Romani v. Harris

McWilliams, J.,

dissenting:

I cannot agree that the requirements of the Statute of Frauds, Code, Art. 95B, § 2-201 (1) (1964 Repl. Vol.), were satisfied. I would modify the decision of the court below by deducting from the total award the $4,600 purchase price of the painting.

It is settled that the provisions of the statute apply to auction sales. And it is generally held, as the majority points out, that the auctioneer or his clerk is the agent of both seller and purchaser for the limited purpose of making and signing a memorandum sufficient to satisfy the statute. See 28 A.L.R. 1114 , 1118 (1924) ; J. Bateman, Law of Auctions 20 (1883) ; 1 S. Williston, Sales § 115 (1948) ; 7 Am.Jur.2d, Auctions and Auctioneers § 36 (1963) ; Restatement (Second) of Contracts *399 § 211, comment b (Tent. Draft No. 4, 1969). The dual role of the auctioneer has long been recognized by this Court. E.g., Singstack’s Ex’rs v. Harding, 4 Har. & J. 186 (1816).

Mrs. Romani does not argue that the rule noted above has not been widely accepted. Her argument is that the auctioneer’s proprietary interest in the painting precludes the application of the general rule. The auctioneer’s position as a dual agent, she continues, is based upon the premise that he has no interest in the subject matter of the sale and would therefore have no motive fraudulently to bind the purchaser. The reason for the rule, she concludes, fails where, as in this case, the auctioneer is, in fact, the owner of the painting.

In his treatise on the law of auctions Mr. Bateman states that “[i]f the auctioneer is himself the vendor, or if he has himself an interest in the contract of sale, besides being a nominal party to it, he cannot bind the purchaser by signing a memorandum in writing to take the case out of the statute of frauds * * J. Bateman, supra at 157 n 1. Professor Williston points out that:

“If the auctioneer is himself interested as a seller, he cannot by his signature bind the buyer, even though the buyer was aware of the auctioneer’s personal interest and expressly assented to his signing the memorandum. The difficulty is insuperable of one party to a transaction signing a memorandum as agent for the other.” 1 S. Williston, supra § 115 at 337 (emphasis added).

7 Am.Jur.2d, supra § 39 at 253-54, indicates that:

“The rule that the auctioneer may bind the purchaser in making the memorandum of sale does not apply where the auctioneer himself is the owner of the goods being sold. The chief reason in support of the rule that he may be the agent of the purchaser to bind him by his *400 memorandum is that he is supposed to be a disinterested person, having no motive to mistake the bargain and entitled to the confidence of the purchaser. This reason fails when he is a party to the contract and a party in interest also; the rule accordingly is that where the auctioneer himself is the owner of the goods being sold, he has no implied authority to make the memorandum of sale on behalf of the purchaser.”

See 1 H. Reed, Law of the Statute of Frauds § 319 at 498 (1884).

The cases in this country in which this question has been raised uniformly support the limitation placed on the auctioneer’s dual role. In the oft cited case of Bent v. Cobb, 75 Mass. 397 (1897), the Massachusetts court held,that the pecuniary and contractual interest of a guardian who acted as auctioneer in selling land of his ward would preclude his executing a memorandum in writing to bind the purchaser so as to satisfy the requirements of the statute. The court noted the dual agent rule applicable to auctioneers but pointed out that :

“* * * this rule is not applicable to cases where the auctioneer is also himself the vendor. The great mischief intended to be prevented by the statute would still exist, if one party to a contract could make a memorandum of it which would absolutely bind the other. If such were its true construction, .it would be a feeble security against fraud; or rather it would open a door for its easy commission. A vendor could fasten his own terms on his vendee. If it was a written contract binding on the purchaser, he could not show by parol evidence that the terms of the bargain were incorrectly or imperfectly stated. He could not vary or alter it by the testimony of those present at the sale. The publicity of a sale by auction would be no *401 safeguard against a false statement of the terms of sale, made in the written memorandum signed by a party acting in the double capacity of auctioneer and vendor. The chief reason in support of the rule, that an auctioneer, acting solely as such, may be the agent of both parties to bind them by his memorandum, is that he is supposed to be a disinterested person, having no motive to misstate the bargain, and entitled equally to the confidence of both parties. But this reason fails when he is the party to the contract and the party in interest also. The purpose of the statute was, that a contract should not be binding unless it was in writing and signed by the party himself to be charged thereby, or by some third person in his behalf, not a party to the contract, who might impartially note its contents.” Id. at 397-98 .

