Options
Old thread on law regarding uncertified coins
RevDrBlimber
Posts: 391
I saw this old thread on the law governing raw coins. Is this true and if so what are the implications?
“When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages.”
http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&STARTPAGE=2
“When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages.”
http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&STARTPAGE=2
0
Comments
I can say that a coin is a specific grade and that merely represents my opinion. You are free to agree or disagree.
<< <i>Grades are opinions...nothing more.
I can say that a coin is a specific grade and that merely represents my opinion. You are free to agree or disagree. >>
All you have to do is say it's your opinion, nothing wrong with representing your opinion. Liability you would think would only be held if you state it as fact, which if found incorrect could be held legally responsible. I'm assuming without reading the article this is the case.
<< <i>I saw this old thread on the law governing raw coins. Is this true and if so what are the implications?
“When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages.”
http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&STARTPAGE=2 >>
That is someone's opinion, and very loosely interpreted too.
I do not know of any Federal or Washington State law like that. If there were laws like that the Used Car dealers would be filling the jails instead of the drug dealers.
In U.S. v. Numisgroup Intern. Corp., 170 F.Supp.2d 340 (E.D.N.Y. 2001), the US sued defendants over coin grading, among other things, and the jury reached a guity verdict, rejecting the defendants claim that "the grading of coins is largely subjective."
That case is discussed in this thread which is linked from the thread in the OP.
I think the implication is that as much as people like to think the subjectivity of coin grading is a blank check, if your goal is to defraud people, such a claim will not protect you. It seems kind of like how there are limits on one's freedom of speech.
<< <i>“When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages.” >>
Buyer: "What is the grade of this coin?"
Seller: "MS65."
Two months later...
Buyer: "PCGS says it's MS64. What are you going to do about it?"
Seller: "Do? Nothing. I said it was MS65. I didn't say PCGS would say it was MS65."
Good luck on collecting damages.
<< <i>Yeah that law is totally legit. It's punishable by up to 5 years in prison for each numerical grade difference. So, if a coin is represented as an MS 64, but it's infact only a 61, that's a 15 year stretch you'll be looking at. >>
But in order for anyone to be convicted on that premise, it would have to be proven that the defendant intended to commit a fraud.
<< <i>
But in order for anyone to be convicted on that premise, it would have to be proven that the defendant intended to commit a fraud. >>
I was being facetious.
<< <i>There are grey areas under the law and white and black ones. With "Numisgroup" with which I had some dealings, their frauds were blatant and some leading numismatic experts testified in court against them. If show dealers call their material a particular grade and refuse to send in their coins to be certified for an objective grade and then they refuse to buy back the coins for a reasonable price when a customer purchases the coin and then sends the coin into grading in the same flip in which he bought it and it grades "cleaned", "damaged", "artificially toned", etc., then the customer has a case, especially relevant when we are dealing with coins in the thousands or tens of thousands. >>
Why would the price or value of the coin be relevant to the discussion? A misrepresented coin is a misrepresented coin. No?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
http://forums.collectors.com/messageview.cfm?catid=26&threadid=866035&STARTPAGE=1
link
While there has been one case posted about the dealer being found liable, I believe there are dozens of other cases where dealers were not liable for coins not making the grade at the grading services. I seem to remember that some of the big mail order dealers have been taken to court, and their disclaimers in small print have been enough to skate free of legal liability, despite years of continually selling overgraded and/or problem coins via full page ads.
Nine times out of ten,the cost of lawyers to sort everything out will be more than the value of the coin.If you are a novice,do not buy
very expensive raw coins without consultation with an experienced dealer/collector.
Everybody's got plans--until they get hit
--Mike Tyson
<< <i>I saw this old thread on the law governing raw coins. Is this true and if so what are the implications?
“When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages.”
http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&STARTPAGE=2 >>
This is just basic contract law 101. If you represent something to be D and sell it as such, even if it was just verbal you could easily find your self receiving a small claims summons if the purchaser latter is told its a Z and not an D.
<< <i>Interestingly, the subjectivity of grading is not a defense that will hold up in court when it comes to defrauding clients.
In U.S. v. Numisgroup Intern. Corp., 170 F.Supp.2d 340 (E.D.N.Y. 2001), the US sued defendants over coin grading, among other things, and the jury reached a guity verdict, rejecting the defendants claim that "the grading of coins is largely subjective."
That case is discussed in this thread which is linked from the thread in the OP.
I think the implication is that as much as people like to think the subjectivity of coin grading is a blank check, if your goal is to defraud people, such a claim will not protect you. It seems kind of like how there are limits on one's freedom of speech. >>
The case that you cited is a Federal District Court case for the the Eastern District of New York. It has no legally binding precedential value and is considered "persuasive" at best. In order for it to have precedential value, it would have had to come from the U.S. Court of Appeals for the Second Circuit, and even then, it would only be binding on the federal courts in the second circuit. Circuit splits are not uncommon and provide the bulk of the litigation that ends up before the Supreme Court of the United States. I would love to know whether the case was appealed.
You also need to be careful about relying on trial court opinions that are often heavily fact based. It is possible that the defendants in that case did not raise all of the arguments raised in the linked threads or this one.
Edited to add: You also overlooked the portion where the defendants made specific statements as to the coin's value; thus, even in the absence of a defined industry grading scale, the defendants have problems because they made false representations as to the value of the items. It is easier to claim subjectivity when defining "MS70," but it is more difficult to claim good faith when you claim a $30 coin is worth thousands of dollars. In one of the instances, the sellers even included a copy of the coin dealer newsletter, representing the items to have a precise value. This is a critical fact that may render the case distinguishable from other cases.
<< <i>
<< <i>I saw this old thread on the law governing raw coins. Is this true and if so what are the implications?
“When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages.”
http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&STARTPAGE=2 >>
This is just basic contract law 101. If you represent something to be D and sell it as such, even if it was just verbal you could easily find your self receiving a small claims summons if the purchaser latter is told its a Z and not an D. >>
But if there were no express statements of which standards were used and there is a unilateral mistake on the part of the buyer, then I see a potential problem. Contracts can only be reformed by clear and convincing evidence upon mutual mistake. Unless an express statement is made about the standards used or a specific value is assigned to the coin, is this fraudulent so as to permit the defendant to void the contract? It is a very interesting legal question, and I am not sure that it is as clear cut as some would suggest. Regardless, I think such behavior is morally wrong and reprehensible.
U.S. v. Numisgroup Intern Corp., 170 F. Supp.2d 340 (E.D.N.Y. 2001) was appealed. See U.S. v. Numisgroup Intern Corp., 368 F.3d 880 (2d Cir. 2004) (affirmed), reversed sub nom., Dupurton v. U.S., 543 U.S. 1098 (2005). The U.S. Supreme Court summarily reversed the decision in a three line opinion, and it is unclear whether it was solely on sentencing guidelines (as suggested by the cited case) or whether other portions of the district court's reasoning on the grading standards and applicability of the fraud statutes were rejected as well. I am having difficulty finding a free copy of the Petition for Writ of Certiorari. Only issues presented in the Petition for Writ of Certiorari would have been affected.
"Two Long Island men were convicted Monday of conspiracy to commit fraud and money laundering in connection with a scam to cheat customers out of $30 million by using high-pressure tactics to sell coins at vastly inflated prices, federal officials said.
"Michael Romano, 45, of Levittown, and William Kearney, 36, of East Islip, were found guilty of conspiracy to commit both fraud and money laundering.. " http://www.newsday.com/long-island/nassau/pair-convicted-in-coin-swindle-1.2954791