agent of the buyer (Murray Dep. at 92-93), is to "strain the contract
language beyond its reasonable and ordinary meaning." Seiden Assoc., 959
F.2d at 428 (quoting Bethlehem Steel Co. v. Turner Constr. Co.,
2 N.Y.2d 456, 459, 161 N.Y.S.2d 90, 93, 141 N.E.2d 590 (1957)).
Plaintiffs have established also the remaining elements of their action
for the price pursuant to Section 2-709(1)(a) of the New York Uniform
Commercial Code. Section 2-709(1)(a) provides that "[w]hen the buyer
fails to pay the price as it becomes due the seller may recover, together
with any incidental damages under the next section, the price of goods
accepted . . . ." N.Y. U.C.C. § 2-709(1)(a) (McKinney 1993). A buyer
is defined by the U.C.C. as "a person who buys or contracts to buy
goods." N.Y. U.C.C. § 2-103(1)(a) (McKinney 1993). As discussed
above, Murray contracted to buy the Degas, and is therefore a "buyer" as
defined by the U.C.C. It is undisputed that Murray failed to pay the
price when it became due. (Weil 56.1 ¶ 30)
The undisputed facts establish also that Murray accepted the Degas.
"Goods that a buyer has in its possession necessarily are accepted or
rejected by the time a reasonable opportunity for inspecting them
passes." Seabury Constr. v. Jeffrey Chain Corp., 2000 WL 1170109, at *2
(S.D.N.Y. 2000) (citing N.Y. U.C.C. § 2-606(1) (McKinney 1993)). As
noted above, Murray first inspected the Degas under an ultraviolet light
when he viewed it at the Weils' home in late October. (Weil 56.1 ¶
5; Murray 56.1 ¶ 12) Murray had the opportunity to further examine
the Degas at his gallery in New York pursuant to the consignment
agreement and his continued possession of the painting following the
expiration of the consignment agreement. (Weil 56.1 ¶ 15; Murray
56.1 ¶¶ 20, 77, 79) It is also undisputed that Murray was present
when Simon Parkes assessed the condition of the painting sometime between
November 3 and November 19, 1997. (Murray Dep. at 82-84; Peck Dep. at
71-73) Not only did Murray have a reasonable time to inspect the goods,
but also it is undisputed that he actually did inspect the Degas. There
is no evidence that Murray found the painting unsatisfactory or
non-conforming. See Integrated Circuits Unltd. v. E.F. Johnson Co.,
875 F.2d 1040, 1042 (2d Cir. 1989) (discussing acceptance as the failure
to make an effective rejection after a reasonable time to inspect).
Although the question of whether the buyer has had a reasonable time to
inspect is generally a question for the trier of fact, Sherkate-Sahami
Khass Rapol v. Henry R. Jahn & Son, Inc., 701 F.2d 1049, 1051 (2d
Cir. 1983), no reasonable jury could find that Murray did not accept the
Degas in light of the undisputed facts that he inspected the Degas on at
least two occasions, signed the written agreement, and continued to
retain possession of the Degas. See Sessa v. Riegle, 427 F. Supp. 760,
767 (D.C.Pa. 1977) (finding acceptance when buyer was permitted unlimited
inspection of a horse and then indicated that he would buy the horse),
aff'd 568 F.2d 770 (3d Cir. 1978).
Moreover, it is undisputed that, without Weil's consent, Murray, at a
minimum, permitted the painting to be cleaned and restored in late
November or early December. (Stern Decl., Ex. Q; Murray Aff. ¶ 21)
Murray's participation in the alteration of the painting, regardless of
whether such alteration increased its value, was an act inconsistent with
plaintiffs' ownership. See N.Y. U.C.C. § 2-606(1)(c) (McKinney 1993)
(defining acceptance); see also In re Fran Char Press, Inc., 55 B.R. 55,
57 (Bankr.E.D.N.Y. 1985) (finding that buyer had accepted posters by
taking possession of them and mounting them on cardboard),
cited with approval in Sobiech v. International Staple & Machine
Co., 867 F.2d 778, 781 (2d Cir. 1989); see also Industrial De Calcados
Martini Ltd. v. Maxwell Shoe Co., 36 Mass. App. Ct. 268, 630 N.E.2d 299
(1994) (finding acceptance where buyer had shoes refinished). Plaintiffs
have established that Murray agreed to purchase the Degas, accepted it,
and nonetheless failed to pay the purchase price.