See Tull v. David, 45 Mo. 444 (1870); Smith v. Harrigan, 15 N.Y.S. 852, 853 (Sup. Ct. 1891).

So far the majority and I have not drawn swords. I cannot agree with the majority, however, that the auctioneer’s clerk should be permitted to do what the auctioneer, acting alone, cannot do. There would seem to be no sound reason to assume that a clerk, under the direction and control of an auctioneer who has a proprietary interest in the subject matter of the sale, will act as a disinterested third person for the purpose of binding the purchaser by executing a memorandum. Nor do the authorities cited by the Chief Judge compel me to reach a contrary conclusion.

As noted by the majority the “leading American case” of Johnson v. Buck, 35 N.J.L. 338 (1872), purports to follow English law. Therefore, I think that a brief discussion of the law relied upon by the New Jersey court is warranted.

The leading English cases are Farebrother v. Simmons, 7 Eng. Rep. 120 (K.B. 1822) and Bird v. Boulter, *402 4 B. & Ad. 443 (K.B. 1833). In Farebrother an action was brought by the auctioneer against the purchaser of goods at an auction sale. It does not appear in that case that the auctioneer was also the owner of the goods sold, as in the case at bar. The purchaser, nevertheless, defended on the ground that the, auctioneer’s notation of the purchaser’s name was not sufficient to satisfy the statute. The court agreed. It theorized that the auctioneer’s role as plaintiff in the suit made him one of the contracting parties. It therefore applied the universally accepted rule that one contracting party cannot act as the agent for the other for the purpose of executing a memorandum sufficient to satisfy the statute. In his opinion, Chief Judge Abbott indicated that

“[i]n general, an auctioneer may be considered as the agent and witness of both parties. But the difficulty arises, in this case, from the auctioneer suing as one of the contracting parties. The case of Wright v. Dannah seems to me to be in point, and fortifies the conclusion at which I have arrived, viz. that the agent contemplated by the legislature, who is to bind a defendant by his signature, must be some third person, and not the other contracting party upon the record.” Id.

As I see it, the court in Farebrother did not allow the auctioneer to act as dual agent because it assumed, erroneously it seems, that the mere instigating of an action by the auctioneer gives him too great an interest to allow him to execute the memorandum.

The decision in Farebrother was followed by the case of Bird v. Boulter, supra. In that case the auctioneer brought an action to enforce the contract of sale against the successful bidder. It is important to note that the auctioneer was not the owner of the goods in question. Id. at 4 B. & Ad. 443. It is also clear that the memorandum was executed by the auctioneer’s clerk. The defendant, in reliance upon Farebrother, raised the de *403 fense that the statute was not satisfied. The plaintiff argued that it should not make any difference whether the auctioneer or the owner brought the action:

“* * * the defendant is either bound by the contract originally, or not bound: if he is bound, it does not matter by whom the action is brought, so that it is a party entitled to enforce the contract by action; and this was the view taken by the learned Judge at the trial.”

Id. at 444.

The court agreed with the plaintiff as to the outcome but chose not to follow his rationale. According to the court, Farebrother was not controlling inasmuch as, in that case, it was the auctioneer who executed the memorandum and brought the action, while, in the case before it, the clerk executed the memorandum. The following excerpt from the opinion of Judge Littledale illustrates his concern as to the applicability of the Farebrother decision and the approach which he chose to follow:

“An auctioneer is enabled by law to sue the purchaser, but, according to the rule insisted upon for the defendant, an action of this kind could not be maintained by the auctioneer. I think that a clerk employed as Pitt was in this case, must, in an action brought by the auctioneer, be considered as his agent for the purpose of taking down the names, and also as the agent of the several persons in the room for the same purpose, and to prevent the necessity of each purchaser coming to the table to make the entry for himself.” Id. at 447.

It therefore appears that the precise question raised by Mrs. Romani has not been resolved by the English cases. There are no English decisions which indicate that an owner-auctioneer’s clerk can execute a memorandum although the owner-auctioneer cannot. The distinction drawn by the court in Bird v. Boulter, supra, *404 was made in the context of prior decisions which promulgated the strict rule that the nonowner-auctioneer who brings an action against the purchaser cannot also act as the agent of that purchaser and execute a memorandum sufficient to satisfy the statute, inasmuch as his status as the “contracting party on the record” gives to him too great an interest to act impartially.

