Let’s imagine that someone (with no particular knowledge of numismatics) brings in a coin to a dealer and the dealer recognizes it as being worth, say, $100,000.00. The dealer then offers $100 for the coin and the seller accepts. He gives the valuable coin to the dealer and walks away with his hundred bucks.
A week later, the seller realizes that the coin was worth many thousands of dollars. Does he have any legal recourse? Is it a criminal act for an expert on coins (or whatever) to knowingly underpay for a rare coin (or whatever)? Could the seller seek remedy in a civil action? Or is it tough luck for him and simply the flip side of caveat emptor?
Caveat emptor. As I understand it, the coin dealer would be under no obligation to offer you a bigger sum even if he KNEW the coin was priceless. It’s the seller’s obligation to know what they have before they sell it.
We run into the same thing at the museum in which I work. Years back, someone donated some “worthless” paintings. Turns out they weren’t so worthless after all. The family went ballistic when they discovered this, and demanded they be returned, saying they wouldn’t have given them to us if they had known. Legally, we’re in the clear, because we have their signed deed of gift.
Then why is it if someone were to walk into a store and get something for a lot cheaper then it was supposed to be have to give it back? There was the case of the kid who bought the baseball card years ago and had to give it back. It seems that in this case the dealer was lying to the person about the value.
This to me is different, at least a bit since the museum did tell them anything. However if they were told, no it’s not worth anything, then the next day turned around and sold them for hundreds of thousands of dollars I’d be pretty pissed too. At least they could get a huge tax write off in that case.
Well, it depends on the circumstances. If I go into a store and see a dozen pairs of shoes with one improperly tagged to be half price, is it really fair for me to take advantage of what I KNOW to be a mistake? If a newbie employee accidentally sells me a valuable item for peanuts, I don’t think it’s fair that I should keep it.
Now, I don’t think it’s fair if the store owner LIES to the guy selling the coin. If all he says is, “I’ll give you a hundred bucks for it” without adressing how much it’s actually worth, it may be sneaky, but it’s not illegal.
We never tell anyone what anything is worth. We may say how rare or old the item is, but we don’t appraise them. We urge owners to get their own appraisals for tax purposes. Other than that, if you want to give us a signed copy of the Constitution, well, okay, we’ll take it without extra warnings of it’s potential value.
Yes, wouldn’t it make a difference to the case if the owner of the coin asked what its market value was? In essence, asking for an appraisal. If the dealer knowingly gives an incorrect appraisal in order to trick the coin owner, I would have to think the dealer has to be doing something illegal.
If not, what is the point of having appraisers/appraisals if they cannot be trusted?
No, it’s perfectly legal, and I don’t think it’s all that “wrong” either. The coin dealer is a for-profit entity so any smart person would take his “appraisal” with a grain of salt. Now, if it was a museum or any other appraiser who did not deal in the products he appraises, it would be different. But you’d probably have to pay yourself for such an appraisal.
But the person posited in the OP makes his living out of selling coins. He’s not an impartial judge and you shouldn’t expect him to be. There are appraisers who are not vendors and they are the ones you should trust. And even then, they still might try to rooker you.
I’ll have to defer to a lawyer to answer the OP, even though I’ve made a living for over 30 years now as a coin dealer.
I did ask a lawyer-customer when I first started out in business. I proposed a hypothetical–say a 20-year-old boy comes into my store and puts a US $20 gold piece on the counter and says “Is this gold? How much would you pay me for it?” Since this kid doesn’t even know what he has, or whether it’s gold, if I were dishonest I could tell him it’s something worth $50 and try to buy it. And if I did, it would be legal. But, according to my lawyer/customer, I could always be sued/tried for the transaction. And a judge might find against me if I paid $50 for a coin that had a gold content of $350. I might be found liable either civily or criminally for knowingly purchasing something that had a much higher value, the argument being that I was acting as a fence, paying pennies on the dollar.
Please don’t take this to be a legal opinion. And I don’t know exactly WHAT crime I would be charged with. Just that my lawyer said if you pay a “fair” price, the likelyhood of you being convicted are slight, but if you paid a rediculously “low” price, you stood a bigger chance of being charged/convicted if the matter ever came up.
I’d love to hear Bricker’s opinions on this. Or any other lawyer’s for that matter.
It seems to me that there is a potential cause of action for fraud here, depending on exactly what the dealer represented to the coin owner.