The return of the painting to Weil and his current possession of the
Degas do not preclude a finding that plaintiffs are entitled to the
contract price. See White & Summers, 1 Uniform Commercial Code 364
(4th ed. 1995) ("[B]uyer's return of accepted goods does not deprive
seller of its 2-709 right to the price."). Section 2-709(2) of the New
York Uniform Commercial Code provides for a seller's retention of goods.
The statute requires only that "the net proceeds of any . . . resale must
be credited to the buyer and payment of the judgment entitles [the buyer]
to any goods not resold." N.Y. U.C.C. § 2-709(2) McKinney 1993).
Plaintiffs are entitled to the contract price of $1 million and any
incidental damages. N.Y. U.C.C. § 2-709(1)(a) (McKinney 1993).
Incidental damages include prejudgment interest, which, in a diversity
case, is controlled by the rule of the jurisdiction whose law controls
liability. See Entron, Inc. v. Affiliated FM Ins. Co., 749 F.2d 127, 131
(2d Cir. 1984); see also Hyosung America, Inc. v. Sumagh Textile Co.,
Ltd., 137 F.3d 75, 81 (2d Cir. 1998); Sobiech, 867 F.2d at 781. Section
5001 of the N.Y. C.P.L.R. requires that prejudgment interest be computed
from the earliest ascertainable date that the cause of action existed, in
this case, December 8, 1997 — the date payment was due but not
received. N.Y. C.P.L.R. § 5001 (McKinney 1992 & Supp. 2000). The
rate of interest under New York law is nine percent simple interest per
annum. N.Y. C.P.L.R. § 5004 (McKinney 1992). Plaintiffs are entitled
to a judgment of $1,298,849.31.*fn5 Upon payment of the judgment, Murray
is entitled to the Degas.
Plaintiffs move also for summary judgment against Murray for breach of
contract and breach of warranty. Because plaintiffs are entitled to
summary judgment against Murray for the contract price on their claim
pursuant to Section 2-709 of the New York Uniform Commercial Code, it is
unnecessary to decide plaintiffs' remaining claims against Murray.
Peck moves for summary judgment against plaintiffs on all claims
brought against him. It is undisputed that Peck did not sign the written
agreement for the sale of the Degas, and had no direct dealings with
plaintiffs prior to December 9, 1997. Therefore, Peck argues, because he
was not a party to the contract, he cannot be held liable for plaintiffs'
breach of contract claim and action for the price. However, summary
judgment is inappropriate because a genuine issue of material fact exists
as to whether Murray was acting as Peck's agent when he signed the
contract to buy the Degas.
Parties may establish an agency relationship through "written or spoken
words or other conduct of the principal which, reasonably interpreted,
causes the agent to believe that the principal desires
him so to act on the principal's account." Itel Containers Int'l Corp.
v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698, 702 (2d Cir. 1990)
(quoting Restatement (Second) of Agency § 26 (1958)). If an agency
relationship is established, the principal is responsible for the agent's
acts within the scope of the his real or apparent authority. Citibank,
N.A. v. Nyland (CF8) Ltd., 878 F.2d 620, 624 (2d Cir. 1989). Although
Peck spends a significant portion of his argument discussing Weil's
perception of the relationship between Murray and Peck, the question of
"whether express agency is formed depends on the actual interaction
between the putative principal and agent, not any perception a third
party may have of the relationship." Itel Containers, 909 F.2d at 702.