Nor does Johnson v. Buck, supra, support the distinction drawn by the majority. It is particularly important to note that the auctioneer in Johnson was not also the owner of the goods. Moreover, the court’s decision, as noted, was predicated upon the rulings in the earlier English cases discussed above.

The conclusion of Professor Williston which is referred to by the majority appears to be unfounded. A careful examination of his treatise will reveal that the decision in Johnson v. Buck, supra, was relied upon to support his belief that the limitation placed upon the owner-auctioneer does not apply to his clerk. No further comment should be necessary. See 1 S. Williston, supra, § 116 at 336 n 11.

The rules set forth in the Restatements cited by the Chief Judge do not appear to be applicable where the auctioneer is also the owner.

Moreover it appears that the majority’s decision is not supported by the Maryland cases. We are not bound by the obiter dicta found in the opinion of our predecessors in Stoddert v. The Vestry of Port Tobacco Parish, 2 Gill & J. 227 (1830). In that case it appeared that while the plaintiff-auctioneer executed a memorandum at the time of the sale, he could not produce it in the court below. Therefore, the plaintiff attempted to show by parol evidence the terms of the sale. Although the defendant objected, the court below determined that the parol evidence was admissible. The defendant appealed and this Court reversed. Judge Archer, for the Court, held that “[t]he parol evidence offered of a sale of a pew was inadmissible, because it would have established a contract different from that contained in the *405 lost memorandum. No parol evidence is admissible to add to, or vary the memorandum.” Id. at 229. Also raised by the defendant on appeal was the defense, as noted by the majority, that the statute had not been satisfied. Although Judge Archer chose to consider this point (and another as well), it is clear that the remainder of his opinion has little relevance to the Court’s actual disposition of the appeal.

On the other hand it was squarely held in Ijams v. Hoff man, 1 Md. 423 (1851), that the clerk of the vendor of land could not assist the auctioneer and execute a memorandum sufficient to satisfy the statute. In I jams, the vendor of land brought an action to recover the price bid by the defendant at an auction sale. It appeared from the record that the party who made the memorandum of sale was acting as the plaintiff’s clerk and not the auctioneer’s. Chief Judge LeGrand, for the Court, pointed out that:

“For the convenience of trade, the courts have recognized the auctioneer as the agent of both parties, and the making by him of a memorandum of sale, has been held a sufficient compliance with the statute, to bind the purchaser; but it has never been held that the clerk of any other person than the auctioneer, without the assent of the purchaser, can bind him by any memorandum.” Id. at 435 (emphasis added).

The reason for not permitting the vendor’s clerk to execute a memorandum which would bind the successful bidder under the statute was set forth by the Supreme Court of Georgia in Howell v. Shewell, 96 Ga. 454 , 23 S. E. 310 (1895) :

“Where the owner employs an agent to sell property, and this agent, in turn engages the services of an auctioneer to conduct the sale at public outcry, the agent should no more be permitted to act as clerk for the auctioneer than *406 the owner himself. Such agent represents the owner, and no one else, and is, in perhaps a modified degree, under the same kind of temptation which might induce the owner himself to make a false entry. At any rate, the agent is certainly not, as to the matter in hand, disinterested, and no one who is not entirely so should be permitted to act as the auctioneer’s clerk.” Id. at 23 S. E. 310 , 311 (emphasis added).

I think it can be most reasonably inferred that the Ijams decision would have been the same if the clerk had been in the employ of the owner-auctioneer. In either case he would most likely have been precluded from executing a binding memorandum inasmuch as his interest in the sale would have been too great to allow him to act impartially.

Rather than indicating that the disability imposed upon the auctioneer does not extend to his clerk, the decision in Reckord Mfg. Co. v. Massey, 151 Md. 348 (1926), appears to indicate to the contrary. In that case the plaintiff’s traveling salesman secured an oral order from the defendant for a quantity of cotton seed meal. Subsequently the salesman mailed the buyer a letter of confirmation. When the defendant refused to accept delivery of the goods the action was brought. The buyer raised the defense that a memorandum was not executed to bind him under the statute. The plaintiff asserted that the letter of confirmation sufficed. This Court agreed with the buyer. Judge Parke for the Court pointed out that the defendant would be bound if the salesman could be deemed his authorized agent (citing the auction cases). He further noted however that “[a] travelling salesman is presumably not authorized by one who buys of him to sign a contract for the customer as purchaser.” Id. at 352 . He went on to say that

“* * * there was nothing in the nature of the salesman’s occupation which conferred upon him the authority to sign for both the seller *407 and the buyer, as in the case of an auctioneer or a broker, who become indifferent middlemen when the sale is made. Moore v. Taylor, 81 Md. 644, 677 ; Williams v. Woods, 16 Md. 220 ; Ijams v. Hoffman, 1 Md. 423, 436 ; Austin, Nichols & Co. v. Lingo, 136 Md. 183, 190 .” Id. at 352-53.

