Guarantees and "Mechanical errors"

[Number Six]

I was just looking for legal perspective on this case: https://forums.collectors.com/discussio ... outhern/p1

A collector bought a 1909 vdb cent on an ebay auction that was uncertified but sold by one of ebay's biggest companies. The guy sends it in to one of the two top certifying agencies that grades it as a $40K matte proof issue instead of the very common business strike issue. The guy starts crowing about his "home run" cherry pick, then the experts chime in to give him the bad news, the certifying company PCGS erred in the certification, within a short time PCGS cancelled the certification while it was still with the collector, less than 24 hours.

So the legal question here is how binding is the PCGS contract? Can a company both claim that they are standing behind values and certifications of their company and then also wriggle out of obligations if it turns out they improperly certified a collectible? Shouldn't they be required to disclose internal records on the cause of the mistake, ie clerical input error vs. a failure to properly grade or certify, no doubt covered by the company's warranty and insurance policy?

5. Customer must inspect all coins immediately upon receipt and PCGS disclaims any liability for damage or discrepancies or errors, including but not limited to errors in the description of the coin, unless reported to PCGS within five (5) days of Customer's receipt of the coin(s). Customer agrees to return any incorrectly described coins to PCGS upon request for correction and agrees to indemnify and hold PCGS harmless from any and all losses and/or claims caused by the circulation or sale of any incorrectly described coin. http://www.pcgs.com/submissionform/usa-onsite.pdf

[AndyK]

It appears that (other than bragging rights) the collector had no loss.

If it had been the other way and he purchased it based on an appraisal which was subsequently rescinded, he would probably have recourse for his actual costs (and possible legal fees).

However, in this case, I believe the legal term is SOOL.

[notorial dissent]

I can't see that the guy has any grounds for complaint since he didn't buy it based on a false or incorrect appraisal. The thing is, from my perspective, if he actually had the coin in his possession in order to send it off to the appraiser, then he had to have known what the condition was or at least had a pretty good idea. He may not have been able to have given it an exact appraisal, but he should have known it wasn't what the appraiser initially claimed. The thing I don't understand is that if he bought it from a top company, considering what it was, why wasn't it already certified?

[Number Six]

"Great Southern", the ebay seller ran it "raw" in their auction, they mustn't have considered it worth sending in to be certified and slabbed. Mistakes get made, even by experts, so the reliance on a grading company becomes imperative. With a population of matte proof cents only in the hundreds with the business strikes in the tens of millions, it is almost an impossibility a proof would show up mixed in with the low value coins. It may be possible, but virtually unheard of.

[Pottapaug1938]

As a longtime coin collector and counselor for the Coin Collecting Merit Badge, I know how difficult it is to grade coins, especially in the higher grades. The hair-splitting I see in the "MS" grades drives me nuts; and someday, I fully expect to see a coin advertised as "MS-64.27525" or something similar.

As to this collector, I don't see that he has any recourse. He bought a raw coin, with no guarantees that it was anything special; and I don't see any evidence that he relied on the erroneous certification to his measurable and quantifiable detriment, so I view him as little different from the scratch ticket holder who finds out that the lottery agent goofed and that his ticket was not, in fact, the grand prize winner.

[notorial dissent]

The most I can see on this is that he got disappointed on an error grading. The only thing he is really out is the grading fee, and they corrected their error.

Again, based on that he bought the coin ungraded "raw" and probably didn't pay all that much for it, he should have had no expectations that the coin was anything other than what it was.

[TheNewSaint]

I agree, there's no case here because no one suffered a loss. But it would be a far more interesting question if they had. If someone had paid $40,000 for this coin based on it being appraised as the rare issue, and it was later declared the common issue, would they have a case against the grader?

IANAL, but what's interesting about this case is that PCGS failed to identify the coin correctly. As Pottapaug said, coin quality grades are notoriously subjective; the grade descriptions themselves include things like "eye appeal". But this isn't a grade; it's whether the collectible was the rare or common variety. That is an objective matter, and seems like something the grading firm could be held accountable for getting wrong.

