Purchase Story

Iowa Court Affirms Auctioneer Overcharge

Two courts in Iowa have ruled in favor of a consignor who claimed that he was overcharged. On August 16 the Court of Appeals of Iowa affirmed the 2016 lower court ruling that auctioneer Tom Harris and Tom Harris Auction Center, Marshalltown, Iowa, had overcharged a consignor, Kevin Rowley, who was awarded $17,194 plus interest by the court.

Kevin and Beth Rowley dissolved their marriage in 2009. They could not agree on the value of their antiques collection, and a court ordered: “The antiques and collectibles of the parties shall be placed into the hands of Tom Harris of Harris Auction for sale and disposition.”

Harris testified that he said the collection should be taken to his storage facilities, identified, marked, photographed, and made ready for sale. Harris thought it might take ten sales to sell it all, splitting up the collection into various specialty sales, and said that the normal commission was 20% plus advertising costs. He offered to sell the collection for a 15% commission plus advertising.

The auctions were held over the course of a year and brought in $407,462.50. Harris deducted his commission and advertising costs, along with $6383 for moving expenses and $39,810 for 2654 hours of labor. Kevin Rowley thought the expenses, including the hours of labor, were excessive.

Rowley filed suit in February 2015, alleging that Harris had overcharged for labor and expenses of moving. He argued that the seller’s commission paid for organizing the property for sale, photographing and cataloging it, and “otherwise dealing with the property” after it arrived at the Harris facility.

Waterloo, Iowa, auctioneer Rich Penn testified as an expert for Rowley, telling the court that if property is moved about after being placed in the possession of the auctioneer, those expenses must be absorbed by the auctioneer, including cleaning, organizing, fixing, when necessary, and photographing the items for sale.

The court ruled in Rowley’s favor, noting that Harris was entitled to a 15% commission, 10% advertising fee, the buyer’s premium, and “$15 per hour for labor transporting the goods to his place of business.”

The court reviewed the hours submitted and determined that 787 hours of the 2654 hours, roughly 30%, claimed under the $15 per hour labor costs was “a reasonable amount of time for the gathering, identifying, collecting, and transporting of the goods to the Harris auction facility. The work incurred subsequent to delivery to the auction site must be absorbed by Harris.” Labor expenses incurred after the property was moved to Harris’s business location “are charges ordinarily and customarily absorbed by the auctioneer as part of his service. The auctioneer is reimbursed for those expenses through the commission and the buyer premium.”

Harris appealed the original October 2016 ruling, claiming that evidence did not support the court’s conclusion that he had breached the agreement or that Rowley had suffered damages as a result of the breach. Harris noted that there was no written agreement and said the only terms of the agreement that could be discerned from the record were his 15% commission and advertising costs. Harris asserted that there was no agreement between the parties “as to what was to be included in the commission and marketing percentages or transport costs.” Harris claimed that his testimony established that he had agreed to the 15% commission arrangement because he believed he could conduct some of the auctions at Rowley’s property but that Rowley’s behavior at that time necessitated Harris’s taking custody of all of the property immediately and holding all auctions at his location, which substantially increased his costs in light of the amount of property to be sold. He likewise asserted that even if there were evidence of the terms of the agreement, there was no evidence that he had breached the agreement or that Rowley had sustained damages.

The appeals court found that “substantial evidence supports the district court’s interpretation of the commission in the parties’ agreement and its conclusion that by charging for expenses and labor after taking possession of the property, Harris breached the agreement.”

Originally published in the October 2017 issue of Maine Antique Digest. © 2017 Maine Antique Digest

comments powered by Disqus
Web Design By Firefly Maine Maine Web Design