You were sold a tree that should never have been on the market. I'm guessing that the lower three feet were covered by a flexible white plastic tube, right? The purpose of this tube in a nursery is supposedly to equip the tree with protection from critters, but in reality it usually serves as a home for insects and a disguise for problems such as canker and the really obvious rot that your poor tree has.
A reputable nursery will remove the plastic sleeve from each tree before accepting it from the supplying nursery; box stores never do this. If only some of the trees at a nursery have sleeves, then I would not shop there - if they don't offer a warranty, then they're intentionally hiding problems. I recommend that you dig the tree back up, place it back in its pot, and try to return it at the place you purchased it. If this was at a reputable nursery, there will be a warranty on the tree and you should be able to get a replacement (obviously, remove the plastic sleeve and inspect the trunk before accepting the replacement). If you purchased this at a box store, you may be out of luck.