<< <i>There is no excuse for this. For a coin of this value, PCGS should have been very careful when grading. For an experienced grader, there is no fine line between AU58 and MS62, either a coin has wear or it doesn't. Either the previous owner or the current owner got the shaft, and without looking at the coin in person there is no way to tell which. >>
There can be rub (ie minimal wear) on grades up to MS67, according to PCGS. I would disagree there is no fine line between AU58 and MS62. PCGS utilizes market, not technical, grading. The market value is equal to the slab grade. Many AU58's are worth more than MS62s. >>
PCGS is a coin grading company, not a coin appraisal company. I really wish PCGS and NGC would do away with market grading. Grade the coins technically and let the market determine the value.
Interesting thread. Eye opening. Not sure about the legal mumbo-jumbo. Other than my wife, I try to avoid lawyers, but as with MOC, lawsuits are part of the professional landscape.
Does Heritage really care that their photography is so unflattering? If the coin market were not so robust, do you think they would care more? (it's a tangent, I know, but enough people have brought it up)
Here's why I think *someone* has a cause of action.
Have you read the PCGS grading terms and conditions? If not, I'll copy at least a portion of the relevant language below. Do you think that would change the opinions on causes of action you have put forth? The criminal cases mentioned all require evidence of scienter, i.e. the perpetrator intended to fool the buyer. They are not cases of 'mistaken grading' or innocent and legitimate disagreements about a grade.
I disagree with your blanket assertion that 'someone has a cause of action' for the coin grading and sales that are part of this thread. I would love to hear your theory, however, as to why the PCGS disclaimer should not apply to the facts of the coin discussed in this thread. Here is section 3 from the PCGS Grading Terms and Conditions as it appears on their submission sheet used to transmit coins for grading.
3. Grading involves individual judgments that are subjective and require the exercise of professional opinion, which can change from time to time. Therefore, PCGS disclaims any warranties, express or implied with respect to the grade assigned by PCGS to any coin, except pursuant to PCGS's guarantee resubmission, re-verification or regrade service as in effect from time to time.
<< <i>Well Robert, according to Coin World they are experts in coin photography. >>
Yeah right, coins I have bought many coins there and just recently sold there and without fail, every coin looked nothing, in the hand, as they did or do in their pix. Gorgeous coins looked "average" at best and the hammer supports this statement.
<< <i>they regraded it as a 62 honestly and fairly. >>
Yeah right again! Anyone with ONE good eye can see the wear on the stars on the obverse. Some are totally full and pointed
while others are flat. The same can be said of the reverse. What you see, plain and simple, is WEAR and wear does not equate
to uncirculated. NO WAY this is an uncirculated coin! Of course, this is just my humble opinion.
I believe the coin was upgraded as is, with nothing being done to it.
By posting this example I didn't want to stir anything up. (Althought the Heritage consignor will probably not be happy with me) I just wanted to give an example of one aspect of this hobby. Here you have an example of one individual who was willing to risk $46,000.00 of his money on an investment ( a gamble, a shot ). An investment that payed off handsomely. What you don't see are all the coins that have been tried and money that has been lost in the past with this same type of risk taking and the years of knowledge and experience it takes to take these kind of shots. The consignor obviously saw something technical about this coin that DOZENS of other EXPERTS didn't and was willing to put his money where his mouth is. Remember this coin had not been graded in over 10 years. I belive that grading has changed dramatically since them. Especially, early silver, where striking becomes a critical issue when determining the grades of Mint State pieces and how difficult it is to determine whether it's wear or strike. As far as value?? Which is right $46,000.00 or $83,000.00?? I certainly don't know. The value is what two or more different bidders think it is worth when bidding live at an auction. When auction frenzy enters the picture who really knows? I liked Andy's point about timing. Maybe it wasn't the coin or the holder it was in, but the timing of bringing different interested bidders together at the same time in the same location?
What makes you think it wasn't a crapshoot that just happened to work out? Do you think if the coin were cracked out and resubmitted it would get an MS grade?
I didn't read all of the comments re this informative thread. However, as I've been saying for years, more often than not, an MS 60 - MS 62 type coin is almost always:
a) a butt ugly Unc (like many of the low grade Unc Morgans we've all seen), or more likely, b) a market graded AU 58 coin.
For this reason, if I want an Unc., it's an MS 63 or better. I've yet to see an MS 62 type coin that IMO, wasn't a problem coin. The MS 63s I've seen have been no-brainer Uncs. which were not butt ugly.
I might add, that when it comes open collar coins, an image useless on which to base a grade. You really need to see the coin in the proper lighting to look for luster breaks and to see if areas of the coin which simply were not fully struck. Capped Bust Halves are a good example of this.
Add to this the bump that many coins with nice eye appeal get in the grading room, and this is where we are right now.
"Vou invadir o Nordeste, "Seu cabra da peste, "Sou Mangueira......."
In the short time I have been involved in buying/selling/trying-to-grade/and primarily finding/making collectible coins, short time compared to most here, it seems there is somewhat of a comfort zone in high quality and/or high cost coins. A gamble it was, but how much less than $46,000 might the buyer have been looking at if it had not upgraded? Again it reminds me of Wayne Herndon's motto on his ebay listings that you are not spending money, you are buying it. Was it still approximately a $46,000 coin without upgrade? I don't know, but my guess is it would be close? It lends credence to the advice given here frequently to buy quality, and coins for which a market exists.
Quis custodiet ipsos custodes?
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
I plainly stated up front that one way grading companies could try to deal with the problem is to disclaim warranties. My understanding is that California (which I assume is the forum state) is not particularly sympathetic to defendants in the 'battle of the forms,' so disclaimers are not always iron-clad.
