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Kohler v. Hindman

September 20, 1995

PETER G. KOHLER AND WALTER J. KOHLER, PLAINTIFFS-APPELLANTS,

v.

LESLIE HINDMAN, INC., AN ILLINOIS CORPORATION, AND RICHARD M. THUNE, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 93 C 6170--Charles P. Kocoras, Judge.

Before CUDAHY, EASTERBROOK, and RIPPLE, Circuit Judges.

CUDAHY, Circuit Judge.

ARGUED SEPTEMBER 20, 1995

DECIDED APRIL 5, 1996

An artist once produced a painting now called "The Plains of Meudon." For a while, the parties in this case thought that the artist was Theodore Rousseau, a prominent member of the Barbizon school, and that the painting was quite valuable. With this idea in mind, the Kohlers consigned the painting to Leslie Hindman, Inc., an auction house, and Richard Thune bought it at auction for $90,000 on the condition that it was, in fact, a Rousseau. It was not. The parties then pursued a lawsuit in the district court to determine who would get stuck with it. Upon a motion for summary judgment, the district court held that, as a matter of law, the contracts between the parties required that the Kohlers keep the painting. The Kohlers contend that the district court erred in its interpretation of the contracts, and they appeal. We affirm.

Background

The Kohlers inherited the painting from their mother, Dorothy Dings Kohler, in 1989. Two years later, they decided to sell it along with some other artwork from their mother's estate, and they contacted Leslie Hindman Auctioneers (Hindman, Inc.). After arranging for the inspection of the artwork, Leslie Hindman, president of her eponymous auction house, met with the Kohlers and discussed the terms by which her company would sell it at auction. Hindman, Inc. and the Kohlers then entered into a consignment agreement which made the company the Kohlers' agent for the auction sale.

Among other things, the consignment agreement defined the scope of Hindman, Inc.'s authority as agent. Two aspects of that authority concern us here. First, Hindman, Inc. was obliged to sell the painting according to the conditions of sale spelled out in the auction catalog. Those conditions provided that neither the consignors nor Hindman, Inc. made any warranties of authenticity. Indeed, the conditions emphasized that "[a]ll lots are sold 'AS IS,' " and one provision of the conditions asserted that "[n]o statement anywhere, whether oral or written, shall be deemed" to be a warranty of authenticity. The conditions also provided that Hindman, Inc. would insure that title to all lots passed with the fall of the auctioneer's hammer. In addition to these prescriptions, another provision of the consignment agreement gave the company extensive and exclusive discretionary authority to cancel sales. In Paragraph 14 of the consignment agreement, Hindman, Inc. declared that

We are authorized as your agent to accept the return and rescind the sale of any [p]roperty if we at any time in our sole discretion determine that the offering for sale of any [p]roperty has subjected us and/or you to any liability under a warranty of authenticity.

Along with the other artwork from the Dorothy Dings Kohler estate, Hindman, Inc. listed the painting in its auction catalog, noting that the painting was, in its best judgment, by Rousseau. Hindman, Inc. also displayed the painting at a pre-auction showing where Thune's agent, Simon Parkes, saw it and developed some doubts about its authenticity. He expressed those doubts to his principal and to Scot Campbell, an employee of Hindman, Inc. Campbell relayed Parkes' suspicions to Ms. Hindman, who was soon in touch with Thune. Thune was still interested in the painting, but he wanted to have it authenticated before committing to its purchase. Unable to obtain an authoritative opinion about its authenticity before the auction, Ms. Hindman and Thune made a verbal agreement that Thune could return the painting within approximately thirty days of the auction if he was the successful bidder and if an expert then determined that Rousseau had not painted it. Neither Ms. Hindman nor anyone else at Hindman, Inc. told the Kohlers about the questions concerning the painting or about the side agreement between Thune and Hindman, Inc.

At the auction on October 13, 1991, Thune prevailed in the bidding with a high bid of $90,000, and he took possession of the painting without paying. He then sent it to an expert in Paris who decided that it was not a Rousseau. Thune returned the painting to Hindman, Inc. in March 1992.

The Kohlers sued both Hindman, Inc. and Thune. They claimed that Hindman, Inc. had breached the consignment agreement with them and its fiduciary duty to them and had committed constructive fraud and conversion. They also claimed that they had a implied contract with Thune himself for the painting, and that Thune had breached that contract by failing to pay the $90,000. Hindman, Inc. and Thune each made various claims of their own.

After the district court dismissed the conversion claim, the parties made cross-motions for summary judgment on all of the remaining claims. The district court ruled that Hindman, Inc. and Thune were entitled to judgment on all of the ...


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