Does This New York Court Ruling Really Require Auction Houses to Identify Sellers?

Here is some complex art market news, if you haven’t heard it already: A New York appellate court recently ruled that the state’s auction houses must reveal consignors’ names to buyers. In the privacy-loving art world, this would seem like a game-changer. But some observers say the ruling may not be as monumental as it seems.

The decision was prompted by a lawsuit brought by the auctioneer William J. Jenack, who was suing a client, Albert Rabizadeh, after he refused to pay for a $400,000 enamel box he won at auction. Rabizadeh struck back, arguing that the auction house lacked the proper documentation to demand payment. Some very smart lawyer for Rabizadeh argued that the General Obligations Law — which originally dates back to medieval England, according to the FT — requires that the vendor’s name be written on a contract in order for that contract to be binding. Because Janeck only identified the seller by his paddle number, 428, and refused to clarify the matter, the judge ruled in favor of Rabizadeh.

The potential implications, according to the Antiques Trade Gazette, are far-reaching. “Not only could it [the ruling] permit similarly unhappy ‘buyers’ to duck out of an auction contract where the seller’s name is not listed,” writes the Gazette’s Roland Artkell, “but it means auction houses will no longer be able to keep the names of consigners secret.” (For more on why auction houses want so dearly to keep those names under wraps, read Georgina Adam and Laura Gilbert‘s recent reports.)

Some observers don’t think the ruling is as dramatic as it appears. As Sotheby’s Jonathan Olsoff points out on the Art Law Blog, “The decision deals only with the evidence that is required if an auction purchaser defaults in paying and is sued by the auction house.” Within these very specific circumstances, Olsoff says, the auction house would have been scot-free if it had provided its internal records identifying the seller (rather than identifying him on the contract) — but Jenack didn’t. “The auction house failed to offer sufficient evidence to establish its claim,” Olsoff explained.

Still, the ruling was enough to spook Christie’s, which has apparently gotten behind Jenack in his quest for an appeal.

UPDATE, 11/6: An earlier version of this post stated that the Antiques Trade Gazette broke the story of the appellate court ruling. In fact, the story was first reported by the Maine Antique Digest. You can read their report here.

Julia Halperin

Photo courtesy STAN HONDA/AFP/Getty Images