And yes, scienter is required in the criminal context. But any quarter-decent civil plaintiff's attorney could survive preliminary motions on a negligence theory. After all, what we're talking about is the SAME COIN that was given two very different grades. Because there is no question about coin deterioration (this coin was upgraded, not downgraded), the reason is either (1) grader error or (2) changing grading standards. As for the latter, PCGS has always stressed (as it should) its continuity of standards. Unlike some other companies, its standards don't change.
And Russ, I continue to disagree with you about whether the prior owner would be *required* to resubmit before claiming 'foul.' The analogy to the use of hazardous equipment and the corresponding duty to use caution is not comparable, as I assume you know. Marketplace chaos will ensue if no one can rely on the grade and instead must always seek second, or third, or fourth, opinions. And anyway, as I explained, the UCC law of 'grades' (in the non-coin context) clearly sets forth that a grade constitutes a specific representation that object is as graded. Grade A eggs must actually be Grade A, or else the grader is liable. That's a sensible approach. There's little reason to think that coins should be treated differently.
All I'm saying is that it's risky to act as if you're not exposed.
Happily, my practice has advanced beyond the point where I am satisfied if I can only 'survive preliminary motions'. I like to win my cases and I find my clients do too. Perhaps I read the tenor of the earlier post wrong. I thought the thrust of it was that either the seller or buyer of the coin had a cause of action against PCGS because of the 2 different grades given on 2 different occassions and could expect to win the case with the assistance of competent counsel. I disagree and stated so, and still disagree. If the actual message was that 'anyone can sue' for anything, and with the assistence of competent counsel expect to survive preliminary motions, then I agree. I think it is wrong to suggest to readers of this forum that there are legal theories likely to succeed in cases such as this.
Also, twice now I've read about 'egg grading' as an anology to make a point on coin grading. I'm sure readers don't need my assistance in understanding the many significant differences between the two industries...and how those differences affect legal theories. I'll mention only one that I find dispositive of the analogy. Egg grading (as well as livestock, grain, and a whole host of commodities) are a well regulated arena. Because of health issues, there are a whole host of federal standards applicable to grading of commodities. In many egg packing plants the USDA actually provides personnel for grading. The grade given ONLY certifies that the eggs have been graded under federal supervision according to USDA standards and regulations. It doesn't mean if you crack open the grade A egg, its not going to have a weak and watery albumen and a flat yoke (grade B eggs for the non farm educated). In short, just because an egg is certified to be graded under appropriate supervision and according to industry standards...the grade is NOT a certification that the egg is in fact what the grade represents it to be. Coin grading is NOT a federally regulated area. Hence, if subjective grading is understood and accepted even in a federally regulated arena, how much more subjectivity is going to be accepted and permitted in an unregulated industry. A subtle point to be sure, but an important one for those of us endeavoring to persevere in the legal arena.
I've always wondered why Heritage puts little effort in taking nice pics,even though it's clearly an AU-58,it looks a whole lot worse in Heritage's pic.
I take you point, but likewise think it's equally wrong to suggest to readers here that legal theories like the one I advanced *won't* succeed, particularly if the principal defense is that the UCC oughtn't apply to coins because other things that are 'graded' are subject to health and/or safety inspections by regulators. That's a pretty thin argument to make, and one that flies in the face of Article 2, § 2-313(1)(a) (“[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis for the bargain creates an express warranty that the goods shall conform to the affirmation of promise”).
Even if it succeeded, a party in PCGS's position in New York or Massachusetts (the two states with which I have some familiarity) would face a strong claim based on violation of consumer protection laws. I can't speak to California law, which I assume would govern.
And no, I did not mean to suggest that the goal was simply to survive a motion to dismiss or even summary judgment. My point was that there's a fair argument that there may well be a legitimate cause of action floating around here. And I continue to believe that anyone who would advise a client that there's no exposure under this kind of circumstance (and note: I'm not suggesting you're doing this!) is giving poor advice.
-c- ps: Nice firm site! Looks like you've got a terrific firm there and do great community work.
First, nice upgrade. It appears to me the absurdity of the example (IMO) in terms of price realized should not lay at the feet of the TPG's. To each his own when spending their own money I suppose, but the enormous gap in price for what is essentially a single grade point jump has become pretty common it seems, and is not particularly rational to me.
Developing theory is what we are meant to do as academic researchers and it sets us apart from practitioners and consultants. Gregor
AU58 and MS62 grades are not worlds apart. They are a few hairs apart if that.
Exactly! What is the retail value for an AU58 bust coin? I've seen AU58's bring MS60, 61, 62 and 63 money. Where does cabinet friction end and circulation wear start? Try and determine that consistently!
Has anyone considered the possibility of TOOLING on this coin? I just cannot get over the difference in the photos. The Heritage coin looks washed out, with poor detail, and looks to be a lifeless AU55-58 coin. The ANR photo looks to have plenty of luster, vibrant color and BETTER details (look at the central hair, the base of the eagles neck feathers and top area of the tail feathers). I'd swear there are details visible on the MS62 photo that don't show in the AU photo. How can that be? Just fuzzy photography? I don't know.
From the photos alone the coins at first look totally different. One looks Unc and the other doesn't.
I've always considered AU58 to MS62 silver coins the same grade. Most all of them have obvious rub prior to about 1873. The AU grade has been stretched to the limit in recent years....as have the lower ranges of "unc." Very few early bust dimes under the grade of MS65 are even truly unc. It is just terminology. What was AU58 in 1989 is now MS62. The value has not changed all that much, just the grade assigned.
I've never seen a holdered MS62 draped bust coin in the past 10 years that I would consider actually unc. And I doubt very few, if anyone else has. I've seen a number of lifeless MS64's that to me weren't even MS60.
