High Court Cases Summaries on Commercial Law (Keyed to Whaley and McJohn, 12th)
Author:
Editorial Staff, Publisher's
Edition:
12th
Copyright Date:
2021
186 chapters
have results for High Court Case Summaries
Shaffer v. Victoria Station, Inc. 6 results (showing 5 best matches)
- SUMMARY JUDGMENT: A court’s decision to dismiss a case due to there being no material facts in dispute and the facts, as alleged, do not establish a prima facie cause of action.
- In this case, the Washington Supreme Court applies
- , the container, or glass in this case, must be
- Mr. Shaffer (P) ordered a glass of wine at the Victoria Station, a restaurant operated by Victoria Station, Inc. (D) (Victoria) and was injured when the wine glass shattered in his hand. Mr. Shaffer (P) filed suit against Victoria (D) under theories of negligence, breach of implied warranty under the Uniform Commercial Code (UCC), and strict liability under section 402A of the Restatement of Torts. Prior to trial, Mr. Shaffer (P) dropped his claim of negligence for lack of proof but still requested that the trial judge submit his claims of breach of implied warranty and strict liability to the jury. Victoria (D) argued that it could not be held liable under either a theory of breach of implied warranty or strict liability because it was not a merchant with respect to wine glasses and, furthermore, it had not sold a wine glass to Mr. Shaffer (P). The trial court agreed and, accordingly, dismissed the case. On appeal, the Court of Appeals affirmed the trial court’s ruling and Mr....Court
- Appeal to Washington Supreme Court from Washington Court of Appeals’ decision to affirm trial court’s decision to grant defendant’s motion to dismiss.
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- Wilson Trading Company (Wilson) (P) sued David Ferguson, Ltd. (Ferguson) (D) for the contract price of a quantity of yarn. Ferguson (D) had refused to pay for the yarn claiming that it was defective because it had “shaded” when Ferguson (D) washed it. Consequently, Ferguson (D) filed a counter-suit against Wilson (P) claiming that Wilson (P) had breached the sales contract by failing to provide workmanlike goods. The sales contract between Wilson (P) and Ferguson (D) provided specifically that no claims relating to shading could be made either more than ten days after the receipt of a shipment or after a shipment had been processed. Applying the language of the sales contract, the trial court granted Wilson (P) a summary judgment for the contract price of the yarn and simultaneously dismissed Ferguson’s (D) counter-claim on the grounds that Ferguson (D) had not complained of the shading within the timeframe set forth in the sales contract. The Appellate Court affirmed the trial
- Appeal to New York Court of Appeals from Appellate Court’s decision to affirm trial court’s summary judgment for Wilson (P).
- (Fuld, C.J.) I agree that the Appellate Court’s decision to uphold summary judgment should be reversed but for reasons much simpler than those supplied by the majority. In my view, the question before the court is simply whether the clause limiting the time in which to make a claim is “manifestly unreasonable.” The question of whether the clause was manifestly unreasonable is a question of fact which should be submitted to a jury.
- While the court seems to have arrived at a reasonable and legal solution to the problem raised by the facts of this case, the question nevertheless remains: how free are parties to bargain for terms and conditions of a contract? The answer seems to be that parties are free to bargain for terms of a contract as long as the terms bargained for do not deprive the contract of its essential purpose. In this case, the court found that a contract that has no remedy for breach is a contract that has been deprived of its essential purpose. Consequently, the court turned to the UCC and supplied the contract with its own remedy for breach. While the court’s solution appears to be fair, it is also paternalistic. As noted, Wilson (P) and Ferguson (D) were equally sophisticated parties who were equally capable of bargaining for terms of a contract that they felt to be in their interests. If the court is going to step in to rescue a party from the consequences of a poor bargain as it did in this case
- makes clear that it is the very essence of a sale contract that at least minimal adequate remedies be available for its breach. Under the circumstances of the case at bar, the requirement that Ferguson (D) notify Wilson (P) of any defects in the yarn before processing essentially deprived Ferguson (D) of any remedy for breach of warranty; the fact is, Ferguson (D) could not have been aware of any defect in the yarn until after processing. The Official Comment to
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Grain Traders, Inc. v. Citibank, N.A. 3 results
- Decision of the United States District Court denying the plaintiff’s motion for summary judgment and granting the defendant’s cross-motion for summary judgment.
- The court holds here that Citibank (D) is not liable under either of the causes of action based on Article 4A. According to the court, Citibank (D) did all that it was supposed to do, i.e., debit one account and credit another account. Citibank (D) did something it was not supposed to: frustrate the entire funds transfer process by using funds received to off-set a debt. Grain Traders’ (P) biggest obstacle was that Article 4A did not provide it with a cause of action against Citibank (D) under these circumstances. The court’s refusal to infer from Article 4A a cause of action by an originator against an intermediary bank is consistent with one of the statute’s underlying policies. The relatively inexpensive cost of moving large sums of money in short periods of time makes it sensible to place much of the risk of loss on the parties who choose to transfer funds electronically, rather than on the banks who make the process possible.
- , respectively. Essentially, Grain Traders (P) argues that because Citibank (D) intended to use the transfer to set-off a debt owed to it by BCI, Citibank (D) improperly accepted and executed the payment order. This argument fails for two reasons. First, Citibank (D) did what it was supposed to do, debit one account and credit another. Second, even if Citibank’s (D) intent to set-off a debt amounted to improper acceptance and execution, the Code sections upon which Grain Traders (P) relies do not provide for a cause of action, they are merely definitional. Grain Traders (P) cannot recover on its claim of a breach of the duty of good faith imposed by the UCC because that section applies only to contracts. Grain Traders (P) had no contractual relationship with Citibank (D). The common law claims must also fail because there is no evidence to support them. Citibank’s (P) cross-motion for summary judgment is granted, and the complaint is dismissed with prejudice.
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Cate v. Dover Corp. 7 results (showing 5 best matches)
- provides that the implied warranty of merchantability may only be disclaimed by conspicuous language. The only instance when the requirement of conspicuous disclaimer language may be overlooked is when it can be shown that the seller brought otherwise inconspicuous language to the buyer’s attention or that the buyer had actual knowledge that the implied warranty of merchantability would not apply to the sale. In the case at bar, Dover (D) claims that the trial court properly granted its motion to dismiss because Dover (D) expressly disclaimed all implied warranties of merchantability in conspicuous language contained in a warranty agreement provided to Cate (P). Dover (D) further claims that the disclaimer language in the warranty agreement was particularly conspicuous as applied to Cate (P), because Cate (P) is a merchant who regularly makes transactions of the type seen in this case. In any event, Dover (D) claims that the issue of conspicuousness is moot as applied to this case,...
- Appeal to the Texas Supreme Court from trial court’s summary judgment in favor of Dover Corp. (D).
- Edward Cate (Cate) (P), the owner of Cate’s Transmission Service, bought three lifts from Beech Tire Mart. The lifts were manufactured by Dover Corp. (Dover) (D) and were to be used in Cate’s (P) shop for the purpose of elevating vehicles brought in for repair. In spite of several efforts at repair made by Beech and Dover (D), however, the lifts never functioned properly. Cate (P) sued Dover (D) for breach of implied warranty of merchantability. Dover filed a motion for summary judgment claiming that it had expressly disclaimed all implied warranties of merchantability in writing contained in an express warranty it had provided to Cate (P). Dover (D) further claimed that, in addition to written notice, there was no implied warranty of merchantability for the lifts and Cate (P) had actual knowledge that there was no implied warranty of merchantability. The trial court granted Dover’s (D) motion for summary judgment, and Cate (P) appealed to the Texas Supreme Court.
- (Ray, J.) I concur with the portion of the majority’s opinion which concludes that, in order to be effective, a disclaimer of the implied warranty of merchantability must be conspicuous to a reasonable person. I take exception, however, with the majority’s conclusion that a showing of actual knowledge of a disclaimer may override the need for a conspicuous disclaimer. There is no language in the UCC which would support such a conclusion and I would hold that the extent of a buyer’s knowledge of a disclaimer is irrelevant to a determination of its enforceability under the UCC. An absolute rule that an inconspicuous disclaimer is invalid, regardless of a buyer’s actual knowledge, will encourage sellers to make their disclaimers conspicuous and will also save our courts from the burden of having to determine the issue of whether a buyer had actual knowledge. The majority’s decision condemns our court to a parade of such cases.
- ...implied warranty of merchantability is the belief that parties to a contract should be allowed to bargain for and set terms of a contract as they see fit. This position however rests on the premise that contractual disclaimers are generally freely bargained for elements of a contract; this premise simply does not comport with the realities of the modern market place. The truth is that the majority of contracts entered into in the modern market place are form contracts, the terms of which are not subject to negotiation. It is indeed very difficult to imagine a situation where parties would freely negotiate a contractual term which expressly disclaims the merchantability of a product. In addition to protecting the consumer, implied warranties of merchantability serve to promote the production of higher quality products and to place responsibility for faulty products on those who profit from their sale. To allow merchants to undermine the policy considerations underlying the...
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Hutzenbiler v. RJC Investment, Inc. 5 results
- (McKinnon, J.) Hutzenbiler (P) was not in default and therefore not entitled to any surplus from the mobile home’s resale. Even if Hutzenbiler (P) was in default, the conclusion by the district court that Hutzenbiler (P) and RJC (D) executed a strict foreclosure was correct, and so the order granting summary judgment for RJC (D) should have been affirmed. No guidance has been provided to the district court as to how to decide the question of whether Hutzenbiler (P) was in default. What constitutes a default may vary from case to case, but here the security agreement states what would have constituted a default: Hutzenbiler’s (P) failure to perform any of the covenants or promises under the agreement. Even if Hutzenbiler (P) was in default, she and RJC (D) executed a strict foreclosure agreement with clear and unambiguous language, and even if the language was ambiguous, the circumstances indicate she was attempting to give up any rights she had in the mobile home, transfer them to...
- Did the court err in granting summary judgment for RJC (D) on the grounds that Article 9 no longer applied after the Release was signed and that the Release satisfied the elements of strict foreclosure?
- ...the course of the contract, Hutzenbiler (P) made some of the payments late, but she denied ever missing payments or defaulting. On December 10, 2015, Hutzenbiler (P) vacated the mobile home and allowed RJC (D) to take possession of it. Hutzenbiler (P) signed a full release of contract (“Release”), under which Hutzenbiler (P) relinquished all rights to the mobile home. When the Release was executed by both Hutzenbiler (P) and the President of Cherry Creek and RJC, Hutzenbiler (P) owed $34,499.01. RJC (D) resold the mobile home for $45,500 without notice to Hutzenbiler (P). Hutzenbiler’s (P) counsel requested an accounting on the sale, but RJC (D) failed to provide it and did not refund any surplus to Hutzenbiler (P), claiming none was owed to her. Hutzenbiler (P) sued RJC (D) for failing to provide an accounting from the resale, for failing to pay her the surplus proceeds from the resale, and alleging the trial court should apply all her payments to the principal, due to RJC’s (D)...
- Appeal from a grant of summary judgment in favor of RJC (D).
- ...provide an accounting for a surplus realized from collection of an account or the disposition of collateral. In this case, Hutzenbiler (P) signed a release. While the parties were free to waive their obligations as to each other, that did not discharge their obligations under the UCC. Regarding whether the release satisfied the requirements of strict foreclosure, there must be mutual agreement and the statute does not allow a creditor to obtain a debtor’s relinquishment of rights without accepting the collateral in satisfaction of the debt and waiving its right to pursue deficiency. Whether or not Hutzenbiler (P) was in default, the plain language of the release is insufficient for strict foreclosure. RJC (D) did not include language which indicated that RJC (D) accepted the collateral in satisfaction of the obligation, that it released Hutzenbiler (P) of her obligations, or that it relinquished its right to pursue a deficiency judgment against her if the mobile home...
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- Appeal to the Fourth Circuit Court of Appeals of a federal district court decision granting summary judgment.
