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Young v. Hefton

December 21, 2007


Appeal from Butler District Court; MICHAEL E. WARD, judge.


1. K.S.A. 84-2-328 sets forth rules for auction sales of goods and is instructive as to auction sales of real estate.

2. The general rule regarding terms and conditions of an auction sale is that the seller of property at auction has the right to prescribe, within reasonable limits, the manner, conditions, and terms of sale.

3. There are generally three types of auctions: (I) with reserve; (ii) without reserve; and (iii) conditional.

4. In an auction with reserve, the placing of the property for sale is an invitation for bids, not an offer to sell. Bids are accepted on the seller's behalf and a contract is formed when the auctioneer closes the bidding, typically by the fall of the hammer or other method that notifies the high bidder that the bid has been accepted. The seller does not have any right to accept or reject bids after the close of bidding.

5. In an auction without reserve or absolute auction, placing of property for sale constitutes an offer to sell and each bid represents a conditional acceptance, subject to receipt of a higher bid. Thus, in an auction without reserve, the seller may not withdraw or refuse to sell the property once the bidding has been opened on that property unless no bid is made within a reasonable time.

6. In a conditional auction, the seller reserves the right to accept or reject bids after the close of the bidding. In order for an auction to be considered a conditional auction, the conditions must be effectively communicated to prospective bidders. The key distinction between an auction with reserve and a conditional auction is that property can only be withdrawn before the close of bidding in the former, but it can be withdrawn after the close of bidding in the latter.

7. Under the facts of this case, where the sales bill may be open to several interpretations but one interpretation is that all contracts are subject to final approval of the sellers for whatever reason, and where there were signs and indications before and during this auction that the sellers were retaining some measure of final approval or control, the auction was conditional in nature and that no contracts were formed until the sellers' acceptances of the highest bids.

8. The call "mark it down" has been interpreted as merely an indication to record the highest bid for seller consideration, subject to acceptance.

9. Whether there has been a contract repudiation within a reasonable time is a question of fact.

10. A memorandum, in order to be enforceable under the statute of frauds, may be any document or writing, formal or informal, signed by the party to be charged or by the party's lawfully authorized agent, which states with reasonable certainty (a) each party to the contract either by name, by such a description as will serve to identify the party, or by the name or description of the party's agent; (b) the land or other subject matter to which the contract relates; and (c) the terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made.

11. A sale of land at auction is within the statute of frauds to the same extent as any other sale or contract of sale relating to land. In order to satisfy the statute of frauds, the writings concerning the sale should contain everything necessary to show the contract between the seller and buyer. For purposes of satisfying the statute of frauds, separate writings may be construed together to determine whether there is sufficient written agreement upon which to base an enforceable contract.

12. Under the facts of this case, K.S.A. 33-105 and K.S.A. 33-106 are satisfied by the Exclusive Right to Sell Listing Agreement, which identified the tracts of land to be sold and was signed by the sellers, together with the Bid Sheet Information or bid receipt and check reflecting earnest money signed by the buyer. The land was adequately described in the Internet sales bill, the printed sales bill, and the listing agreement, and all terms and conditions of the sales were in the Internet sales bill and printed sales bill.

The opinion of the court was delivered by: Greene, J.


Before RULON, C.J., GREENE, J., and BRAZIL, S.J.

Michael R. Young appeals the district court's judgment against him on his claim for specific performance of a contract to purchase a tract of real estate resulting from his bid at an auction (tract 3). Edward G. Hefton, and other members of the Hefton family who were the sellers at that auction, cross-appeal the district court's judgment of specific performance in favor of Young on a different tract of real estate placed at auction by the Heftons (tract 4). We affirm the district court's conclusion that there was no contract formed on tract 3, but that an enforceable contract was formed on tract 4.

Factual and Procedural Background

The Hefton family hired an auctioneer to sell five tracts of land at public auction to be held October 8, 2005, and the listing agreement set a minimum price on each tract. The auction was advertised extensively in newspapers, by public sale bills, and on the auctioneer's website. These public notices were not consistent as to the terms of the auction, but none of them specifically stated there were minimums or that the auction was "with reserve." The sales bill, however, stated: "All contracts will be signed at the end of the auction. Earnest money is only refundable if seller rejects contract."

On the day of the auction, the auctioneer made announcements regarding the terms of each sale, but the evidence is conflicting as to the content of such announcements. Four witnesses and the auctioneer testified that the announcements mentioned that bids or contracts were subject to final approval by the sellers, whereas seven ...

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