Pennsylvania Auctioneer and Auction Licensing Act Allows Unlicensed Support Staff of an Auction Company to Set up and Conduct Auctions; provided a Licensed Individual Actually Conducts Auction And Is Responsible for Such Acts of the Support Staf

The Superior Court of Pennsylvania in Ritchie Bros. Auctioneers Int'l v. E & A Contr., 706 A.2d 874 (Pa. Super. Ct. 1998) held that the Auctioneer and Auction Licensing Act (“Act”) does not require every auction company to be licensed to perform acts to facilitate an auction. The Act only requires a licensed individual to conduct the auction and be responsible for the unlicensed support staff.  

Ritchie Bros. Auctioneers Int'l ( “Appellant”) is a limited partnership that provides auction services and conducts auctions for the parties who are interested in liquidating various types of property.  Charles Baer (Mr. Bare) was a “sales representative” for Appellants. Mr. Bear after locating interested parties sends details for the holding of an auction and prepares and executes contracts for the conducting of an auction. Appellant then send a licensed auctioneer to conduct the auction. Appellants prior to conducting auction in Pennsylvania would apply and receive “special licenses" as specified in the Act.  

John Engle, a principal of E & A Contracting (“Appellee”) contacted Mr. Baer to liquidate some of its equipment at auction. Mr. Baer inspected Appellee’s equipment and gave a rough estimate of what Appelle could expect to receive at auction for the equipment. After Mr. Baer's appraisal a contract was executed between Appellants and Appellee for auctioning the equipment at Imperial, Pennsylvania. The contract was signed by Mr. Engle for Appellee, and individually as guarantor, and Mr. Baer signing for Appellants. The contract was executed with an anticipated auction date. 

Prior to the auction date, Appellee independently, and without Appellant’s permission, sold the equipment that was subject to the auction agreement. As a result Appellant through counsel sent a letter to Appellee indicating that Appellee breached the agreement and is liable for commission to Appellant. Appellee refused to make a payment and Appellant filed a suit in the Court of Common pleas of Somerset County. After various pleadings had been filed, Appellees filed a motion for summary judgment arguing that the contract was unenforceable because Mr. Baer was not licensed as an auctioneer in Pennsylvania. The trial court granted summary judgment in Appelle’s favor. This appeal followed.  

In the case at hand, the court had to decide whether or not an auction company violates the Act (63 P.S. § 734.1 et seq.) by using unlicensed individuals to conduct auctions or to arrange the conduct of an auction.  Ritchie Bros. Auctioneers Int'l .706 A.2d 874.

The Superior Court noted that the relevant portion of the Auctioneer and Auction Licensing Act, 63 P.S. § 734.3 reads as below:

It is unlawful for any person to engage in or carry on the profession of auctioneer, to conduct a sale at auction, to hold himself out as an auctioneer or as an apprentice auctioneer or to offer to conduct sales at an auction in this Commonwealth without first obtaining from the board a license as an auctioneer or apprentice auctioneer. Any member, officer or employee of a partnership, association or corporation who attempts to sell at auction or who is actively engaged in the auction profession must have a license as an auctioneer or apprentice auctioneer.  Id. at 875. 

The Appellate court also stated that although it could be argued that the activities of Mr.Baer in soliciting Appellant’s auctioning services to businesses and individuals in need of liquidating property rendered him "actively engaged in the auction profession," as set forth in the Act, the Act was not intended to require every employee of an auction company who might perform tasks in furtherance of the conducting of an auction business to be licensed under the Act. Id. at 875.
 
In reaching this conclusion, the appellate court referred to and analyzed certain sections of the Act that are more specifically detailed below. Id.

The appellate court noted that the Act classifies licenses into two: an auctioneer and apprentice auctioneer license, the requirements of which focus on the actual conducting of auctions. The licensure requirements for auctioneer require actual participation in no less than 30 auctions as an apprentice in an apprenticeship that lasts two or more years. There are no licenses provided for the performance of activities in support of conducting an auction such as solicitation and administrative functions. Id. at 875-876.

The court found that there are no specific provisions in the Act which explicitly include or exclude someone like Mr. Baer from the licensing requirements of the Act.  However, the court believed that certain other provisions in the Act support the conclusion reached by the appellate court. Id. at 876. 
The court observed  that 63 Pa. Cons.Stat.§ 734.3(g) states :If the applicant for a license is a partnership, association or a corporation, then a member of the partnership or association or an officer of the corporation, who is licensed in this Commonwealth as an auctioneer, must be designated as the auctioneer-of-record. The auctioneer-of-record is principally responsible for the conduct of the auctions of the partnership, association or corporation in accordance with this Act. A partnership, association or corporation auctioneer license becomes invalid if the license of the auctioneer-of-record is not renewed or is suspended or revoked. Id.  
The Appellate court further stated  that: “[a] lthough the above section does not explicitly state that individuals who are employed by, or who are even principals in, an auction company can occupy those positions even though they are unlicensed - as long there is a licensed auctioneer who is principally responsible for the conduct of the auctions - it certainly implies that much. If this is the case,   then certainly it appears allowable under the Act to have unlicensed employees or partners whom, we must assume, would be involved in various aspects of running the auction company even though they are not licensed as auctioneers. Like the first section of the Act quoted, this particular section seems to focus upon the actual conducting of an auction and require a licensed auctioneer to perform this function and to be responsible for the actions of unlicensed employees and/or partners. It does not seem to contemplate that every employee or even officer or partner in an auction company will be licensed under the Act.” Id.

The appellate court also referred to § 734.20(a)(3),an enforcement section of the Act, which calls for a suspension or revocation of an auctioneer's license if he/she engages in a "continued or flagrant course of misrepresentation or making false promises through agents or apprentice auctioneers." This section certainly appears to contemplate, without any apparent disapproval, that a licensed auctioneer will be using unlicensed "agents" in furtherance of conducting an auction business. Id.

After reviewing the whole Act, the court concluded that the Act does not contemplate that every employee, or even principal of an auction company, must be licensed. Nor does the Act, in court’s opinion, prohibit unlicensed individuals from performing acts facilitating or supporting the conducting of an auction. Rather, the Act requires a licensed individual to actually conduct the auction and to be responsible for the actions of unlicensed support people in setting up and conducting auctions. Id.

In view of above, the appellate court vacated summary judgment granted in Appellee’s favor and remanded the case for a continuation of proceedings.