Mastro/Legendary Article in Today's NY Daily News

[oldjudge]

Adam, I still don't agree. Let me flesh an example:

Buyer A wins a lot in Mastro auctions
Mastro makes a loan to Buyer A for the amount due
Buyer A takes the loan money, agrees to the loan provisions, and hands the money back to Mastro (Mastro has thus received no net funds)
Mastro sends out the lot to Buyer A
Two things have happened; Mastro has been paid and Buyer A owes Mastro the loan amount
Because Mastro has been paid he owes the Consignor and since the lot has been paid for the Consignor has no right to recall it
The Consignor is now due only funds from Mastro and, if not paid, their only recourse is to sue Mastro

This is effectively what happens every time any lot is shipped before a check is received. In some cases there is an interest bearing loan due at some point in the future. In some cases it is a very short term zero interest loan.

[sportscardtheory]

Originally Posted by oldjudge

Adam, I still don't agree. Let me flesh an example:

Buyer A wins a lot in Mastro auctions
Mastro makes a loan to Buyer A for the amount due
Buyer A takes the loan money, agrees to the loan provisions, and hands the money back to Mastro (Mastro has thus received no net funds)
Mastro sends out the lot to Buyer A
Two things have happened; Mastro has been paid and Buyer A owes Mastro the loan amount
Because Mastro has been paid he owes the Consignor and since the lot has been paid for the Consignor has no right to recall it
The Consignor is now due only funds from Mastro and, if not paid, their only recourse is to sue Mastro

This is effectively what happens every time any lot is shipped before a check is received. In some cases there is an interest bearing loan due at some point in the future. In some cases it is a very short term zero interest loan.

lol, which can all be avoided by holding the item until it is paid for. When all you have to do is close up shop and change your name to relinquish your debt to your consignees, it is now simply a fraud perpetrated upon unknowing victims. So, you are sticking up for a fraud.

[oldjudge]

Wrong again--I think that Legendary starting up before all Mastro consignors were paid is very wrong (and very stupid). What I am defending, subject to good credit analysis, is the practice of shipping lots before a check is received.

[sportscardtheory]

Originally Posted by oldjudge

Wrong again--I think that Legendary starting up before all Mastro consignors were paid is very wrong (and very stupid). What I am defending, subject to good credit analysis, is the practice of shipping lots before a check is received.

It is quite evident you have never lost items of value to Mastro. I'm sure your tune would change if you lost your collection because the auction house shipped it all away without receiving payment and closed up shop telling you you are crap out of luck. Tell us you like the practice of shipping before payment then.

[oldjudge]

Plus, even if no lot was shipped before payment was received, this problem may not have been eliminated. Remember, major auction houses pay cash advances for new consignments (and pay salaries, returns to equity holders, rent, etc). The auction business is a dynamic process. Before, after and during auctions money is going out for these advances so that material comes available for the upcoming auctions. Once the credit lines dried up, even if every lot auctioned off up to that point was paid for, there may have not been sufficient funds to pay consignors. The credit lines were the safety net to overcome cash flow timing issues. Poor credit decisions only exacerbated the problem.

[oldjudge]

I would be angry and would contact my lawyer if the amount was significant. I fully understand how an aggreved consignor would feel. I doubt, however, that I would be against the practice (see prior post).

[sportscardtheory]

If I ran an auction house, it would be 10% or more up front and pay in full within 60 days or the item gets returned or re-auctioned at the discretion of the consignee. You don't get your item until it's paid in full and lose your down payment if after 60 days you haven't paid, no questions asked. See how simple that is? It's called running a legitimate business with your bread and butter in mind first and foremost. Your customers are the consignees, NOT the buyers/bidders.

[drc]

Until the buyer pays for it, the consignor is the owner of the lot. The auction house facilitates the sale, charging a fee for the service, but never owns the lot. Obviously, a contract will have agreed upon ground rules and time lines for sale and payments-- for examples, a consignor can't pull a lot in the middle of an auction, an unsold lot is to be promptly relisted, unpaid for lot goes to the underbidder or a bidder has to allow at least 30 days before receiving payment .

If the late lots have not been paid for, they still belong to the consignor, even if they were shipped a year ago. I don't see why the consignor can't go to the non-payer's house and pick up his stiff. If the buyer never paid, the items certainly don't belong to him and some might label the items as stolen property.

Beyond the practical pitfalls of shipping early (the buyer might not pay), I don't believe the auction house has a right to ship before payment. Unless there is contact details allowing the practice, the lot isn't theirs to ship before payment. Once purchased (paid for) by the winner, then the lot should be promptly given to the new owner.