T5 Jackson - $47,853 vs. $182,425

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Posted By: Corey R. Shanus

To answer a question, I don't know all the people who bid on the MHCC T5 Jackson. And that's part of the problem. I'd be lying if I said the circumstances surrounding the sale of this card do not make one reasonably wonder whether at some level all these different bidders you make reference to ever existed, and that is why the Mastro one sold for what it did. Or if they did exist their existence was predicated on some factually incorrect representation by MHCC as to the uniqueness of the card.

Also, how can you now possibly say that I was inaccurate in my statement that the only reason you valued the card as high as you did was because of your belief the card was unique. Here is what you said: "I suppose it was a blessing to me to have only come in second when the following day I learned that Mastro had secured one. ....My offer for Mastro's example was too far off from their asking. My offer was based solely on the fact that the photo had the horizontal flaws and more importantly the item was certainly not unique and I had questions about how many more are out there. Making the value I placed on the item significantly less." You'll forgive me but I continue to read these comments as saying that the high value you placed on the card was based on your belief that the card was unique. I do thank you though for confirming your reliance on Brian Drent's representations about the card's uniqueness, or am I being inaccurate again in saying that?

Let's leave it then that each person can read the various posts on this thread and form his/her own opinion.

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Posted By: Peter Spaeth

While I would have advised Brian to word it differently, so long as he didn't actually guarantee that it was the only one in existence (which he didn't) and so long as he didn't actually KNOW of another one, I would think he could successfully defend against any claim of misrepresentation on a couple of grounds, one, he technically didn't make any false statements of FACT other than to report the results of his due dilegence (although admittedly it comes fairly close), and two even if what he said could be read as an affirmative representation that the card was the only one of its kind, it probably isn't reasonable to rely on such a statement because if you think about it there is no way for anyone to know that is true to a certainty (one can only know it is false). In other words, it's hype, puffery, etc.

Now that said, it would not be an entirely frivolous claim on the other side, and I can see the arguments (my friend Hal being a plaintiff's attorney could probably make them quite cogently) but I think Brian would have the better side of it.

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Posted By: warshawlaw

"I'd be corning the Thorpe market if I won the lottery."

Uh, not what you meant?

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Posted By: Jay

Jay--Would it be too much to ask you to change your name...perhaps Nigel

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Posted By: warshawlaw

Obscure 1980s new wave day, I guess.

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Posted By: jay behrens

Jay, I would change it to Nigel, but that is my son's name. I think they should jsut call you O-J

Jay

I love pinatas. You get to beat the crap of something and get rewarded with candy.

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Posted By: Dan Koteles

Corey-the Jax garter , i believe was a 1913. The price was
quite surprising to say the least ,and not to mention it did
have a couple of problems. I have a few questions about garters
to you. EMail me whan you get a chance. thank you !

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Posted By: Mark

I think the winner of the MHCC card could get pretty far asserting that either:

(i) MHCC didn't "thoroughly research" the card's population (a material misrepresenation) (heck, if MHCC had merely posted an inquiry on this forum, a poster would have told them there was at least one other T5 Jackson); or

(ii) MHCC must have known there was more than one such card (fraud) (e.g., find a T5 collector who would testify that "all respected T5 collectors know there is more than one Jackson out there").

I'm not saying MHCC did anything wrong, and I know little about T5s, but I can see it coming down to a battle of the experts and the winner would only need to prove (i) or (ii) by a preponderence of the evidence.

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Posted By: Peter_Spaeth

Agree it would be an interesting case. Would make a good law school exam question too. Hopefully the buyer is happy with his purchase and nothing more will come of it.

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Posted By: Max Weder

Hey Mark, I thought we'd get the tax implications from you for the consignor and the auction house. Hope you haven't switched practices

Max

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Posted By: Mark

Max: I am considering switching to litigation after comparing the quality of our collections to that of the Lewis and Spaeth Collections.

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Posted By: barrysloate

This is an issue that concerns me too and Corey and I have discussed it at length privately. Actually, this may never fully be solved (assuming we need to solve it) and part of the problem is the price is so off the charts related to what it is really worth and we don't know what the winning bidder was actually thinking. I'm going to assume it sold and that the winner thought it was unique. He may be upset now or not even care. All crazy prices look funny, but I know I have sold things myself for multiples of what I thought they were worth. Sometimes collectors just can't let it go, that's just the psychology of collecting.

