In July, the art world rests. Auctioneers and collectors alike head for castles in Spain or cottages on Cape Cod to drown sorrows or celebrate memories of the auction year.

But this year, the summer peace has been violated by confessions of wrongdoing, threats of restrictive legislation, announcements of impending lawsuits, statements and counterstatements, and a great deal of breast-beating and tut-tutting.

Causing the spin is last week's disclosure that David Bathurst, then head of Christie's New York, had lied following a May 19, 1981, auction, saying that three Impressionist paintings were sold when, in fact, only one had been. Cristallina, the Lausanne, Switzerland, art company that owned the paintings at issue, had consigned eight works to Christie's. One, Degas' "Portrait of Eugene Manet," brought $2.2 million -- a record for a Degas.

But Bathurst falsely announced that Van Gogh's "Houses at Saintes-Marie-de-la-Mer," an 1888 streetscape, sold for $2.1 million and that Gauguin's "Still Life with Mangos," painted in Tahiti, went for $1.3 million. Neither in fact had been sold. Five others -- by Cezanne, van Gogh, Marisot, Renoir and Monet -- were correctly listed as being unsold.

Bathurst said later that he feared the effect on the market if the paintings were known to be unsold. In London, Christie's International board said it took the "gravest view of this isolated lapse from the high standard of conduct that Christie's employs" and that it would "certainly not happen in the future."

The revelations came to light July 2, when New York's Supreme Court dismissed an action brought by Dimitry Jodidio, the head of Cristallina, which sought some $8 million damages from Christie's, charging that the auction was "improperly handled." The 1982 suit also charged that Christie's appraised the paintings at a higher price than the paintings brought.

Judge Eugene R. Wolin, dismissing the suit, wrote that "with respect to the allegations of breach of fiduciary duty and failure to warn plaintiff of the risks of an auction, the court finds the affidavit of plaintiff's principal officer Dimitry Jodidio completely incredible." The monetary value of the paintings, Wolin wrote, "can only be established by responsible persons actually bidding for the paintings not by jurors engaging in a fantasy auction."

The controversy gives a rare inside view of a glamorous business where Old Master paintings, rare jewels and antique furnishings are sold for millions in elegant surroundings, accompanied by sherry and black tie. Gossip about the auction business has always been widespread, but it's usually discreet. Buyers and sellers are frequently anonymous, and auction officials re great keepers of secrets; crass commercialism is concealed by erudition, titles and even backgrounds in national intelligence agencies. Christie's, Sotheby's chief rival, did a business of more than $207 million in New York last year. The 1985 figures, to be released at the end of this month, are expected to be lower. Worldwide sales for Christie's 1984 season were $432 million.

The recent disclosures may make more auction-goers wonder if all is what it seems.

As a result of the revelation, the New York City Department of Consumer Affairs is investigating whether Bathurst and Christie's are "fit" to continue to hold their license to do business in New York.

The department's counsel, Christopher FitzPatrick, said, "This conduct raises doubt whether Christie's is fit to engage in the auction business and whether they should be allowed to hold a license. The investigation could lead to a formal hearing with the strong possibility of suspension or revocation of the licenses in question, along with monetary penalties." He said his office is discussing the matter with Christie's lawyers and expects that either a hearing or other resolution of the matter will come in the next two weeks.

But having said that, FitzPatrick softened his comments by adding, "We wouldn't be looking to put Christie's out of business. We don't want to indict on one fairly stale incident. But we do have responsibility to the public."

The consumer affairs department plans to recommend legislation to the city council that would force auction houses to reveal the reserve prices (the seller's minimum) of auction lots.

American auction houses, unlike those in many other places, currently do not normally disclose this secret price. In Vienna, for example, the "ruf" price, or the reserve, is noted both in catalogues and in the presale exhibitions. If the owner's reserve is not met, the object is said to be "bought in." The usual practice is that in the post-sale price list, the lot is simply not listed -- numbers would jump from 101 to 103 if 102 were withdrawn or not sold.

FitzPatrick said Bathurst's admission is "a dramatic illustration of something that's fairly common. People in the know say it goes on all the time. There's no way of telling how often it happens. We don't often get complaints about auctions.

