Anonymous Art Auction Bidding Can Continue in New York

We previously posted about  Jenack Inc. v. Rabizadeh, a decision that threatened auction anonymity in New York.

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.

The auction house then sued the winning bidder, 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.”  The Appellate Division held that the number on the clerking sheet was insufficient and violated the statute of frauds.  Thus, plaintiff could not enforce the sale, and summary judgment was awarded to the defendant.   Based on this decision, if an auction house wanted to enforce a sale, it needed to reveal the name of the consignor to the purchaser.

The Court Of Appeals recently heard the case, and reversed the Appellate Division.  The Court pointed out that separate writings can be pieced together to satisfy the statute of frauds, finding that the clerking sheet clearly linked up to the absentee bidder form, which spelled out all of the purchaser’s details.  In addition, the Court found that the actual owner/seller does not need to be identified either, because naming the auctioneer, as agent for the seller, was sufficient.  As a result, the statute of frauds and New York’s statute on auctions were satisfied.

If you would like further information, please write to Mike Bono.