Although Peck claims that he did "not specifically" discuss the Degas
prior to its arrival in New York (Peck Dep. at 64), Murray asserts that
Peck asked him to arrange to have it brought to New York. (Murray Aff.
¶ 10) And, although Peck claims only to have "expressed an interest"
in the painting after seeing it (Peck Dep. at 77, 79, 150-51), Murray
asserts that on or before November 8, 1997, he agreed with Peck that Peck
would purchase the painting with Murray "acting as a broker." (Murray
Aff. ¶ 12) Furthermore, Peck's attorney wrote the first draft of the
written agreement. (Murray Dep. at 77; Stern Aff. in Opp., Ex. N) Murray
contends that he showed Peck a version of the final written agreement,
and that Peck "authorized" him to sign it.*fn6 (Murray Aff. ¶¶ 31,
32) Finally, although Peck asserts that he went "collectively" with
Murray to Perdiguero to have the painting cleaned and restored (Peck
Dep. at 14), Murray claims that the painting was sent at Peck's request.
(Murray Aff. ¶ 21) It is undisputed that Peck paid Perdiguero for
his work on the Degas. (Peck Dep. at 14; Murray Dep. at 179) Looking at
the facts in the light most favorable to non-moving plaintiffs, a
reasonable jury could conclude that Peck's conduct, reasonably
interpreted, caused Murray to believe that Peck wanted him to buy the
painting on Peck's behalf, and therefore that Murray was acting as an
agent for Peck when he agreed to buy the Degas.
Peck argues also that he is entitled to summary judgment because the
written agreement is explicitly a bilateral agreement between Murray and
plaintiffs, and therefore, Peck cannot be bound by it. However, the
contract states that the "undisclosed principal shall also be bound by
this agreement." (emphasis added) Murray asserts that Peck was the
undisclosed principal referred to in the agreement. If the jury were to
determine that Murray was acting as Peck's agent, with authority to sign
the contract, then Peck could be bound. Furthermore, although Murray
signed the contract in his name, not as the agent for Peck or the
undisclosed principal, a "partially disclosed principal is subject to
liability upon an authorized contract in writing . . . although it
purports to be the contract of the agent unless the principal is excluded
as a party by the terms of the instrument or by the agreement of the
parties." Restatement (Second) of Agency § 149 (1958). Finally, it
bears mention that the written agreement, if signed by
Murray as Peck's authorized agent, satisfies the Statute of Frauds. See
N.Y. U.C.C. § 2-201 (McKinney 1993 & Supp. 2000).
Peck's potential liability for the contract is not inconsistent with
the summary judgment against Murray granted above. An agent who enters
into an agreement on behalf of an undisclosed or partially disclosed
principal is jointly and severally liable with the principal. Cf. St.
Charles Cable TV Inc. v. Eagle Comtronics, Inc., 687 F. Supp. 820, 832
(S.D.N.Y. 1988) (addressing undisclosed principal). aff'd 895 F.2d 1410
(2d Cir. 1989); see also Orient Mid-East Lines v. Albert E. Bowen, Inc.,
458 F.2d 572, 576 (2d Cir. 1972) (citing Restatement of Agency (Second)
§ 321 (1958)). Genuine issues of material fact exist as to whether
Murray was acting as Peck's authorized agent when he signed the written
agreement. Therefore, Peck is not entitled to summary judgment against
plaintiffs dismissing their breach of contract claim and action for the
Plaintiffs concede that if they are awarded the contract price, they
will be made whole, and therefore will not seek recovery on their damages
claims. (Mem. in Opp. at 21, n. 10) Because plaintiffs are entitled to
summary judgment, albeit against Murray, for the contract price, I need
not decide Peck's motion for summary judgment on plaintiffs' injury to
For the reasons stated above, plaintiffs' motion for summary judgment
against Murray is granted on their action for the price. Peck's motion
for summary judgment against Plaintiffs is denied as to plaintiffs'
breach of contract and action for the price claims.