For many years, the practice of major New York auction houses like Soethby's and Christie's is to not disclose the identity of the owner of an item up for auction if the seller so requests. But tradition ran aground against the law when a state appellate court ruled last year that buyers at auction have the legal right to renege on a deal unless the seller provides his or her name. The business litigation has since been appealed to the New York Court of Appeals, which will issue a decision that could have a large impact on how auctions work in the state.
The litigation concerns the auctioning of an 19th Century decorative box in 2008. The final price was $460,000. According to the seller, the buyer later had second thoughts and did not pay. The seller sued and won. But on appeal, the court agreed with the buyer, who said that the sale was not legally binding because the seller had remained anonymous through the auction and in documents printed up after the sale.
While recognizing that auction houses have long kept sellers anonymous at their request, the appellate court said that New York's fraud statutes "clearly and unambiguously require" the buyer to be able to identify the seller by the time the auction sale reaches the document stage.
While this case involves the sale of fine art, auction businesses throughout the state could be affected by the Court of Appeals' decision. The Court is scheduled to hear the case this spring. One observer predicted that if the Court upholds the appellate decision, auction houses would lobby for an amendment to the anti-fraud statute to allow sellers to keep their anonymity.
Source: The New York Times, "Lawyers Fight to Keep Auction Sellers Anonymous," Tom Mashberg, Feb. 3, 2013