It sounds like PCGS really screwed the pooch on this one. What they declared ultra-rare was obviously common to everyone else who looked at it, including the coin firm that sold it, and PCGS itself when they looked at it again. I would think that such a rare proclamation would have triggered some automatic internal cross-checking before it went out. If nothing else, this episode should lead to an internal review, which is good for all concerned.

[notorial dissent]

I'm curious as to what he actually spent for the coin to begin with. I would expect not all that much. The only thing I can see that he is actually out is some self induced disappointment and the grading fee, which I think should have been refunded to him.

[Number Six]

The interesting thing about this is the hillbilly who bought it from "Great Southern" for around $60 delivered initially, thought he had something really special, and though he hasn't been forthcoming on details of how he sent it in could have marked the forum as a proof issue, in which case data entry may have duplicated the error and it was never checked in quality control. But "Larry Pelf" who started this has a little trouble stringing together coherent words and sentences: https://www.cointalk.com/threads/ebay-s ... 17.290909/

You see rare items cherry picked frequently by people who know what they are doing, not by country bumpkins who refer to their favorite coins as like "holographic" and like a "peacock". He got unraveled when he realized he didn't have a $40K coin but instead a problem with the company wanting him to FedEx it back to them for re-examination. One sample of his comments, I guess one reason lawyers advise their clients to keep their mouths shut if they know what's good for them:

"Yea Yea Yea...Somebody PLEASE GO CHECK ON THE CRYBABBIES....I said I wasn't going to post back on here but you guys are Such CRYBABBIES...Wouldn't have spotted You'll with my 10x 20x are 30x loupe WOW...LMAO....I took the coin in the slab to 2 local coin dealers today and they both trying to buy it...Also for you Rim & Die Marker guys this is what was told to me today.."What ever they had it in toned everything even the Rim" so the photos cut the Rim to make the.end result that those guys are seeing"...The Best part about all this is I own the coin. In question and all the Haters probably been after this coin for years and to see someone pick one off the market like this will dig deep in your sole and bring out some jealousy...I don't own a zoo but I did nickname the coin "The Peacock" and I'm in the process of setting up a 360 viewing page of coin Now, the only thing is that it will cost $1 to view it (PayPal Only) Screen Shot will be disabled so get ready to be creative with your photo taking LOL...Anyway, This was sent to me from a Real Matte Proof Specialist..."Your coin just may be the Best example of what a coin looks like a new die stage other are looking at coins that are in late Stages of a coin die life...If your going to sell it you just hit a Home Run"...Now this post is officially over...Have Fun With Your Coins...LP...!!!!!!"

This reminds me a little of how Lynn Meredith quoted letters from tax protesters sent to the IRS with responses from them about how based on "our" or "your" information there was no tax liability. And then her accountant Karl who had the letter from the IRS that "pure trusts" have no tax requirements. Garbage in garbage out.

[Pottapaug1938]

This morning, I was on another web site, reading about all of the Lincoln cent errors (various double dies, and 1960-D large over small date) which can be found in circulation.

I'm reminded of all those ads in the back of comic books, 50+ years ago, telling me how much money I could get if I found a 1943 copper cent, 1955 double die cent, 1804 silver dollar and more in my pocket change. Somehow, I never found anything quite on that level. Now, I'm imagining sitting at my desk at home, looking through roll after roll after roll after roll after roll of Lincoln cents, looking for those super-duper error coins.... How exciting -- almost as much fun as watching paint dry.

I have made a bit of money with cherry-picking; but it's usually a matter of something I stumble across in a dealer's offerings at a coin show, and it always involves coins not from the US or Canada. Somehow, I have the feeling that I'd have much better odds making money out of what is essentially gambling if I bought scratch tickets.

