Jerome M. Eisenberg is an antiquities dealer and a self-proclaimed expert in classical antiquities with a doctorate in Roman, Egyptian, and Near Eastern art.
Maurice E. Hall Jr. is an art dealer who mainly deals in 16th- to 19th-century art. Hall asserts that his expertise is in Renaissance art and that he is merely an “amateur collector” of classical antiquities.
In 2009, Eisenberg visited Hall’s townhouse, out of which Hall operated his business, and purchased two items: a marble bust of Faustina II, purported to be ancient Roman, and a bronze warrior statue, purported to be Etruscan or Roman era. A few months later, Eisenberg sold the bust to the Mougins Museum of Classical Art in France. In April 2011, Eisenberg obtained the bronze statue from Hall. Eisenberg submitted the statute to a lab in France for metallographic analysis. The lab determined that the statue was actually from the 19th or 20th century, and therefore not ancient. In September 2011, the Mougins Museum informed Eisenberg that the bust was a fake in that it was modern and not ancient. Eisenberg filed suit against Hall, claiming the contract should be voided due to mutual mistake. The trial court ruled in favor of Hall, and Eisenburg appealed.
JUSTICE RAKOWER Plaintiff alleges that due to the “mutual mistake” of the parties regarding whether the items were ancient, it is entitled to summary judgment.
We agree with the motion court’s decision that plaintiff is not entitled to summary judgment on its breach of contract claim pursuant to the doctrine of mutual mistake. Although the record reflects that both plaintiff and defendants mistakenly assumed at the time of the transactions that the items at issue were ancient, issues of fact exist as to whether plaintiff bore the risk of that mistake due to its “[c]onscious ignorance” of the items’ authenticity.
“Generally, a contract entered into under a mutual mistake of fact is voidable and subject to rescission” because it “does not represent the meeting of the minds’ of the parties” (Matter of Gould v. Board of Educ. of Sewanhaka Cent. High School Dist., 81 NY2d 446, 453 [1993]). In order to justify rescission, “[t]he mutual mistake must exist at the time the contract is entered into and must be substantial” (id.).
The doctrine of mutual mistake “may not be invoked by a party to avoid the consequences of its own negligence” (P.K. Dev. v. Elvem Dev. Corp., 226 AD2d at 201). Where a party “in the exercise of ordinary care, should have known or could easily have ascertained” the relevant fact (id. at 202)—here, whether the items were ancient—that party is deemed to have been “[c]onscious[ly] ignoran[t]” and barred from seeking rescission (id. at 201 [second and third alterations added]) or other damages. This is true “[e]ven where a party must go beyond its own efforts in order to ascertain relevant facts (such as obtaining experts’
reports)” (id. at 202).
The conscious ignorance exception applies only where a party is aware that his knowledge is limited but decides to contract anyway “in the hope that the facts accord with his wishes,” thus assuming “[t]he risk of the existence of the doubtful fact … as one of the elements of the bargain” (Backus v. MacLaury, 278 App Div at 507 [internal quotation marks omitted].
We agree with the dissent that both plaintiff and defendants shared the mistaken belief that the Faustina Bust and the Etruscan Warrior were “ancient.” Where we diverge is that we find that the record at this time does not support a finding that Eisenberg did not consciously ignore his uncertainty as to a crucial fact.
Questions exist as to whether Eisenberg genuinely believed the bust and statue to be ancient, or was aware that they might not be ancient but decided to assume this risk. Plaintiff presented evidence that Eisenberg is an expert on classical antiquities and a qualified appraiser who generally relies on his own expertise in evaluating works unless he is unsure of a piece’s authenticity. He could thus have reasonably accepted that the items were ancient “based on [a]
rational assessment of the source and style of work” … Moreover, as to the Etruscan Warrior, Hall admittedly informed Eisenberg that he believed it to be from the private collection of renowned art collector J. Pierpont Morgan as signified by a painted red number. Eisenberg could have rationally relied on Morgan’s reputation in addition to his own observations (id.).
However, plaintiff also admits in its complaint that several other items purchased from defendants later turned out to be inauthentic. This suggests that plaintiff should have been on notice that the items might not be ancient—at least by the time of the later Etruscan Warrior purchase.
The circumstances surrounding the transactions, including the visits to Hall’s townhouse and bedroom, with little or no discussion of the provenance of the pieces, as well as plaintiff’s admission that several other items purchased from defendants turned out to be inauthentic, cast plaintiff’s professed certainty as to the authenticity of the items into doubt and could support a finding that plaintiff was on notice that the items might not be ancient.
CRITICAL THINKING:
What is conscious ignorance, and how is conscious ignorance important to the judge’s reasoning in this case?
ETHICAL DECISION MAKING:
What values are furthered by the decision in this case?