First of all the two bidders were probably at the auction and had probably seen the coin in hand. So Heritage's pictures are for the internet. It depends on your video card, computer and monitor and the setting of each. Second, why is it wrong for someone to get an upgrade on this coin! Many people on this board do it all the time! This individual got a big one. Whether it was heritage or the little old lady down the street. If the coin is not MS62 then it is not. If I was at the auction I could probably tell with the coin in my hand. I have had experience with having the coin at the right time and place. I tried to sell a coin on Ebay last year. It went 7 days with no bids. Two weeks later I relisted it for half the other auctions price. I sold it for 2 1/2 times what I was asking for in the first auction!
Not only is grading subjective, but so is trying to determine the value of a particular coin. Someone made a comparison to the grades of eggs or beef. That is not a comparison. Eggs and beef are commodities with specific pricing for specific grades. Where coins are collectibles and pricing swings dramatically in any given grade. A numerical grade may determine wear but it doesn't tell you what the planchet quality is. Whether the coin is original or not etc, etc.... Are all MS-65 Seated Halves the same price? No. Not only is grading inconsistant, so is pricing.
The biggest game in today's market is upgrading and defining what is PQ or what isn't. If the coin's owner left money on the table, shame on him. All of us have done it, and will continue to do it. That's the coin (con?) game! I'd have to say that 95% of non-dealers who sell their coins, leave money on the table. It might only be 3-10% in many cases, but in lots of cases it's 20-200%.
"AU58 and MS62 grades are not worlds apart. They are a few hairs apart if that. Your facts for your lawsuit are borderline feckless. "
Maybe, but those few hairs are pretty expensive -- $37,375 dollars' worth of expensive, and value --or, perhaps more accurately, loss -- is what's at issue.
That a 58 goes for $46K and a 62 goes for $83K establishes almost by definition that the market thinks there's a big difference.
And if 58 and 62 are so close, who's fault is that? PCGS is the one making distinctions: AU58, MS60, MS61, and MS62. That's three grades up. If it's only "a few hairs apart," as you say, then 60 and 61 should be eliminated as unnecessary.
That a 58 goes for $46K and a 62 goes for $83K establishes almost by definition that the market thinks there's a big difference.
Just because A-K beats wired Aces once, doesn't mean that I wouldn't take the Aces every time. You can't draw the conclusion you are drawing off one data point. I can point to plenty of examples where an AU58 sells for MS61 or even 62 money. And I can point to even bigger monetary swings between the same coin in the same holder at two different auctions.
And if 58 and 62 are so close, who's fault is that? PCGS is the one making distinctions: AU58, MS60, MS61, and MS62. That's three grades up. If it's only "a few hairs apart," as you say, then 60 and 61 should be eliminated as unnecessary.
No - they aren't unnecessary. MS60 is reserved for a really doggy true unc. MS61 is nicer true unc or heavy cabinet friction. MS62 is a bit nicer true unc or lighter cabinet friction. And so on. And this is an evolution of the marketplace ... the distinction between cabinet friction and circulation wear has evolved over time. How is it PCGS's fault that this interpretation has changed between gradings?
Anyone who would buy a coin like that without doing the proper research on it and the few remaining ones like it, and the coins provenance deserves whatever they get. On the other hand maybe two wealthy people had to have it regardless of the cost------------BigE
True, the price *among* grades may vary depending on the coins that make up those grades, but here you have THE SAME COIN. There is therefore NO QUESTION about ITS value: as a 58, THIS PARTICULAR COIN was valued at $46,000 and as a 62 its fair market value was $83,375. That's exactly WHY I can draw a conclusion based on a sample of one -- because it's the exact same coin. The exact same one. I would not, and could not, make this argument if we were talking about two different coins; in that case, I would agree with you entirely.
And by the way: if you can point to even bigger examples of the same coin having two different grades and resulting in "even bigger monetary swings," then you're pointing to an even bigger scandal.
I don't agree that 60 and 61 are unnecessary; I was simply replying to jamesfm's comment that there was a de minimus distinction between 58 and 62. Obviously the market thinks there's a huge distinction.
As to "changed grading standards," I've never heard PCGS claim that its standards have changed -- to its credit.
"Anyone who would buy a coin like that without doing the proper research on it and the few remaining ones like it, and the coins provenance deserves whatever they get."
I understand the sentiment, but I hope you don't really mean that literally. Nobody 'deserves' to get ripped off.
If someone sells a first generation holder graded almost 20 years ago, is the TPG liable because initial grading interpretations were much more conservative than they are now? If so, how are the damages impacted by the fact that the seller bought the coin too conservatively graded? In other words, how can he have been damaged at all if he bought it at the lower grade and sold it at the same grade?
And further, if a person sells a coin graded before the cameo designation came into effect, then is he due damages from the TPG? How can he be?
It seems clear that if the coin was properly graded under the standards and interpretations in effect at the time of grading, there simply cannot be any liability.
<< <i>Anyone who would buy a coin like that without doing the proper research on it and the few remaining ones like it, and the coins provenance deserves whatever they get------------BigE >>
True, the price *among* grades may vary depending on the coins that make up those grades, but here you have THE SAME COIN. There is therefore NO QUESTION about ITS value: as a 58, THIS PARTICULAR COIN was valued at $46,000 and as a 62 its fair market value was $83,375. That's exactly WHY I can draw a conclusion based on a sample of one -- because it's the exact same coin. The exact same one.
A few years back, a 1951-S MS66 FBL Franklin sold for $69,000 at auction and then a few months later sold for $46,000. Exact same coin... exact same holder.
Tell me - what was the true market value of the coin?