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Posted By: Tom Boblitt

what the term 'due diligence' REALLY means to MHC as it is pretty apparent from this (and the other) thread that it was well known by no less than a few people that this was not a unique card.....

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Posted By: Peter_Spaeth

One would think that if it was uniqueness that drove the price, and we don't really know that although it is certainly a fair inference at this point, then anyone considering spending that amount of money likely would have had private conversations with Brian and probably others rather than just relying on a rather vague statement hyping the auction about unspecified due diligence. Wouldn't they?

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Posted By: Corey R. Shanus

Peter, thanks for your posts analyzing the various legal issues. I find them very informative.

I would like to probe a bit further on one aspect. Let's assume we are correct in our inference that the high price was fueled by the perception the card was unique. And let's also assume it can be proven that that perception of uniqueness was created solely by the MHCC catalog description and subsequent conversations with MHCC personnel. Are you saying that MHCC could more likely than not mount a successful defense to an allegation of misrepresentation on the grounds that bidder reliance on these MHCC assertions of uniqueness was unreasonable? While I understand your point about hype, puffery, etc., in this instance it still seems strange to believe a court would look sympathetically on an auction house's defense that even though the bidders were lead to believe solely by the actions of the auction house precisely what the auction house wanted them to believe, they acted unreasonably in believing it.

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Posted By: Daniel Bretta

I think anyone who has been around in this game long enough should take any claim of "unique" with a grain of salt. There are so many secretive high end collectors out there with fabulous collections that we have no clue really. I don't think we should assume that the winner of the MH Jackson bid this high because he thought it was unigue. Perhaps he figured this to be his one legitimate shot at picking the "card" up. We'll never know unless he/she wants us to know.

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Posted By: Kenny Cole

I said this earlier in a post regarding a similar issue, and will reiterate it here -- if the buyer had a beef and I was representing him/her, I would allege constructive fraud. Assuming that the seller had a duty to disclose the true facts, which I think is a reasonable inference when you are talking about an auction description of a card as "unique" when it is not, at least in Oklahoma even an innocent misrepresentation (i.e., no intent to deceive) can be constructive fraud if the buyer is misled to his/her detriment. IMO, what that means is that saying something is "unique" when that statement is demonstrably false, even if that statement was made in the belief that it was true, may be grounds to avoid the contract IF the buyer can show that the untrue description of the item as "unique" was the basis for the decison to purchase it.

A finding of constructive fraud generally has the same legal effect as a finding of actual fraud. Theoretically, I suppose that means that damages could be awarded. However,I've never seen a constructive fraud case that resulted in anything other than avoidance or reformation of the contract. There may be one, but my take on the situation is that if constructive fraud could be proven, the buyer could probably make a pretty compelling argument for undoing the deal and getting his/her money back.

As a by the way, Mark, don't give up your day job as a tax lawyer just yet. The burden of proof in a fraud case is clear and convincing evidence, not a preponderance. However, practically speaking, I don't really think it matters all that much if you have to try the case -- if the jury is pissed off at what the defendant did, you probably get a verdict, regardless of the theoretical proof standard. If they aren't, you don't. It's just as simple as that.

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Posted By: JimB

I have dealt with Brian Drent several times and found him to be a very honest and straightforward guy. I doubt he knowingly or intentionally misled on this one.
JimB

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Posted By: leon

First off, obviously, I am no lawyer so what I say might not make legal sense but I want to go ahead and make a post concerning some thoughts. I have had numerous conversations with Brian Drent the last few days. He has no idea I am posting this. I am convinced he thought this was a uniquely known card when selling it. I am not sure of the due diligence put into the investigation of the rarity of the T5. I do believe there was a buyer for the card that is not totally inside our niche. I believe he is a card collector but maybe is working his way back in time, as far as collecting, as so many card collectors do. I don't believe there was any fraud committed. There is obviously a motive to sell something for more money (higher fees). So let's say he thought the card would bring 50k, which is an approximate value, and obviously about where the next one ended WITHOUT all of the bidders. SO there was an extra 100k. Nowadays consignors with high end material know that consignment fees can be all but waived (and with really nice stuff like this waived altogether). Let's assume there were no sellers fees. The extra 100k in price netted the auction about 15k. IS that motive enough to ruin your reputation, business, and career? I don't think so. One could argue that dumber stuff has been done but I don't think that it would be worth it to try to make an extra 15k. Also, for the record how many of us have paid way more than we should have for something? And 100k to one person might be like 1k to another. As for taking all of this to court and proving anything, with the price of those darn lawyers, the card price might be the lowest ticket item vis a vis the attorney invoices.

