When John McEnroe partnered with Lawrence Salander to purchase Arshile Gorky’s Pirate II back in 2004, he could not have imagined that he would eventually have to step into a different kind of court just to get back what was rightfully his. But that is exactly what he did in The Dorothy G. Bender Foundation, Inc. and John McEnroe v. Carroll, after Salander, his partner in the joint venture, traded the painting away without his knowledge.
When McEnroe agreed to purchase the painting with Salander, the now infamous fraudster committed his first fault by entering into a similar arrangement with Morton Bender to purchase the same painting. After taking money from McEnroe and Bender, Salander purchased the painting in 2004 and led both men to believe that Pirate II belonged to them. Two years later, he committed his second fault when, unbeknownst to McEnroe and Bender, and using the name of a fictional entity, he swapped Pirate II for two lesser valued works from Joseph Carroll in 2006. After learning that Carroll was in possession of their painting, McEnroe and Bender filed suit to recover it.
Article 2 of the Uniform Commercial Code usually protects purchasers of fine art when the work was entrusted to a merchant who deals in goods of the kind. The test is whether the buyer, without knowledge that the purchase violates the rights of another, bought the work in the ordinary course of business. But like many rules in the legal world, this one has exceptions; and Judge Kornreich found that one of them applied.
Because art dealers have knowledge of their trade, a heightened standard of commercial reasonableness applies to their transactions. This includes a duty to investigate when “red flags” are raised about a potential sale. In this case, the court found it significant that Carroll obtained Pirate II by trading two works significantly lower in value, failed to inquire into the existence of Salander’s fictional entity that originally aroused his suspicions, and ignored a provenance statement that did not list a current owner of the work. According to the court, acquiring Pirate II under these circumstances did not meet the UCC’s standard of commercial reasonableness. Accordingly, the court ruled that McEnroe was entitled to have his property returned.
McEnroe could not have known he was dealing with a fraudster when he purchased Pirate II in 2004. Fortunately for him, the result he obtained in the New York Supreme Court was just as favorable as those he routinely earned on the tennis court. Despite the protections afforded to bona fide purchasers by the UCC, McEnroe was undoubtedly happy to learn that when fairness dictates a result, courts of law can indeed be serious.
Special thanks to Michael Gauvin for his contribution to this post. For more information, please contact Dennis M. Wade at email@example.com.