Christie’s have joined auctioneers William J. Jenack in a bid to overturn a legal ruling that says New York salerooms must reveal consignors’ names to buyers.
Rejecting the claim that New York's
auctioneers follow common practice when preserving the anonymity of
their clients, the Supreme Court said last month that a binding
auction contract in the state must include the name
of both buyer and seller.
The shock September 19 ruling delivered by
Justice Peter B. Skelos of the Supreme Court of the State of New
York, Appellate Division was prompted by an otherwise 'routine'
legal action brought by Chester, New York saleroom William J.
Jenack against a buyer who declined to pay his bill.
Back in September 2008, Albert Rabizadeh, a
Long Island-based dealer in Russian works of art, had bid $400,000
($460,000 including buyer's premium) for a silver and enamel box by
Ivan Petrovich Khlebnikov. When his buyer failed to pay, Jenack
began legal action that in January 2010 saw Rabizadeh ordered by
the New York State Supreme Court to pay $497,398 minus $109,250,
the price achieved when the box was reoffered in May that year.
However, the case took a less orthodox route
when Rabizadeh took the court's decision to appeal and argued that
the auction house had lacked the proper documents to demand
payment. His argument was based on the letter of the General
Obligations Law, the statute covering contracts between buyers and
sellers in New York, which says a legally recognised contract must
include the names of both parties.
The General Obligations Law states: "Every
agreement, promise or undertaking is void, unless it or some note
or memorandum thereof be in writing, and subscribed by the party to
be charged therewith, or his lawful agent…
"If the goods be sold at public auction, and
the auctioneer at the time of sale, enters in a sale book, a
memorandum specifying the nature and price of the property sold,
the terms of the sale, the name of the purchaser, and the name of
the person on whose account the sale was made, such memorandum is
equivalent in effect to a note of the contract or sale, subscribed
by the party to be charged therewith."
Justice Peter B. Skelos (with three other
justices concurring) agreed in his ruling that the General
Obligations Law was clear on this matter. He rebuffed the auction
house's claim that they had merely followed common practice when
they did not disclose the consignor's name (instead the consignor
of the Russian box was noted simply with the number 428).
William Jenack's attorneys, Benjamin Ostrer
and Cynthia Dolan, argued that the requirement specifying the name
of the person for whom they were selling was "satisfied solely by
inclusion of the consignor's assigned number on the clerking
sheets". Justice Skelos said that was not enough.
"The plaintiff [Jenack] claims that it is
common practice for auction houses not to disclose the names of
their consignors, and that such disclosure is 'unnecessary'. While
it may be true that auction houses commonly withhold the names of
consignors, this court is governed not by the practice in the
trade, but by the relevant statute.... In that regard, the statute
clearly and unambiguously requires that the 'name of the person on
whose account the sale was made'... be provided in the
memorandum."
Wider Implications
The immediate effect of the ruling was that
previous court decisions approving Jenack's attempts to recover
damages from Rabizadeh were overturned.
However, the wider implications of the
ruling to the New York auction scene are huge. Not only could it
permit similarly unhappy 'buyers' to duck out of an auction
contract where the seller's name is not listed, but it means
auction houses will no longer be able to keep the names of
consignors secret.
The potential effects of the ruling were not
lost on Christie's, who have joined Jenack in the appeal process to
have the ruling overturned.
Christie's declined to comment on the matter
at this stage.
Justice Skelos included a paragraph in his decision suggesting
the need for a change in the law to accommodate common practice in
the auction world: "To the extent that the requirement in General
Obligations Law may be at odds with the general industry practice,
and may be burdensome to consignors or auction houses or both, a
change in the law to eliminate that requirement may be warranted.
However, consideration of the propriety of that change is not for
the courts, but rests with the Legislature."
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