In Minnesota, once a Property is Struck off at Auction, the Auctioneer Becomes the Purchaser’s Agent to the Extent of Binding Both Parties by his Memorandum of Sale

In Schwinn v. Griffith, 303 N.W.2d 258 (Minn. 1981), the Supreme Court of Minnesota held that an auctioneer also becomes the agent of the purchaser after the property is struck off at auction.  The auctioneer acts as the purchaser’s agent when he signs the memorandum of sale immediately after the auction.  The purchaser is bound by the auctioneer’s acceptance of delivery of the property sold at auction.

This case involves an action for specific performance of an auction sale.  In this case, the seller, Schwinn (“Appellant”) placed his property for an auction sale.  Griffith (“Respondent”) was the highest successful bidder, but he left the auction without signing the memorandum of sale. Subsequently, he refused to sign the purchase agreement.  However, the agreement was signed by the Appellant and the auctioneer involved in the auction sale.  The seller initiated an action against the bidder seeking specific performance.  The trial court dismissed the Appellant’s complaint finding that the agreement was not enforceable because the statute of frauds, Minn. Stat. § 513.05 (1980) required the bidder’s written acceptance for the sale of real property to be enforceable.  This appeal followed. 

The Supreme Court stated that, in the case at hand, the bidder did not sign the memorandum, it was only signed by Appellant and auctioneer. Id. at 262.  But since the sale in question was an auction sale, certain rules apply.  Ordinarily, an auctioneer acts for the seller. Id. See State v. Tysdal, 303 Minn. 233, 228 N.W.2d 230 (1975). But, once the "’property is struck off, he becomes also the agent of the purchaser, at least to the extent of binding him by his memorandum of sale.’" Id. (citing Wright v. May, 127 Minn. 150, 152, 149 N.W. 9, 10 (1914).
 
According to Restatement of Contracts § 212 (1932), the general rule is: 
 
(1) In a sale and in a contract to sell at auction the auctioneer or his clerk, if not interested in the subject matter of the sale otherwise than in his function as auctioneer or auctioneer's clerk, is authorized to make and sign a memorandum on behalf of both the buyer and the seller, immediately after the sale.

(2) The power of the auctioneer and of his clerk to sign a memorandum as stated in Subsection (1) may be revoked by a buyer or seller at any time before the power is exercised.
 
Id.; see 4 S. Williston, A Treatise on the Law of Contracts § 588.

The Court observed that auction sale in question meets the requirements of section 212:

Firstly: the memorandum of sale was drafted immediately after the auction; it was signed by the Appellant seller and the auctioneer;
Secondly: the auctioneer had no personal interest in the subject matter property, there is no evidence to the contrary. 
Thirdly: the Respondent bidder did not repudiate the oral contract until the memorandum of sale was prepared and subscribed. 

In light of the points noted above, the auctioneer by signing the purchase agreement, following the auction accepted delivery of the memorandum on behalf of respondent for the purpose of satisfying the statute of frauds. Id.
The Court noted that, in the present case, there exists a sufficient memorandum of sale that was subscribed by the vendor, the delivery of which was accepted by the vendee's agent.  Therefore, the Appellant is entitled to a decree of specific performance. Id.at 263. The Court reversed the trial court’s decision.