My former public policy professor, who is gracious enough to indulge ex-students by reading their self-indulgent blogs, writes via email:

"I remember the story a little differently, but not in any truly important respect: Coase gave the paper in a workshop, during which Friedman, George Stigler (also later to win a Nobel prize), and others argued with Coase that he was surely wrong. After the workshop they continued the conversation at Aaron Director’s house (Rose’s father), with the room full of some of top living economists all convinced that Coase was wrong, and Coase, who was relatively unknown at the time, holding his ground. During the long night, one by one Coase convinced the doubters. Friedman, predictably, was the last to change his opinion. But he did, finally conceding to Coase that he was right and Friedman had been wrong. Friedman left the evening one of Coase’s strongest supporters, convinced by Coase’s superior logic on this point.

"George Stigler later described this as the most intellectually exciting and gratifying evening of his life, watching an unpopular idea triumph through the force of reason and the willingness of brilliant, but strong-willed skeptics to bow to the force of a superior argument."