An American collector has filed two lawsuits against Sotheby's, alleging they concealed a financial interest in and inflated the price for an Edward Hicks' Peaceable Kingdom that he bought in May for almost $10m.
Halsey Minor, a dotcom entrepreneur, filed his case against
Sotheby's on September 22 in reply to the auctioneer's legal
request (on September 2) for payment of the Hicks and two other
paintings. He now claims that "Sotheby's actively conceals
information concerning its own economic interests in property it
places at auction" and that "Sotheby's intentionally deceives its
clients into bidding more for auctioned property than they
otherwise would have, and more than Sotheby's believes the property
to be worth".
It was an open secret that the 'vendor' of the Peaceable
Kingdom with the Leopard of Serenity was troubled jeweller and
folk art collector Ralph Esmerian who - while promising the picture
to the American Folk Art Museum that houses much of his collection
- had also pledged it to Sotheby's as collateral for a loan that
was not repaid.
When Sotheby's failed to find a buyer by private sale earlier
this year, it was entered for sale in a specialist American
pictures auction in New York on May 22 with a $6-8m estimate. It
sold to Minor's premium-inclusive bid of $9,673,000, a record for
Hicks and for American folk art.
Court papers state that Minor was not told - personally or in
the auction catalogue - that Sotheby's had an interest in the
Peaceable Kingdom over and above the normal
vendor-auctioneer relationship. Disclosure of an interest in a lot
is required by New York City law and is typically denoted by a
symbol (in Sotheby's case a triangle) next to the lot number with
an explanation of its meaning in the conditions of sale.
In this case Sotheby's did not put a symbol next to the
Peaceable Kingdom in the catalogue.
Minor says it is for this reason that his bill remains unpaid.
He does not ask that the sale be made void - instead he wants the
contract to "be reformed to reflect the amount a reasonable buyer
would have paid to purchase the Peaceable Kingdom had
Sotheby's disclosed its economic interest".
Minor claims his winning bid for the picture - that came
following competition with at least one other party - "grossly
exceeded the figure at which Sotheby's had internally valued the
In October, Minor invited others to join in his crusade with the
launch of a separate class-action suit in California that "seeks to
put an end to - and to obtain redress from - a custom of deception
practiced by Sotheby's".
The class-action suit asks for an injunction requiring
"disclosure in its catalogues of all economic interests Sotheby's
holds in any auctioned property… and identities of all
counter-parties whose indebtedness to Sotheby's has resulted in an
economic interest being held by Sotheby's in the auctioned
property". The suit asks for money for each class member (persons
who, within the last six years, purchased property at auctions in
which Sotheby's held any economic interest) as well as damages for
Another Peaceable Kingdom by Edward Hicks - thought to
be of comparable quality to the Esmerian picture - was unsold
against its estimate of $4m-6m at Christie's New York at an October
Americana sale blighted by the financial crisis.