Did an “absentee bid form” signed by a successful auction sale bidder satisfy the statute of frauds? Answer: Yes.

In William J. Jenack Estate Appraisers & Auctioneers, Inc. v. Rabizadeh, 2013 NY Slip Op 08373 (decided December 17, 2013), the Court of Appeals noted that:

The underlying dispute arises from Jenack’s claim for damages resulting from Rabizadeh’s failure to pay for an item offered at a Jenack public auction. The central issue in contention between the parties is whether the sale of the auction item to Rabizadeh is memorialized in a writing that satisfies the Statute of Frauds. Id. at 2.

The Court summarized the facts:

Several days prior to a September 21, 2008 auction, Rabizadeh submitted a signed, absentee bidder form wherein he provided, as required by Jenack, his name, e-mail address, telephone numbers, fax number, address, credit card number, and a list of items that Rabizadeh intended to bid on by telephone. Rabizadeh’s list included the item at issue in this case, designated by Jenack as “Item 193”, and described in the online and printed catalogue as a “Fine Russian silver/enamel covered box with gilt interior, signed I.P. Khlebnikov, 19th Century Height 1 1/2 top 1/2 x 3 ⅝ (Estimate $4000-$6000).” Upon receipt of this form, Jenack assigned bidder number 305 to Rabizadeh, and included this number on the top of the form.

At the September auction, Rabizadeh submitted a $400,000 bid on item 193, and successfully outbid a competing bidder.  At the close of the bidding for this item, the chief clerk recorded the winning bid on Jenack’s “clerking sheet”. This clerking sheet sets forth in a preprinted tabulated column format, a running list of the items presented at the public auction, with a separate line for each item that includes the item’s lot number, catalogue description, and the number assigned by Jenack to the consignor. At the top of the clerking sheet Jenack’s name and title are set forth as “William J. Jenack Appraisers/Auctioneers”. On the line for item 193, the chief clerk filled in Rabizadeh’s previously assigned bidding number to reflect him as the buyer, and the amount of his winning bid, $400,000. Id. at 2.

Rabizadeh was the successful bidder and, accordingly:

Shortly after the auction, Jenack, who was in possession of item 193, sent Rabizadeh an invoice for $497,398, which reflected the bidding price, the 15% “buyer’s premium” and applicable taxes. When Rabizadeh failed to pay, Jenack commenced this action for breach of contract, seeking damages, including the bid price and buyer’s premium.  Id. at 3.

Section 5-701 of the General Obligations Law provides that:

§ 5—701. Agreements required to be in writing

a. Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent…

6. Notwithstanding section 2—201 of the uniform commercial code, if the goods be sold at public auction, and the auctioneer at the time of the sale, enters in a sale book, a memorandum specifying the nature and price of the property sold, the terms of the sale, the name of the purchaser, and the name of the person on whose account the sale was made, such memorandum is equivalent in effect to a note of the contract or sale, subscribed by the party to be charged therewith. Id. at 4.

Rabizadeh moved for summary judgment claiming that “there was no writing memorializing any contract between Jenack and Rabizadeh, as required by the Statute of Frauds.” Id. at 3.  Jenack cross-moved for summary judgment “asserting that the clerking sheet and related bidding documents complied with [GOL 5-701(a)(6)]” id.  Supreme Court denied Rabizadeh’s motion, granted Jenack’s cross-motion, and, after a Bench trial, entered judgment in favor of Jenack for $402,398. The Appellate Division reversed on the ground that “the clerking sheet did not include ‘the name of the person on whose account the sale is made’, as required by the statute[.]” Id.

The Court of Appeals reversed the order of the Appellate Division and reinstated the judgment of Supreme Court. The Court found, at the outset, that “the numbers assigned by Jenack to represent the buyer and seller/consignor on the clerking sheet did not satisfy [the requirements of the General Obligations Law,]” however, the analysis did not end there because the Court “must consider whether there are ‘related writings’ that supply the required names, and which may be read, along with the clerking sheet, to provide the information necessary to constitute a [legally sufficient] memorandum[.]” Id. at 5.

The Court of Appeals concluded that “the absentee bidder form, along with the clerking sheet, provide[d] the necessary information to establish the name of Rabizadeh as the buyer. ’” Id.  The Court also noted the industry practice of maintaining the confidentiality of the seller and that “the clerking sheet list[ed] Jenack as the auctioneer, and as such it served as the agent for the seller.” Id. at 6.  The Court of Appeals then concluded that “the [GOL] does not reference the ‘seller’, making it clear that the seller’s name need not be provided in order to satisfy the requirement of ‘the name of the person on whose account the sale was made’.” Id. at 5-6.

And, in closing, cautioned that:

The Statute of Frauds was not enacted to afford persons a means of evading just obligations; nor was it intended to supply a cloak of immunity to hedging litigants lacking integrity; nor was it adopted to enable defendants to interpose the Statute as a bar to a contract fairly, and admittedly, made (Morris Cohon & Co. v Russell, 23 NY2d 569, 574 [1969] citing 4 Williston on Contracts § 567A at 19-20 [3d ed.]). 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. 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 for item 193, 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. Id. at 6-7.