"It seems clear that if the coin was properly graded under the standards and interpretations in effect at the time of grading, there simply cannot be any liability."
That's the best argument I've heard yet. But what evidence do you have that PCGS's standards are indeed different? (Note that other grading companies' standards are irrelevant, since PCGS was the only one involved with this coin.)
"Fair market value" is univerally defined as the price a willing buyer, not under compunction to buy, pays to a willing seller, not under compunction to sell. The value can change, as illustrated in your example. First its value was $69K, then later it was much less. -c-
The buyer of a coin in this high price category must make their own determination as to the grade, and their level of interest in the coin to make a purchasing decision and to decide how much they wish to pay (or not pay) for the coin.
In my opinion because of the weak strike (which I believe is common for Draped Bust Dimes) I'd personally consider it to be an AU-58 net grade and would pay accordingly if I were interested in it.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
"The buyer of a coin in this high price category must make their own determination as to the grade, and their level of interest in the coin to make a purchasing decision and to decide how much they wish to pay or not pay) for the coin."
That statement should be true for every single coin, regardless of value. But the fact is that there are companies that charge money to assign a grade based on some set of standards. People who pay for that service ought to be able to rely on the accuracy of the company's representation as to the grade assigned. That's particularly the case with PCGS, which is widely regarded as the finest and most reliable of the lot. Here the company screwed up by assiging two materially different grades. Personally I don't know which one is the 'correct' grade, but it doesn't matter--somebody got screwed.
Fair market value" is univerally defined as the price a willing buyer, not under compunction to buy, pays to a willing seller, not under compunction to sell. The value can change, as illustrated in your example. First its value was $69K, then later it was much less.
I see ... and yet it is fair to conclude that a TPG is liable for damages in the instance of the dime simply because the grade changed. But you claim that only the grade changed, and yet in the case of the half you state that the fair market value of a coin can change based on other factors. Your conclusions are mutually exclusive - perhaps you could decide which you prefer?
I don't follow your argument at all (just as you apparently don't follow mine).
If the same coin that we're talking about were to be once again put on auction (in the same PCGS 62 holder), and it sold for $46,000, then that's the fair market value and the original owner -- and me -- wouldn't have a thing to say about the original owner being harmed. Conversely, if it were again put up for auction and sold for $150K, then the original owner is even more aggrieved.
Yes, fair market value definitely changes. Right now, that coin's fmv stands at precisely $83,375. If that changes, so too does my analysis.
Does that make my position clearer? (I'm really trying to explain what I mean, and don't seem to be succeeding too well.)
I didn't see who said the coins aren't the same... but just look at the damage to the shield on the reverse, the crack above the far right of Liberty's breast, and the damage right under the beginning of the eagles beak. Clearly the same coin.
-Daniel
"It is the mark of an educated mind to be able to entertain a thought without accepting it."
-Aristotle
Dum loquimur fugerit invida aetas. Carpe diem quam minimum credula postero.
<< <i>Conversely, if it were again put up for auction and sold for $150K, then the original owner is even more aggrieved. >>
CSW.....You're assuming that the grade on the holder was the determining factor in arriving at a price for the coin. Neither you or I are in a position to know what the buyers thinking was or what other factors were involved resulting in the sale price.
I understand what you're saying, but it's my opinion that your position is based upon erroneous conclusions. I believe that it is not conclusive that the conservative grade placed on the dime 10 years ago damaged the seller in any way:
1) It's been demonstrated by my example that dramatic swings in value can occur for the same coin in the same holder, therefore the dramatic swing in value for this dime between auctions is NOT conclusively due to the change in grade.
2) We don't know the circumstances behind the bidding between the auctions. What if the buyer in each case loved the quality of the coin and had a top bid of $100,000. But the original seller placed his reserve at the current AU50 market value [after all, he thinks that's what an AU coin is worth - right?] whereas the second seller knew exactly what an AU58/62 could sell for and placed it at the top end of the appropriate range. So in this instance, the TPG caused no damages whatsoever - the seller's inability to assess the true market value of his coin caused him to lose money.
3) How did it damage the seller if he originally bought the coin as an AU58 and sold it as an AU58? If standards haven't changed, apparently he got a good bargain when he bought it and sold it in the same manner.
"CSW.....You're assuming that the grade on the holder was the determining factor in arriving at a price for the coin. Neither you or I are in a position to know what the buyers thinking was or what other factors were involved resulting in the sale price."
That's true, elwood, and it's a great point. I've assumed that the new buyer relied in part on the 62 grade PCGS assigned. The idea behind liability is that if someone misrepresents something and another person reasonably relies, at least in part, on that misrepresentation in deciding what to do, then there's a problem. If, as you hypothesized, the buyer made his or her decision completely independently of PCGS's imput, then you are absolutely right.
I strongly suspect, however, that as a factual matter the buyer really did at least partly rely on the 62 grade.
<< <i>How many people, assuming they liked the coin at the grade, would pay more than 46K for this coin in the 62 holder? IMHO, not many at all. So perhaps the price realized the second time around had little to do with plastic and much more to do with timing and luck. >>
Are you saying there are people out there willing to "pop off" for $86k that aren't watching regularly? Maybe there are suckers out there and if so, tell them to call me. I've got a few pop 1's to dump.
<< <i>I had a patient last week using the threat of a law suit to try and get his way. I simply told him to get in line with all the other jerks. At this time I have only been named twice in 20 years but hear threats often. EVERYONE wants to friggin sue because they think they have been mis-treated. usually it all comes down to the stupidity of the plantiff. >>
Give him my number. I'm a lawyer now providing medical services across the southeast. I'll 'splain it to him. s
<< <i>Are you saying there are people out there willing to "pop off" for $86k that aren't watching regularly? Maybe there are suckers out there and if so, tell them to call me. I've got a few pop 1's to dump. >>
There's dozens, if not hundreds of people that "overpay". (Not necissarily, as with very rare coins, there's really not a set price for any of them, just what someone pays.) More money than sense is what everyone seems to refer to it as, but if someone want's to spend that much on a coin, let them do it I say.