The cases cited by Judge Parke were those in which the auctioneer was not also the owner of the goods sold. It therefore appears that the traveling salesman was prevented from executing a binding memorandum ex parte because he was the employee of the vendor and could not be considered as an indifferent middleman. His authority to execute a memorandum for the buyer, like that of his employer, had to be actual and could not be inherent. Likewise, I think that the authority of a clerk to execute a memorandum, like that of his employer, the owner-auctioneer, must also be actual.

Mr. Browne, in his treatise on the statute of frauds, fortifies my position. During his discussion of the English court’s decision in Bird v. Boulter, supra, he points out that

“* * * though the entries at an auction sale should be really made by the clerk of the auctioneer, still, in this view [of the Bird court], the auctioneer could read it in evidence upon an action brought by himself. If the auctioneer were in any just sense a party in interest, or a party to the contract, it would be hard to admit the signature of his clerk as competent evidence, his own not being so.” C. Browne, Statute of Frauds § 368 at 499 (5th ed. 1897) (emphasis added).

Harris also argues that the alleged $100 deposit was sufficient to satisfy the part payment exception to the statute, Code, Art. 95B, § 2-201 (3) (c) (1964 Repl. Vol.). Although the majority did not have to reach this *408 question in view of its decision that the requirements of § 2-201 (1) were satisfied, I shall do so here since I cannot agree with the majority’s conclusion. It is apparent that if the appellee satisfied the requirements of the part payment exception then my dissent is in vain. It seems to be settled that a deposit made after the close of the bidding is evidence that a contract has been reached. Montgomery v. Pacific Coast Line Bureau, 94 Cal. 284 , 29 P. 640 (1892); Ryan v. Gilbert, 320 Mass. 682 , 71 N.E.2d 219 (1947); 7 C.J.S. Auctions and Auctioneers § 7 (f) at 1258 (1937); 7 Am.Jur.2d Auctions and Auctioneers § 34 at 250 (1963). The effect of a deposit made before the auction is far from settled. It may be nothing more than an admission fee. It may be simply a charge for the catalogue, stiff enough to keep out triflers. It may be refundable in whole or in part. I do not attach any spécial significance to the condition of sale which provides that “deposits shall apply to all purchases made at this sale and not to any one particular lot,” especially in light of another condition which requires a “cash deposit of not less than 10% of the purchase price.” (Emphasis added.) It is at once obvious that the amount of the deposit cannot be determined until after, the item has been struck off to the successful bidder and it seems to me that this is the kind of deposit which must be made if the requirements of the statute are to be met. In any event the evidence does not establish to my satisfaction that Mrs. Romani deposited any money. Had Judge Grady found as a fact that she had paid $100 on account of the picture I might have difficulty concluding that such a finding was clearly erroneous. Since he did not so find and since I think otherwise it would seem to follow that the requirements of the statute have not been met. See Hearn v. Ruark, 148 Md. 354 (1925); Wenger v. Grummel, 136 Md. 80 (1920).

My opinion might have been different had the auctioneer, when he reached the catalogue item concerning the Sully portrait, announced to those assembled at the sale that he, Mr. Harris, was offering for sale this item *409 which was owned by him and had announced also that the highest bidder to whom the item would be sold should immediately approach the clerk’s desk and sign a memorandum of sale indicating his intention to be bound as purchaser. I cannot believe that the employment of such a procedure would disrupt the progress of an auction sale. In this case, for example, the Sully portrait was the only item owned by the auctioneer which came within the ambit of the statute of frauds. I do not suggest the prohibition of sales by an owner-auctioneer of his own property. However, I think that the law ought to require an auctioneer to make a full disclosure of his ownership prior to offering the item for sale.

Judge Marbury has authorized me to state that he concurs in the views herein expressed.