In an Auction Sale Where Seller Specifically Reserves the Right to Accept or Reject the High Bid at a later time, the hammerfall signals only the end of the bidding, rather than the consummation of the sale

The Court of Civil Appeals Of Oklahoma, Third Division in East v. Brown, 986 P.2d 523 (Okla. Civ. App. 1999) held that in an auction sale where the seller specifically reserves the right to accept or reject the high bid at a later time, the hammerfall is only an end of bidding.  In such cases, the auction sale is not consummated when the hammer falls.  

East involved an auction sale in which Browns, owners of real property, (“Appellees”) contracted with Williams & Williams auctioneers (“Auctioneers”) to sell their inherited property in Tulsa.  Appellant East (“Appellant”) was the highest bidder.  Appellant testified that the auction announcement did not indicate it was a reserve auction; whereas, the Auctioneer and Appellees testified that the sale was subject to the seller’s approval of the high bid.  Appellant testified that at the end of the bidding, Auctioneer declared him the high bidder and said "sold." Appellant further testified that when he signed the contract after the bidding ended, the Auctioneer told him that the purchase was subject to probate court’s approval.  The Appellant testified that, on the next day, the Auctioneer called and informed him that the Appellees had rejected his bid.  The Appellant then sued for specific performance.  The trial court granted Defendants-Appellees' motion to dismiss for failure to state a claim. The dismissal order was reversed on appeal. The trial court then found for defendants and denied plaintiff's motion for a new trial.

The Appellant argued that he complied with the minimum bid requirement and Appellees did not withdraw the property prior to the fall of the gavel.  Therefore the auction sale contract was accepted at the instant of the hammerfall. Id. at 524

The Court in this case held that the general rule is that in a reserve auction, the seller may withdraw the property up until the "hammerfall."  However, there exists an exception to that rule in cases where the seller specifically reserves the right to approve or reject the high bid at a later time. Id. at 525 (citing  Cuba v. Hudson & Marshall, Inc., 213 Ga. App. 639, 445 S.E.2d 386, 388 (1994); J & L Investment Company, 233 Mich. App. 544, 593 N.W.2d 196, 1999 WL 41638 (Mich.App.).  The Court made it clear that in such cases, the hammerfall signals only the end of the bidding. Id.  It does not signal the consummation of the sale. Id. 

This Court found that the there is sufficient evidence to support the trial court’s determination that the sellers specifically reserved the right to accept or reject the high bid. Id.  The appellate Court affirmed that the bid was rejected by the sellers pursuant to a stated reservation of the right of approval. Id.   The Court affirmed the trial court’s decision because it found that the trial court's judgment is not contrary to the clear weight of the evidence. Id.  Also the Court affirmed the denial of Appellant plaintiff's motion for new trial. Id.