Jim Crandell's personal thread

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Posted By: Corey R. Shanus

Leon,

I actually think the issue of the legal obligation of an auction house to accept the return of a slabbed altered card might be a bit more involved than you think. Peter S and I had a spirited exchange on this question in a thread last year. To make my point let me give an extreme example-Coaches Corner. In my view they would be found to have fraudulently sold those autographs with Morales' authentication. Under the reasonable person standard, they should have known the authenticator was not qualified to render the opinion and they should have sought a second opinion from a recognized authenticator before selling the item. Now let's jump to case of slabbed cards. Just as in the case of the incompetent autograph authenticator, I would make the argument that grading companies in the very early days of grading were not adequately qualified to detect alterations. The issue had not yet received prominance (so therefore they weren't necesarily looking for it) and the alterers were probably way ahead of the grading companies in their ability to get things by. Therefore, it's my view (which admitedly is probably a minority view) that unless an auction house (1) discloses that a statistically significant percentage of slabbed cards from certain issues are believed to be altered, (2) performs its own inspection on slabbed cards using the latest technology and performed by people with appropriate expertise, or (3) resubmits the card to the grading company for the purpose of checking for alterations, a good faith purchaser of a slabbed altered card would have a colorable legal claim against the auction house. The basis would be that under the reasonable person standard the auction house should have known of the risk of alteration and taken steps (e.g., disclosure, inspection and/or resubmittal) to protect its good faith bidders.

I might add that I have discussed this point from the legal perspective. From the business perspective, I agree with Jim C that an auction house (for their good customers at least) would irrespective of any legal obligation accept the return and then seek restitution from the grading company.