- (Per Curiam) Yes. The district court held that the fax dated October 16 constituted an ineffective entitlement order. The court recognized that Powers (P) and D’Ambrosia were entitlement holders, and because D’Ambrosia was an entitlement holder, AEFA (D) contended that he was an “appropriate person” to give an entitlement order under
- ...P) and D’Ambrosia, though Powers (P) later claimed that her signature was forged. A few weeks later, D’Ambrosia sent AEFA (D) a fax, dated October 16, 1997, which contained a memo from D’Ambrosia, a statement of the couple’s account at AEFA, and a copy of the September 26 letter. The memo, which had only D’Ambrosia’s signature, directed AEFA (D) to transfer the entirety of the couple’s funds to a joint bank account held by Powers (D) and D’Ambrosia. AEFA (D) complied with D’Ambrosia’s request and wired $86,836.79 to the requested account, from which D’Ambrosia promptly withdrew the funds and absconded. Upon discovering that the money was gone, Powers (P) filed suit against AEFA (D) seeking a recovery of the $86,836.79. In a motion for summary judgment, Powers (P) claimed that AEFA (D) had violated Maryland Commercial Code § 8–507(b), under which a securities intermediary which transfers funds pursuant to an ineffective entitlement order is liable to an entitlement holder for...court
- , a securities intermediary has a number of obligations or duties with respect to the financial assets that it maintains for an entitlement holder. At issue in the present case is the specific duty of the securities intermediary to comply with an entitlement order made by the entitlement holder. An entitlement order can be defined as an order given by an entitlement holder that requires the securities intermediary to do a specific act with a particular financial asset. In the present case, that order was to transfer the $86,836.79 from the AEFA (D) account to another account held by the parties. The duty to comply with entitlement orders is contained in
- CASE VOCABULARY
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Bowdoin v. Showell Growers, Inc. 4 results
- Appeal to United States Court of Appeal for the Eleventh Circuit of District Court’s decision to grant summary judgment in favor of FMC (D).
- (Wisdom, J.) No. In order to be effective, a disclaimer of the implied warranties of merchantability and fitness must be part of the basis of any bargain struck. In this case, FMC (D) did not provide a written disclaimer of the implied warranties of merchantability and fitness until actually delivering the spray rig. The problem is that FMC (D) did not deliver the spray rig to Showell (D) until two weeks after the two had struck the bargain for the sale of the rig. (Note: Although Showell is styled as the defendant in this case, the opinion treats Showell as if it is standing in the place of Mrs. Bowdoin, the plaintiff. FMC (D) is a defendant) The fact that FMC (D) did not provide Showell (D) with the disclaimer until two weeks after the sale renders the disclaimer ineffective as a matter of law. By definition, a disclaimer that appears for the first time after a sale has been consummated is not a part of the basis of the
- Mrs. Bowdoin (P), an Alabama chicken farmer, was severely injured when she was sucked into the in-take shaft of a high pressure spray rig which had been supplied to her by her employer, Showell Grower’s Inc. (Showell) (D), for the purpose of cleaning her chicken house. Showell (D) had purchased the spray rig from its manufacturer, FMC Corporation (FMC) (D) and the safety shield and drive shaft components of the spray rig which had most directly contributed to Mrs. Bowdoin’s (P) injuries were supplied to FMC (D) by NEAPCO, Inc. (D). Mrs. Bowdoin (P) filed suit against Showell (D), FMC (D) and NEAPCO (D) alleging, among other things, that FMC (D) and NEAPCO (D) had breached the implied warranties of merchantability and fitness for a particular purpose. The U.S. District Court dismissed Mrs. Bowdoin’s (P) implied warranties claims finding that FMC (D) and NEAPCO (D) had effectively disclaimed all implied warranties for the spray rig. When it delivered the spray rig to Showell (D), FMC...
- to the facts before it, the court here found that FMC (D) had not effectively disclaimed any implied warranties on the spray rig. As the court stated, a post-sale disclaimer is by definition not conspicuous because the disclaimer does not exist at the time of sale. The court rightly rejected FMC’s (D) argument that the sophistication of the buyer makes a difference. Whether the buyer is an individual or a sophisticated corporate dealer makes no difference on the issue of conspicuousness—no buyer could be aware of a disclaimer that is not disclosed until a sale takes place. But consider the possible scenario in which a disclaimer is not provided until after a sale, yet by virtue of the parties’ course of dealing, the court is able to find that the implied warranties of merchantability and fitness had nonetheless been disclaimed.
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Bank of America v. Kabba 6 results (showing 5 best matches)
- The court suggested that BOA (P) was trying to use MERS’s Assignment of Mortgage to establish the delivery of the note and
- The trial court granted the assignee’s motion for summary judgment and homeowners appealed.
- BOA’s (P) case rested on its assertion that it held the promissory note. This position was untenable for several reasons. First, it never proved when, precisely, it became the holder of the note. BOA (P) filed the note, with a blank endorsement, with its summary-judgment papers rather than with the foreclosure complaint. The “Assignment of Mortgage,” similarly, was filed
- the mortgage secured. The note first appeared in the record in BOA’s (P) summary-judgment papers, but the endorsement on the note was blank. The trial court entered summary judgment for BOA (P) and the Kabbas (D) appealed, contending that, without the note, BOA (P) did not have standing to foreclose the mortgage.
- opinion asserts that possession of the promissory note and “proper supporting documentation” is a “fundamental precept of the law.” It states that requiring proper documentation ensures that the plaintiff really does have the right to right to take away the defendant’s home. Although the case was decided in 2012, other foreclosure cases arising out of the 2008 collapse of the real-estate market suggest the court has a rather romantic notion of the world. The mortgage crisis was caused,
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Canty v. Vermont National Bank 7 results (showing 5 best matches)
- [permits a bank to be subrogated to the rights of a payee, against its own customer, the drawer or maker]. A bank may assert its subrogation rights defensively when, as in this case, the customer brings an action for wrongful debit of the account. As with the case of a stop payment order, the issue of unjust enrichment is a factor. The depositor bears the burden of proving actual loss. In addition, the payee must be considered. Here the payee is the IRS. One’s account with the IRS is never closed, even upon death. To avoid unjust enrichment, the issue is whether the customer suffered any loss by the improper payment. If he did not, he may not recover because to do so would enrich him twice, once to the payee and once on his satisfied judgment. The burden is shifted to the party who has best access to the facts. Since the Bank
- Motion for summary judgment in trial court to collect amount wrongfully paid to payee by bank.
- governs a bank’s subrogation rights. Whereas the previous case,
- PRIMA FACIE CASE: When the evidence is sufficient to prove the case, unless contrary evidence is presented by the other side.
- Canty (P) had a checking account with Vermont National Bank (the Bank) (D). Canty (P) had problems with the Internal Revenue Service and was asked [more likely told] by it to provide canceled checks to document the previous payment of certain obligations to the IRS. After Canty (P) forwarded the canceled checks to the IRS it [wanting to get even more money] redeposited the canceled checks and the Bank (D) paid them a second time. Canty (P) sued the Bank (D) contending that the checks were wrongfully paid the second time and the Bank (D) should recredit his account for the funds withdrawn. The Bank (D) argued that it did not have to recredit the account unless there was proof of actual loss to Canty (P) from the improper payment to the IRS. Canty (P) moved for summary judgment.
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Klocek v. Gateway, Inc. 7 results (showing 5 best matches)
- (Vrath) No. Under the relevant states’ laws, an arbitration clause included with a shipped product is not binding merely because the buyer keeps the product. If Klocek’s (P) claims are subject to arbitration, then dismissal (in favor of arbitration) is appropriate, because the Federal Arbitration Act requires it. The burden of proving arbitrability is on Gateway (D), much like the proof burden for summary judgment; Gateway (D) must present evidence sufficient to demonstrate an enforceable arbitration agreement. If defendant does, then the burden shifts to plaintiff to submit evidence demonstrating genuine issues requiring trial. Before staying or dismissing cases pending arbitration, courts must determine whether parties have a valid, written agreement to arbitrate. In deciding this, courts apply ordinary state law governing contracts’ formation; arbitration becomes effective by contractual agreement. If the parties dispute having agreed to arbitrate, then jury trial on such...
- STAY: Court order freezing litigation, usually to await the final outcome of some trial. Here, staying the case would amount to dismissing it, since it would be sent to arbitration, and decided there.
- in District Court.
- This case involves a circuit split, so its holding is not necessarily the law in all states.
- Case Vocabulary
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Kunkel v. Sprague National Bank 5 results
- ...interest. In five transactions, Morken purchased interests in cattle from Hoxie Feeders, Inc. (“Hoxie”) (D). For each transaction, Morken granted Hoxie (D) a purchase money security interest (“PMSI”) in the cattle. Hoxie (D) perfected its security interests by taking possession of the cattle. The feedlot agreement between Hoxie (D) and Morken provided that Hoxie (D) would sell the cattle in its own name for slaughter, would receive direct payment from the packing house, would deduct the feeding and purchase expenses from the sale proceeds, and remit the balance to Morken. However, Hoxie (D) needed Morken’s authority to sell the cattle and Morken determined the sales price. Morken then filed for bankruptcy. Hoxie (D) then sold the cattle to Iowa Beef Processors (“IBP”) and deducted the care and feeding expenses. Sprague (D) and Hoxie (D) both claim the remaining $550,000 in sale proceeds. While this case was pending, Hoxie (D) gave Sprague (D) notice of its competing... ...summary...
- Appeal of summary judgment in adversary proceeding in bankruptcy.
- CASE VOCABULARY
- ...case is in sync with the current version of § 9–324. Official Comment 5 provides that if a debtor never receives possession of the collateral, as Morken never did here, the five-year period never begins, and the PMSI has priority even if the creditor does not give notice. Notice is required when the collateral is inventory, but not when the collateral is consumer goods. This is because in inventory financing, debtors often ask their general creditors for new extensions and offer new collateral. The notice requirement protects general creditors from dishonest debtors that seek a secured loan against new inventory from the original creditor when the debtor had already granted a PMSI to another creditor. The priority extends to cash proceeds only to the extent the proceeds are received on or before the delivery of the inventory to a buyer. The inventory purchase money lender’s priority does not carry over into accounts receivable that arise when the inventory is sold. This rule is...
- provides that a PMSI’s “superpriority” extends to “identifiable cash proceeds received on or before the delivery of the inventory to a buyer.” This language is meant to distinguish cash sales, to which “superpriority” applies, from credit sales, to which it does not apply. Here, the sale to IBP was a cash sale, and Hoxie’s (D) receipt of the cash proceeds was reasonably contemporaneous with the delivery of the cattle. Accordingly, Hoxie’s (D) “superpriority” extends to those proceeds. We reverse the district court’s holding that Sprague (D) did not have a security interest in the cattle, but we affirm its judgment that Hoxie’s (D) security interest has priority over Hague’s (D).
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Tongish v. Thomas 5 results
- ...whereby Tongish (P) agreed to grow 160 acres of sunflower seeds and Coop would purchase the crop. The crop was to be delivered in increments of one-third by December 31, 1988, March 31, 1989, and May 31, 1989. Coop had a contract to deliver the seeds to another company, with the only anticipated profit to Coop being the handling fee for that sale. Tongish (P) delivered seeds to Coop in October and November 1988. Due to a short crop, bad weather, and other factors, the market price for sunflower seeds in January 1989 was double what the parties had contemplated in their contract, and on January 13, 1989, Tongish (P) notified Coop he would not deliver any more sunflower seeds. In May 1989, Tongish (P) sold and delivered his sunflower seeds to Thomas (D) at a cost reflecting the higher market price, meaning he would receive $5,153.13 more than he would have under the contract with Coop. Thomas (D) only paid for approximately one-half of the seeds and Tongish (P) brought an action...
- buyer has made a resale contract for the goods, which the seller knows about, it may be appropriate to limit the damages to actual loss, absent bad faith breach on the part of the seller. However, the trial court found that Tongish (P) had breached the contract for no valid reason, and the majority rule for market damages is more reasoned and should be the preferred measure of damages. While this method of calculating damages may not reflect the actual loss to the buyer, application of the rule encourages a more efficient market and discourages the breach of contracts. Judgment reversed and case remanded.
- On petition for review before the Supreme Court of Kansas following reversal by the Court of Appeals.
- EVEN WHERE A BUYER SUFFERS NO LOST PROFITS FROM A BREACH OF CONTRACT, COURTS MAY AWARD DAMAGES FOR THE DIFFERENCE BETWEEN THE MARKET PRICE AND CONTRACT PRICE
- Did the Court of Appeals err in computing damages arising from the nondelivery of contracted-for goods on the basis of the difference between market price and contract price?
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- ...shuttles or until September 30, 1994, whichever came first. The LSA limited damages to direct damages only and excluded consequential damages. NASA (D) issued manifests assigning the Hughes (P) satellites specific slots on shuttles. After the space shuttle Challenger exploded in January 1986, NASA (D) suspended operation of the shuttles until September 1988. In August 1986, President Reagan announced that NASA (D) would no longer launch commercial satellites on shuttles. NASA (D) informed Hughes (P) that it would not launch any Hughes (P) satellites on shuttles. Hughes (P) then launched three of its HS-393 satellites on expendable launch vehicles (ELVs), which was more expensive than launching the satellites on shuttles. Hughes (P) also launched six HS-601 satellites on ELVs. HS-601 satellites are more powerful than HS-393 satellites and better suited for ELVs. Hughes (P) sued the U.S. (D) for breach of contract and for taking its property without just compensation. The Court of...
