Case Name: Cornelius E. Byrne, Respondent, v. Fremont Realty Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1907-07-15
Citations: 120 A.D. 692
Docket Number: 
Parties: Cornelius E. Byrne, Respondent, v. Fremont Realty Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 120
Pages: 692–700

Head Matter:
Cornelius E. Byrne, Respondent, v. Fremont Realty Company, Appellant.
First Department,
July 15, 1907.
Principal and agent — auctioneer—revocation of authority to sell land — specific performance refused.
The authority of an auctioneer employed to sell lands may he revoked by his principal at any, time prior to the execution of. a written contract of sale although he has already knocked down the land to a bidder. .
If during the auction the principal publicly denies that the bid accepted was made by the person to Whom it was awarded and states that he will refuse to carry out the contract, the agency is revoked, the bidder charged with notice thereof, and the subsequent acts of the auctioneer in executing a memorandum of sale are not binding upon his principa].
The granting of specific performance rests wholly in the discretion of the court and it will not be decreed where it would be inequitable.
When during an auction the principal denies that the property has been knocked . ; down to the proper party and asks that the sale be reopened, and on the refusal of the auctioneer to do so,f revokes the agency, equity will not decree specific performance of a contract of sale subsequently executed by the auctioneer.
Houghton and Lambert, JJ., dissented.
Appeal by the defendant, the Fremont Realty Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of'the county of New York on the 1st day of February, 1907, upon the decision of the court rendered after a trial at the New York Special Term.
H. B. Davis [Henry S. Mansfield with him on the brief], for the appellant.
Abraham A. Silberberg, for the respondent.

Opinion:
Ingraham, J.:
This action was brought for the specific performance of a pur.chase of a piece of real property. The answer of defendant denied all the allegations of the complaint and set forth that the alleged contract of sale was void under the Statute of'Frauds. The court found that the defendant was the owner of a certain piece of land in the city of New York which included the land described in the' complaint; that the defendant engaged one George W. Bard as its auctioneer to -sell this property, and said property was offered for sale at public auction by said auctioneer; that the said auctioneer duly struck down and sold .to the plaintiff in this actión the land described in the complaint for the sum of $5,880, which said sum was the bid made and offered by the plaintiff and accepted as the final bid for said lands by the auctioneerthat the plaintiff after the said lands were knocked down to him subscribed in duplicate a memorandum of his' purchase and delivered one of these memoranda to the auctioneer and paid to the auctioneer on account of the purchase price the sum of $588, and received from the auctioneer' a memorandum acknowledging payment by the plaintiff of the said sum on account of the purchase price of the land as aforesaid, signed by the auctioneer, with a duplicate of the original terms of the sale subscribed by the defendant; that by the terms of sale the deed to the property sold was to be delivered at the office of the auctioneer on January 19, 1906, at which time'the balance of the purchase price over and above the mortgage was to be paid by'the purchaser; that the purchaser at the time and place named tendered and offered to pay to the defendant the balance of the' purchase price and was ready and willing to comply with the terms of sale, but the defendant refused- to convey the premises. The court also found that one Harry B. Davis, who was president of the. defendant corporation, and other persons besides the plaintiff made ' bids at such' auction'sale .on the land described in the complaint; that said Davis and, the plaintiff were seated near to each other in the auction room; that- after the bid for said lots reached $1,400 per lot the - bidding was limited to the plaintiff and the said Davis; that a bid of $1,470 per lot was made .at such auction sale- and after receiving shell bid the auctioneer knocked down the lots to the plain-' tiff for that sum ; " that immediately thereupon the said Harry B. Davis arose and publicly stated to the auctioneer in the presence and hearing of the plaintiff that the said bid of $1,470 per lot was his (Davis'), bid, and protested against the said lots -being knocked down to the plaintiff and requested the said auctioneer to put the said lots up for sale again, wliiclvthe said auctioneer refused to do; that upon the refusal of the said auctioneer to put up the said lots for sale again the said Harry B. Davis publicly stated in the presence and hearing of the plaintiff that the defendant would not deliver title under said sale; " that the payment of the ten per cent by the plaintiff and the execution of a receipt and memorandum of the sale was made after the said Davis had publicly claimed that the said bid of $1,470' per lot was his bid ; after said Davis had publicly protested against the said lots being knocked down to the plaintiff on said bid and after the said Davis had publicly requested the said auctioneer to put said lots up again for sale and after said Davis had publicly stated that the defendant would not deliver title.. under said sale to plaintiff ; that the defendant declined to accept the ten per cent of the purchase price of said, lots paid to .the auctioneer. And as a conclusion of law that the memorandum of purchase signed by the plaintiff and -delivered to the auctioneer,.' together with the terms of sale read to and delivered unto the plaintiff, and' the receipt of moneys on account of the purchase price signed by the defendant's auctioneer, constituted a valid contract for the sale of the' lands described in the complaint, and that the plaintiff is entitled to judgment directing the defendant y to specifically perform said contract, and judgment was. entered in accordance with this decision. .
