I bought an iphone from an auction as the owner's assets were sold to defray costs. How can I unlock and use this iphone in my possession

Are you facing an Activation Lock?

Contact the seller, cause he is the one, who can remove it. Provide him with these instructions: Turn off Find My iPhone Activation Lock - Apple Support

If you can't reach him, then there's nothing that you, we or even Apple could do. This iPhone is useless to you.

I'm sorry.

...OR need to submit the original proof of purchase, to be received form the previous owner or reseller, in order to remove the account already linked to the device, after which new Apple ID from the new owner can be used to sign into the device.

Apple will only un-Activation Lock a device for the original owner, not for a subsequent owner even if he has the purchase documents (unlikely). As you say, only the previous owner, who set the lock, can unlock the device; and buying a device without checking this has been done leads to this issue which has affect quite a large number of posters here.

Then contact Apple Support. If you do not meet their requirements for unlocking the device, then there's nothing we could do.

Apple will not unlock a used phone, only for the original owner.

I think that mokiti64 explained his problem to an Apple Solutions Consultant and my comment was only related to what he posted, originally I've never said that Apple WILL DO IT. But he could try

It is not clear what kind of unlock you are talking about. If the unlock is about the carrier, network unlock, apple can not do it. You need to contact the network the device is locked to. If the issue is about the activation lock, device already linked to an Apple ID to the previous owner, then still you need to contact the previous owner or reseller. OR need to submit the original proof of purchase, to be received form the previous owner or reseller, in order to remove the account already linked to the device, after which new Apple ID from the new owner can be used to sign into the device. No other way around. That is why people trying to buy a second hand apple device always need to confirm the previous owner has signed out from iCloud, iTunes and App Store from that device.

Are you in fact talking about the phone being locked to a particular carrier's SIM, rather than the Activation Lock which prevent you accessing the phone at all? If that's the case none of the above remarks apply, however you will have to approach the carrier (service provider) - Apple can't unlock the SIM.