- (Rader, J.) Yes. In breach of contract cases the general rule is to award damages to put the injured party in as good as position as he or she would have been if there was no breach. The damages must be foreseeable. If a seller breaches a contract for goods, the buyer may “cover” or obtain substitute goods from another seller. The same is true for services contracts such as the LSA. When a buyer covers, the buyer’s remedy for the seller’s breach is the difference between the cost of the substitute services and the contract price plus other losses. The U.S. (D) argues that Hughes (P) may only recover damages for the three HS-393 satellites it actually launched. While Hughes (P) did not launch the fourth and fifth HS-393, it did incur costs in launching the HS-601s. The lower court’s holding that launching the HS-601s was a reasonable substitute was based on the witnesses’ credibility. Such determinations are hardly ever clear error. This Court rejects the U.S.’s (D) cross-appeal. To...
- Despite its technical language, this case sets forth the basic rule in UCC § 2–712 that if a seller breaches a contract, the buyer may cover, i.e., buy substitute goods from another seller. The substitute goods do not have to be identical, but they must be a commercially reasonable substitute. This is a way the buyer mitigates damages. Here, the court held that launching the two different types of satellites on ELVs was a reasonable substitute for launching the one type on the space shuttles. When a buyer covers, the buyer can recover the amount that its increased costs exceed the contract amount. A buyer does not have to cover. If the buyer does not, under UCC § 2–712 he may recover the difference between the market price when the buyer learned of the breach and the contract price. Under UCC § 2–715, the buyer may recover consequential damages only if they could not be reasonably prevented by cover or otherwise.
- CASE VOCABULARY
- Appeal of damages action for breach of contract in federal court.
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Norton v. Knapp 6 results (showing 5 best matches)
- which presents a summary of the history of the case for use as a record on appeal.
- defines acceptance as the “drawee’s signed agreement to pay as presented” which involves more than a mere signature on the back of the draft. The court was required in this case to interpret the meaning of the words “kiss my foot” to determine whether Knapp (D) had accepted the draft. Note that
- Case Vocabulary
- Buyer of equipment signed back of sight draft with the words “Kiss my foot,” and court held that this did not constitute an acceptance.
- Norton (P) sold and delivered to Knapp (D) a piece of equipment, and the purchase price was due and unpaid. Thereafter, Norton (P) drew a sight draft on Knapp (D) for the agreed price of the equipment, which provided that “at sight pay to the order of Exchange Bank of Nora Springs, Iowa, eighty dollars, value received, and charge the same to the account of Norton Keeler.” Knapp (D) signed the back of the draft and wrote the [very vulgar] words, “Kiss my foot. Miles Knapp.” The issue before the court concerned whether these words constitute a legal and valid “acceptance” of the draft.
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- Appeal from a grant of summary judgment in a declaratory judgment case.
- (Posner, J.) Yes. When there is doubt as to whether an instrument has been forged or merely altered, the court will assume that the instrument was altered. The bank on which a check is drawn—in this case, Wachovia (P)—warrants that the check is genuine (meaning that a check on which the drawer’s name has been forged cannot be returned once it is paid), but the presenting bank—in this case, Foster (D)—warrants that the check has not been altered since it was issued. When checks were inspected by bank employees, and when cancelled checks were stored, rather than merely copied, this allocation of responsibility was consistent with the principle that the party who could prevent a loss at the lowest cost has the duty to avoid the loss. Foster (D) could not reasonably determine whether the signature on the check could be forged, but may have had reason to suspect that Choi was not the intended payee, and would have been just as capable of detecting an alteration as Wachovia (P). Wachovia...
- When there is doubt as to whether an instrument has been forged or merely altered, the court will assume that the instrument was altered.
- checks, but Foster (D) has not shown that retention of paper copies of checks would be a reasonable method of determining whether the drawee or the presenting bank should be liable for a loss. The court cannot accept the rule that a drawee bank cannot enforce the “presentment warranty” unless it retains a paper copy of the check. A depository bank may sometimes see an alteration, or the size of the check may give some warning to the bank to delay making funds available for withdrawal. If reform of the rule allocating the loss is necessary in light of modern copying technology, that is not something for a federal court, sitting in diversity, to decide. Affirmed.
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- Ruling on the FDIC’s (P) motion for summary judgment on its breach of contract case.
- provides that fraud in factum often occurs when the maker is tricked into signing a note in the belief that it is merely a receipt or some other document. The test is that of excusable ignorance of the contents of the writing signed. The party must not only have been in ignorance, but must also have had no reasonable opportunity to obtain knowledge. The Kansas case of
- The court here followed the reasoning of the Kansas Supreme Court. One of two innocent parties had to lose: either Culver (D) or the FDIC (P). Because Culver (D) was negligent, he should bear the loss. The court held as a matter of law that Culver (D) had a reasonable opportunity to obtain knowledge of the document’s character before he signed it. Generally, however, negligence is a factual issue to be determined by the finder of fact. It is rarely disposed of on summary judgment like it was here. As it is, Culver (D), a farmer who hired someone else to handle the financial affairs of his farm, is forced to pay back a $50,000 note for which he received only $30,000. His only avenue of recourse is against the unknown intervening holder who actually filled in the terms of the note.
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Valley Bank of Ronan v. Hughes 4 results
- Since the court is reviewing a grant of summary judgment, it is only considering the evidence favorable to Hughes (D). In assessing Valley Bank’s (P) negligence, it will be necessary to know what Hughes (D) said about the checks, or if he explained why he wanted to transfer such a large sum of money overseas. At the trial of this case, Valley Bank (P) should also be able to raise the usual defenses to Hughes’s (D) claim, including, for example, comparative fault.
- The trial court granted Valley Bank’s (P) motion for summary judgment on Hughes’s (D) counterclaims, holding that the UCC preempted Hughes’s (D) common law and equitable claims.
- Hughes (D) does not make claims regarding only the processing of the checks, but also about Valley Bank’s (P) communications about the processing. Such communications are not addressed by the UCC, so common law and equitable principles supplement the UCC and govern the legal rights and responsibilities that apply to the representations made by Valley Bank (P) and relied upon by Hughes (D). Case law cited by Valley Bank (P) does support the proposition that the UCC preempts claims regarding the processing of checks, but language in those cases leaves open the possibility that the banks in those cases could have been liable for express representations made to customers. The trial court properly determined that Valley Bank (P) did not violate the duty of due care in processing the checks, but the court erred in failing to consider whether common law principles supplement the statutorily defined duty of ordinary care with respect to the representations about that process. Affirmed in...
- Appeal from an order granting summary judgment and granting a motion
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Cleveland v. McNabb 3 results
- arise in the area of what constitutes notice. The UCC articulates a standard for notice akin to a totality of the circumstances test, but like a “knew or should have known” standard as well. In terms of fairness, it is difficult to fault the court’s conclusion that the Commodity Credit Corporation and the ASCS should be familiar with state agricultural liens. After all, advancing credit for crops
- CASE VOCABULARY
- states that a person has “notice” when he has reason to know of a fact in light of “all the facts and circumstances.” Several facts in this case give rise to a finding that CCC (D) had notice of the landlord’s liens. First, the Department of Agriculture has a regulation providing that cotton taken under the CCC (D) loan program must be free of liens. This regulation obligates ASCS to make inquiry about possible liens on cotton before executing its loans. It would be unreasonable to expect tenant farmers to be completely familiar with statutory liens. Simply asking McNabb (D) about possible liens, therefore, was not sufficient inquiry. ASCS, however, had access to McNabb’s (D) lease with Cleveland (P). ASCS also had the warehouse receipts that referenced the ginning tickets, which showed that McNabb (D) grew the cotton on Cleveland’s (P) land. Given all the facts and circumstances, CCC (D) cannot be said to have taken the warehouse receipts without notice of Cleveland’s (P) liens.
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- Appeal from the Florida District Court’s entry of summary judgment.
- Although Article 4A is meant to be read on a clean slate, the provisions of the statute should not be read without reference to the policies they are intended to carry out. The problem in this case was one of legislative oversight.
- ...received by a beneficiary’s bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur.” Because we must read this statute according to its plain language, we decline Ocean Bank’s (D) invitation to look to legislative intent and conclude that the “or” should be read in the conjunctive. In this case, the payment order correctly identified the beneficiary, but referred to a nonexistent account. Under the clear and unambiguous terms of the statute, Ocean Bank (D) could not have accepted the payment order. As to Corfan’s (P) claim for negligence, we hold that Corfan (P) may not recover. Article 4A was enacted on a clean slate in order treat funds transfers as a unique method of payment, governed by unique rules addressing issues of risk of loss, liability, and the like. The statutory scheme preempts common...
- as codified by the Florida Legislature and on principles of common law negligence. The trial court dismissed the complaint on the ground that Corfan (P) was in the best position to avoid the loss.
- ...J.) The court has taken to restrictive an approach to the problem. It was Corfan’s (P) own negligence that led to its loss, not any mistake by Ocean Bank (D). More importantly, nothing in the statute precludes Ocean Bank (D) from taking the action it did. The fact that the statute permits the bank to look at “other identification” surely allows for more flexibility than the majority have allowed. Ocean Bank’s (D) actions comport with the statutory scheme and the policies underlying it. The primary purpose behind fund transfers is to enable the beneficiary to receive money quickly. Had Ocean Bank (D) refused to accept the payment order, the entire reason for the funds transfer may have been rendered moot. Consistent with the need for rapid transfers, Ocean Bank (D) resolved the discrepancy on its own, risking liability if its decision ultimately proved incorrect. Had Ocean Bank’s (D) decision been incorrect, it would undoubtedly have been liable. However, Ocean Bank (D) should not...
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Procter & Gamble Distributing Co. v. Lawrence American Field Warehousing Corp. 6 results (showing 5 best matches)
- Appeal from trial court’s grant of summary judgment in favor of bailor.
- ...with a bill of lading attached.” Beginning in 1962, P & G (P) began “field warehousing” its oil at Allied’s request. Field warehousing involved storing oil in tanks leased by Allied and sublet to Lawrence American Field Warehouse Corp. (D) who acted as a warehouser. Allied would purchase oil from P & G (P) or other producers. The oil was then shipped “to the seller’s order, and stored for the seller’s account” in Field’s (D) tanks. Allied would make a 20% down payment at the time Field’s (D) tanks received the oil. Allied paid the “balance by sight draft with a bill of lading attached, or cash in advance of shipment. . . .” In March and April of 1963, P & G (P) shipped to its own account over 9,000,000 pounds of soybean oil to be stored in Field’s (D) tanks. Field (D) issued warehouse receipts for the oil, and noted on monthly statements that Field (D) was warehousing the oil. Then, the oil disappeared. P& G (P) sued Lawrence (D) for conversion of the missing oil. The trial court...
- in support of its proposition that there is a triable fact in this case.
- This case alerts the future business lawyer to the fact that even in large-scale, routinized transactions, attention to detail is vital. The practitioner who represents the warehouse must advise his client on the level of care required for a warehouseman to avoid liability for loss or damage. Once the warehouse has the bailor’s goods, the UCC establishes the standard of care as that of a reasonable person would exercise under similar circumstances. For the lawyer counseling a bailor,
- (1) A bailee is liable for the unexplained loss of goods for which he has issued a warehouse receipt. (2) When the date of loss or conversion of bailed goods cannot be established, damages are the highest market value of the goods between the date of bailment and the date that bailor becomes aware of the loss or conversion.
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Helena Chemical Co. v. Williamson 5 results
- The trial court denied the seller’s motion for summary judgment on the issue of whether the buyer could recover consequential damages.
- Williamson (D) was a beginning farmer with a tenth-grade education. He needed Helena’s (P) goods and services and had to sign the Credit Sales and Services Agreement to obtain the seed. He was in no position to bargain for better terms and had no effective remedy against Helena (P). The limit on remedies was therefore unconscionable and the court denied Helena’s (P) motion for summary judgment.
- Helena (P) filed a motion for summary judgment relying on a limitation-of-remedies clause in the parties’ agreement. According to Helena (P), the clause unambiguously precluded consequential damages. Instead, Williamson’s (D) exclusive remedy was damages not to exceed “the price of the specific goods or services which cause[d] the alleged loss, damage, injury or other claim.” Claims for “special, direct, consequential damages or expenses” were explicitly waived.
