Relates to consignments of works of art to art merchants by artists and their successors in interest.
TITLE OF BILL: An act to amend the arts and cultural affairs law, in relation to consignments of works of art to art merchants by artists and their successors in interest
PURPOSE OR GENERAL IDEA OF BILL: To provide increased protections for a consignor or his or her heirs when, their works of art are under the fiduciary care of a consignee or art merchant and to mandate that such works of art shall never become the property of the consignee, particularly when a consignee is paving a creditor's claim.
SUMMARY OF SPECIFIC PROVISIONS: Section 1- Amends section 11.01 of the arts and cultural affairs law, subdivision 21 as renumbered by chapter 940 of the laws of 1990, are renumbered subdivisions 21 and 22 and a new subdivision 20 is added to define "successor in interest"
Section 2- Amends section 12.01 of the arts and cultural affairs law, as added by chapter 849 of the laws of 1984 and paragraph (c) of subdivision 1 as added by chapter 575 of the laws of 1995 to clarifies artistart merchant relationships to provide increased protections for a consignor's trust property under the fiduciary care of a consignee, including cases of bankruptcy and provides for the consignor's ability to recover damages.
Section 3- Sets forth effective date.
JUSTIFICATION: The current law governing artist-art merchant relationships does not go far enough to protect the artist and his or her heirs from having the works of arc they consign to art merchants taken from them without any financial compensation when the galleries of such merchants are mismanaged and or when the art merchant decides to use the funds gain from the sale of a work of art for reasons other than to compensate the artist. For instance, in past bankruptcy proceedings, some art merchants, as the consignees of the works of art, have used the proceeds from the sales of such works to payoff claims of creditors, violating their fiduciary duties to Protect the consignor's work and to compensate him or her when the work is sold.
Galleries receive compensation from an artist in the form of a fixed fee or, a percentage of the work of art when such work is sold. This legislation would ensure that the law is clear in prohibiting galleries from unrightfully taking works of art from artists and not properly compensating them.
LEGISLATIVE HISTORY: New Bill.
FISCAL IMPLICATIONS: None to the State.
EFFECTIVE DATE: This act shall take effect on the sixtieth day after it shall have become law an,d shall apply to all contracts or arrangements entered into, extended or renewed after such effective date.
STATE OF NEW YORK ________________________________________________________________________ 4988--A 2011-2012 Regular Sessions IN SENATE May 2, 2011 ___________Introduced by Sens. LITTLE, LANZA -- read twice and ordered printed, and when printed to be committed to the Committee on Cultural Affairs, Tourism, Parks and Recreation -- recommitted to the Committee on Cultural Affairs, Tourism, Parks and Recreation in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the arts and cultural affairs law, in relation to consignments of works of art to art merchants by artists and their successors in interest THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivisions 20 and 21 of section 11.01 of the arts and cultural affairs law, subdivision 21 as renumbered by chapter 940 of the laws of 1990, are renumbered subdivisions 21 and 22 and a new subdivi- sion 20 is added to read as follows: 20. "SUCCESSOR IN INTEREST" SHALL MEAN A "PERSONAL REPRESENTATIVE", "TESTAMENTARY BENEFICIARY", TRUSTEE OR BENEFICIARY OF A "LIFETIME TRUST" OR AN "HEIR" (INCLUDING HEIRS WHO ACQUIRE THE WORK OF FINE ART, CRAFT OR PRINT FROM THE ARTIST OR CRAFTSPERSON OR FROM ANOTHER HEIR OR BENEFICI- ARY OF THE ARTIST OR CRAFTSPERSON), WHICH TERMS SHALL HAVE THE SAME MEANINGS AS SET FORTH IN THE ESTATES, POWERS AND TRUSTS LAW. S 2. Section 12.01 of the arts and cultural affairs law, as added by chapter 849 of the laws of 1984 and paragraph (c) of subdivision 1 as added by chapter 675 of the laws of 1995, is amended to read as follows: S 12.01. Artist-art merchant relationships. 1. Notwithstanding any custom, practice or usage of the trade, any provision of the uniform commercial code or any other law, statute, requirement or rule, or any agreement, note, memorandum or writing to the contrary: (a) Whenever an artist or craftsperson,
