An Art Merchant is (1) a person who is in the business of dealing in works of fine art or multiples, or (2) a person who by his occupation holds himself out as having knowledge or skill peculiar to such works, or (3) an employee of 1 or 2.
By the terms of the statute, an “Art Merchant” includes “an auctioneer who sells such works at public auction” and, those “not otherwise defined or treated as art merchants herein, who are consignors or principals of auctioneers (except in the case of multiples).
Example A: Company sells Artist’s limited edition prints. Artist does not personally deliver his prints to the Company. Company experiences trouble and Artist sues company to have prints returned. Company argues it is not an “Art Merchant” because it was a “publisher.” Company also argues Artist didn’t personally deliver the works. The Court disagreed with the Company and held it was an Art Merchant; it “deal[t] in multiples” by selling prints, and it held itself out to have special knowledge. In the court’s words, “[a]ll that is required is that the art merchant either deal, exclusively or nonexclusively, in multiples, or that the art merchant, or his or her agent or intermediary, holds him or herself out as having knowledge or skill peculiar to such works.” It did not matter that the artist did not personally deliver the works.
Example B: Artist, who purchased several pieces of Chinese Art, was not considered an art merchant where he maintained his collection for his own personal pleasure (as opposed to for commercial purposes).
What is the effect of the artist-art merchant relationship?
The default framework between an artist and an art merchant can be modified by many things, including custom and an agreement. But if not modified, and if several requirements are met (e.g., work is the artist’s own creation), the law establishes a consignor/consignee relationship as between such artist or craftsperson and the Art Merchant. This means (i) the art merchant (consignee) is an agent of the artist; (ii) holds the property in trust for the benefit of the artist; and (iii) proceeds from the sale of the work are trust funds for the benefit of the artist.
The artist’s work is protected from the merchant’s creditor’s: “no such trust property or trust funds shall be subject or subordinate to any claims, liens or security interest of any kind or nature whatsoever.”
Can the artist/art merchant relationship be waived?
For the most part, it cannot. The artist can waive only the provision that “proceeds from the sale of the work are trust funds for the benefit of the artist,” and even then, there are several limitations. The agreement must be “clear, conspicuous, and in writing.” It’s only valid for amounts over $2,500 a year, and it does not apply a work initially received on consignment but subsequently purchased by the merchant directly or indirectly. The waiver also cannot benefit the merchant’s creditor’s in a way that is inconsistent with the artists’ rights granted by the artist merchant relationship.
Can the merchant get a security interest in the art if it pays for some of the costs?
Section 12 prohibits the Art Merchant from taking a security interest in the art.
Example A: Art Merchant pays to publish Artist’s prints. Merchant claims this gives it interest in the prints. The court disagrees, and holds “The clear intent of the statute is to create a trust relationship even when the art merchant makes a financial investment in the art.”
Example B: Artist signed an agreement with a gallery (Art Merchant) wherein the art gallery would be the excusive seller of Artist’s work in exchange for %50 of the proceeds of Artist’s work. The gallery ended up giving the Artist an advance in the form of a $129,000 loan and in exchange, the Artist agreed that the gallery would hold all of his works until the loan was repaid. The gallery and the Artist eventually ended their relationship With over $36,000 still outstanding. The Artist insisted that he wanted his works back, but the gallery claimed it could hold them as a security interest until the $36,000 was recovered. The court held that the Artist could recover his property without paying his debt because “a plain reading of Arts & Cultural Affairs Law § 12.01(1)(a)(v), as written, prohibits the security interest asserted by the Gallery.”
Does the artist/merchant relationship apply to all agreements?
It does not apply to agreements made before September 1, 1969, unless the parties agree otherwise.
Arts and Cultural Affairs Law § 11.01(1)
Wesselmann v. International Images Inc., 657 N.Y.S.2d 284 (NY Sup. Ct. 1996).
Dawson v. Malina, Inc., 463 F.Supp. 461, 466 n. 4 (S.D.N.Y. 1978).
Arts and Cultural Affairs Law § 12.01(1)(a)
Arts and Cultural Affairs Law § 12.01(1)(a)(i)-(iii).
Arts and Cultural Affairs Law § 12.01(1)(a)(v).
Wesselmann v. International Images Inc., 657 N.Y.S.2d 284, 288 (NY Sup. Ct. 1996)
Art Merchant FAQ
Who is an Art Merchant under New York Law?