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Posted By: Peter_Spaeth

Certainly what you are saying has a certain logic and persuasive force. However, there are certain alleged misrepresentations on which a buyer in a transaction may not reasonably rely or which just can't form the basis for a fraud/misrepresentation claim in the first place. For example, statements of opinion are (with certain exceptions) generally not considered actionable.

Here, assuming for the sake of argument Brian actually represented the card was unique (and I think he stopped short of that) how can any sophisticated purchaser really rely on that to conclude the card was in fact unique? As Dan Bretta alluded to, it is not a statement that can be proven true, only one that can be proven false. Brian Drent cannot possibly have examined every collection in the country to determine that, as a factual matter, there was no other T5 Jackson. Noone considering spending huge bucks on the card could possibly have believed Brian Drent was in a position to know for sure there was no other T5 Jackson. So all you have, at the end of the day, is a presumably truthful representation by Brian that he believed based on his research there wasn't another one out there. That to me doesn't mean a hell of a lot, no disrespect to Brian. I can certainly see the logic of what you are saying, and I don't think by any means this is an open or shut case and a plaintiff represented by a good advocate such as Kenny Cole could make out a sympathetic case. But in my view, no buyer could reasonably rely on a representation about the uniqueness of a card.

Now having said that, I also believe Brian didn't really represent that it was unique, he only represented that based on his diligence he BELIEVED the card was unique, and that statment presumably was truthful. Leaving aside the reliance issue, if he overstated the extent of his diligence, or if his diligence was so obviously below a standard of care, then the statement could form the basis of a negligent misrepresentation action -- but again I see a reasonable reliance problem.

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Posted By: Peter_Spaeth

Here is what I think the best plaintiff's case would be IF certain facts were proven, and as I sit here I of course have no idea what Brian did and didn't do. Anyhow, here is the best case scenario as I see it. I, the plaintiff, did not rely on Brian to conclude the card was in fact unique. However, based on what Brian said about the extent of his due diligence, it certainly in my mind made the chances that it was unique a lot stronger, so I was willing to pay a lot more for it. That was reasonable, as Brian has a lot more expertise than I do and claimed he had done thorough research into the matter. In fact, although Brian represented that his due dilgence was extensive, it wasn't -- he didn't do x y and z which a responsible dealer would have done before making the claims he did. Therefore, while I have no reason to believe Brian KNEW there was another T5 out there, he had no business suggesting there wasn't -- in other words, he made the representation negligently, with no reasonable basis for doing so. As a result, I overpaid by x, and want part of my money back -- or I want to rescind the deal altogether.

EDITED TO ADD: Leon, you don't necessarily need fraud, a claim can be brought based on NEGLIGENT misrepresentation, where the seller makes a statement without a reasonable basis for knowing whether or not it is true.

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Posted By: Corey R. Shanus

In regard to the issue of uniqueness, I have never had reason to doubt that MHCC really did not know of the existence of another one when they wrote their catalog description. While at the end of the day I think they could have performed their due diligence a bit better and been a bit more careful in how they described the card's scarcity, their actions in this regard is not what triggered this thread. I also agree with you that one would think that bidders, especially those prepared to pay that kind of money, should reasonably know that there is really no way of knowing how many are out there and that another one could turn up at any time, especially with the publicity generated by a staggering reported realized price.

My agreement that a bidder would not be acting reasonably by believing the card is unique, coupled with a poster on this Board coming out before the close of the auction and flat out saying he knew of the existence of another one, is one reason I responded so skeptically to the underbidder, an experienced dealer at that, using the uniqueness argument as a principal justification for going as high as he did in the MHCC auction but then rejecting the opportunity to buy the Mastro one when it was privately offered.

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Posted By: Brian

Corey,

It seems that Greg has very clearly explained himself. Either you believe him or you don't. Either way, I don't see the purpose of rehashing your perspective of his (faulty) thought process...

What am I missing?

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Posted By: Patrick McMenemy

The T5 Jackson w/o the white border and the gray mount was lot #187 in the Copeland Collection (March 1991). The damaged bottom left corner is a match.