[his heirs or personal repre- sentatives]OR A SUCCESSOR IN INTEREST OF SUCH ARTIST OR CRAFTSPERSON, delivers or causes to be delivered a work of fine art, craft or a printEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09750-02-2 S. 4988--A 2
[his]SUCH ARTIST'S OR CRAFTSPERSON'S own creation to an art merchant for the purpose of exhibition and/or sale on a commission, fee or other basis of compensation, the delivery to and acceptance thereof by the art merchant establishes a consignor/consignee relationship as between such artist or craftsperson, OR THE SUCCESSOR IN INTEREST OF SUCH ARTIST OR CRAFTSPERSON, and such art merchant with respect to the said work, and: (i) such consignee shall thereafter be deemed to be the agent of such consignor with respect to the said work; (ii) such work is trust property in the hands of the consignee for the benefit of the consignor; (iii) any proceeds from the sale of such work are trust funds in the hands of the consignee for the benefit of the consignor; (iv) such work shall remain trust property notwithstanding its purchase by the consignee for his own account until the price is paid in full to the consignor; provided that, if such work is resold to a bona fide third party before the consignor has been paid in full, the resale proceeds are trust funds in the hands of the consignee for the benefit of the consignor to the extent necessary to pay any balance still due to the consignor and such trusteeship shall continue until the fiduciary obligation of the consignee with respect to such transaction is discharged in full; and (v) SUCH TRUST PROPERTY AND TRUST FUNDS SHALL BE CONSIDERED PROPERTY HELD IN STATUTORY TRUST AS DEFINED AND CONTEMPLATED BY 11 U.S.C. SECTION 541 AND OTHER RELEVANT BANKRUPTCY LAW, AND no such trust property or trust funds shall BECOME THE PROPERTY OF THE CONSIGNEE OR be subject or subordinate to any claims, liens or security interest of any kind or nature whatsoever OF THE CONSIGNEE'S CREDITORS. (b) Waiver of any provision of this section is absolutely void except that a consignor may lawfully waive the provisions of clause (iii) of paragraph (a) of this subdivision, if such waiver is clear, conspicuous, in writing, IN WORDS WHICH CLEARLY AND SPECIFICALLY APPRISE THE CONSIG- NOR THAT THE CONSIGNOR IS WAIVING RIGHTS UNDER THIS SECTION WITH RESPECT TO PROCEEDS FROM THE SALE OF THE CONSIGNOR'S WORK, and subscribed by the consignor, provided: (i) no such waiver shall be valid with respect to the first two thou- sand five hundred dollars of gross proceeds of sales received in any twelve-month period commencing with the date of the execution of such waiver; (ii) no such waiver shall be valid with respect to the proceeds of a work initially received on consignment but subsequently purchased by the consignee directly or indirectly for his own account; and (iii) no such waiver shall inure to the benefit of the consignee's creditors in any manner which might be inconsistent with the consignor's rights under this subdivision. (c) [proceeds]PROCEEDS from the sale of consigned works covered by this section shall be deemed to be revenue from the sale of tangible goods and not revenue from the provision of services to the consignor or others, except that the provisions of this paragraph shall not apply to proceeds from the sale of consigned works sold at public auction. 2. IF A CONSIGNEE FAILS TO TREAT THE TRUST PROPERTY OR TRUST FUNDS IDENTIFIED IN PARAGRAPH (A) OF SUBDIVISION ONE OF THIS SECTION IN ACCORDANCE WITH THE REQUIREMENTS OF FIDUCIARIES IN SECTION 11-1.6 OF THE ESTATES, POWERS AND TRUSTS LAW, SUCH FAILURE SHALL CONSTITUTE A VIOLATION OF THIS ARTICLE AND OF SECTION 11-1.6 OF THE ESTATES, POWERS AND TRUSTS LAW AND SHALL BE SUBJECT TO THE PENALTIES PROVIDED THEREIN.S. 4988--A 3
3. ANY PERSON WHO HAS BEEN INJURED BY REASON OF A VIOLATION OF THIS ARTICLE MAY BRING AN ACTION IN HIS OR HER OWN NAME TO ENJOIN SUCH UNLAW- FUL ACT, TO RECOVER HIS OR HER ACTUAL DAMAGES, OR BOTH. THE COURT MAY AWARD REASONABLE ATTORNEYS' FEES, COSTS AND EXPENSES TO A PREVAILING PLAINTIFF IN ANY SUCH ACTION. 4. Nothing in this section shall be construed to have any effect upon any written or oral contract or arrangement in existence prior to September first, nineteen hundred sixty-nine or to any extensions or renewals thereof except by the mutual written consent of the parties thereto. S 3. This act shall take effect on the sixtieth day after it shall have become a law and shall apply to all contracts or arrangements entered into, extended or renewed after such effective date.