New York by statute has prescribed additional duties to protect consignors who are artists. Article 12 of the New York Arts and Cultural Affairs Law (“NYACAL”) expressly says that when an artist delivers work to a dealer, it is deemed to be a consignment relationship, and the dealer is deemed to be the artist’s agent (and therefore his fiduciary) with respect to the consigned work. Title to the work remains with the consignor until it is sold, and the work becomes trust property in the hands of the dealer; the arist’s work and the proceeds of its sale are held in trust for the benefit of the artist. As such, the proceeds cannot be used as the dealer’s own funds. Nor can the dealer retain consigned artwork as collateral for claims it may have against the artist. Perhaps most importantly, the statute protects the artist’s work and the proceeds of its sale from the claims of any of the dealer’s creditors.

Late last month, the New York State Legislature passed a bill that would make a breach of one’s obligations under Article 12 subject to the penalties of a misdemeanor. The bill, which is awaiting the governor’s signature, will also permit artists and their heirs to bring civil lawsuits under the statute, and would allow them to recover attorney’s fees if successful.