- Limitations on remedies, as the opinion suggests, are generally acceptable, as parties to a contract can shape their agreement as they please. The notion that parties are free to make their own contracts falls apart somewhat in the case of form contracts offered on a take-it-or-leave-it basis, especially to consumers. Nevertheless, arbitration clauses, which limit a consumer’s access to the courts are routinely enforced in favor of nonjudicial proceedings. In a way, an arbitration clause also limits a consumer’s remedies. What is the difference?
- contract is unlikely to be found unconscionable. In the case of farmers and suppliers of seed, however, the parties may not have equal bargaining power, because the farmer usually cannot bargain for more favorable terms and cannot test the seed before buying it. If the seed does not germinate, the losses will be substantially greater than the cost of the seed.
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- Appeal from the trial court’s order granting Huntington’s (P) motion for summary disposition.
- Did the trial court err by granting defendant’s motion for summary disposition?
- ...(“Huntington”) (D). On October 20, 2014, Walter provided Brackmann with instructions for completing the wire transfer and Brackmann contacted Huntington (D) to ask if the check had cleared. Brackmann later testified that the bank teller he spoke with at Huntington (D) told him “The check is cleared. You’re good to go.” Based on those statements by the bank teller, Brackmann completed the paperwork for the wire transfer. Brackmann learned that the check was dishonored and, although Huntington (D) attempted to stop the wire transfer and recover the funds, $58,155.20 remained lost. Subsequently, W&B (P) filed suit against Huntington (D) claiming that Huntington (D) should be held liable for the unrecovered funds because it falsely represented that the fraudulent check had cleared. Huntington (D) filed a motion for summary disposition arguing that under Michigan’s version of UCC 4–207, W&B (P) was barred from recovery because it breached its warranty that the cashier’s check...
- ...avail itself of a defense so long as it takes a check from a customer in good faith. The UCC defines “good faith” as “honesty in fact and the observance of reasonable commercial standards of fair dealing.” Comments to the UCC further state that fair dealing is concerned with the fairness of conduct rather than the care with which an act is performed. Good faith is required for the manner in which the bank accepts the check and does not extend to the processing of the check. There was no evidence that Huntington (D) took a check that bore any indicia of counterfeiting. Further, when the teller spoke with Brackmann, she was not looking at the check, did not reference anything except the computer display of the W&B (P) account summary, and no evidence was presented to show that she had information about the internet origin of the check. In its previous decisions, transfer warranties have been held to place the risk of loss on the customer, regardless of whether the bank, customer...
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In re Troupe 3 results
- Bankruptcy court decision on cross-motions for summary judgment.
- The bankruptcy trustee (P) argued that Troupe (P) and his wife (P) should not be bound by the representations, since they did not know of them. But one who signs an agreement is bound by its terms, absent fraud or misrepresentation. There is no allegation of fraud or misrepresentation here. Deere’s (D) motion for summary judgment is granted.
- The rule that a debtor is bound by his or her classification of collateral has the advantages of simplicity and definiteness. The creditor does not, as the court noted, have to monitor the uses of collateral, and the creditor does not have to engage in lengthy discussions about what “commercial” or “personal” mean in this context. The decision is left to the debtor, and the debtor’s word is final. This may work to the detriment of the debtor in cases in which the collateral does not have a solely “commercial” or “personal” use, or where, as here, the line between “commercial” and “personal” is unclear to the debtor.
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Bank of America N.T.S.A. v. Sanati 5 results
- Appeal from the trial court’s decision to grant the plaintiff’s motion for summary judgment on the ground that the defendant had no defense to a claim for restitution for an erroneous transfer of funds.
- (Johnson, J.) No. The “discharge for value” rule can not be invoked in a case where the alleged preexisting debt or lien is at best a probable yet undetermined interest in a portion of funds. We must first note that the law in effect at the time of the transfer was not that of Article 4A. Rather, general common law principles govern this case. Under those principles, the recipient of an unauthorized transfer of funds could defend against a claim for restitution only if there had been detrimental reliance upon receipt of the funds by an innocent beneficiary or if the beneficiary had a good faith belief that the transfer was intended as a full or partial payment of a preexisting debt owed by the originator to the beneficiary, the latter defense known as the “discharge for value” rule. Even if Article 4A were to apply to this case, as Mrs. Sanati (D) argues, we believe that she has failed to raise a triable issue of fact as to whether Mr. Sanati owed her a preexisting debt. In essence,...
- This case illustrates the general policy that a bank’s liability under Article 4A should be kept to a minimum in order to keep the cost of wire transfers low. An executing bank ordinarily is bound by its execution errors that result in a completed funds transfer, but is expressly allowed to recover any unwarranted payment from the designated beneficiary. The California Court of Appeals was of the opinion that express adoption by Article 4A of the law of mistake and restitution—which permits executing banks that erroneously transfer a greater amount than that authorized to recover from the beneficiary—also incorporated the defenses available under that body of law. Therefore, the only defense available to Mrs. Sanati (D) was that of the “discharge for value” rule. But the court of appeals rejected the argument that an unliquidated debt, such as a “quasi community property interest,” was sufficient to qualify as a “preexisting debt” under that rule.
- While separated from his wife and living in Iran, Hassan Sanati had instructed Bank of America (P) in London to send interest, as it accrued monthly from his account, to an account held by he and his wife at Bank of America (P) in Tarzana, California. On April 30, 1990, Bank of America (P) in London erroneously sent the principal and accrued interest to the Sanati’s account in Tarzana. The total amount of the erroneous transfer was $203,750. Upon receipt of the funds, Mrs. Sanati (D) authorized her children to withdraw $200,000 from the Tarzana account. These funds were then deposited in other bank accounts. In July, Bank of America (P) filed a complaint against the Sanati’s (D) seeking restitution. Bank of America’s (P) motion for summary judgment was granted on the ground that the Sanati’s had no defense to the claim for restitution.
- The “discharge for value” rule cannot be invoked in a case where the alleged preexisting debt or lien is at best a probable yet undetermined interest in a portion of funds.
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- ...the severe shortage of critical raw materials and an increase in labor costs. Allegheny (D) has the burden of proof of showing commercial impracticability. There are no facts to indicate that Allegheny (D) would have been unprofitable in the year in question. To the contrary, Allegheny (D) officials testified at deposition that a profit was anticipated even if Allegheny (D) had performed under the contract. Even if Allegheny (D) had suffered a loss, the loss must be especially severe and unreasonable. Allegheny’s (D) cost of performance did not increase to the extent necessary to excuse its performance under the doctrine of commercial impracticability. Allegheny’s (D) further assertion that claims of commercial impracticability cannot be resolved by summary judgment is also incorrect. To hold in such a way would allow sellers to hide behind the defense in order to be guaranteed a trial. Allegheny (D) also argues that the contractual provision allowing LP&L (P) alone the...
- ...increased by specified percentages if LP&L (P) delayed shipment beyond predetermined shipping dates. Prior to shipment, Allegheny (D), citing increased costs in materials and labor, requested additional compensation for performance under the contract. LP&L (P) advised that it considered these increased costs to be business risks that must be absorbed by Allegheny (D). In response, Allegheny (D) indicated that it would not perform under the contract. LP&L (P) responded by demanding written assurances within thirty days that Allegheny (D) would fully and properly perform under the contract. After the thirty-day time period elapsed and Allegheny (D) had not made the requested assurances, LP&L (P) notified Allegheny (D) that it considered the contract repudiated by Allegheny (D). Allegheny (D) subsequently offered to make delivery at Allegheny’s (D) full cost of producing the material, a price higher than that specified in the contract. LP&L (P) rejected that offer and eventually...
- Plaintiff seller moves for summary judgment in breach of contract action seeking “cover” damages.
- Case Vocabulary
- : This section provides, in pertinent part that “[a] contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other party may in writing demand adequate assurance of due performance. . . . After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.”
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London Leasing Corp. v. Interfina, Inc. 5 results
- Motion for summary judgment in trial court concerning action for money due on promissory note.
- (Crawford) No. Where the party personally endorsing the note consents to the agreement between the note’s maker and payee to extend the time when payment is due, there is no discharge of the endorser on the obligation on the note. There is no question that summary judgment should be granted against Interfina (D1). The issue presented is whether summary judgment should be entered against Evans (D2).
- This case examines
- Interfina, Inc. (D1) made and delivered to London Leasing Corp. (London) (P) a promissory note in the sum of $52,000.00. Interfina’s (D1) President, Evans (D2), signed the note on behalf of the corporation, and he also personally endorsed the note. The note was not paid on its due date. Thereafter, Interfina, Inc. (D1), by its President Evans (D2) in his corporate capacity only, entered into letter agreements with London (P) extending the time for payment of the note. London (P) filed a motion for summary judgment against Interfina (D1) and Evans (D2) for the sum of $19,500.00 due on the note. Evans (D2) contends that the extension agreements, which were not signed by him in his personal capacity, discharged him from personal liability on the note because he did not personally consent to the extension.
- Case Vocabulary
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Agricredit Acceptance, L.L.C. v. Hendrix 6 results (showing 5 best matches)
- Decision by the United States District Court for the Southern District of Georgia on a group of cotton merchants’ motion for summary judgment against an agricultural lender.
- , “[a] document of title confers no right in goods against [one who has a prior] perfected security interest in [the goods] and who neither: (a) [d]elivered or entrusted [the goods] . . . to the bailor . . . with actual or apparent authority to ship, store, or sell; nor (b) [a]cquiesced to the procurement by the bailor . . . of any document of title.” The UCC defines entrusted as any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties. However, Georgia courts have found that this definition only applies to owners of goods as one cannot entrust goods one does not own. The merchants’ (D) motion for summary judgment is based on two theories: (1) that the EWRs were duly negotiated to the merchants (D) and their interest in the cotton therefore has priority over AAC’s (P) interest; and (2) that AAC (P) waived the priority of its security interest by entrusting the cotton to Hendrix. It is undisputed that the merchants (D)...
- court held that the above-stated rule does not apply to duly negotiated electronic warehouse receipts when there has been no entrustment of the goods to another by the secured party and no acquiescence in the procurement of the document of title. In terms of the facts of this case, that means that if AAC (P) cannot be shown to have entrusted the cotton to anyone and does not appear to have acquiesced in the procurement of the electronic warehouse receipts, it can collect from the merchants (D) as the electronic warehouse receipts at issue cannot be said to have been duly negotiated to the merchants (D). The purpose of this exception is to protect those owners of goods, or persons with prior perfected security interests in goods, whose goods or documents of title are wrongfully taken and thereafter duly negotiated to an innocent buyer. In such a case, the original owner is not responsible for the loss of the documents of title and therefore should be permitted to retain his or her...
- CASE VOCABULARY
- ...Sea Island, and the EWRs were transferred into their names. Sea Island, however, never paid AAC (P) or Hendrix (D) for the cotton, and, as a result, AAC (P) filed suit against Hendrix (D) and the merchants (D) who had purchased the cotton. In its suit AAC (P) sought foreclosure of its security interest, a writ of possession against anyone in possession of the cotton, and a finding of conversion and an award of damages against the merchants (D). In response, the merchants (D) claimed that the cotton was no longer subject to AAC’s (P) security interest because the EWRs were duly negotiated to them by Sea Island and because AAC (P) entrusted the cotton to Hendrix (D) with apparent authority to sell it. That is, the merchants (D) asserted that duly negotiated EWRs have priority over a prior perfected security interest, especially when the secured party entrusts the collateral to the borrower. The merchants (D) filed a motion to dismiss, which was denied, and then a motion for summary...
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Good v. Wells Fargo Bank, N.A. 4 results
- Did the trial court err by granting partial summary judgment in favor of Wells Fargo (D)?
- ...secured by a mortgage which identified Synergy as the lender and Mortgage Electronic Registrations Systems, Inc. (“MERS”) as a nominee for the lender. Good (P) stopped making payments on the loan and MERS subsequently assigned the loan to Wells Fargo Bank (D). Wells Fargo (D) filed a complaint to foreclose on the mortgage and Good (P), acting pro se, filed an answer alleging that Wells Fargo (D) was not a holder in due course of the note and that it lacked standing to foreclose on the mortgage. Wells Fargo (D) moved for summary judgment, arguing that it had possession of the note and that it was either the original payee of the note or the note had been duly endorsed. Good (P) argued that Wells Fargo (D) had only a photocopy of the note without any endorsements and that, without more, it did not establish that it was entitled to enforce the note. Wells Fargo (D) replied claiming that it controlled the electronic note and was entitled to enforce it as the holder pursuant to 15 U....