[TheNewSaint]

I went through something similar with baseball cards. I spent so much of my youth (c. 1980) lovingly putting them into plastic sheets and so forth, spurred on by promises I would see massive return on investment. It turned out everyone else was doing the same thing. So cards less than 40-50 years old have almost no value, because they're laughably common. Even older cards have little value unless they are pristine. And even cards from a well-curated collection won't be anywhere near pristine.

To this day, I have a gigantic pile of them in my back room. The whole pile probably isn't worth $200, but I can't let go of the notion that throwing out Cesar Geronimo's rookie card will cost me someday. I sell some of them on eBay, but the pile doesn't get any smaller. I swear they're reproducing, like Tribbles. I should take a match to the whole lot, but I'm too sentimental. And, I'm trapped in the sunk-cost fallacy; considering the cards cost 3-7 cents apiece when new, I must have spent enough money to support a moderate cocaine habit.

They aren't even worth the boxes, holders, shipping supplies, and other things you have to buy to store or get rid of them. I've got stacks of 75-cent boxes holding 20 cents each worth of cards. As with any gold rush, the only real winners were the people who sold the picks and shovels.

I'm a real-life Steve Martin bit. "I bought cardboard when it was 2 cents a ton. And I bought 4 tons. And, I got a special deal where I only have to keep 2 tons of it at my house."

[NYGman]

I think I have around 5 or 6 1984 Darryl Strawberry Rookie cards, in both Fleer and Tops. I remember when I got them, they were really valuable. Now I think they go for $2-5. Not a great investment. I will say my brother is an avid collector and has managed to make money, but he really like a part time dealer, buying low selling high at shows and on eBay and he keeps the stuff that actually has value and is old. It is a hobby for him, and he enjoys the sport.

[The Observer]

But holding on to the cards may not be a bad strategy for the long term. My friend relates a story out of his youth in the early 50s when Micky Mantle's rookie card hit the streets - literally. He said that everybody on his block had plenty of the cards. The cards seemed so numerous that he and his friends invented other things to do with the cards other than collect them - they used them as decks of cards, put them in the spokes of their bicycles, etc. Of course, all of these cards ended up trashed, eliminated, or given away as his generation grew up.

He kicks himself for not putting away at least a couple of these cards for the future.

[Pottapaug1938]

But holding on to the cards may not be a bad strategy for the long term. My friend relates a story out of his youth in the early 50s when Micky Mantle's rookie card hit the streets - literally. He said that everybody on his block had plenty of the cards. The cards seemed so numerous that he and his friends invented other things to do with the cards other than collect them - they used them as decks of cards, put them in the spokes of their bicycles, etc. Of course, all of these cards ended up trashed, eliminated, or given away as his generation grew up.

He kicks himself for not putting away at least a couple of these cards for the future.

A card dealer once told me that the prime collectible baseball cards often come from the collections of "nerds" who bought the cards (or whose parents or grandparents bought the cards for them), looked at them once or twice, and then put them away. Me, I incinerated my collection (including at least one Pete Rose rookie card), covering the late 50s to the mid-60s; but they would not have been in prime condition anyway.

[TheNewSaint]

I think I have around 5 or 6 1984 Darryl Strawberry Rookie cards, in both Fleer and Tops. I remember when I got them, they were really valuable. Now I think they go for $2-5. Not a great investment.

The speculation value of "rookie cards" got completely out of hand in the mid-late 1980s. People were paying huge premiums for current cards of not just Darryl Strawberry, but the likes of Todd Van Poppel. The cards of totally unproven players (many of whom would not even become major leaguers) were going for 10 times what the top players' equivalent cards (e.g., Cal Ripken) were worth. Even as a teenager, I thought "how can this possibly pay off?"

I will say my brother is an avid collector and has managed to make money, but he really like a part time dealer, buying low selling high at shows and on eBay and he keeps the stuff that actually has value and is old. It is a hobby for him, and he enjoys the sport.

