298.    Whereas, the Appellees claim as stated in the brief is that “the advertisement constitutes a complete memorandum of a contract, not of sale, but to sell, to the person who should comply with its condition. Id.  It follows that as soon as any person complied with the condition, i.e., became the highest bidder at the auction provided for in the writing, this proposal became a binding written contract to sell to that person the building at his bid." Id.

The Court referred to and discussed a number of cases before arriving at the conclusion. Id. at 314.  The Court stated that, based on principle and authority the correct rule is that an announcement that a person will sell his property at public auction to the highest bidder is a mere declaration of intention to hold an auction at which bids will be received. Id.  The Court further stated that a bid is simply an offer and it is accepted when the hammer falls. Id.  The bidder or the seller does not assume any legal obligation against each other until the acceptance of the bid is signified in some manner. Id. 

The Court further noted that, at any time before the highest bid is accepted, the bidder may withdraw his offer to purchase or the auctioneer his offer to sell. Id.  The seller's offer to sell is made at the time through the auctioneer, and not when he advertises the auction sale. Id. The Court found that the advertisement in this case was a mere statement of intention to offer the property for sale at public auction to the highest bidder. Id. Therefore, the Appellee’s bid did not complete either a contract of sale or a contract to make a sale. Id.

The Court reversed the lower court’s judgment with directions to enter judgment for the Appellant. Id.