N.Y. Arts and Cultural Affairs Law § 12.01: Artist-art merchant relationships

§ 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, or a successor in interest of

such artist or craftsperson, delivers or causes to be delivered a work

of fine art, craft or a print of 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, 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

consignor 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

thousand 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 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.

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

unlawful 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.