I am hoping that someone on the list can settle an argument between myself and a colleague...

If an institution sells (say in a fundraising auction) an antique item (say an autographed 1st ed. book) that was donated for the sale, but would really be more appropriately kept for the collection, is that a) illegal, b) unethical, c) neither of these, but still just not a good idea? Please cite a source to support your position if you can.