An Art Merchant is (1) a person who is in the business of dealing in works of fine art or multiples, or (2) a person who by his occupation holds himself out as having knowledge or skill peculiar to such works, or (3) an employee of 1 or 2.
By the terms of the statute, an “Art Merchant” includes “an auctioneer who sells such works at public auction” and, those “not otherwise defined or treated as art merchants herein, who are consignors or principals of auctioneers (except in the case of multiples).
Example A: Company sells Artist’s limited edition prints. Artist does not personally deliver his prints to the Company. Company experiences trouble and Artist sues company to have prints returned. Company argues it is not an “Art Merchant” because it was a “publisher.” Company also argues Artist didn’t personally deliver the works. The Court disagreed with the Company and held it was an Art Merchant; it “deal[t] in multiples” by selling prints, and it held itself out to have special knowledge. In the court’s words, “[a]ll that is required is that the art merchant either deal, exclusively or nonexclusively, in multiples, or that the art merchant, or his or her agent or intermediary, holds him or herself out as having knowledge or skill peculiar to such works.” It did not matter that the artist did not personally deliver the works.
Example B: Artist, who purchased several pieces of Chinese Art, was not considered an art merchant where he maintained his collection for his own personal pleasure (as opposed to for commercial purposes).
What is the effect of the artist-art merchant relationship?
The default framework between an artist and an art merchant can be modified by many things, including custom and an agreement. But if not modified, and if several requirements are met (e.g., work is the artist’s own creation), the law establishes a consignor/consignee relationship as between such artist or craftsperson and the Art Merchant. This means (i) the art merchant (consignee) is an agent of the artist; (ii) holds the property in trust for the benefit of the artist; and (iii) proceeds from the sale of the work are trust funds for the benefit of the artist.
The artist’s work is protected from the merchant’s creditor’s: “no such trust property or trust funds shall be subject or subordinate to any claims, liens or security interest of any kind or nature whatsoever.”
Can the artist/art merchant relationship be waived?
For the most part, it cannot. The artist can waive only the provision that “proceeds from the sale of the work are trust funds for the benefit of the artist,” and even then, there are several limitations. The agreement must be “clear, conspicuous, and in writing.” It’s only valid for amounts over $2,500 a year, and it does not apply a work initially received on consignment but subsequently purchased by the merchant directly or indirectly. The waiver also cannot benefit the merchant’s creditor’s in a way that is inconsistent with the artists’ rights granted by the artist merchant relationship.
Can the merchant get a security interest in the art if it pays for some of the costs?
Section 12 prohibits the Art Merchant from taking a security interest in the art.
Example A: Art Merchant pays to publish Artist’s prints. Merchant claims this gives it interest in the prints. The court disagrees, and holds “The clear intent of the statute is to create a trust relationship even when the art merchant makes a financial investment in the art.”
Example B: Artist signed an agreement with a gallery (Art Merchant) wherein the art gallery would be the excusive seller of Artist’s work in exchange for %50 of the proceeds of Artist’s work. The gallery ended up giving the Artist an advance in the form of a $129,000 loan and in exchange, the Artist agreed that the gallery would hold all of his works until the loan was repaid. The gallery and the Artist eventually ended their relationship With over $36,000 still outstanding. The Artist insisted that he wanted his works back, but the gallery claimed it could hold them as a security interest until the $36,000 was recovered. The court held that the Artist could recover his property without paying his debt because “a plain reading of Arts & Cultural Affairs Law § 12.01(1)(a)(v), as written, prohibits the security interest asserted by the Gallery.”
Does the artist/merchant relationship apply to all agreements?
It does not apply to agreements made before September 1, 1969, unless the parties agree otherwise.
Arts and Cultural Affairs Law § 11.01(1)
Wesselmann v. International Images Inc., 657 N.Y.S.2d 284 (NY Sup. Ct. 1996).
Dawson v. Malina, Inc., 463 F.Supp. 461, 466 n. 4 (S.D.N.Y. 1978).
Arts and Cultural Affairs Law § 12.01(1)(a)
Arts and Cultural Affairs Law § 12.01(1)(a)(i)-(iii).
Arts and Cultural Affairs Law § 12.01(1)(a)(v).
Wesselmann v. International Images Inc., 657 N.Y.S.2d 284, 288 (NY Sup. Ct. 1996)
Zucker v. Hirschl & Adler Galleries, Inc., 648 N.Y.S.2d 521, 526 (Sup. Ct. 1996)