-Daniel
"It is the mark of an educated mind to be able to entertain a thought without accepting it."
-Aristotle
Dum loquimur fugerit invida aetas. Carpe diem quam minimum credula postero.
"1) It's been demonstrated by my example that dramatic swings in value can occur for the same coin in the same holder, therefore the dramatic swing in value for this dime between auctions is NOT conclusively due to the change in grade.
"2) We don't know the circumstances behind the bidding between the auctions. What if the buyer in each case loved the quality of the coin and had a top bid of $100,000. But the original seller placed his reserve at the current AU50 market value [after all, he thinks that's what an AU coin is worth - right?] whereas the second seller knew exactly what an AU58/62 could sell for and placed it at the top end of the appropriate range. So in this instance, the TPG caused no damages whatsoever - the seller's inability to assess the true market value of his coin caused him to lose money.
"3) How did it damage the seller if he originally bought the coin as an AU58 and sold it as an AU58? If standards haven't changed, apparently he got a good bargain when he bought it and sold it in the same manner. "
1. I thought you were talking about the same coin in a different holder with a different grade. Yes, of course the same coin in the same holder sells for radically different amounts. So what? That's just changing market value at work.
I agree that the price alone isn't conclusive evidence that the change in grade accounts for the change in fair market value. But what I am saying is this: if the new buyer relied, at least in part, on the grade that PCGS assigned (62), then PCGS has an exposure problem. Only the new buyer knows the answer to that question for sure.
2. There's no way to know what people were really willing to pay. What matters is what was actually paid, and that's information we have. Courts confronting valuation issues exclude the kind of speculation that you posed because it's just that -- speculation. Yes, you may be right that someone was willing to pay more or sell for less, but that's virtually impossible to prove under the rules of evidence as they stand now. The only thing that counts from the law's perspective is the actual price that was actually paid.
3. You're right once again -- since the coin is a 62, the seller who bought it as a 58 got a good deal. But he was entitled to 62 money for it, since it was (according to PCGS) a 62 coin. We could loop into an infinite regression here, but the point is that someone, somewhere along the buy/sell chain, took an unnecessary hit because PCGS can't make up its mind about what grade the coin is. (And on that last comment, note that above I agreed that if the coin was properly graded according to standards prevailing at the time, we'd have a different story.)
Comments
<< <i>
I think it's perfectly reasonable for someone who purchases a coin graded by PCGS to expect that PCGS has accurately graded the coin.
>>
<< <i>
<< <i>There is no excuse for this. For a coin of this value, PCGS should have been very careful when grading. For an experienced grader, there is no fine line between AU58 and MS62, either a coin has wear or it doesn't. Either the previous owner or the current owner got the shaft, and without looking at the coin in person there is no way to tell which. >>
There can be rub (ie minimal wear) on grades up to MS67, according to PCGS. I would disagree there is no fine line between AU58 and MS62. PCGS utilizes market, not technical, grading. The market value is equal to the slab grade. Many AU58's are worth more than MS62s. >>
PCGS is a coin grading company, not a coin appraisal company. I really wish PCGS and NGC would do away with market grading. Grade the coins technically and let the market determine the value.
Box of 20
<< <i>Looking at the pics was the coin dipped to get rid of the toning and thus it got the higher grade? >>
More likely it's just Heritage's notoriously bad imaging.
Russ, NCNE
Does Heritage really care that their photography is so unflattering? If the coin market were not so robust, do you think they would care more? (it's a tangent, I know, but enough people have brought it up)
Have you read the PCGS grading terms and conditions? If not, I'll copy at least a portion of the relevant language below. Do you think that would change the opinions on causes of action you have put forth? The criminal cases mentioned all require evidence of scienter, i.e. the perpetrator intended to fool the buyer. They are not cases of 'mistaken grading' or innocent and legitimate disagreements about a grade.
I disagree with your blanket assertion that 'someone has a cause of action' for the coin grading and sales that are part of this thread. I would love to hear your theory, however, as to why the PCGS disclaimer should not apply to the facts of the coin discussed in this thread. Here is section 3 from the PCGS Grading Terms and Conditions as it appears on their submission sheet used to transmit coins for grading.
3. Grading involves individual judgments that are subjective and require the exercise of professional opinion, which can change from time to time. Therefore, PCGS disclaims any warranties, express or implied with respect to the grade assigned by PCGS to any coin, except pursuant to PCGS's guarantee resubmission, re-verification or regrade service as in effect from time to time.
Greg Hansen, Melbourne, FL Click here for any current EBAY auctions Multiple "Circle of Trust" transactions over 14 years on forum
<< <i>Well Robert, according to Coin World they are experts in coin photography. >>
Yeah right, coins I have bought many coins there and just recently sold there and without fail, every coin looked nothing, in the hand, as they did or do in their pix. Gorgeous coins looked "average" at best and the hammer supports this statement.
<< <i>they regraded it as a 62 honestly and fairly. >>
Yeah right again! Anyone with ONE good eye can see the wear on the stars on the obverse. Some are totally full and pointed
while others are flat. The same can be said of the reverse. What you see, plain and simple, is WEAR and wear does not equate
to uncirculated. NO WAY this is an uncirculated coin! Of course, this is just my humble opinion.
By posting this example I didn't want to stir anything up. (Althought the Heritage consignor will probably not be happy with me) I just wanted to give an example of one aspect of this hobby.
