Jerome M. Eisenberg, Inc. v. Hall
48 N.Y.S.3d 71 (2017)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A contract entered into under a mutual mistake of fact may not be rescinded if the party seeking rescission bore the risk of the mistake by being consciously aware of their limited knowledge and proceeding with the transaction anyway.
Facts:
- Jerome M. Eisenberg, a self-proclaimed expert in classical antiquities, operated an antiquity dealing business, Jerome M. Eisenberg, Inc.
- Maurice E. Hall was an art dealer who primarily dealt in European art and was considered an 'amateur collector' of classical antiquities.
- In February 2009, Eisenberg acquired a marble bust of Faustina II from Hall, with both parties believing it to be an authentic ancient Roman artifact.
- In April 2011, Eisenberg acquired a bronze warrior statue (the 'Etruscan Warrior') from Hall, which Hall suggested may have been from J. Pierpont Morgan's collection; both parties believed this piece was also ancient.
- Prior to the transaction for the Etruscan Warrior, Eisenberg had purchased several other items from Hall which were later discovered to be inauthentic.
- After the purchases, Eisenberg sold the Faustina Bust to a museum, which later informed him it was a modern forgery based on expert analysis.
- Eisenberg had the Etruscan Warrior independently analyzed, and it was also determined to be a modern forgery from the 19th or 20th century.
Procedural Posture:
- Plaintiff Jerome M. Eisenberg, Inc. sued defendants Maurice E. Hall, Jr. and his companies in the Supreme Court, New York County, which is a trial-level court.
- Plaintiff filed a motion for summary judgment on its breach of contract cause of action, seeking to rescind the sales based on the doctrine of mutual mistake.
- The trial court denied plaintiff's motion for summary judgment.
- Plaintiff, as the appellant, appealed the trial court's denial of its motion to the Supreme Court, Appellate Division, First Department.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the doctrine of mutual mistake permit a party to obtain summary judgment to rescind a contract for the sale of art, believed to be ancient but later found to be a forgery, when the party seeking rescission is an expert who relied on their own evaluation under circumstances that may have put them on notice of potential inauthenticity?
Opinions:
Majority - Acosta, J.P.
No. While a contract based on mutual mistake is generally voidable, rescission is not available where issues of fact exist as to whether the moving party bore the risk of that mistake through 'conscious ignorance.' Although both parties mistakenly believed the antiquities were authentic, Eisenberg's status as an expert, his prior purchases of forgeries from Hall, and the informal circumstances of the sale raise a triable issue of fact as to whether he was aware of his limited knowledge and proceeded with the transaction anyway. The 'conscious ignorance' exception applies when a party is aware their knowledge is limited but contracts in the hope that the facts align with their wishes, thereby assuming the risk. Given the evidence suggesting Eisenberg should have been on notice that the items might not be ancient, he is not entitled to summary judgment.
Dissenting - Andrias, J.
Yes. The contract should be rescinded because it was based on a mutual mistake of a material fact and there is no evidence of 'conscious ignorance.' It is undisputed that both parties believed the sculptures were ancient and based the price on that assumption, meaning there was no true 'meeting of the minds.' The conscious ignorance exception does not apply because Eisenberg rationally and genuinely believed the items were authentic based on his own expertise and representations from Hall, such as the connection to J. Pierpont Morgan. Being an expert does not automatically mean a party assumes the risk of forgery, and prior dealings where refunds were issued for fakes should not impose a heightened duty of inquiry.
Analysis:
This decision reinforces and clarifies the 'conscious ignorance' exception to the doctrine of mutual mistake, particularly in transactions involving expert buyers. It establishes that an expert's own assessment, while potentially reasonable, does not automatically shield them from assuming the risk of a mistake. The ruling suggests that when circumstances exist that could put an expert on notice of potential problems (like prior forgeries from the same seller), a court may find a triable issue of fact as to whether the expert consciously disregarded their uncertainty, making it more difficult for such parties to win rescission on summary judgment.
Unlock the full brief for Jerome M. Eisenberg, Inc. v. Hall