- Appeal from a partial grant of summary judgment in favor of defendant.
- (Barnes, J.) Yes. In order to establish that a party is a holder of an electronic note and entitled to enforce it under the UCC, the party must demonstrate evidence that it controls the negotiable instrument. The court found that there was no dispute regarding whether the mortgage was assigned to Wells Fargo (D) from Synergy. Under Article 3 of the UCC, a ...person in possession of a negotiable instrument that is payable either to bearer or to an identified person if the identified person is in possession of the instrument. The court agreed that a person that has control of a note is the holder for purposes of the UCC and that delivery, possession, and endorsement are not required. Under the statute, upon Good’s (P) request, Wells Fargo (D) was required to provide “reasonable proof” that it was in control of the note. Despite repeated requested by Good (P) Wells Fargo (D) did not present evidence that documented the transfer or assignment of the note from Synergy to Wells Fargo (D...
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State Street Bank and Trust Co. v. Lord 3 results
- The Florida District Court of Appeals affirmed a summary judgment in favor of the mortgagor/borrower.
- The court recognized that its ruling might be viewed as a “windfall” to Lord (D). It noted that the
- Second, although Florida recognizes the principle that a right to enforce a lost note can be assigned, State Street (P) could not establish that it was entitled to benefit from the principle because, again, there was no evidence establishing who possessed the promissory note when it was lost. The court distinguished a case permitting enforcement of a lost note,
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Heritage Bank v. Bruha 3 results
- The Nebraska Supreme Court reviewed a summary judgment for the plaintiff-assignee.
- Only the fourth note was at issue on the appeal. The fourth note stated that it was for $75,000 “or so much as may be outstanding.” The note specifically stated that it was “evidence [of] a revolving line of credit.” Bruha (D) received three advances on the line of credit for a total of $51,000. He admitted that he signed the note, but contended it was not enforceable because it was induced by misrepresentations from Sherman Bank about the investment. The trial court granted summary judgment to Heritage (P), finding that it was a holder in due course entitled to collect. Bruha (D) appealed.
- The court agreed with Bruha’s (D) contention that neither the FDIC nor Heritage (P) was a HDC. Generally, a HDC takes a negotiable instrument free of defenses and competing claims. To achieve HDC status, however, the note must be “negotiable,” a technical concept that requires that the note include “an unconditional promise or order to pay a fixed amount of money with or without interest or other charges described in the order.”
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Gibraltar Financial Corp. v. Prestige Equipment Corp. 10 results (showing 5 best matches)
- Appeal from an order of the court of appeals affirming summary judgment in favor of Prestige Equipment (D).
- ...transaction with Finance, Vitco entered into several loan agreements with Gibraltar Financial (P). As a part of those agreements, Vitco gave Gibraltar (P) a security interest in virtually all of its tangible and intangible assets, including its equipment. Gibraltar (P) perfected its security interest. Vitco was out of business by 2007. Finance repossessed the press in July 2007 and sold it to a joint venture of National Machinery Exchange (D) and Prestige Equipment (D). Gibraltar filed suit against Vitco in July 2007, and was awarded possession of the collateral in which it had an interest. In May 2008, Gibraltar (P) filed suit against Prestige (D), alleging that Prestige (D) acquired the press subject to Gibraltar’s (P) security interest. The parties agreed that the dispute turned on whether the lease was a true lease, as argued by Prestige (D), or a sale subject to a security interest, as argued by Gibraltar (P). The trial court concluded that the transaction was a true...
- Was Prestige (D) entitled to summary judgment on the question of whether the transaction was a lease or a sale subject to a security agreement?
- Prestige (D) had the burden of establishing the absence of any genuine issue of material fact as to the economic realities of the transaction showing that it was a lease as a matter of law. To do so required evidence of the expectations of Vitco and Finance at the time the transaction was entered into as to such factors as the value of the punch press on the early buy-out and the lease expiration dates, the discount rate, and whether the only economically sensible course for Vitco would have been to exercise the early buy-out. Because such evidence was not presented, summary judgment was not appropriate.
- To be entitled to summary judgment, Prestige (D) bears the burden of demonstrating the absence of any genuine issue of material fact as to whether the economic realities of the transaction dictate that it is a lease as a matter of law. In the end, we focus on all the economic factors that drove the transaction and that were the prime impetus to the ultimate decision to enter into the transaction, as well as the reasons for structuring the transaction as it was done. Pointing toward the transaction creating a security interest is the fact that Vitco already owned the punch press when it entered into the lease. Pointing toward the transaction creating a lease are the useful life of the punch press, the absence of limitations
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Heritage Bank v. Bruha Part 2 4 results
- The Nebraska Supreme Court reviewed a summary judgment for the plaintiff-assignee.
- Only the fourth note was at issue on the appeal. Bruha (D) contended that the lending bank fraudulently induced him to sign the note. Specifically, Bruha (D) argued that the bank misrepresented the risks of the investments he was making in the trading company the bank had recommended to him. The trial court granted summary judgment to Heritage (P), finding that it was a holder in due course (HDC) entitled to collect under
- The court assumed that Bruha (D) was fraudulently induced to sign the fourth note, but ruled that he was still liable on the note because the fraud defense was barred by the
- addressed secret agreements, the Supreme Court has also ruled that the defense of fraud in the inducement is barred in actions to collect on a note given to a failed bank. In
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Cook Specialty Co. v. Schrlock 5 results
- Motion and cross-motion for summary judgment before trial court for breach of contract seeking damages for loss of goods.
- the interpretation of the Code to the maximum] the contract MSI (D1) made for transporting the machine was not reasonable because it did not ensure that R.T.L. (D2) had sufficient insurance coverage to compensate Cook (P) for a loss in transit. Accordingly, Cook (P) asserts that the machine was never duly delivered to the carrier, and the risk of loss therefore never passed to Cook (P). Cook (P) and MSI (D1) each have motions for summary judgment pending before the court.
- This case examines three UCC Sections: 1)
- Case Vocabulary
- come up with?] Cook (P) contends that there was a duty or obligation on the part of the seller, MSI (D1), to ensure that the transportation carrier had adequate insurance coverage. Cook (P) relies upon certain language contained in Section 2–504(a) which provides that when the seller puts the goods in the possession of a carrier he must “make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case.” Cook (P) argues that because the machine was never duly delivered to a carrier within the meaning of
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Virginia National Bank v. Holt 2 results
- Appeal by Virginia National Bank (P) from the trial court’s denial of its motion for summary judgment.
- ...Holt’s (D) deposition when she “denied that she signed the note.” The loan officer responded, “Yes, I was. Somewhat surprised.” The only evidence offered on Mrs. Holt’s (D) behalf was a set of answers the Bank (P) had filed in response to interrogatories made by her attorney. The answers indicate that the Bank (P) did not know of any witnesses who saw Mrs. Holt (D) sign the note. The trial court found that the question of whether the signature was genuine was for the jury. This was error. Section 3–308 establishes the burden of proof in an action in which issues arise challenging the genuineness of a signature. Under this section, a signature on an instrument is admitted unless the “effectiveness” of the signature is put at issue by a specific denial. The burden is then put on the other party to establish the genuineness of the signature, but such a party is aided by a presumption that the signature is genuine. The effect of the presumption is to eliminate the requirement that...
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In re Duckworth 6 results (showing 5 best matches)
- In 2010, Duckworth (D) filed a Chapter 7 bankruptcy petition. The bank filed two complaints in bankruptcy court to initiate adversary proceedings. On cross-motions for summary judgment, the bankruptcy court held that the mistaken date in the security interest did not defeat the bank’s security interest and that the security agreement of December 13, 2008 secured the note of December 15, 2008. The bankruptcy court issued two decisions in favor of the bank, one for proceeds from the sale of Duckworth’s (D) crops and another for proceeds from the sale of some of his farm equipment. The trustee appealed both bankruptcy court orders to the district court, where the orders were affirmed.
- . The court in that case addressed a mistake in identifying
- Appeal from orders affirming decisions by the Bankruptcy Court.
- A bankruptcy trustee is not a stand-in for the bankruptcy debtor. The general duty of a trustee is to oversee a bankruptcy case in a way that protects the creditors. The agreement could be reformed if a reformation action were brought against Duckworth (D), but the Trustee (D) is the real party in interest here, and the one whose rights and obligations must be considered.
- . In that case, we held that parol evidence about the original parties’ intentions could not be used to correct a mistake in a security agreement. We recognized that the result was contrary to the intentions of the original parties. We explained, though, that the result should promote economy and certainty in secured transactions more generally, a central goal of
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In re Arlco, Inc. 5 results
- [good faith purchaser’s right is superior to reclamation right], the seller’s right to reclamation is “subject to” the rights of a good faith purchaser from the buyer. This does not automatically extinguish the reclamation right, but only makes it subordinate to the good faith purchaser’s right. Most courts treat a holder of a prior perfected, floating lien on inventory as a good faith purchaser. Galey (P) points out that to define “good faith purchaser,” these courts have referred to the definitions of
- ...wholesaler of home furnishings. Since 1995, CIT Group/Business Credit Inc. (CIT) has held a perfected security interest in substantially all of Arley’s (D) assets, including accounts receivable and inventory. Galey & Lord, Inc. (Galey) (P), in its ordinary course of business, sold textile goods on credit to Arley (D). On May 16, 1997, Galey (P) sent a letter to Arley (D) (May 16th letter) demanding that Arley (D) return the goods it received during the prior 10 days and notifying Arley (D) that it should protect and segregate all goods subject to its reclamation right and not use them for any purpose. On June 6, 1997, Arley (D) filed for chapter 11 bankruptcy, and on June 9, Galey (P) commenced an adversary proceeding against Arley (D) for reclamation of the goods it referred to in its May 16th letter. In September 1997, the court approved an asset purchase agreement for the sale of substantially all of Arley’s (D) assets. Pursuant to this agreement, Arley (D) changed its name...
- Motions for summary judgment in bankruptcy adversary proceeding seeking reclamation of goods.
- This case demonstrates that a secured creditor with a floating lien on inventory is a good faith purchaser who gets to fully satisfy his claim from the inventory before a reclaiming seller can enforce his rights at all. Only if there are goods left over after the secured creditor’s
- CASE VOCABULARY
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Pierce v. Catalina Yachts, Inc. 5 results
- ]. Paragraph 1 authorizes limited warranties, letting parties “limit or alter the . . . damages recoverable . . . as by limiting the buyer’s remedies to . . . repair and replacement,” and to agree that the limited remedy is the “exclusive, . . . sole remedy.” But when a limited remedy fails, Paragraph 2 nullifies the warranty’s limitation (“if circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the [UCC]”). Courts agree that a limited warranty to repair “fails of its essential purpose” when either (A) the seller is unable or unwilling to conform the goods to the contract, regardless of good or bad faith, or (B) there is unreasonable delay in repairing or replacing. However, the UCC’s next Paragraph 3 separately provides that consequential damages may be limited “unless the limitation or exclusion is unconscionable.” This creates an inconsistency, because this
- Case Vocabulary
- COURTS SPLIT ON WHEN TO ENFORCE LIMITED WARRANTIES
- Generally, a warranty can disclaim consequential damages. However, as here, sometimes those disclaimers will be found unconscionable, and thus voided. Note, though, that courts can follow any of the three rules described here, and remain sharply divided. Also, if both parties are merchants, then courts are much more likely to uphold limited warranties, even if they seem to fail in their essential purpose. With consumer form contracts (and, similarly, with merchants who lack bargaining power against the counter-party), strictly enforcing the limited warranty would work an injustice where one party refuses to honor its repair duties promptly, thus multiplying consequential damages for the other through sheer delay.
- ...P) contracted to buy a boat from manufacturer Catalina Yachts, Inc. (D). Catalina’s (D) contract included a limited warranty, promising that if the boat’s smooth hull resin blistered, Catalina (D) would repair it, or pay for repair. Catalina’s (D) contract disclaimed consequential damages. When Pierce (P) discovered blistering, he submitted a repair estimate ($10K) to Catalina (D). Catalina (D) refused the estimate, insisting only minor patching was required, and stalled for 6 months. Pierce (P) sued Catalina (D) in contract, tort, and unfair trade practices. Before trial, the court ruled the warranty’s provision barring consequential damages was not unconscionable, and thus enforceable. At trial, the jury found Pierce (P) gave timely notice, Catalina (D) breached its warranty and acted in bad faith in ignoring its warranty obligations, and Pierce (P) could not have avoided the damages, awarding Pierce (P) $12K for reasonable repair costs. Pierce (P) appeals, claiming [among...court
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- Hearing on Woodworth’s (P) motion for partial summary judgment and Signet Bank’s (D) motion for summary judgment.
