The New York Court of Appeals has overturned a decision that could have forced the state’s auctioneers to make public the names of their consignors.
In September 2012 the Supreme Court
rejected the claim that New York's auctioneers follow common
practice when preserving the anonymity of their clients and said
that a binding auction contract in the state must include the name
of both buyer and seller.
The surprise ruling had followed a
legal action brought by Chester, New York saleroom William J.
Jenack against a buyer who declined to pay his bill. Lawyers for
Albert Rabizadeh, a Long Island-based dealer in Russian works of
art, argued that the auction house had lacked the proper documents
to demand payment of $400,000 ($460,000 including premium) for a
silver and enamel box by Ivan Petrovich Khlebnikov he won with a
telephone bid in 2008.
Rabizadeh's 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.
A panel of four judges had agreed that a simple consignment number
used by Jenack on his paperwork was not enough.
Legal opinion has been split on the
ruling and its implications for New York auctioneers. "As of now
you can back out of any transaction where the name of the seller is
not provided," said Peter Stern of Manhattan art lawyers McLaughlin
Others, such as Jonathan Olsoff of
Sotheby's, had argued that the significance of the ruling had been
overstated as it related only to cases when a purchaser defaulted.
Nevertheless Sotheby's were among those to submit a 'friend of the
court' brief urging the Court of Appeals to rule in favour of
In a review of the case, the New York
Court of Appeals, the state's highest court, decided unanimously
that the Supreme Court had erred in its judgment. It ruled that the
information provided by the auctioneer's clerking sheet (a headed
document listing items offered for sale and number assigned by
Jenack to the consignor) and an absentee bidding form was
sufficient for the sale agreement to stand, even without the
Judge Jenny Rivera wrote in her ruling
of December 17 that the General Obligations Law did not require the
name of the seller but "the name of the person on whose account the
sale is made". Accordingly, it was enough for the auctioneer to be
named on documentation as the seller's agent.
Referencing a historic ruling that the
statute "was not enacted to afford persons a means of evading just
obligation; nor interpose the statute as a bar to a contract fairly
made", Judge Rivera had sharp words for Rabizadeh.
"Using the statute as a means of
evading a just obligation is precisely what Rabizadeh attempts to
do here, but the law and the facts foreclose him from doing so.
Rabizadeh took affirmative steps to participate in Jenack's
auction, including executing an absentee bidder form with the
required personal information. He then successfully won the
bidding… closing out other interested bidders, with his $400,000
bid. He cannot seek to avoid the consequences of his actions by
ignoring the existence of a documentary trail leading to
Anonymity is often prized in auction
transactions. Jenack and other auctioneers argued that their
business is important to New York and would be undermined without
the "time-honored and necessary custom and practice" of keeping
sellers' names confidential.