Paula Scher
Paula Scher (designboom)

A prominent artist and graphic designer is the rightful owner of more than 300 prints of her work made by a third party under a contract with a gallery that has since ended, a state appeals panel has ruled, largely affirming a lower court judge.

However, the four-judge Appellate Division, First Department panel on Thursday declined to adopt Manhattan Supreme Court Justice Melvin Schweitzer’s finding that the artist, Paula Scher, owns the prints under New York’s Arts and Cultural Affairs Law, relying instead on her contract with the gallery.

It also ruled that Scher is entitled to the full list price of prints that are missing or were sold without documentation, an issue that Schweitzer did not address.

Justice David Friedman (See Profile) wrote the opinion in Scher v. Stendhal Gallery, 650598/10, joined by Justices Peter Tom (See Profile), Helen Freedman (See Profile) and Paul Feinman (See Profile).

Scher entered into a contract with the Stendhal Gallery in Manhattan in 2005. Under the contract, she consigned to the gallery for sale a series of 12 oil paintings based on maps painted over previous years, and agreed to consign any future paintings she made while the contract was in effect. The contract gave the gallery a 50 percent commission on each sale.

The agreement also provided that the gallery would be Scher’s “exclusive agent” in the sale of any limited edition prints, though it did not specify a 50 percent commission for such prints. The agreement remained in effect for four and a half years, until Scher sent the gallery a termination letter in 2010.

While the agreement was in effect, Scher allowed the gallery to make prints of her map paintings at its expense and sell them. The parties agreed orally that Scher would get 10 percent of the sale price and the gallery would get the rest. The gallery hired an outside printing company to make the prints. While Scher worked closely with the printer to create the prints, and signed each one, the gallery paid for them.

When Scher ended the contract, 320 of these prints were unsold. She demanded that the unsold prints be returned, but the gallery refused. It sold several more before Scher sued, and Schweitzer ordered the prints held in escrow.

In her suit, Scher sought a judgment that she owned the unsold prints, and the gallery had no rights to the proceeds from their sale. She argued that, although the gallery paid for the prints, and hired a printer to physically make them, she owned them under the Arts and Cultural Affairs Law.

The relevant part of the law states that when an artist “delivers or causes to be delivered a work of fine art, craft or a print of his own creation to an art merchant,” the merchant holds that work in trust for the benefit of the artist.

Scher also alleged that the gallery still owed her money from sales that took place under the contract. Those claims are still pending and are not affected by Thursday’s First Department decision.

Scher and the gallery cross-moved for partial summary judgment over ownership. Schweitzer initially found that while Scher owned the prints, the gallery is still entitled to 90 percent of the proceeds of their sales.

Scher then moved for reargument. Schweitzer granted that motion, and the second time around, he ruled that Scher was entitled to all of the proceeds from the prints because they belonged to her, and the agreement to share sale proceeds ended when the contract ended.

The gallery appealed. It argued that Arts and Cultural Affairs Law does not apply to the prints because Scher did not make them, and in fact never actually possessed them, meaning that she could not have “delivered” them to the gallery.

In the appellate ruling, Friedman said that this argument “seemingly has some cogency, as it would appear anomalous for the law to designate property that did not belong to the artist in the first place as ‘trust property’ for the artist’s benefit.”

However, he said, there was no need to address the Arts and Cultural Affairs Law at all because “the written 2005 agreement between Scher and the gallery specifies that the gallery was acting with regard to the prints as Scher’s ‘exclusive agent.’”

That means that when the gallery contracted and paid for the prints, it was acting as Scher’s agent, and she still owned them, he said.

If the gallery had wanted to ensure its ownership of the prints it paid for when Scher terminated the contract, Friedman said, it could have explicitly written that in the contract.

“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,” he said.

Friedman said that Schweitzer was right in finding that, since Scher owned the prints, the gallery had no right to their proceeds once the contract was over.

He also wrote that Scher is entitled to proceeds of the handful of prints sold after the contract was terminated, and to the full list price of any prints that are “missing or are believed to have been disposed of through undocumented transactions.”

According to a reply brief filed by Scher in Supreme Court, there are 212 such prints, with a total sale price of about $1.6 million.

Scher is represented by Judith Wallace, counsel at Carter Ledyard & Milburn, and Michael Bauscher, an associate there. Jeffrey Loop, a former counsel at Carter Ledyard who has since left to become a member at Kaufman & Company, also worked on the case.

“We are pleased that the Appellate Division recognized the importance of protecting the rights of artists, their ownership of their artwork, and their entitlement to their fair share of the proceeds of the sale of their work,” Wallace said in an email.

The gallery is represented by Michael Ledley, a partner at Wollmuth Maher & Deutsch, and Melissa Finkelstein, an associate there. Ledley declined to comment on the decision.