In Mississippi, is it Permissible for an Auctioneer as Part of His Contract to Guarantee a Sum Certain to be Paid to the County on an Absolute Auction?

Mr. Thomas H. Dyson
AGO 93-322
No. 93-0322
Mississippi Attorney General Opinions
July 13, 1993

         Mr. Thomas H. Dyson
         Deputy State Auditor
         Office of the State Auditor
         3750 I–55 North Frontage Road
         Jackson, MS 39211
         RE: AUCTIONEERS

Dear Mr. Dyson:
         
        Attorney General Mike Moore has received your letter of request and has assigned it to me for research and reply. Your letter poses the following matter for consideration:
    
        I am writing to request an official opinion from you concerning Section 19–3–69(h), Mississippi Code Annotated (1972 amended). Section 19–3–69(h) gives county boards of supervisors authority to contract with auctioneers to sell county personal property pursuant to the provisions of Section 19–7–5, Mississippi Code Annotated (1972 amended), and the standards established by this office. I have enclosed a copy of the standards established by this office for your reference.
    
    This office's question is as follows:
        
    Is it permissible for an auctioneer as part of his contract to guarantee a sum certain to be paid to the county on an absolute auction?
    
        The auctioneer or his employees would not purchase the county property prior to the auction and they would not obtain ownership of the county property if the sale price received during the auction is below the guaranteed price. The ownership of the county equipment would be transferred only to the highest bidder. The transfer of ownership to the highest bidder would occur even if the bid is below the guaranteed price requiring the auctioneer to make up the difference.
    
        This office has been advised that a guaranteed price alleviates any anxiety the county board of supervisors may have about entering an absolute auctionand that an absolute auction draws a larger crowd to bid on equipment.
    
        We are aware of no provision under state law that would prohibit the county from entertaining a contract with a professional auctioneer wherein theauctioneer guarantees a minimum price. However, as provided in the Department of Audit regulations, such arrangement must provide that the sale be an arms length transaction to the highest bidder, and further that the auctioneer, his agent, and members of his firm are prohibited from purchasing the property being auctioned. To allow otherwise could taint the credibility of the auction process and frustrate the goal of obtaining the highest possible price for the county's surplus equipment.

Sincerely yours,
          
    MIKE MOORE, ATTORNEY GENERAL
    
    Samuel W. Keyes, Jr., Assistant Attorney General