The Consignment That Cannot Be Accounted For

The summary is not an accounting - it is a total, and totals cannot be checked.

A consignor is entitled to know what happened to each item she entrusted, because the auctioneer is handling her property and her money. A proper accounting shows:

• Each lot sold: lot number, description, hammer price, and the buyer's premium treatment if any (and whether the premium was charged to the buyer or taken from her proceeds).
• Each lot unsold: that it did not sell, why (no bid, reserve not met), and where the item is now - held for return, re-offered, or disposed of, and under what authority.
• The commission calculation: the percentage, the base it was applied to, and every fee added on top (lot fees, photo fees, hauling, no-sale fees), each with its contractual authorization.
• Charges to the consignor: every deduction itemized, because the auctioneer bears the burden of proving each charge was authorized by the consignment agreement.
• The disbursement record: date, amount, and method of each payment.

Why the summary fails: it cannot be reconciled. Nora cannot tell whether the $861 is a 20% commission or a 12% commission plus $340 of unexplained fees, and she cannot tell whether her three box lots were stolen, sold, or thrown away. "$861 commission and fees" does not answer the question the consignor asked.

What the auctioneer may not do: defend the summary as "the statement I always send" or treat the consignor's questions as an accusation. The duty to account is not satisfied by a total.

The check is fine. The Zelle payment is a problem, and it looks worse than it is because it came out of the wrong account.

The company check for $2,000: ordinary. It draws on a business account, it is traceable, and it ties to the settlement statement.

The Zelle payment for $1,449 from the auctioneer's personal account:

• It destroys the audit trail. Payouts to consignors should come from the business account so that the payment, the settlement statement, and the consignor's file reconcile in one place. A personal-account payment creates a gap and forces the auctioneer to prove a negative - that the Zelle transfer was a payout and not something else.
• It looks like commingling in reverse. Even if the auctioneer was reimbursing the business from personal funds, the pattern suggests that consignor money was not segregated and that the accounts were being used interchangeably. Once the pattern is established, every other payout is going to be questioned.
• It creates reporting and tax problems. A personal account moving business money is a bookkeeping problem for the auctioneer and a documentation problem for the consignor.
• It may violate the trust-account requirement if client funds were ever held outside a designated escrow account, even briefly.

What should have happened: all consignor proceeds held in the designated client/escrow account, paid out by company check or company ACH from that account on the settlement date, with the payment reference and lot schedule attached.

Now: the auctioneer should document the Zelle payment with the bank record, a written explanation tying it to the settlement statement, and a correction of the file so the payout chain is complete.

Exposure:

• The duty to account and the duty to keep records are separate obligations. Losing the source records does not suspend the duty - it makes proving compliance harder. Failure to maintain adequate records of a consignment sale is itself a ground for discipline, independent of whether the money was right.
• The burden is on the auctioneer, not the consignor. If the auctioneer cannot show that the $861 was authorized, a dispute resolver is likely to resolve the ambiguity against the party who should have kept the records. The same logic applies to the three box lots: if the auctioneer cannot show they were returned, re-offered, or disposed of under the consignment terms, the default assumption is that the consignor is owed for them.
• Adverse inference. A missing electronic file, especially one lost after the consignor started asking questions, invites the argument that the records would have been unfavorable.
• Retention issue. Records from a sale must be kept for the period required by the Act and rules; "the laptop died" is not a retention plan, and 14 months is well inside any reasonable retention window.

How to reconstruct:

1. Pull every independent record that survives: bidder registration and buyer invoices, credit card and payment processor reports (these usually list lot numbers and amounts), clerk sheets, the auctioneer's own bid-calling notes, photos and catalog pages, the consignment agreement, and any online platform reports.
2. Rebuild a lot-by-lot schedule from those sources and mark each entry as verified or estimated, stating the source.
3. Recompute the settlement and, if the reconciliation shows Nora was underpaid, pay the difference with a written correction. If it shows she was overpaid, do not unilaterally claw it back - raise it in writing.
4. Resolve the three box lots in writing: produce them, or show the consignment clause authorizing disposal and what was done.
5. Deliver the itemized accounting with the reconstruction methodology disclosed, and stop using a personal account for client payments.

Takeaway: records are the defense. An auctioneer who can produce a lot-by-lot schedule can win an argument with a consignor; one who cannot has already lost the benefit of the doubt.