- . The policy of both pre-Code law and of the Code is that instruments should be as concise as possible and uncluttered by other promises, orders, obligations or powers. The promissory note here contains a term which gives Richmond (D) the option to cancel Woodworth’s (P) interest in Richmond (D) if he defaults on the note. The term also provides that Richmond (D) will have no obligation to repay any payments it has received. This term is clearly a promise by the maker, Woodworth (P), that his partnership interest will be forfeited in the event of default. It is more than a recitation of security or an agreement to protect collateral; it is a forfeiture provision. In the case of
- Case Vocabulary
- The court here found that the UCC means what it says when it provides that the unconditional promise to pay may not contain any additional orders, promises, or obligations. These types of additional promises or obligations can clutter the note and make negotiability and marketability difficult. This is especially so where the original party to the note, Richmond (D), continues to hold an option to declare a forfeiture even after it has assigned the note to another party. Situations like this demonstrate why the promise to pay must be unconditional and may not contain additional promises or obligations.
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Leeds v. Chase Manhattan Bank, N.A. 5 results
- ...conversion of an instrument may not be brought by the issuer or acceptor of the instrument or a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.” Although the check was not actually delivered to the Leeds (P), it was delivered to Egnasko as Leeds’s (P) attorney, with intent that title be transferred to the Leeds (P), the payees. Thus, the Leeds (P) are entitled to bring this action for conversion as one who “received[d] delivery of the instrument . . . through delivery to an agent.” By crediting Egnasko’s trust account for the face amount of the check, Chase (D) paid the check to “a person not entitled to . . . receive payment.” As a depositary bank under the UCC, Chase (D) is strictly liable for conversion on a forged or stolen instrument, because it made or obtained payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. Thus, the motion court...
- Appeal from entry of summary judgment in action for conversion.
- ...the proceeds of the sale of the home. Trustco honored the check drawn to the Leeds (P), and they received payment on that check. [So, what’s the problem you ask?—Well. . . .] Egnasko improperly used other funds from the Trustco account—which had come from a check made payable to another bank, Shrewsbury, for which he had similarly altered and deposited—and paid the Leeds (P), instead of paying the Shrewsbury bank to whom the funds should have been paid. Trustco—facing a claim of conversion by Shrewsbury—sued attorney Egnasko and the Leeds (P) seeking repayment of the monies traceable to Egnasko’s fraud. The Leeds (P) cross-claimed admitting receipt of the Trustco check but denying that they owed Trustco the converted proceeds of the check. Their cross-claim alleged that Chase (D), the depositary bank, and Summit, the drawer/drawee/payor bank, were both strictly liable for conversion due to the payment on the altered settlement check. Chase (D) and Summit moved for summary...
- CASE VOCABULARY
- This case concerns an action for “conversion,” as set forth in
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- After Metzger (P) purchased the car, Americredit (D) located it, repossessed the vehicle, and sold it at auction. Metzger (P) reported the car as stolen, and then learned that it had been repossessed. Metzger (P) sued Americredit (D) for conversion, negligence, deceptive trade practices, breach of the peace, breach of good faith, racketeering, unjust enrichment, and breach of sale. Metzger (P) moved for partial summary judgment, and Americredit (D) made a cross-motion for summary judgment on all of Metzger’s (P) claims. The trial court granted Americredit’s (D) motions.
- Appeal from an order granting partial summary judgment.
- ...(D) argued that the statutory exception does not apply to Metzger (P), because the perfected New York security interest did not apply once application was made for a Georgia certificate of title. However, another Georgia statute provides that a security interest perfected in another state may remain perfected even if goods are covered by a Georgia certificate of title. When read together, the two statutes give protection to a good faith purchaser for value when there is continued perfection of the security interest, but the certificate of title does not reflect that interest. Furthermore, a specific statute will govern over a more general one. The statutes addressing continued perfection of an out-of-state security interest are general statutes, while the statute that provides protection to Metzger (P) is a limited one, addressing a specific circumstance. Americredit’s (D) interpretation is incorrect. Reversed and remanded with directions to enter summary judgment for Metzger (P)...
- CASE VOCABULARY
- ...of title is required, who gives value for the goods and receives them after the certificate is issued, takes the goods free of a security interest perfected in another jurisdiction if the certificate of title does not show the security interest and the buyer did not know of the interest. Ordinarily, a security interest in a motor vehicle is perfected when the application documents for a certificate of title are delivered to the Department of Motor Vehicles or the local tag agent, provided that the application documents properly reflect the security interest. Perfection occurs on the date of delivery of the documents, even if the certificate of title issued does not reflect a security interest. There are exceptions to this rule, and the one applicable in this case provides protection for some good-faith purchasers who are likely to have relied on a “clean” certificate of title. Metzger (P) meets all of the requirements for the exception: the security interest in the car...
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Nichols v. Seale 5 results
- Seale (P) sued Carl V. Nichols (Nichols) (D) for personal liability on a promissory note. Nichols (D) was sued “individually and doing business as The Fashion Beauty Salon.” Nichols (D) had signed and wrote his name on the promissory note below the words “The Fashion Beauty Salon.” He answered the complaint by denying that he signed the note in his individual capacity and alleging that he signed on behalf of a corporation, Mr. Carls Fashion, Inc. Seale (P) filed a motion for summary judgment and Nichols (D) filed an affidavit in opposition thereto wherein he stated that he was President of Mr. Carls Fashion, Inc. a corporation, and that it did business as The Fashion Beauty Salon. He further stated that he signed the promissory note in the capacity of officer of the corporation, and not in his personal capacity. [It was to no avail.] The trial court granted summary judgment in favor of Seale (P) and against Nichols (D). He appealed contending that extrinsic evidence existed to show...
- This case examines
- Appeal from summary judgment in action to collect money due under promissory note.
- (Guittard) Yes. We hold that where an instrument is signed by an agent or other representative, names the person represented, but does not show that the representative signed in a representative capacity, extrinsic evidence is admissible to establish the capacity of the signer and whether he is personally liable. In this case, Seale (P) asserts that Nichols (D) is personally liable because the note neither “names” the corporation nor shows that Nichols (D) “signed in a representative capacity.” However, the use of an assumed name does “name the person represented” within the meaning of
- Case Vocabulary
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- Millard (D) has also moved for summary judgment asking the court to confirm the enforceability of the limitation of liability in the warehouse receipts. There is no evidence of a monopoly or unequal bargaining power that would make the contract unenforceable. Admiralty Island (P) and the others (P) argue in opposition that the limitation is unenforceable as against public policy. The depositors (P) contend that they will show at trial that Millard (D) acted with gross negligence. “Gross negligence” is defined as the absence of slight care, or a tortfeasor’s actual knowledge that its actions posed a danger but intentionally failed to act to prevent the harm. If Millard (D) did act in a grossly negligent manner, enforcement of the limitation of liability could be against public policy. There is some evidence that Millard (D) knew or should have known of the thefts before it did anything about them. There are genuine issues of material fact regarding Millard’s (D) actions. Both motions...
- Decision on cross-motions for summary judgment.
- .... As each load of seafood was delivered, Millard (D) issued a warehouse receipt. The front of the receipt provided that, unless the depositor declared a valuation for the stored goods that was greater than $.50 per pound or $12 per cubic foot, and the higher valuation was agreed to in writing, Millard’s (D) liability would be limited as provided on the back of the receipt. The front of the receipt also provided that goods were accepted for storage subject to the terms on the reverse of the receipt. The reverse side of the receipt provided that Millard’s (D) liability for loss, damage, or destruction of stored goods would be limited to the lesser of the actual cost of replacing or reproducing the damaged goods and the cost of transportation, the fair market value of the goods on the date the depositor was notified of the loss, fifty times the monthly storage charge, or the lesser of $.50 per pound of the net weight of the goods or $12 per cubic foot. The receipt also stated that...
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Accettura v. Vacationland, Inc. 4 results
- ...dinette area, damaging the walls and causing electrical failure. Vacationland (D) was unable to make the repairs itself and told Accettura and Wozniak (P) it would have to send the RV back to the manufacturer for repair. Neither Vacationland (D) employees nor the manufacturer could provide an estimate as to how long the repairs would take. On August 2, 2014, the Accettura and Wozniak (P) called Vacationland (D) and verbally revoked their acceptance of the RV. The manufacturer picked up the RV on August 4, 2014 and returned it on or around September 23, 2014. Vacationland (D) called the Accettura and Wozniak (P) to inform them that their RV was fixed and that they could pick it up, after which their attorney sent Vacationland (D) a letter confirming the earlier revocation of acceptance of the RV. Accettura and Wozniak (P) filed suit seeking the return of their purchase price and other damages. Vacationland (D) moved for summary judgment, arguing that Accettura and Wozniak (P)...court
- Appeal from the affirmation of a grant of summary judgment in favor of Vacationland (D).
- Whether a buyer rejects or accepts (and possibly later revokes acceptance) goods may depend on a number of considerations, including the extent or severity of the defect, the market or industry in which the goods fall, the buyer’s interactions and relationship with the seller, and trade practices, amongst other considerations. While rejection and revocation of acceptance seem quite similar, there are important differences between them, and whether a buyer is deemed to have rejected goods or revoked acceptance of goods can make or break the buyer’s ability to defend against a seller’s action for the price of those goods. One important difference between rejection of goods and revocation of acceptance of goods is the time frame in which they occur. Rejection forecloses any possible acceptance, whereas revocation can only occur after acceptance. Another important difference, as seen in this case, is that in the case of revocation, the burden shifts from the seller to the buyer, who...
- (Garman, J.) Yes. Under the UCC, a buyer is not required to give the seller an opportunity to cure a substantial nonconformity before revoking acceptance. The Illinois version of the UCC states: “(1) The Buyer may revoke his acceptance of a lot or commercial unit whose-non-conformity substantially impairs its value to him if he has accepted it (a) on the reasonable assumption that the nonconformity would be cured and it has been seasonably cured; or (b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or the seller’s assurances.” Section (1)(b) applies in this case, where the buyer did not know there was a defect upon purchase and discovered it only later. The statutory language is plain in that section (1)(a) specifically mentions a cure as part of the contract, whereas section (1)(b) does not. Accettura and ...of acceptance of goods, and in the case of revocation, the seller loses...
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- BMW Financial (P) subsequently filed a replevin complaint in the circuit court of Du Page County, seeking possession of a 2011 Porsche Panamera. The complaint named Felice as defendant, but an amended complaint named both Felice and Auto Showcase (D), as defendants. Felice was later dismissed from the action after Auto Showcase (D) repurchased the Porsche from him. BMW Financial (P) and Auto Showcase (D) filed cross-motions for summary judgment.
- Appeal from summary judgment in favor of BMW Financial (P).
- CASE VOCABULARY
- On November 29, 2012, Auto Showcase (D) sold the Porsche to Richard D. Felice (“Felice”) for $59,000. By letter dated January 30, 2013, BMW Financial (P) advised the Secretary of State that the lien release letter submitted by Grant was fraudulent. BMW Financial (P) asked the Secretary of State to “accept this letter as notice that any further attempt to title the [Porsche] without showing [BMW Financials’ (P)] lien should be denied.” Auto Showcase (D) later brought a mandamus action in the circuit court of Du Page County to compel the Secretary of State to issue a certificate of title naming Felice as the owner of the Porsche. The court entered judgment in favor of Auto Showcase (D), and the Secretary of State issued a certificate of title to Felice. BMW Financial (P) was not a party to the mandamus action.
- Auto Showcase (D) maintained that the assignment via the duplicate certificate of title was not subject to BMW Financials’ (P) security interest, contending that “the issuance of the duplicate Certificate of Title . . . which removed BMW [Financial]’s (P) lien, must control the determination of possession.” The court disagreed, noting that not only does Auto Showcase (D) cite no authority for the proposition that the issuance of a duplicate certificate somehow renders the original certificate ineffective under Illinois law, but state law provides that a duplicate certificate “shall contain the legend ‘This is a duplicate certificate and may be subject to the rights of a person under the original certificate.’ ...language would be meaningless if, as Auto Showcase (D) argued, the original certificate was no longer effective. Consequently, the court rejected Auto Showcase’s (D) assertion that, by issuing the duplicate certificate, the Secretary of State “removed” BMW Financials’ (P)...
