Philately and the Law:
Troughton v. Bartels

by Stanley M Bierman, M.D.

The following is my attempt to provide a summary of the highlights of this case as reported in the article in The Congress Book of 1986.

The two adversaries in this suit were Albany Troughton, a Canadian businessman, and J. Murray Bartels, a New York City philatelic dealer.  The suit involved Bartels' acquisition of a ten-cent Baltimore Provisional on envelope from Troughton. He subsequently sold the cover to Philip Ward for $7500.

Troughton was bequeathed a packet of autographs and stamps by his father, a bishop in England.  He surmised that the material had some value principally for the autographs involved.  He entrusted the material to his mother-in-law, a Mrs. Erskine, to inquire of dealers for its value.  She took the material to Bartels on Nassau Street on March 28, 1928, where the dealer recognized the item and began haggling over a price.  The initial offer was $125. He made another offer of $150.  He finally reluctantly told the lady that the material was ". . . worth $200 to me."  This was the selling price which was accepted.

Difficulties arose when Troughton received an angry letter from his mother in England enclosing an April, 1928, newspaper clipping noting that the cover had been sold to Ward for $7500, and then to another collector (Henry Gibson?) for $8500, and then to another collector (George Tyler?) for $10000. An article from the New York Times of April 22, 1928, stated that Ward "declined to say exactly what he had paid for the 'lucky find,' but admitted that he expected to sell it to some collector for about $10000, and, at that . . . would not make a very big profit."

As it was too late to rescind the purchase, the lawyer engaged by Troughton sued Bartels on the grounds of legal fraud with hopes of receiving damages consisting of the sale value of the stamps less the original price received.

The trial clearly established Bartels' impressive philatelic credentials. The plaintiffs lawyer argued that "a cautious stamp dealer should ascertain whether the seller of an item belongs either to the uninformed public or to an informed collector class.  If he is dealing with the latter, it was legitimate to transact business with a view to driving the best bargain, disparaging the value of the stamp in question, if that is his method of doing business.  The law may not presume fraud in statements of value made by a buyer to a person when the two are on equal footing.  Their bargaining will then be regarded as expressions of opinion, rather than representation of existing fact so long as the collector does not inform the dealer that he is relying on the dealer's special knowledge regarding a particular stamp.  It is likewise appropriate that a dealer may not conceal the value or prevent the seller from ascertaining the value of the stamp involved.  The dealer who acquires the proffered issue in giving his opinion of the value and misrepresenting or concealing from an inquiring customer the value of the stamp, when the customer is ignorant of value is believed to have committed fraud if the sale is consummated and the seller damaged thereby."

"Much was made during the course of the trail regarding Bartels' statement that, 'It is worth $200 to me.' This was in contrast to the litigant's claim that Bartels informed Mrs. Erskine that, 'It is worth $200.'  Regardless of this conflict in testimony, New York law states, '. . .  if a dealer speaks, he is bound to speak the truth.' Even if a dealer whose valuation was requested was unaware of the value of the stamp later found to be a rarity, if he unintentionally and through his ignorance misstates the value, and then buys the stamp, the law will set aside the transaction and give damages if the sale was induced by misrepresentation."

Bartels was ordered to pay restitution to Troughton.  Court costs and interest added resulted in a judgment of $9443.

The principle sustained in this case was that "when a seller who is ignorant of the value of a rare stamp relies on the expert and superior knowledge of a stamp dealer concerning the value thereof, the law says that the parties are not on equal footing.  If the dealer purchases the stamp and misrepresents the true value of the stamp, thereby inducing the seller to part with his stamp for a lesser sum, the purchaser is liable for the difference between what he paid the seller and the real value of the stamp.  As a general rule, when a buyer and seller are not relying on each other's special knowledge, and dealing at arm's length, there is no legal obligation for either buyer or seller to inform the other of facts peculiar to his own special knowledge.  Even when one of the parties to a proposed bargain is aware of certain defects or advantages in the commodity, which is known to the other party, he has no legal duty to disclose all facts to the other party.  In such instances both buyer and seller should beware 'Caveat emptor' or 'Caveat vendor.'"

Editor's note:  This is largely a copy of pertinent parts of the article. It may or may not be current law, but it seems like a starting point.