Art law News USA

Auction sellers can remain a secret, New York court rules

Court of Appeals puts to bed a case that threatened to upend longstanding art market practice of anonymity

Albert Rabizadeh must now pay $400,000 for this 19th-century Russian silver and enamel box (est $4,000-$6,000)

In a case that threatened to upend longstanding art market practice, New York’s highest court ruled on Tuesday, 17 December that auction houses need not reveal a consignor’s name. The New York Court of Appeals reversed an earlier decision that had alarmed auctioneers and those in the trade because, if upheld, it could have required them to disclose sellers’ identities in some circumstances, even if they want to remain anonymous.

In 2008, Albert Rabizadeh submitted a winning, $400,000 bid as an absentee bidder for what was identified as a 19th-century Russian silver and enamel box, with an estimate of only $4,000-$6,000, sold through the upstate auction house William J. Jenack in Chester, New York. When the company sent him an invoice, Rabizadeh refused to pay and the auction house sued.

A New York statute says that when an auctioneer makes a record at the time of the sale, “the name of the person on whose account the sale was made” must be included for a contract to be valid. In its record, Jenack had referred to the seller by number and not by name. Rabizadeh argued that since the seller’s name was missing, the record didn’t follow the statute and therefore there was no contract requiring him to pay.

The Court of Appeals disagreed. It said the seller could remain anonymous: since the auction house was the seller’s agent, Jenack’s name alone, which was disclosed in writing, would satisfy New York’s requirements. Rabizadeh therefore had to hand over the money for the silver enamel box.

The court had sharp words for him. 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 him.”

Although the case involved a smaller auction house, it reverberated at the highest levels of the art market, where anonymity in multi-million-dollar deals is the norm. Sotheby’s submitted a brief urging the Court of Appeals to rule in favor of Jenack and Christie’s was reported to have considered joining the appeal.

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