The elements of fraud, if I remember correctly, are: (1) misrepresentation, (2) of a material fact, (3) knowledge of falsity, (4) intent to deceive, (5) justifiable reliance, and (6) damage. The first element, misrepresentation, includes affirmative misrepresentation and concealing facts which one is bound to disclose.
If the dealer told the coin owner that the coin was worth $100, that would have been an affirmative misrepresentation. The price was a material fact because if the owner knew the value of the coin were higher, he would not have sold it for only $100. The dealer knew the misrepresentation to be false. The dealer made the misrepresentation with intent to deceive and induce the owner into selling the coin for $100. The owner was obviously damaged in the amount of $99,900. The owner relied on the dealer’s representation about the price in accepting the $100 offer. Was that reliance justifiable, i.e. is it justifiable to rely on a dealer’s valuation? That’s maybe a grey area. But I don’t think it would be unreasonable for a jury to find fraud here…
On the other hand, if the dealer merely offered to pay $100 for the coin, without affirmatively representing the value, then there hasn’t been an affirmative misrepresentation. There is a concealment of facts, but I doubt that the dealer is bound to disclose those facts. And there is the same question about justifiable reliance. So, in this scenario, I think a finding of fraud is less tenable.
This is the principle behind the “Make Millions in Real Estate”: convincing a home owner to sell the property to you for quick cash before the property goes into foreclosure, then your selling the property to someone else for it’s true value. Like if someone had a $50K lien on the property and you offered them $70K cash. Then a week later you sell it for the property value of $200K.
What would happen in the opposite case from the OP? Say that I go into a pawn or coin shop with a coin that I know to be worth its value (say $.05) and the owner thinks that it is actually a rare coin and buys it from me for $1000. When the dealer finds out that the coin is actually worthless (for all intents and purposes) could I be charged with fraud? I’m selling something for much more than it’s worth, but I didn’t do anything to make the dealer think the coin was valuable. Am I responsible for informing the dealer of any misconceptions that he/she might be under in the process of the transaction?
See this to me is different then selling. You’re actually telling someone to get it appraised before giving it away, then if I still want to give it to you then fine. However, the dealer is supposed to be someone you can trust, or at least your supposed to be able to. I know they wouldn’t give you full market value for it, no dealer ever does, but to out right lie seems to be pretty bad.
vertizontal, I don’t remember the story fully. I was always told he was forced to give the card back.
My grandfather had a very rare gun. He took it to a couple of gunshops around the country and got some offers for it. I told him to double whatever they had offered him as an indication of the gun’s actual worth.
Secondly, shop owners are not necessarily experts when it comes to appraising items, especially if they don’t specialize in that type. In my grandfather’s case, the dealers may have sold guns, but not ones of antique German manufacture.
On the whole, I don’t know if I’d say store owners are any more or less honest than the populace at large. There tends to be a filtering process where people refuse to do business with dishonest shops, so I’d say any store that has been around under the same ownership for a long time is more likely to treat you fairly.
Unfortunately, honesty seems to be rather rare. I bought a box of used hardback books from a customer of mine. Since hardback fiction doesn’t sell well around here, I pay a buck a book. I found one that was worth quite a bit more than that. When I sold it, I called the customer, explained what happened, and offered her $100. She turned me down, since we’d already agreed on a deal.
Both my action and hers seem to baffle some people, but to me it’s just the way things should be.
Remember that “worth” can mean two different things. Dealers have to make a living, so wholesale “worth” is usually significantly different from retail “worth.” If I’m buying a used book that will probably sit on my shelves for years before I can sell it, I’ll typically offer about 1/3 of what I think I can get for it. If I think I can resell it in a matter of months, I’ll offer about 2/3. The average, as you said, is half.
All antique and collectable dealers do this all the time. There is no law requiring them to disclose an items actual market value when making a purchase. The correct response to spotting a $500 Captain Midnight decoder ring marked $1 at a yard sale is to pick it up, appear mildly interested and say “Idunno. Will you take fifty cents?”
However, if a customer wants anything appraised the proper response is to determine market value to the best of your ability, and charge %10 for the appraisal.
Giving an intentionally low appraisal for the purpose of buying an item at a reduced price is fraud. A few of the appraisers from Antiques Roadshow were found guilty of undervaluing items so that they or cohorts could buy them at reduced price.