Here you have an example of one individual who was willing to risk $46,000.00 of his money on an investment ( a gamble, a shot ). An investment that payed off handsomely. What you don't see are all the coins that have been tried and money that has been lost in the past with this same type of risk taking and the years of knowledge and experience it takes to take these kind of shots. The consignor obviously saw something technical about this coin that DOZENS of other EXPERTS didn't and was willing to put his money where his mouth is.
Remember this coin had not been graded in over 10 years. I belive that grading has changed dramatically since them. Especially, early silver, where striking becomes a critical issue when determining the grades of Mint State pieces and how difficult it is to determine whether it's wear or strike.
As far as value?? Which is right $46,000.00 or $83,000.00?? I certainly don't know. The value is what two or more different bidders think it is worth when bidding live at an auction. When auction frenzy enters the picture who really knows? I liked Andy's point about timing. Maybe it wasn't the coin or the holder it was in, but the timing of bringing different interested bidders together at the same time in the same location?
Do you think if the coin were cracked out and resubmitted it would get an MS grade?
a) a butt ugly Unc (like many of the low grade Unc Morgans we've all seen), or more likely,
b) a market graded AU 58 coin.
For this reason, if I want an Unc., it's an MS 63 or better. I've yet to see an MS 62 type coin that IMO, wasn't a problem coin. The MS 63s I've seen have been no-brainer Uncs. which were not butt ugly.
I might add, that when it comes open collar coins, an image useless on which to base a grade. You really need to see the coin in the proper lighting to look for luster breaks and to see if areas of the coin which simply were not fully struck. Capped Bust Halves are a good example of this.
Add to this the bump that many coins with nice eye appeal get in the grading room, and this is where we are right now.
"Seu cabra da peste,
"Sou Mangueira......."
<< <i>Yeah right again! Anyone with ONE good eye can see the wear on the stars on the obverse. Some are totally full and pointed
while others are flat. The same can be said of the reverse. >>
That could very easily be a misaligned die, and likely is.
Russ, NCNE
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
And yes, scienter is required in the criminal context. But any quarter-decent civil plaintiff's attorney could survive preliminary motions on a negligence theory. After all, what we're talking about is the SAME COIN that was given two very different grades. Because there is no question about coin deterioration (this coin was upgraded, not downgraded), the reason is either (1) grader error or (2) changing grading standards. As for the latter, PCGS has always stressed (as it should) its continuity of standards. Unlike some other companies, its standards don't change.
And Russ, I continue to disagree with you about whether the prior owner would be *required* to resubmit before claiming 'foul.' The analogy to the use of hazardous equipment and the corresponding duty to use caution is not comparable, as I assume you know. Marketplace chaos will ensue if no one can rely on the grade and instead must always seek second, or third, or fourth, opinions. And anyway, as I explained, the UCC law of 'grades' (in the non-coin context) clearly sets forth that a grade constitutes a specific representation that object is as graded. Grade A eggs must actually be Grade A, or else the grader is liable. That's a sensible approach. There's little reason to think that coins should be treated differently.
All I'm saying is that it's risky to act as if you're not exposed.
-c-
Tiger trout, Deerfield River, c. 2001.
Also, twice now I've read about 'egg grading' as an anology to make a point on coin grading. I'm sure readers don't need my assistance in understanding the many significant differences between the two industries...and how those differences affect legal theories. I'll mention only one that I find dispositive of the analogy. Egg grading (as well as livestock, grain, and a whole host of commodities) are a well regulated arena. Because of health issues, there are a whole host of federal standards applicable to grading of commodities. In many egg packing plants the USDA actually provides personnel for grading. The grade given ONLY certifies that the eggs have been graded under federal supervision according to USDA standards and regulations. It doesn't mean if you crack open the grade A egg, its not going to have a weak and watery albumen and a flat yoke (grade B eggs for the non farm educated). In short, just because an egg is certified to be graded under appropriate supervision and according to industry standards...the grade is NOT a certification that the egg is in fact what the grade represents it to be. Coin grading is NOT a federally regulated area. Hence, if subjective grading is understood and accepted even in a federally regulated arena, how much more subjectivity is going to be accepted and permitted in an unregulated industry. A subtle point to be sure, but an important one for those of us endeavoring to persevere in the legal arena.
Greg Hansen, Melbourne, FL Click here for any current EBAY auctions Multiple "Circle of Trust" transactions over 14 years on forum
Even if it succeeded, a party in PCGS's position in New York or Massachusetts (the two states with which I have some familiarity) would face a strong claim based on violation of consumer protection laws. I can't speak to California law, which I assume would govern.
And no, I did not mean to suggest that the goal was simply to survive a motion to dismiss or even summary judgment. My point was that there's a fair argument that there may well be a legitimate cause of action floating around here. And I continue to believe that anyone who would advise a client that there's no exposure under this kind of circumstance (and note: I'm not suggesting you're doing this!) is giving poor advice.
-c-
ps: Nice firm site! Looks like you've got a terrific firm there and do great community work.
Tiger trout, Deerfield River, c. 2001.
AU58 and MS62 grades are not worlds apart. They are a few hairs apart if that. Your facts for your lawsuit are borderline feckless.
and it sets us apart from practitioners and consultants. Gregor
Exactly! What is the retail value for an AU58 bust coin? I've seen AU58's bring MS60, 61, 62 and 63 money. Where does cabinet friction end and circulation wear start? Try and determine that consistently!
How can that be? Just fuzzy photography? I don't know.
From the photos alone the coins at first look totally different. One looks Unc and the other doesn't.
