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A Gallery, as Agent for an Artist, Was Obligated to Disclose All Material Facts Within the Scope of the Agency/The Failure to Disclose the Gallery’s Intention to Treat Prints Made from the Artist’s Originals as Belonging to the Gallery Precluded Any Claim of Ownership by the Gallery

In a full-fledged opinion by Justice Friedman, the First Department determined the terms of the contract between a gallery and an artist (Scher) designated the gallery as the artist’s agent with respect to prints created from the artist’s original works. Therefore, the artist was the owner of the prints.  In addition, the court determined, under the General Obligations Law, the terms of a written contract were not changed by an alleged oral agreement:

…[S]ection 1 of the 2005 agreement (“Scope of Agency”) expressly provides that Scher was appointing the Gallery “to act as [her] exclusive agent . . . for the exhibition and sales of . . . limited edition prints published exclusively by [the] [G]allery,” among other kinds of artwork, for the duration of the agreement. Thus, when the Gallery commissioned the printer to produce the prints, paid the printer for the prints, and took delivery of the prints, it did so as Scher’s agent and, hence, fiduciary … . Accordingly, the prints must be deemed to be Scher’s property… . …

As Scher’s fiduciary, the Gallery was obligated to disclose to her in plain terms all material facts within the scope of the agency, obviously including any understanding the Gallery had, upon entering with Scher into the oral print deal, that it would own the prints and any intention it entertained to treat the prints as its own property … . If the Gallery did not wish to finance the production of prints that it would not own, it could have sought to reach an agreement with Scher specifying that prints made at the Gallery’s expense would be the Gallery’s property. Alternatively, if the Gallery merely wished to protect itself from being abruptly terminated as Scher’s agent before it had a fair chance to sell the prints, it could have sought to reach an agreement with her on a minimum time-period it would have to sell each batch of prints during which the agency could not be terminated without cause. Instead, the Gallery left itself exposed by going forward with the print deal based on only a vague, unwritten agreement that left nearly all of the terms up in the air except for the basic 90/10 split of sales revenue (and even as to that, there is a dispute as to whether Scher’s cut is calculated based on gross or net sales). We see no reason to relieve a fiduciary, such as this professional art merchant, of the consequences of its own carelessness in dealing with its principal.  Scher v Stendhal Gallery Inc, 2014 NY Slip Op 02154, 1st Dept 3-27-14

 

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Agent for Partially Disclosed Principal Is Personally Liable on the Contract

In finding the agent (Sussman) liable for a contract because the principal was not fully disclosed, the Second Department wrote:

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…[The evidence] indicates at best that Sussman was acting as an agent for a “partially disclosed principal,” in that the agency relationship was known, but the identity of the principal remained undisclosed (Restatement [Second] of Agency § 4[2]…). As an agent for an undisclosed principal, Sussman became personally liable under the contract (…Restatement [Second] of Agency § 321). Stonhard v Blue Ridge Farms, LLC, 2014 NY Slip Op 00985, 2nd Dept 2-13-14

 

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Garagekeeper’s Lien Ineffective Against Owner of Leased Vehicle/Lessee Did Not Have Apparent Authority to Consent to Vehicle Repair and Storage on Owner’s Behalf

A leased vehicle was damaged by hail and the lessee brought the car to respondent’s garage for repairs.  When no one picked up the car or paid for the repairs, the garage served a garagekeeper’s lien on the owner (lessor) of the vehicle.  The Third Department determined the lien was not effective against the owner, who never consented to the repairs or storage of the vehicle, and the lessee did not have apparent authority to consent on the owner’s behalf:

Supreme Court properly held that respondent failed to establish the validity of its garagekeeper’s lien.  A garage owner is entitled to such a lien if he or she establishes that the garage is duly registered as a repair shop as required by statute, is the bailee of a motor vehicle, performed garage services or storage with the vehicle owner’s consent, and the parties had agreed upon a price or – absent such agreement – the charges were reasonable … .  The dispositive issue here is whether respondent provided repair services and storage with the owner’s consent.  It is undisputed that respondent never had any communication with petitioner, the title owner, until well after the repairs were performed.  …

While a lessee may be considered an owner for purposes of Lien Law § 184 if he or she has apparent authority …, “[a]pparent authority will only be found where words or conduct of the principal – not the agent – are communicated to a third party, which give rise to a reasonable belief and appearance that the agent possesses authority to enter into the specific transaction at issue” … .  Respondent does not indicate that it undertook any steps to determine the scope of the [lessee’s]  authority… .  Petitioner’s actions in allowing [lessee] to register the vehicle in New Jersey and … to obtain insurance on the vehicle do not constitute permission to enter into a transaction that would allow a lien to attach to the vehicle.  Respondent does not point to any other words or actions of petitioner…that could create a reasonable belief that [the lessee] had authority to enter into a transaction as an owner, so as to permit the creation of a garagekeeper’s lien.  Matter of Daimler Trust…v SG Autobody LLC, 516792, 3rd Dept 12-12-13

 

 

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No Need for Proof of Agent’s Authority—Five-Day Notice Demanding Rent Valid

The Second Department determined a five-day notice demanding unpaid rent under a lease was not invalid because it was signed by a purported agent of the landlord without proof of the agent’s authority to act for the landlord.  In so finding, the Second Department distinguished a case relied upon by the tenant:

…[T]he Appellate Term properly distinguished this Court’s decision in Siegel v Kentucky Fried Chicken of Long Is. (108 AD2d at 221). … Siegel is limited to the “factual peculiarities” of the lease in that case. The lease in Siegel, unlike the lease in the case at bar, designated certain rights that were to be exercised by “the Landlord or Landlord’s agent[ ]” and designated the landlord’s attorney by name, while the three-day forfeiture notice that was the subject of that dispute was sent by another attorney, who was unknown to the tenant …. The relevant provision of the lease herein (hereinafter the notice provision), provided that the “Landlord shall give Tenant written notice of default stating the type of default,” and, unlike the lease in Siegel, did not expressly obligate [landlord] to act only personally or through an identified agent. Consequently, although the notice indicated that it was signed by [landlord’s] previously unidentified agent, the failure to include evidence of the agent’s authority to bind the landlord, which we found necessary in Siegel, did not render [landlord] noncompliant with the requirements of the notice provision (see RPAPL 711[2]), and did not render the notice invalid. Matter of QPII-143-45 Sanford Ave, LLC v Spinner, 2013 NY Slip Op 05083, 2nd Dept 7-3-13

 

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Hospital Can Be Vicariously Liable for Actions of Non-employee Physician Under Apparent or Ostensible Agency Theory

The Second Department explained when a hospital can be held vicariously responsible, under a theory of apparent or ostensible agency, for the actions of non-employee physicians who provide medical services at the hospital:

“A hospital [is] responsible to a patient who sought medical care at the hospital, . . . rather than from any particular physician although the physician whose malpractice caused injury to the patient was not an employee of the hospital”… . To create an apparent or ostensible agency, the plaintiff must reasonably rely on the appearance of authority, based on some misleading words or conduct by the principal, not the agent. Moreover, the plaintiff must accept the services of the agent in reliance upon the perceived relationship between the agent and the principal, and not on reliance on the agent’s skill…. In the context of a medical malpractice action, the patient must have reasonably believed that the physicians treating her were provided by the hospital or acted on the hospital’s… . In evaluating whether a doctor is the apparent agent of a hospital, a court should consider all attendant circumstances to determine whether the patient could properly have believed that the physician was provided by the hospital… .  Loaiza v Lam, 2013 NY Slip Op 04780, 2nd Dept 6-26-13

 

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Religious Organization Vicariously Liable for Negligence of Volunteer Under Agency Theory

The Third Department affirmed Supreme Court’s finding that a volunteer [Strimling] was an agent of the defendant [Gateway], a corporation hosting a religious event, such that the defendant was vicariously liable with respect to an automobile accident involving the volunteer:

A  principal-agent relationship can  include a volunteer when  the requisite conditions, including control and  acting on  another’s behalf, are shown … .Gateways was  operating a program  where  it expected  700  to 800  attendees, who each paid $700 to attend.  Strimling’s fee to attend was waived  as it had  been  previously and, with his fee waived, he helped with various tasks that had to be accomplished to run the event. Strimling’s responsibilities included  arriving early to help set up, and  he was  supposed to remain after the event to pack up items for the return trip. Strimling referred to his responsibilities as work and  a job, reflecting his understanding of control by Gateways. Although he was not paid directly by Gateways, his $700 fee was waived and one of the individuals from Gateways in charge of the event also gave him $200. There was proof that the accident occurred when an individual who had authorized Strimling’s free attendance realized that two-way radios were needed and Strimling was summoned from his room to go to a store to purchase such items. Strimling was given a Gateways’ credit card and embarked on  a trip to a store solely to purchase the requested items for Gateways when  the accident occurred. He did so despite the fact that the timing of the request created a significant likelihood that Strimling would be put in the difficult position of traveling at a time of the evening that was prohibited by his religious beliefs. The proof sufficiently supports Supreme Court’s decision.  Paterno v Strimling…, 515978, 3rd Dept, 6-13-13

 

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Only Sellers’, Not Buyers’, Agent Can Be Liable for Failure to Disclose Lead Paint Dangers

In dismissing a complaint seeking damages pursuant to the Residential Lead-Based Paint Hazard Reduction Act (RLPHRA) for the failure to make disclosures regarding the dangers of lead paint, the Second Department noted that only seller’s agents, not buyer’s agents, can be held liable under the act:

The statutory language of the RLPHRA “is unambiguous with regard to the liability of real estate agents; only seller’s agents are liable” for the failure to ensure compliance with its provisions… . Contrary to the plaintiffs’ contention, it would be contrary to the unambiguous language of the statute to construe 24 CFR 35.86 so as to impose a duty on an agent or representative of a buyer… . Accordingly, the Supreme Court should have granted the …defendants’ motion to dismiss the complaint insofar as asserted against them. Felix v Thomas R Stachecki Gen Contr, LLC, 2013 NY Slip Op 03966, 2nd Dept, 6-5-13

 

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Criteria for Motions to Dismiss Pursuant to CPLR 3211 Discussed in Detail

In a full-fledged opinion by Justice Dickerson, the Second Department laid out the requirements for determining a motion to dismiss pursuant to CPLR 3211(a)(7), the elements of the theory of agency, the requirements for a judgment based on documentary evidence pursuant to CPLR 3211(a)(1), and the elements of a cause of action alleging breach of a fiduciary duty.  Faith Assembly v Titledge Of NY Abstract, LLC, 2013 NY Slip Op 02046, 2011-04345, Index No 28579/09, 2nd Dept 3-27-13

 

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