NY Court Ruling Allows Auction Sellers to Remain Anonymous

by Jillian Steinhauer on December 18, 2013

gavel-640The New York Court of Appeals has ruled in the case of Jenack v. Rabidazeh, reversing a lower court’s decision and allowing sellers of objects at auction to remain anonymous.

The story goes like this: William J. Jenack Estate Appraisers and Auctioneers held a sale on Sept. 21, 2008, at which Albert Rabizadeh won a 19th-century Russian silver and enamel box with an absentee bid of $400,000. Rabizadeh, however, failed to pay, and Jenack took him to court.

In the first legal round of the case, the New York Supreme Court decided in Jenack’s favor, awarding him the principal sum of $402,398. But Rabizadeh appealed, and the Appellate Division sided with him, their decision hinging on a very technical point: Jenack had not complied with an article in the General Obligations Law of the Statute of Frauds because his clerking sheet did not include “the name of the person on whose account the sale is made.” In other words, the seller was not listed because he or she wished to remain anonymous, and this anonymity invalidated Jenack and Rabizadeh’s bidding agreement.

That decision, made last October, could have had big repercussions in the New York auction world, as sellers frequently prefer to remain anonymous.

But yesterday the Court of Appeals reversed the appeal. Their reasoning is that the auction house may itself serve as the “name of the person on whose account the sale is made.” The decision states:

Obviously, requiring the name of an agent in cases where the seller wishes to remain anonymous in no way undermines the industry practice, because the seller need not be divulged without the seller’s consent. Here, the clerking sheet lists Jenack as the auctioneer, and as such it served as the agent of the seller.

The decision ends with a fairly pointed jab at Rabizadeh for attempting to evade his obligation to pay. “Using the Statute of Frauds 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,” the judges write. “He cannot seek to avoid the consequences of his actions by ignoring the existence of a documentary trail leading to him.” And New York’s auction houses, which thrive on anonymity, can breathe a collective sigh of relief.

h/t New York Times

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