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G.A.C. Commercial Corp. v. Wilson 4 results
- (Bryan, J.) No. Norwood (D) is not liable to GAC (P) because the straight bills of lading in this case were non-negotiable and GAC (P) was not the “owner” or “consignee” of the goods. Bills of lading issued by a common carrier for interstate commerce are controlled by the Federal Bills of Lading Act
- involves non-existent goods. The court in
- Is a carrier liable to an assignee for issuing straight bills of lading in cases where no goods were delivered to consignee?
- CASE VOCABULARY
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Hogan v. Washington Mutual Bank, N.A. 9 results (showing 5 best matches)
- Hogan (P) filed a lawsuit to enjoin each foreclosure, seeking to halt the sale until the respective beneficiary of each deed of trust proved it had the right to enforce the underlying note. The cases were consolidated. The trial court dismissed both cases, concluding that the statute governing nonjudicial foreclosure did not require production of the note and the Arizona Court of Appeals affirmed. Hogan (P) then appealed to the Arizona Supreme Court.
- The court in
- The trial court dismissed Hogan’s (P) suit to enjoin the property sales until the beneficiaries of the deed of trust produced the underlying notes, and the Arizona Court of Appeals affirmed.
- The court affirmed the trial court’s order dismissing Hogan’s (P) complaints.
- Case Vocabulary
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Casserlie v. Shell Oil Co. 5 results
- In 1999, the dealers (P) filed suit against Shell (D), alleging, among other claims, that Shell (D) engaged in bad faith when it set the DTW price. The dealers (P) alleged that the rack price was often substantially lower than the DTW price. The dealers (P) claimed that this pricing was unreasonable and was part of a marketing plan designed to drive them out of business. The trial court granted summary judgment for Shell (D), holding that Shell did not violate
- A number of cases in other jurisdictions have relied on the posted-price comment when considering open price terms. Relying on the Official Comments helps promote uniformity in interpreting the UCC. These other courts have noted that the posted-price safe harbor avoids extensive litigation over open price terms while seeking to avoid discriminatory prices. Subjective intent alone was not intended to be a basis for liability. A few courts have held that there is no posted price safe harbor when there is subjective bad faith. Those cases hold that the safe harbor applies only in a “normal case,” and “normal case” does not include a situation where a seller is purposefully trying to drive a buyer out of business. This interpretation would eviscerate the safe harbor whenever a plaintiff alleges circumstantial evidence of an improper motive, even if the prices charged were within the range of prices charged in the industry. If subjective intent determined bad faith, a seller charging a...
- Appeal from an order affirming a grant of summary judgment.
- ...P) claim that Shell’s (D) goal in setting prices was to drive them out of business, but the only evidence of bad faith was that the prices set were too high for dealers (P) to remain profitable and compete with jobbers. However, Shell (D) was not required to sell gasoline at a price that is profitable for buyers. Shell (D) submitted expert testimony that showed that the DTW prices were within the range set by its competitors. The dealers (P) did not rebut this evidence. The dealers (P) also claim that Shell’s (D) prices varied throughout the area, but that does not itself demonstrate unreasonable or discriminatory pricing. There was no evidence that Shell (D) discriminated among similarly situated buyers. Finally, the dealers (P) argue that jobbers were charged significantly less for gasoline. Jobbers and dealers are not, however, similarly situated buyers. The price difference is partially explained by the fact that the DTW price includes a delivery charge, while the rack price...
- (Moyer, C.J.) Yes. A price in an open price contract is set in good faith if it is both commercially reasonable and nondiscriminatory. This is an objective test, and a subjective inquiry into the seller’s motives is not permitted in the normal case. Prices set in an open price contract must be reasonable. A price is reasonable if it was set in good faith. The Ohio version of
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Walter v. National City Bank of Cleveland 6 results (showing 5 best matches)
- Walter (P) brought an action for civil conversion against National City Bank of Cleveland (the Bank) (D) after it set off a bank account against the unmatured debt of its loan to its depositor Ritzer. Walter (P) claimed priority of right to Ritzer’s bank account with the Bank (D) since he had a judgment against Ritzer, and had obtained a garnishment order in order to collect the judgment from the account. When Ritzer executed a 90-day promissory note in connection with the loan from the Bank (D), its balance sheet showed it to be insolvent. Walter (P) did not obtain his judgment against Ritzer until weeks after Ritzer had signed the promissory note in favor of the Bank (D). When the Bank (D) was served with the garnishment order, the debt by Ritzer was unmatured since the 90 days had not yet expired. Nevertheless, the Bank (D) sent the court a letter stating that it was setting off the amount of its loan, leaving only $25.50 to send to the court to apply towards Walter’s (P)...
- Appeal of judgment entered following granting of motion for summary judgment in action seeking damages for civil conversion.
- . . . that the UCC does not contain any provisions concerning rules to apply for setoff, although the term is mentioned in passing in certain sections of the Code. The right to setoff developed through common law and exists in virtually all states today. However, federal legislation places certain restrictions on the right of setoff. For example, setoff is generally prohibited in cases involving customers’ credit card debts, so that the bank issuing the credit card may not setoff the bank account to satisfy overdue payment on the credit card. In addition, setoff may only be had against general accounts, such as checking and savings accounts, of the depositor. In this case, the court was reluctant to permit the Bank (D) to set off the loan since Ritzer was insolvent when the loan was made. Thus, if the company had been solvent at the time the note was signed, and thereafter became insolvent, the Bank (D) may have prevailed. An exception to the general rule provides that if the...
- Case Vocabulary
- COURT FAVORS JUDGMENT CREDITOR AND DISALLOWS BANK’S SETOFF OF UNMATURED LOAN AGAINST INSOLVENT DEPOSITOR
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Mundaca Investment Corp. v. Febba 5 results
- (Brock) Yes. When a principal is not expressly identified in an instrument signed by an agent, the agent can be personally liable to the holder of the instrument unless the agent proves that the original parties did not intend the agent to be personally liable. The contentions on appeal by Febba (D) and the others are twofold: one, the notes and mortgages, when read together, show unambiguously that Febba (D) and the others signed in a representative capacity for the trust, as principal, and therefore there is no personal liability, and two, there was a genuine issue of material fact regarding whether the original parties intended Febba (D) and the other signors to be personally liable so as to preclude summary judgment.
- Appeal from entry of summary judgment in action for money due on promissory notes.
- The court was primarily considering the application of that portion of
- .... As part of the financing, they executed two promissory notes, secured by two mortgages, payable to Dartmouth Savings Bank (Bank). At the end of both notes below the signature lines, the names of the individuals were typewritten beside the preprinted term “Borrower.” Following the signatures, Febba (D) and the other individual defendants [believing that they would be off the hook] handwrote the word “Trustee.” The trust is not identified on the face of the notes, but the notes state that they are secured by a mortgage. The mortgages however identify the “Borrower” as the trust. Thereafter, Mundaca (P) acquired the two notes from the Federal Deposit Insurance Corporation, which was receiver for the Bank. Mundaca (P) notified Febba (D) that the two promissory notes were in default. Mundaca (P) foreclosed on the condominium units and filed suit against Febba (D) and the two other individuals for the remaining amount due on the notes. Mundaca (P) moved for summary judgment, and it...
- Case Vocabulary
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In re Zaochney 3 results
- Cases cited by Zaochney (D) in support of her argument that the court should strike down the cross-collateralization agreement are distinguishable. Some of those cases arose before the 2001 UCC amendments, and are superseded by those amendments. The case of
- Cases decided after the 2001 amendments that struck down cross-collateralization clauses are also distinguishable. Some of them involve security agreements signed by multiple debtors used to secure an individual debt of only one debtor. In another case,
- Post-amendment cases have upheld security agreements in a consumer context even after a finding that the agreement was an adhesion contract, or after a finding that the debtor had not read the contract. In this case, there has been no showing that the loan agreement was an adhesion contract, nor is there evidence of bad faith or unconscionability. The security agreement is in simple English, and is not embedded in small print. The clauses are valid and enforceable, and Alaska USA’s (P) secured claim is valued at $12,950. Motion granted.
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Ventura v. Ford Motor Corp. 5 results
- This opinion stands for the simple premise that a buyer does not always need to have direct privity of contract with a seller before a court will enforce a remedy for breach of the implied warranties of merchantability and fitness. The court first discusses the Magnuson-Moss Warranty Act, which statutorily enhances a consumer’s position in warranty disputes by removing the requirement of direct privity of contract before a buyer can enforce rights against a seller for breach of the implied warranties of merchantability and fitness. Under the Magnuson Act, a buyer has rights against all warrantors, even if the buyer did not purchase directly from the warrantor; no privity of contract is required. The problem for Mr. Ventura (P) in this case was that, though he could have sued Ford (D) directly under the Magnuson Act, he could not have sought the remedy of rescission under the Magnuson Act because Ford (D) had extended only a limited warranty for the car. The Magnuson Act does not...
- (Botter, J.) Yes. A buyer may sue a manufacture for breach of an implied warranty under both the Magnuson-Moss Warranty Act (Magnuson Act) and under the Uniform Commercial Code (UCC). In the case at bar, the first issue to be decided by the court is whether Marino’s (D) disclaimer of all express and implied warranties with respect to the automobile was effective. We find that it was not. Marino (D) supplied Mr. Ventura (P) with a written warranty at the time of sale whereby it agreed to fulfill obligations and guarantees made in Ford’s (D) written warranty. Having furnished a written warranty to the consumer, Marino (D), as a dealer and supplier, could not disclaim or modify any implied warranties connected with the sale of the automobile. The Magnuson Act specifically prohibits a supplier who has provided a written warranty to a consumer from disclaiming or modifying any other implied warranties
- Appeal to New Jersey Superior Court from trial court’s award of damages resulting from a breach of contract.
- Case Vocabulary
- ...the time he bought the car, Marino (D) supplied Mr. Ventura (P) with a copy of Ford’s (D) express warranty for the car. At the same time, while Marino (D) agreed that it would perform all conditions of the owner’s service policy, it specifically disclaimed all express and implied warranties for the car. Mr. Ventura (P) began to experience problems with the car soon after taking delivery. When Marino (D) failed to adequately address his complaints, Mr. Ventura (P) returned the car and sued for rescission of the purchase contract. Marino (D), in turn, filed suit seeking indemnification from Ford (D). Ford (D) argued, first, that Mr. Ventura (P) could not make a claim against Marino (D) because Marino (D) had effectively disclaimed all express and implied warranties. Secondly, Ford (D) claimed that, even if the court granted rescission of the contract, Marino (D) could not seek indemnification because, under the Magnuson-Moss Warranty Act (Magnuson), rescission of a contract is not...
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Frix v. Integrity Medical Systems, Inc. 3 results
- In this case, the court determined, using the predominant purpose test, that the predominant or overwhelming purpose of the transaction was for goods, which is why Article 2 of the UCC was applied and interpreted by the court. Cases such as this one illustrate the importance of understanding the Article 1 definitions used throughout the UCC, as well as the definitions under each Article that are unique to the subject content in that Article. The UCC provides several options to achieve merchant status, which can be critical in cases such as this one where one party seeks to incorporate certain terms into the contract that might otherwise be excluded if the other party is determined to have non-merchant status.
- Decision on Frix’s (P) motion for partial summary judgment.
- ...the UCC includes all professionals is inconsistent with the statutory language, which restricts the knowledge or skill that would trigger the merchant provisions to such “knowledge or skills peculiar to the practices or goods involved in the transaction.” Frix (P) proposed that a physician is more akin to a consumer or user of a product like medical devices, as opposed to a merchant thereof. While this proposition speaks more to a common understanding of merchant, rather than the UCC’s definition, ultimately common sense and understanding are what must determine the issue. Physicians are not experts in the equipment itself. There is nothing peculiar about being able to use a machine for its intended purpose, and there is no indication that physicians generally know how to take apart, put back together, install, or repair complex medical devices. There is also no indication that physicians can converse easily about the market for medical equipment. Motion for partial summary...
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Peters v. Riggs Natl. Bank, N.A. 4 results
- Peters (P) contends that the notice provision should be tolled in this case because of his mother’s incapacitation and subsequent death. Peters (P) also contends that the period should be tolled because he did not discover the unauthorized transactions until months after his mother’s death. In essence, Peters (P) is essentially asking the court to read a discovery rule into § 28:4–406(f) that would permit equitable tolling. Equitable tolling cannot apply to statutes of repose. A statute of repose establishes an absolute time period within which legal proceedings must be initiated, regardless of when a cause of action accrues. Courts in other jurisdictions have applied this statutory bar even in cases where the result is harsh, or when the plaintiff is mentally incompetent. The bar has also been applied in fraud cases where the party forging checks intercepted bank statements, preventing the account holder from actually receiving the statements and reporting any errors. These...
