It would be exremely unusual for a seatpost to be so long in proportion to a 50 cm frame that it couldn't be lowered WAY past where anyone might want to ride it. With a steel frame, I'm guessing it's stuck. The difference is easy to tell - can it be raised or turned?

Stuck seatposts can usually be freed with a LOT of effort and chemicals (Sheldon Brown's page has good suggestions) but I would want a MAJOR price break before taking a risk on a bike with a stuck seatpost.