Published: February 19, 2013
It was a bit of good news for auction house owner William Jenack. “I got a letter from my lawyer telling me the Court of Appeals will review the ruling,” said Jenack, recently returned stateside after some R&R abroad. “The fact that the Court of Appeals is willing to review the issue,” continued Jenack, is “a big step in its own right, as it usually only agrees to examine cases where there is merit.”
That review will be of a current law governing the contractual obligation to disclose sellers’ identities when property is consigned at auction.
Current trade practice many times has auction patrons bidding on an item that may be described as “from the collection of a distinguished gentleman” or “property of a lady,” a longstanding arrangement between auction houses and their consignors designed to protect anonymity. Reasons vary †family conflicts over inherited assets, embarrassment of debt or divorce or an institution that does not want to publicize a deaccession from its collection.
In September 2012, however, Judge Peter Skelos of the Supreme Court of the State of New York’s Appellate Division ruled that according to General Obligations Law 5-701, a legally recognized contract has to include the names of both buyer and seller.
Auction houses are upset at the decision because it could cause potential consignors to take their business out of state, where no such obligation is enforced. Under the current law, a buyer would be allowed to back out of the sale if the seller’s name was not provided.
The contentious issue arose in September 2008 when a silver and enamel box by Ivan Petrovich Khlebnikov was consigned to an auction at William J. Jenack Estate Appraisers and Auctioneers in Chester. (See Antiques and The Arts Weekly, December 7, 2012.)
Jenack and others argue that it is common practice for auction houses to assign a consignor number to each item. It is less cumbersome, and as long as there is an identifying code that can be matched with the consignor’s name, the system works and has been in use by auction houses for decades.
True, agreed Skelos, but “this Court is governed not by practice in the trade, but by the relevant statute, which it is bound to apply in accordance with foregoing rules of construction.” Without the name of the person on whose account the box was sold, the contract that any auction house has with a deadbeat bidder is not enforceable.
General industry practice may indeed point to a need to change the law, the judge concluded, but “consideration of the propriety of that change is not for the courts, but rests with the Legislature.”
If the current law is upheld by the Court of Appeals, however, Jenack added, “a real consideration is the issue of personal privacy. There’s a lot of talk now about Second Amendment rights, but what about a person’s right to privacy?”‘ The law, if upheld, would make sellers’ names more public, a potentially business-chilling prospect.
Requests for comment as to the time frame of the appellate review and whether other major New York auction houses, such as Sotheby’s and Christie’s, were prepared to join the brief were not returned by press time from Jenack’s legal counsel, Ostrer & Hoovler.