Legal Question About Coin Ownership

Of course it's not illegal, that's how countless dealers have become rich

Why would the seller have claim on something they had not researched and learned the value of? Is that due diligence not their responsibility, and if they don't, why does the new owner have to pay them back?

There are no ethics concerns if both buyer and seller were on the same page regarding knowledge (or lack there of) on the coin. Things get grey when one knows more and uses that to take advantage of the other. In one sense its capitalism, but transparency and honesty mean a lot too.

The dealer would have a claim if, and only if, there was some fraud involved on your part in arriving at that $10 price.

Example: suppose you are a recognized expert in Early American cents. A coin dealer friend asks you to help him identify and value an early US cent. You recognize at once that it is a scarce variety, but you decide to "pull a swifty" - you tell the dealer it's cheap and common, or even a fake, an offer $10 for it. The dealer accepts the offer, and you turn around and on-sell it for $10000. You've lied, and committed fraud, for personal gain. And that's a crime.

Even here, it's a legal dice roll, because it's really, really hard to prove "intent" in a court of law. It's entirely possible that you, the EAC expert, honestly thought it was "just a $10 coin" when you made the offer, then only later discovered its true worth once you had the chance to study it closely at leisure. If it came to a lawsuit, I'm sure the defence would be making that exact argument. In that case, you weren't lying or trying to be fraudulent, but from the point of view of the dealer, that second scenario looks exactly the same as the first scenario.

Which is why most coin experts, when placed in such situations, will almost universally decide to voluntarily share their windfall profits with the dealer who made it possible. There may not be a "legal claim", but there certainly might be a perception of a moral and social claim. Keeping the friendship is worth a few thousands bucks.

And even in this scenario, I only see the dealer "losing" if and when it comes time to sell. If you're a collector, and you're going to keep the coin in your collection forever, whether it becomes a $10000 jewel or stays a $10 piece of gravel, then there's no actual net financial gain taking place.

I shall relate my own, slightly less extreme example of this exact same scenario. I bought this coin off a local coin dealer here in Brisbane, Australia for $2 back in 1999. It's not listed in the world coin catalogue, but I figured it was just a catalogue error. I finally got around to asking about it in that thread on the forums in 2006. Turns out it's actually rather rare; the mint that struck them burned down while the coins were in storage, so only a handful were scraped out of the ashes. Probably worth about $1000 these days.

The coin dealer I bought it from had gone out of the coin business and left town in 2004. But even if I had been able to track him down, I wouldn't have felt compelled to give him any extra money, because in a very real sense, I didn't actually have the money to give him, since I hadn't sold the coin. Still haven't. The $1000 "profit" is only virtual, theoretical profit. I paid $2 for it, and as far as any rational person is concerned, it's still only worth $2, until and unless I actually try to sell it. It's entirely possible that by the time I get around to selling it, someone discovers a vatful of them in the ruins of the old mint and they become $2 coins again.

I can't imagine the seller would have any legal claim unless there was fraud on your end, like Sap said. However, if this is a real scenario, it's best to consult an actual lawyer on the matter if need be.

Uh-oh! Now you have thrown a very large log into the fire.

If you are talking about purchasing a family member's claim into the mix, I can see where there can/will be stumbling blocks down the road.

Methinks a written agreement, signed by all parties, needs to be in place.

'Nuff said.

Once more than one family member is involved then
potential for situations like this to go south ...immense .

"If I purchase a coin for, say, $10, not knowing the value, and later on the coin turns out to be worth $10,000, does the seller (your sibling) have any legal claims on the coin?"....

I once saw a true-crime documentary kinda similar to what you're describing, someone ended up in the morgue & the other in prison. Good luck w/ the purchase of the large collection!