I've always considered AU58 to MS62 silver coins the same grade. Most all of them have obvious rub prior to about 1873. The AU grade has been stretched to the limit in recent years....as have the lower ranges of "unc." Very few early bust dimes under the grade of MS65 are even truly unc. It is just terminology. What was AU58 in 1989 is now MS62. The value has not changed all that much, just the grade assigned.
I've never seen a holdered MS62 draped bust coin in the past 10 years that I would consider actually unc. And I doubt very few, if anyone else has. I've seen a number of lifeless MS64's that to me weren't even MS60.
roadrunner
That's the coin (con?) game! I'd have to say that 95% of non-dealers who sell their coins, leave money on the table. It might only be 3-10% in many cases, but in lots of cases it's 20-200%.
roadrunner
Maybe, but those few hairs are pretty expensive -- $37,375 dollars' worth of expensive, and value --or, perhaps more accurately, loss -- is what's at issue.
That a 58 goes for $46K and a 62 goes for $83K establishes almost by definition that the market thinks there's a big difference.
And if 58 and 62 are so close, who's fault is that? PCGS is the one making distinctions: AU58, MS60, MS61, and MS62. That's three grades up. If it's only "a few hairs apart," as you say, then 60 and 61 should be eliminated as unnecessary.
Tiger trout, Deerfield River, c. 2001.
Just because A-K beats wired Aces once, doesn't mean that I wouldn't take the Aces every time. You can't draw the conclusion you are drawing off one data point. I can point to plenty of examples where an AU58 sells for MS61 or even 62 money. And I can point to even bigger monetary swings between the same coin in the same holder at two different auctions.
And if 58 and 62 are so close, who's fault is that? PCGS is the one making distinctions: AU58, MS60, MS61, and MS62. That's three grades up. If it's only "a few hairs apart," as you say, then 60 and 61 should be eliminated as unnecessary.
No - they aren't unnecessary. MS60 is reserved for a really doggy true unc. MS61 is nicer true unc or heavy cabinet friction. MS62 is a bit nicer true unc or lighter cabinet friction. And so on. And this is an evolution of the marketplace ... the distinction between cabinet friction and circulation wear has evolved over time. How is it PCGS's fault that this interpretation has changed between gradings?
True, the price *among* grades may vary depending on the coins that make up those grades, but here you have THE SAME COIN. There is therefore NO QUESTION about ITS value: as a 58, THIS PARTICULAR COIN was valued at $46,000 and as a 62 its fair market value was $83,375. That's exactly WHY I can draw a conclusion based on a sample of one -- because it's the exact same coin. The exact same one. I would not, and could not, make this argument if we were talking about two different coins; in that case, I would agree with you entirely.
And by the way: if you can point to even bigger examples of the same coin having two different grades and resulting in "even bigger monetary swings," then you're pointing to an even bigger scandal.
I don't agree that 60 and 61 are unnecessary; I was simply replying to jamesfm's comment that there was a de minimus distinction between 58 and 62. Obviously the market thinks there's a huge distinction.
As to "changed grading standards," I've never heard PCGS claim that its standards have changed -- to its credit.
Tiger trout, Deerfield River, c. 2001.
<< <i>Bust and drapery doesn't convince me this is same piece, nor does date (and marking below). >>
Good grief man. It couldn't be more obvious or more clear that its the same coin.
I understand the sentiment, but I hope you don't really mean that literally. Nobody 'deserves' to get ripped off.
-c-
Tiger trout, Deerfield River, c. 2001.
If someone sells a first generation holder graded almost 20 years ago, is the TPG liable because initial grading interpretations were much more conservative than they are now? If so, how are the damages impacted by the fact that the seller bought the coin too conservatively graded? In other words, how can he have been damaged at all if he bought it at the lower grade and sold it at the same grade?
And further, if a person sells a coin graded before the cameo designation came into effect, then is he due damages from the TPG? How can he be?
It seems clear that if the coin was properly graded under the standards and interpretations in effect at the time of grading, there simply cannot be any liability.
<< <i>Anyone who would buy a coin like that without doing the proper research on it and the few remaining ones like it, and the coins provenance deserves whatever they get------------BigE >>
I second that notion.
A few years back, a 1951-S MS66 FBL Franklin sold for $69,000 at auction and then a few months later sold for $46,000. Exact same coin... exact same holder.
Tell me - what was the true market value of the coin?
That's the best argument I've heard yet. But what evidence do you have that PCGS's standards are indeed different? (Note that other grading companies' standards are irrelevant, since PCGS was the only one involved with this coin.)
-c-
Tiger trout, Deerfield River, c. 2001.
-c-
Tiger trout, Deerfield River, c. 2001.
In my opinion because of the weak strike (which I believe is common for Draped Bust Dimes) I'd personally consider it to be an AU-58 net grade and would pay accordingly if I were interested in it.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
That statement should be true for every single coin, regardless of value. But the fact is that there are companies that charge money to assign a grade based on some set of standards. People who pay for that service ought to be able to rely on the accuracy of the company's representation as to the grade assigned. That's particularly the case with PCGS, which is widely regarded as the finest and most reliable of the lot. Here the company screwed up by assiging two materially different grades. Personally I don't know which one is the 'correct' grade, but it doesn't matter--somebody got screwed.
Tiger trout, Deerfield River, c. 2001.
I see ... and yet it is fair to conclude that a TPG is liable for damages in the instance of the dime simply because the grade changed. But you claim that only the grade changed, and yet in the case of the half you state that the fair market value of a coin can change based on other factors. Your conclusions are mutually exclusive - perhaps you could decide which you prefer?
If the same coin that we're talking about were to be once again put on auction (in the same PCGS 62 holder), and it sold for $46,000, then that's the fair market value and the original owner -- and me -- wouldn't have a thing to say about the original owner being harmed. Conversely, if it were again put up for auction and sold for $150K, then the original owner is even more aggrieved.