Patrick

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Posted By: Bottom of the Ninth

Corey

In order to have meaningful and constructive communication with people it is essential that both parties be able to listen and understand what the other party is saying or writing. You seem to really be struggling with this one. Your obsession of MHCCC or me is obviously preventing you comprehending this situation. You are placing words in my mouth and totally disregarding what I have written.

I am going to ask you nicely this one time to please refrain from making further insults and disrespectful comments towards or about me. You do not know me and where I come from this is entirely inappropriate. If you want to be a man and take this off of the board I would be more than happy to discuss this with you via phone or email. If you want to continue to spin your theories and be disresptful I would be more than happy to introduce you to another side of me.

Greg

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Posted By: Bob

Beyond a reasonable doubt is a criminal term, preponderance of the evidence is a civil term, at least in this and most other states. Misrepresentation, a civil creature, in our bailiwick, does not require intent to deceive thus there would be no need to prove the seller/auction house had intentionally tried to deceive the buyer in to believing the card was unique and one of a kind. I recognize the "puffery" argument but I think a strong case could be made for recission of the contract and/or damages based on the facts set forth above. The plaintiff need only show that the statement was false and that he relied upon the statement by a bare 50.1% showing of proof. The auction house would be held to a higher standard than that of Joe Blow who operates a mom and pop junk shop or Fred Cardboy who sells used clocks, appliances and a few refractor cards from the 90's. The statement that MHCC thoroughly investigated the situation and found that based on that investigation that it could state the card was unique, is damning. I am assuming MHCC probably is relying on the civil law of remedies in the state in which it is incorporated but it should thank its lucky stars it isn't located in this State because I think the buyer would have plenty of ammunition to pursue the redress of a civil wrong under our laws IMHO.
Caveat- I am a criminal defense attorney, not a civil litigator, but I did sleep in a Holiday Express last night

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Posted By: cmoking

I am not a lawyer and I know very little about the law. But as a betting man, I'd be shocked if Mile High loses a court battle on the T5 Jackson.

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Posted By: warshawlaw

Civil fraud is one of my main areas of practice.

Normally, an auctioneer has disclaimers in its rules. MHCC has some:

"While we as a firm perform due diligence in order to maintain the integrity of our auctions, we encourage bidders to use every resource available to them to draw their own conclusions. As a firm we will make every effort to help in the process. Because of our efforts to ensure the authenticity of the items within the catalog as well as the opportunity we offer bidders to confirm our findings as well as that of our experts and third party authentication, it is our policy that all sales will be considered final. "

"USER EXPRESSLY AGREES THAT USE OF THE SERVICE IS AT USER'S SOLE RISK. THE SERVICE IS PROVIDED ON AN "AS" AND & "AS AVAILABLE" BASIS. THIS AUCTION SITE EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY KIND"

Oddly, they don't have a limitation on returns of non-graded items, Their returns poliy is: "Returns - Returns of graded cards are not allowed. We will make every effort by the above means to describe as accurately as possible any graded card in the auction for you. The emphasis, therefore, is on the bidder to ensure that the lots are satisfactory and are not returned." This is a lousy clause. It is a negative pregnant; by covering only graded cards, it implies ungraded items are open for returns.

In my state, the "as-is" language, claims that sales are final, and the disclaimer of warranties [not quoted here] would not trump all misrepresentation claims and the hole left in the returns policy would give a plaintiff a shot at rescission. The issue would center around (1) what did they really do as due diligence to let them say the card was unique, (2) did they really flat out say it was unique or did they say something else that could be construed as a non-actionable opinion.

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Posted By: cmoking

Their description starts with :

"It is not often within the organized hobby of Sports Collectibles that one can be nearly assured that an item is one of a kind or unique, but after performing our due diligence in regards to research, we are confident that this is the one and only example of a 1911 T5 Pinkerton cabinet of Joe Jackson extant. "

http://auction.milehighcardco.com/displayitem.php?item=2&category=Closed%20Auction

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Posted By: Peter_Spaeth

In California wouldn't reasonableness of reliance also be an issue? I still think irrespective of how you construe the operative language in the auction that King just cited (and I agree with you, the key issues there are how close does it come to a guarantee and what due diligence did Brian actually do), a flaw in the plaintiff's case would be that it was unreasonable to assume Brian Drent whatever he claimed was in a position to know for a fact that the T5 was unique. How on earth could he be? You can't prove a negative, at least not this one. That said, I can see a claim that the buyer paid more than he might otherwise have because Brian's assurance increased his confidence that the card was unique although it didn't give him an absolute belief that it was, as mentioned in my prior post.