"Since the publicity about Christie's, we've probably gotten a handful of calls alleging similar things have happened to them -- but not at Christie's, at other auction houses. So we are looking to see if we can change the law to see it can't happen again."

The New York court's summary judgment may not be the last word legally, either.

At week's end, Robert A. Weiner, Cristallina's New York attorney, charged that Christie's statement Monday "mischaracterized aspects of the case" -- namely when Bathurst said that Cristallina "was at all times aware that only one painting had been sold."

In response, Christie's New York office said officially it would have no immediate further comment because legal action is involved.

Weiner also said that Cristallina intends to ask for a reargument of the decision, and if that is denied, it intends to appeal, if necessary, to New York's highest court, the Court of Appeals.

The art world's reactions to the charges and countercharges have varied strongly.

William Doyle, owner of the New York auction house of the same name, said: "I am shocked. I thought Christie's talked only to God, and therefore they were pure and without sin. I thought Bathurst only left church to come to work. That's the impression they gave me."

He added that he had heard a rumor three years ago that the paintings had not really been sold. "We all use auction records as though they were the last quote on the stock market. I'm afraid people will be frightened away."

Clement Conger, curator of the White House and the State Department, rarely has been known to say "no comment." But last week he said, "I hoped you wouldn't call me."

Harry Lunn, the international art dealer who almost singlehandedly created a market for photographs, said he recently bid the high estimate on a photograph at a Sotheby's auction in London -- and fell short of the reserve. "The reserve price was above the high estimate," he said. "I was approached afterward and asked if I wanted to offer more, but I didn't. It wouldn't be likely to happen in New York."

At Sotheby's, vice president David Yudain said, "We want to make it perfectly clear that what has been sold we announce as sold. We make very clear what has not been sold. Our price lists always omit any lot not sold." And he added, "I've never seen a business as driven by rumors as the art business."

Donald Webster, an owner of Sloan's auction house here, said, "I am very sorry to hear that Bathurst fell into the error of making a false report, but I admire his forthrightness in admitting the mistake. He's not a trickster, there may be more to it than came out. I doubt it's all his responsibility."

Webster said he was disturbed by another common auction practice. Some auctioneers, he said, begin bidding by saying "I have a bid of umptee ump," when actually there is no bid, only the reserve price. "That's deceptive."

As for legislation that would force disclosure of reserves, Webster said, "Often the owner changes the reserve right up until the night before the auction. If the owner hasn't given us a reserve, we set it at 50 percent of the presale estimate, though we recommend they reserve at 60 to 75 percent. We never accept reserves higher than the low sale estimate."

Christopher Weston, chairman and chief executive officer of Phillips, the U.K.'s third largest auction house, and chairman of the British Society of Fine Art auctioneers, said, "I think it would be a pity if anything happens to the market to shake the public's confidence. Very unfortunate!"

He said Bathurst "may have made his comments with the best intent. He must have thought he was doing the right thing. I don't understand it. If it's not sold, we show it as not sold."

Other words of sympathy for Bathurst came from Russell Burke, formerly head of Phillips New York and once an auctioneer in Washington. Burke is now a vice president at the Kennedy Galleries in New York. "David Bathurst is a gentleman," Burke said. "All I know is what he said. He thought he was doing the best thing for all concerned. I remember times when it would have been easier to say everything sold, but we never did."

Burke also noted that when "a gallery says they'll give you $10,000 for a painting, they have to write the check. That's the difference between auctions and private sales. The other point is that Bathurst told the seller that the paintings would bring $8 million when sold privately or $10 million at auction. He's hoisted himself on his own ample petard. It suggests that it's cheaper to buy from a dealer . . ."

John Wilmerding, deputy director of the National Gallery of Art, said, "I hope that it was an indiscretion, rather than a pattern. There's no indication that Bathurst has been doing this on a regular and continuing basis. We should know the context and circumstances at the time before we condemn outright. We should reserve judgment."

He cautioned, however, that "we should all be more self-policing. We all depend on one another. We don't want to mislead. The fact that it came to light makes everyone stand up and take notice. We all need to be careful. The art market is so volatile; good works of art can be damaged unfairly by bad word of mouth."