Yes, fair market value definitely changes. Right now, that coin's fmv stands at precisely $83,375. If that changes, so too does my analysis.
Does that make my position clearer? (I'm really trying to explain what I mean, and don't seem to be succeeding too well.)
-csw
Tiger trout, Deerfield River, c. 2001.
-Daniel
-Aristotle
Dum loquimur fugerit invida aetas. Carpe diem quam minimum credula postero.
-Horace
<< <i>Conversely, if it were again put up for auction and sold for $150K, then the original owner is even more aggrieved. >>
CSW.....You're assuming that the grade on the holder was the determining factor in arriving at a price for the coin. Neither you or I are in a position to know what the buyers thinking was or what other factors were involved resulting in the sale price.
I understand what you're saying, but it's my opinion that your position is based upon erroneous conclusions. I believe that it is not conclusive that the conservative grade placed on the dime 10 years ago damaged the seller in any way:
1) It's been demonstrated by my example that dramatic swings in value can occur for the same coin in the same holder, therefore the dramatic swing in value for this dime between auctions is NOT conclusively due to the change in grade.
2) We don't know the circumstances behind the bidding between the auctions. What if the buyer in each case loved the quality of the coin and had a top bid of $100,000. But the original seller placed his reserve at the current AU50 market value [after all, he thinks that's what an AU coin is worth - right?] whereas the second seller knew exactly what an AU58/62 could sell for and placed it at the top end of the appropriate range. So in this instance, the TPG caused no damages whatsoever - the seller's inability to assess the true market value of his coin caused him to lose money.
3) How did it damage the seller if he originally bought the coin as an AU58 and sold it as an AU58? If standards haven't changed, apparently he got a good bargain when he bought it and sold it in the same manner.
That's true, elwood, and it's a great point. I've assumed that the new buyer relied in part on the 62 grade PCGS assigned. The idea behind liability is that if someone misrepresents something and another person reasonably relies, at least in part, on that misrepresentation in deciding what to do, then there's a problem. If, as you hypothesized, the buyer made his or her decision completely independently of PCGS's imput, then you are absolutely right.
I strongly suspect, however, that as a factual matter the buyer really did at least partly rely on the 62 grade.
-c-
Tiger trout, Deerfield River, c. 2001.
<< <i>How many people, assuming they liked the coin at the grade, would pay more than 46K for this coin in the 62 holder? IMHO, not many at all. So perhaps the price realized the second time around had little to do with plastic and much more to do with timing and luck. >>
Are you saying there are people out there willing to "pop off" for $86k that aren't watching regularly? Maybe there are suckers out there and if so, tell them to call me. I've got a few pop 1's to dump.
<< <i>I had a patient last week using the threat of a law suit to try and get his way. I simply told him to get in line with all the other jerks.
often. EVERYONE wants to friggin sue because they think they have been mis-treated. usually it all comes down to the stupidity of the plantiff. >>
Give him my number. I'm a lawyer now providing medical services across the southeast. I'll 'splain it to him.
s
<< <i>Are you saying there are people out there willing to "pop off" for $86k that aren't watching regularly? Maybe there are suckers out there and if so, tell them to call me. I've got a few pop 1's to dump. >>
There's dozens, if not hundreds of people that "overpay". (Not necissarily, as with very rare coins, there's really not a set price for any of them, just what someone pays.) More money than sense is what everyone seems to refer to it as, but if someone want's to spend that much on a coin, let them do it I say.
-Daniel
-Aristotle
Dum loquimur fugerit invida aetas. Carpe diem quam minimum credula postero.
-Horace
"2) We don't know the circumstances behind the bidding between the auctions. What if the buyer in each case loved the quality of the coin and had a top bid of $100,000. But the original seller placed his reserve at the current AU50 market value [after all, he thinks that's what an AU coin is worth - right?] whereas the second seller knew exactly what an AU58/62 could sell for and placed it at the top end of the appropriate range. So in this instance, the TPG caused no damages whatsoever - the seller's inability to assess the true market value of his coin caused him to lose money.
"3) How did it damage the seller if he originally bought the coin as an AU58 and sold it as an AU58? If standards haven't changed, apparently he got a good bargain when he bought it and sold it in the same manner. "
1. I thought you were talking about the same coin in a different holder with a different grade. Yes, of course the same coin in the same holder sells for radically different amounts. So what? That's just changing market value at work.
I agree that the price alone isn't conclusive evidence that the change in grade accounts for the change in fair market value. But what I am saying is this: if the new buyer relied, at least in part, on the grade that PCGS assigned (62), then PCGS has an exposure problem. Only the new buyer knows the answer to that question for sure.
2. There's no way to know what people were really willing to pay. What matters is what was actually paid, and that's information we have. Courts confronting valuation issues exclude the kind of speculation that you posed because it's just that -- speculation. Yes, you may be right that someone was willing to pay more or sell for less, but that's virtually impossible to prove under the rules of evidence as they stand now. The only thing that counts from the law's perspective is the actual price that was actually paid.
3. You're right once again -- since the coin is a 62, the seller who bought it as a 58 got a good deal. But he was entitled to 62 money for it, since it was (according to PCGS) a 62 coin. We could loop into an infinite regression here, but the point is that someone, somewhere along the buy/sell chain, took an unnecessary hit because PCGS can't make up its mind about what grade the coin is. (And on that last comment, note that above I agreed that if the coin was properly graded according to standards prevailing at the time, we'd have a different story.)
-c-
Tiger trout, Deerfield River, c. 2001.
Nonsense. There is no such thing as "market value" for a rare coin. There are only offers to buy, offers to sell, and transaction prices.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.