For a variety of reasons, potential sellers of art like to remain anonymous when the consign works to auction houses. The New York Court of Appeals recently agreed to consider an appeal of a controversial decision that has the potential to curtail auction anonymity in New York.
In Jenack Inc. v. Rabizadeh, the defendant submitted an absentee winning bid of $400,000 for an antique Russian box to the plaintiff, William J. Jenack Estate Appraisers and Auctions, Inc. The “clerking sheet” that recorded the transaction identified the consignor of the work by a numeric code, in order to maintain his or her anonymity. Plaintiff subsequently invoiced defendant, but defendant, for whatever reason, never paid for the antique.
Plaintiff then filed suit to recover for breach of contract, and both parties moved for summary judgment, with plaintiff prevailing. However, on appeal, the Second Department sided with the defendant, finding that the statute of frauds, which requires certain contracts to be in writing, was violated.
New York General Obligations law §5-701, requires, among other things, that a written agreement for goods sold at a public auction list the name of the purchaser and “the name of the person on whose account the sale was made.” Although separate writings can be pieced together to satisfy the statute (indeed, that is what happened here to name the defendant), plaintiff failed to submit any writing that identified the name of the consignor. The Court held that the number on the clerking sheet was insufficient, violating the statute of frauds. Thus, plaintiff could not enforce the sale, and summary judgment was awarded to the defendant.
Therefore, as the law currently stands, if an auction house wants to enforce a sale, it must reveal the name of the consignor to the purchaser. We will continue to follow this case and report on how the Court of Appeals addresses this interesting issue.
If you would like further information, please write to Mike Bono.