The terms of sale which were subscribed by the defendant pro- - vided that the premises described would be sold under the direction of the George W. Bard Real Estate Company, George W. Bard, auctioneer, under the conditions that ten per cent of the. amount bid was to be paid to the auctioneer at the time arid place of sale for which a receipt would be given and twenty per cent of the. purchase money might be paid in cash on' the delivery of the deed on the 19th day of January, 1906, at the office of the George W. Bard Real Estate-.Company; that seventy per cent of the purchase money might be provided for to be paid by the purchaser assuming the mortgage now .on the property and executing to the vendor a bond and mortgage to cover the difference existing between the thirty per cent before mentioned and the amount of mortgage now on the premises to be assumed by the purchaser; that the bidding would be kept open after the property was struck ddwn, and in case any purchaser should fail to comply with the above conditions of the sale the premises would be put up for sale under the direction of. the auctioneer under the same terms of sale and the purchaser held liable for any deficiency. The memorandum of purchase executed by the plaintiff was as follows:
" I, C. E. Byrne have this day of December 19,1905, purchased the premises shown by the numbers, diagram O, 31E, 31F, 31G, 31H, on auctioneer's map or diagram, or as read at the beginning of sale, by description in terms of sale, for the sum of $1,470 each, and I hereby promise and agree to comply with the terms and conditions of the above mentioned sale as- read at the beginning of said sale. (Signed) CORNELIUS E. BYRNE.
" December 19, 1905."
. There was delivered to the plaintiff an instrument dated the same day which recited that there was received from " O. E. Byrne *. * the sum of 588 Dollars, being 10f0 of the amount bid by at Auction Sale held this date at by the George W. Bard Beal Estate Company, George W;.Bard, Auctioneer,"- and déscribing the property, signed " The George W. Bard, Beal Estate Go,, Auctioneer, G;eo. W. Bard, per O. T: Strassle.". The learned trial judge held that these 'instruments, taken together, were a sufficient contract in writing to satisfy the requirement of the Statute of Frauds. - . '
I have serious doubts whether these memoranda, taken together, were a sufficient compliance with the statute; but assuming that they were and that, if the authority of the auctioneer to complete the transaction had been unrevoked at the time the sale was' actually made and the transaction completed -by the payment of the ten per cent and the signing of the receipt by the auctioneer and the entry of the sale to the plaintiff in the auctioneer's book, a valid contract was evidenced by the writing, it seems to me clear .that the authority of the auctioneer to proceed.f urther with the sale was revoked by the. president of. the defendant in the presence of thé plaintiff. Immediately tipon the auctioneer's announcing that '.lie had'accepted plaintiff's bid the president of the defendant publicly and in the presence of the plaintiff objected to the bid' being received by the auctioneer.as such bid was not, the hid of the plaintiff. The president of the- defendant and the plaintiff were at the -time' the only bidders' for the property.. When the auctioneer announced that he had accepted plaintiff's bid the president of the defendant at once ¡untested against, awarding the property to the plaintiff claiming that it was his bid that.had been made at the price named .and insisting that the-property shoiild be again exposed for sale. At this time no memorandum -of any kind had been made. The only authority that the' auctioneer' had to make a sale of the property or to sign a'memorandum of sale which would bind-the defendant was-the authority conferred upon him by'the defendant under the terms of the sale. It cannot be disputed but that -at any . time prior to the completion of a valid sale, evidenced by some memorandum in writing, the defendant could, revoke the authority of the auctioneer to . sell the property. When 'the auctioneer refused to comply with the' request of the president of the defendant and insisted that he had knocked the property down to the plaintiff as the highest bidder, when in fact he was 'not, the president of the defendant publicly notified the auctioneer in the presence of the plaintiff that the .defendant would not comply with the contract and would not deliver title under - the said sale. As before stated, this was before a legal contract had been made; before there had been any entry of the sale to the plaintiff, or any'instrument of any kind signed by either the plaintiff, aucr tioneer or the defendant, or anything which evidenced the sale. Whether or not the plaintiff knew that' Mr. Davis was an authorized representative of the company,- there -was á statement made in his presence to the auctioneer which was heard; and understood by the auctioneer, who was assuming to act as the defendant's agent in making the sale, that his authority to make that particular sale had been revoked and that the company would not recognize it or comply with it. The authority of the auctioneer to proceed further was thereby revoked, and what he did subsequently was not as agent of the defendant. A statement by the person under whose authority the sale was being conducted, that the defendant revoked tlie authority of the auctioneer and would not carry out the contract, having been made in the presence of the alleged purchaser, he was then charged with notice of the fact that a person claiming to have authority to act for the defendant had revoked the agency, and if such person as a fact had the power to revoke such agency, then the act of the agent after the revocation of his authority could not bind the defendant. There is no question but' what the authority of Mr. Davis, as representing the company was known' to the auctioneer; that he had actual authority to revoke the agency of the auctioneer, and actually revoking such authority in the presence of the plaintiff was sufficient notice to the plaintiff that he could not accept an act of the auctioneer and hold the defendant. I think, therefore, upon the findings of the learned trial judge, that the authority of the auctioneer to continue this sale was revoked, a\id tli,at his subsequent entering the sale in his book and delivering the receipt to the purchaser, and accepting from the .purchaser ten per cent of the purchase price, was not under any authority of the defendant, and for that reason the plaintiff was not entitled to specifically enforce the contract against the defendant. But, assuming that this revocation of authority did not bind the plain tiff, I do not think that a court of equity should specifically enforce a contract made under such circumstances.