This really would be an interesting case, no question.

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Posted By: warshawlaw

Reasonableness of reliance is always an issue for the jury (proving reasonable reliance is one of the elements of the tort), but is relatively easy to overcome in a situation where a purported expert makes a material representation of fact supposedly based on his thorough investigation of the facts. In this case it would be less of an issue because the basic cause of action would be rescission, which could be for misrepresentation or material mistake. If the card isn't unique, the materiality of the mistake is apparent.

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Posted By: Peter_Spaeth

Adam whle I generally agree with your assessment of reasonable reliance in the context of a representation by a purported expert, I think it is a much harder question given the highly unusual nature of the representation at issue, namely that there are no other cards on earth of the same type as the one for sale. Expertise seems to me to give way to common sense here: what rational person, especially a presumably sophisticated buyer, could reasonably believe such a representation? Would anyone here have relied on Brian Drent for the proposition that the Jackson was unique, for example?

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Posted By: Josh Adams

If this Jackson is ungraded, and therefore no presumptive way to have an objective catalogue, i.e. the PSA Pop report, to track the number of issues available, how can anyone make the claim that this card is one of a kind?
I mean, isn't it possible that there are several more of these Jacksons stored in safes, boxes, desks, drawers, all over the country? MH, or any auction house for that matter, seems to have no way to tell that the card they offered is the only one in existence.
And as we have discovered, it is not.

Go Go White Sox
2005 World Series Champions!

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Posted By: Peter Spaeth

Josh, you are right, but which way does it cut is the interesting question. Does it mean Brian had no right to make the statement, or does it mean noone could reasonably have relied on the statement? Or both?

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Posted By: Josh Adams

Peter,
I think the reasonable prudent person in the buyer's position (who happens to have $100K to spend on a baseball card) should probably know that just because the auction house says the T5 is the only one out there, doesn't exactly make it so.
Is this just puffery by the auction house? I don't think so, because as king put it, the first line states as fact that this card is the only one in existence. If the auction house said "it's the only known Jackson as of the date of this printing" then this whole problem could have been avoided. See, it's all about the drafting.
In the end, I think it's a question of reliability for the jury to decide!

Go Go White Sox
2005 World Series Champions!

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Posted By: Peter Spaeth

So true. I cannot count the number of cases I have been involved in that resulted from ambiguously worded contracts. Brian also could have said, based on my due diligence which included the following, to the best of my knowledge it is the only one in existence. But I guess this is all hindsight, and at the time it probably seemed highly unlikely anything would come along to show that the more aggressive statement (if one interprets it as a factual statement that the card was unique) was false.

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Posted By: Gilbert Maines

the item description could have misled a somewhat educated buyer

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Posted By: Paul

The lot description specifically recognizes the fact that cards usually cannot be deemed "unique." But it then goes on to say that this case is the exception and the seller has done the research to prove it. I'd say that's a huge point in the buyer's favor in any lawsuit, even though I agree that any buyer who believed the description was guilty of a little wishful thinking.

I also think that the fact that T5s typically are NOT unique is another point in the buyer's favor. If an auction house said that an Alpha or an Allegheny was unique, every sophisticated buyer knows exactly what that statement is based upon, and knows that there is some small possibility of duplicates showing up. But there is no similar story of uniqueness behind the T5 set. So the seller's claim of "due diligence" adds something to the equation. It tells buyers that the seller has done some research on this specific card that is not widely known and that this research has led the expert seller to the conclusion that the card is unique.

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Posted By: barrysloate

Unique is a tricky area. If I say there are 4 or 5 known of something and it turns out there are 7, nobody cares. But if I call something unique and there are two, then it becomes sticky. Of course, what is the definition of due diligence when there are collectors who own things they keep secret and don't want others to know about. If there are ten T5 Jacksons and the nine other collectors have kept that private, you can be sure a reported price of 180K will shake a few of those out. I don't think the buyer has any recourse, if the auction house genuinely was not aware of other examples. If they were deliberately holding back information and it could somehow be proven, that is something else.

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Posted By: Preece1

Since I have been asked this question by over a dozen collectors over the last 2 weeks, I wanted to let everyone know that I DID NOT purchase either of the T5 Jackson cards. I am primarily a 19th century guy