I enjoy it too, but unless you're dealing in very old/high-end stuff, there's just no financial reward in it. (And I used to play $1-$2 limit poker online.) I re-discovered the hobby in my middle age (bit of a mid-life crisis, I think), but I quickly tired of trying to buy cards for 10 cents and sell them for 15. And with eBay and whatnot, people can easily acquire whatever cards they need. Going to shows and dealers to complete your "want list" was a lot of the fun back in the day.

I'm really just refining my childhood collection into a useful state: complete sets, or cards that are individually worth keeping. The idea is to put it in a form my descendants can easily enjoy and/or cash in once I shed this mortal coil.

[TheNewSaint]

A card dealer once told me that the prime collectible baseball cards often come from the collections of "nerds" who bought the cards (or whose parents or grandparents bought the cards for them), looked at them once or twice, and then put them away.

That was me. I had complete sets in sheets that hadn't been touched since they were brand new in 1982. But when I pulled the money cards and sent them for grading, they rated 9s or even 8s, which are not worth a premium. Granted, some of that is due to imperfections in the card itself (centering, brightness, clarity) rather than condition. But it furthers the point that very few cards from ordinary collections measure up to modern grading standards. As you said about coins, the distinctions between top grades are maddeningly fine.

All of this echoes the theme about the coin in the OP: the probability of an ordinary shmoe stumbling across an ultra-valuable item is practically nil.

[TheNewSaint]

But holding on to the cards may not be a bad strategy for the long term.

I actually calculated the cost of the space the cards occupy in my home. My affordable midwestern condo costs about 75 cents per square foot per month. At that rate, it works out to about 1 cent per card per 10 years. (Not accounting for the additional space needed by binders and whatnot.) Since I've had most of these cards 35-40 years, I figure most of the MLB Players Assocation owes me at least a nickel in back rent. Especially Cesar Geronimo. I couldn't open a pack without finding that guy.

[The Observer]

Me, I incinerated my collection (including at least one Pete Rose rookie card), covering the late 50s to the mid-60s; but they would not have been in prime condition anyway.

My other horror story of card collecting was from a co-worker who collected cards during the 50's. He stowed them in the attic of his childhood home as he grew older, went to Nam when he got drafted, and after getting home, started college and earned his accounting degree and CPA. As the baseball card craze hit its apex in the 80's, he remembered he had stashed his collection and called home to Mom to see when he could come over and pick them up. Mom told him, "Oh, honey, I had no idea you were still interested in those. We threw them out when you were in Viet Nam when we decided to clean the attic out." He figured there was easily $50k-75K in cards that were sitting somewhere at the bottom of the city dump.

[Number Six]

I was at a card and coin show in Fairfield recently, actually a lot more card dealers. A collector showed me a Gale Sayers card he had just picked up, the guy who was a basis for "Brian's Song". Interesting how early on James Caan played good guys; later bad ones ("Eraser"). I've seen the Goudey baseball cards, especially Babe Ruth at flea market that fetch top dollar.

[TheNewSaint]

I was at a card and coin show in Fairfield recently, actually a lot more card dealers. A collector showed me a Gale Sayers card he had just picked up, the guy who was a basis for "Brian's Song". Interesting how early on James Caan played good guys; later bad ones ("Eraser"). I've seen the Goudey baseball cards, especially Babe Ruth at flea market that fetch top dollar.

Goudey dates back to the 1930s. They're one of the few series that existed between about 1915 (tobacco cards) and 1950 (the beginning of modern cards). As such, they are the only cards that exist of the Babe during his career. They go for thousands of dollars, even in dreadful condition.

Football cards aged much better than baseball cards did. They were perceived as second-tier during the baseball card craze, and thus avoided that era's worst excesses. Meanwhile, fan interest in football has increased while baseball has shrunk, making them more sought after now. In addition to Gale Sayers, Brian Piccolo's (only) trading card is also valuable, because of that movie. His name is misspelled on it.

Anyone curious about the prices of such things, or just taking a look at them, should visit comc.com. That website may be the most comprehensive library of anything, ever.

Forgive me, I do go on about this topic.