.The general rule under which a court of equity acts in determining whether or not the specific performance of a contract should be enforced is well settled. Judge Martin in Stokes v. Stokes (155 N. Y. 581, 590) says: " Specific performance will never be decreed where it would be inequitable. It is immaterial whether the fact that it is inequitable arises from-the provisions of the contract, or.from external facts or circumstances which affect the situation and relations of the parties, for in either case it may constitute a sufficient ground for a court óf equity to withhold this peculiar relief and to leave the parties to-their legal remedy." In Heller v. Cohen (154 N. Y. 299) it is said" that " the right of specific perforriiance by a. decree of a court of equity rests in judicial discretion-, and may be granted or withheld upon a consideration of all the circumstances and in the exercise-of such discretion." And in Gotthelf v. Stranahan (138 N. Y. 345) it was said: " But even if the contract by its'true interpretation imposes upon the defendant the legal obligation to pay the assessment, this is not decisive of the right of the plaintiff to relief by way of specific performance. This equitable remedy cannot be claimed as a matter of right. It is discretionary with the court 'to grant or withhold it in furtherance of justice or to prevent injustice. Where by reason of circumstances attending the making of the contract, such as fraud, accident, mistake, or where unconscionable advantage has been taken, or where by reason of circumstances which have intervened between the making of the contract and the bringing of the action, the enforcement of the equitable remedy would be inequitable and produce results not within the intent or understanding- of the parties when the bargain was made,-and. there- has been no inexcusable laches or inattention by the party resisting performance in not foreseeing and providing for contingencies which have subsequently arisen, the court may and .will refuse to specifically enforce the contract and will leave- the party to his legal remedy. The'cases are very numerous under this head, and no hard and .fast rule can be formulated by which it can be readily determined how the discretion of the court in a given case should be exercised." (See, also, Willard v. Tayloe, 8 Wall. 564.)
Under the circumstances disclosed in this record I think this contract, if there was one, should not be specifically enforced. The property was to be sold at auction by the defendant corporation to the highest bidder. Exposing property for sale under such circumstances is based upon the understanding' that there should be a reasonable opportunity to all bidders to make their bids, aud it is the person willing to give the highest price for the property to whom the defendant was to .convey. We may assume that the two parties who were bidding for the property each made a bid, and the auctioneer, noticing one bid and not the other, accepted the bid of the party that he had noticed. His attention was at once called to the mistake, and a request to open the sale so as to enable it to be ascertained which of the two parties making, the bid would be willing to give the most for the property was made by one bidder who also represented the vendor at the sale, which request the auctioneer refused. Unless the auctioneer is to be convicted of deliberate fraud, of which there is no evidence, there was here a clear case of a mistake upon which was based the act of the auctioneer in accepting the plaintiff's bid as the highest bid when in fact it was not. The evidence seems to be undisputed that the price bid for the property was quite inadequate, and that if the auctioneer had continued to receive bids after the mistake-that he had made, it is a reasonable inference to be drawn from the testimony that a higher price would have been obtained for the property. The immediate repudiation of the transaction by the vendor to the auctioneer in the presence of the plaintiff and.the persistent refusal of the vendor to recognize the authority of the auctioneer to procéed further and to give a contract which would bind the defendant, releases the case from any question of laches by the defendant. It seems to me that there was here presented a clear case of a contract based upon a mistake which went to the very essence of the agreement, the acceptance by the auctioneer of the plaintiff's bid, and that under such circumstances it would be most inequitable for a court of equity to specifically enforce, the contract. The court should have left the parties to their action at law to recover' such damage as the law awards for the breach of such a contract. Where the auctioneer had clearly .acted upon a mistake in announcing that the plaintiff had been the highest bidder when another bidder had- made at least'a bid for the same amount, it. was the plain duty of the auctioneer to have again put up the- property for sale and ascertain which of the' contending bidders would be willing to pay the most-for the. property.; and where, instead of performing this duty, he persistently insists upon recognizing the bidder that he saw and refusing to recognize another bidder who claimed to have made a bid for the same amount, and refused to recognize the right of- his employer or principal to repudiate his authority to proceed further, and award the property to the bidder who was not the highest bidder is a plain violation of what I conceive to be his duty. I certainly think that a situation is presented which justifies a court of ecpiity in the exercise of its judicial. discretion in refusing to specifically enforce the contract.
For the reasons stated I think the judgment-appealed from should be.reversed and a new trial ordered, with-costs to the appellant to abide the event. -
Patterson, P.- J., and Clarke, J., concurred; .Houghton and . Lambert, JJ., dissented.
Judgment reversed, new trial" ordered, costs to appellant to abide event.