- Appeal from an order granting summary judgment.
- ...allowed to open his mother’s safe deposit box, and then learned Graves had won the lottery. Graves’s bank accounts showed balances of $2174.18 and $159.81. Peters was appointed personal representative of his mother’s estate in April 2003. That month, he learned that Graves’s account held over $92,000 in August 2002, but one month later, the balance was $58,935.98. Peters (P) formally requested more information from Riggs (D), and six weeks later Riggs (D) supplied some records but said it was still investigating. Riggs (D) provided more documentation in June 2003. Peters (P) apparently believed Riggs (D) was continuing its investigation. On November 7, 2003, Peters (P) notified Riggs (D) that Riggs (D) may have improperly permitted payments and withdrawals, but he would await the results of Riggs’s (D) investigation before making a formal claim. Riggs (D) failed to provide any additional information, and on August 4, 2004, Peters (P) filed a complaint with Superior Court. Riggs...
- . provides that a claim is barred if the customer does not discover and report the unauthorized signatures or alterations within one year after the statement or items are made available to the customer. The UCC also provides that contracting parties may agree to vary UCC terms. According to the terms of the contract between Graves and Riggs (D), Graves had sixty days from the mailing of her account statements to discover and report unauthorized transactions. Peters (P) argues that the time period provided is too short, or that it excuses Riggs (D) from exercising due care. Other courts have upheld contractual shortening of the notice provisions to sixty days or less. The contractual shortening does not alter Riggs’s (D) duty to exercise due care or good faith; it merely varies the notice period. Peters (P) as not shown that the notice period is unconscionable. A reasonable contraction of the notice period encourages due diligence by the customer and promotes the UCC’s goal of finality.
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Simulados Software v. Photon Infotech Private, Ltd. 7 results (showing 5 best matches)
- The parties agreed that California law governed. Simulados (P) contended that the contract was for the sale of software, which was a form of “goods” and was thus subject to Article 2 remedies. The court stated that the primary test for determining whether software is a “good” under Article 2 is “the predominant factor test, where courts look to the ‘essence of the agreement’ on a case-by-case basis to decide how to characterize the transaction.”
- has been followed in two subsequent cases,
- The court noted that when software is “mass-produced, standardized or generally available,” it is a form of goods, even if a contract requires modifications to the software or provides ancillary services such as installation, training or technical support. Several courts, including the Third and Seventh Circuits, have held that software adapted for specific needs also can be deemed a form of “goods.”
- After the case was transferred to the venue selected in the parties’ contract, Defendant brought a motion to dismiss the amended complaint.
- When a contract includes both a sale of goods and a sale of services, courts apply the “predominant-purpose” test to determine whether
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Shapiro, P.A. v. Wells Fargo Bank, N.A. 4 results
- ...email purportedly from Mr. Messenger which directed the wire transfer to a different account at Wells Fargo (D) in Texas. Shapiro (P) did not email or speak to Mr. Messenger, and despite the typographical and capitalization errors in the second email, Shapiro (P) initiated the wire transfer to the Wells Fargo (D) account. The account did not in fact belong to Mr. Messenger, who never received the funds, but belonged to another individual who promptly removed the funds from the account. Shapiro’s (P) bank later sent Wells Fargo (D) a recall request, but Wells Fargo (D) denied the request because the funds were already gone. Wells Fargo (D) processed its wire transfers through a Money Transfer System (“MTS”), which processed wire transfers through an automated process and created an audit trail documenting the steps in the process. In this case, the audit trail included an entry that read “possible name mismatch in CDT party.” Nobody at Wells Fargo (D) saw the name mismatch entry....
- Decision on a motion for summary judgment.
- ...the time when it is brought to the attention of the individual conducting the transaction, and in any case, from the time when it would have been brought to the attention of the individual if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. The statute permits and encourages banks to process electronic funds transfers via automated systems. Moreover, the statute expressly excuses banks from any duty to verify whether the recipient’s name matches the name on the account. The mere presence of information in an automated computer program does not create actual knowledge or a duty to investigate. Here, Wells Fargo (D) processed the wire transfer using an automated process. Although a person reviewed the transaction for compliance, the person did not actually look at whether the...
- According to the FBI and other data collection sources, cyber-initiated wire transfer fraud is exploding with reported losses over the last eight years reaching tens of billions of dollars by some estimates. Wire fraud schemes generally fall into one of two categories: phishing or malware that enables the fraudster to gain access to the victim’s account to make a wire transfer, or (as seen in this case) the use of an email to the unwitting victim sent from a hacked account and containing wire instructions with erroneous information. With these incidents on the rise, financial institutions will no doubt continue to be confronted with lawsuits from customers relating to authorized and unauthorized wire transfers.
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Philko Aviation, Inc. v. Shacket 5 results
- ...of innocent third parties can be affected. Any other construction of the statute would defeat the congressional purpose for the act, that being to create one repository where any person could go to find out information relating to any claims against, or liens, or other legal interests in an aircraft. The state law in the instant case is in direct conflict with our interpretation of the federal law. The state law does not require any documentation for a valid transfer of title to be effected. We hold that state laws allowing undocumented or unrecorded transfers of interest in aircraft to affect innocent third parties are preempted by the federal act. The transfer must be documented and recorded with the FAA before third party rights can be affected. That is not to say that the state law does not apply with respect to priority. Priority of lien holders is not a concern of the federal law. Priority of lienholders may still be determined by state law, but in order to obtain that...court
- ...after the sale to the Shackets (D), Smith fraudulently sold the same airplane to Philko (P). Smith told Philko (P) that the plane was in Michigan for servicing, and both Philko (P) and its financing bank were satisfied with that explanation. The bank checked the FAA records for information regarding the title and found the title good. At closing, Smith gave Philko (P) the title documents, which Philko (P) handed over to its bank. The bank subsequently recorded the title with the FAA. The Shackets (D) commenced a declaratory judgment action to quiet title when the scam was discovered. Philko (P) argued that it had title to the aircraft because the Shackets (D) never recorded their title with the FAA. Philko (P) relied on § 503 of the Federal Aviation Act, which provides that no conveyance or instrument affecting title to a civilian aircraft shall be valid against third parties not having actual notice of the sale unless such conveyance is recorded with the FAA. The District Court...
- Appeal to Supreme Court of lower court’s declaratory judgment granting Shackets (D) title under state commercial law.
- CASE VOCABULARY
- Some federal statutes displace state commercial laws, and some preempt state law completely. It is common for a federal law to affect some portions of state commercial law, but to be supplemented by state law in other regards. Such an effect is commonly seen with federal tax statutes. It is important for a legal practitioner to be aware that some commercial transactions need to be researched on both a state and federal level. As can be seen from the instant case, aircraft titles are in part regulated by federal statutes. The same situation may occur with ships, patents, trademarks, and railroad equipment, among other things. What it is most important to realize is that the UCC (state law) will apply to the extent that any federal law does
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Moore v. Pro Team Corvette Sales, Inc. 4 results
- Moore (P) brought suit against Pro Team (D), claiming that the warranty disclaimer in the agreement was not sufficient to disclaim the warranty of title. Moore (P) also alleged unjust enrichment, negligence, and violations of the Consumer Sales Protection Act. He moved for summary judgment, claiming that Pro Team’s (D) disclaimer was legally insufficient to disclaim the warranty of title, but his motion was denied. Moore (P) voluntarily dismissed all his claims, except for the breach of warranty claim. The trial court dismissed the warranty claims, holding that the language in the sales agreement was sufficiently specific to exclude the warranty of title.
- SUMMARY JUDGMENT: A judgment granted on a claim about which there is no genuine issue of material fact and upon which the movant is entitled to judgment as a matter of law. This procedural device allows the speedy disposition of a controversy without the need for trial.
- Case Vocabulary
- The court mentions, briefly, that most buyers would expect a disclaimer of warranty to relate only to warranties of quality, not title. A car buyer—especially a buyer like Moore (P), who probably was buying the Corvette more as a collectible, rather than for transportation—might not think anything of a disclaimer of a warranty of quality. Such disclaimers are routine. On the other hand, a potential buyer may very well pause if a seller tells him or her that there are no promises that the seller has legal title to the goods. This is especially true when the
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Yaddehige v. Xpert Technologies, Inc. 4 results
- Yaddehige (P) loaned CLS $3 million in 2013, and as collateral, CLS granted Yaddehige (P) a security interest in “all assets of CLS.” Xpert (D) obtained a judgment against CLS for $199,680 in a separate action. CLS satisfied this judgment with money from the deposit account. Yaddehige (P) sued (Xpert) (D) arguing he held a perfected, first-priority security interest in the money used to satisfy the judgment. Yaddehige (P) alleged Xpert’s (D) retention of the money would amount to unjust enrichment and sought an injunction preventing Xpert (D) from collecting judgment with collateral securing Yaddehige’s (P) loan. The trial court granted summary disposition in Xpert’s (D) favor.
- Appeal from an order granting summary disposition to Xpert Technologies (D).
- Yaddehige (P) also argued that the trial court erred in its conclusion that MCL 440.9332 precluded his unjust enrichment claim. Unjust enrichment is defined as the unjust retention of money or benefits which in justice and equity belong to another. The court held that Yaddehige (P) did not establish that the transfer at issued violated his alleged security interest. Additionally, Yaddehige (P) did not show that the transfer caused him any harm.
- CASE VOCABULARY
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Triffin v. Somerset Valley Bank 3 results
- ...to the stamp used on Hauser (P) paychecks. Hauser (D) stopped payment on the checks. Somerset Valley Bank (the Bank) (D) received more than 80 forged Hauser (D) checks valued at $25,000. In 1999, Triffin (P) purchased 18 dishonored Hauser (D) checks from check cashing companies. The check cashing companies stated that they cashed the checks for value, in good faith, without notice of any claims or defenses to the checks, without knowledge that the signatures were unauthorized or forged, and with the expectation that the checks would be paid. All the checks were marked by the Bank (D) as “stolen” and stamped with the warning “do not present again.” Triffin (P) then sued the Bank (D), Hauser (D), and each of the payees to enforce Hauser’s (D) liability on the checks. Triffin (P) argued that Hauser (D) was negligent in failing to safeguard its payroll checks and its signature facsimile stamp and was therefore liable for payment of the checks. Triffin (P) filed a summary judgment...
- Appeal of summary judgment motion in action for negligence.
- Because the check writing companies were holders in due course, they had the right to sue the purported maker, Hauser (D), for payment of the checks in this case. Under the shelter rule, the check cashing companies could assign these rights to Triffin (P), even if Triffin (P) had knowledge otherwise. Comments 2 and 3 to § 3–202 explain that it is inherent in the character of negotiable instruments that any person in possession of an instrument that is payable to that person or to the bearer is a holder. A holder in due course may even take the instrument from a thief and be protected against the claim of a rightful owner. While the equities may favor Hauser (D) over Triffin (P), the free negotiability of checks is a cornerstone of our longstanding banking practices.
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Plymouth Savings Bank v. U.S. I.R.S. 4 results
- ...of her tangible and intangible personal property individually and as owner of Greenlawn, including all cash and non-cash proceeds arising from her rendering of services; all general intangibles including proceeds of other collateral; and all of Dionne’s inventory, receivables, contract rights or other personal property. Later that year, Dionne defaulted on her loan leaving $65,465 unpaid. Dionne also failed to make FICA payments. On February 2, 1995 the IRS (D) assessed her liability at $62,767, and filed a tax lien on February 14. Exactly 45 days later, on March 31, 1995, Dionne signed a contract whereby she agreed to help Jordon Hospital (the Hospital) obtain a license to operate a nursing home, and the Hospital agreed to pay her $300,000 in three installments. Dionne fully performed as agreed, but the Hospital did not pay her the final installment of $75,000. The Bank (P) sued the Hospital to recover this sum. The court ruled that the Bank (P) had security interest in the...court
- Appeal from summary judgment granted in action for declaratory relief.
- CASE VOCABULARY
- the parties to develop the record on remand. Because the Bank’s (P) lien may trump the IRS’s (D), we reverse the summary judgment in favor of the IRS (D). Reversed and remanded.
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- in collecting J & J’s payment. The District court erred in finding that the letter called for NBC (D) to notify Sutton only in case of J & J’s default. The Rules state that special instructions in letters of collection should be “complete and precise.” Even though the letter could have been clearer, it was sufficient to alert NBC (D) to notify Sutton in case of any “difficulty” in payment. NBC (D) argues that it did not breach its duty under Article 20 (iii)(c) because it did not have actual notice of the wine’s arrival. Essentially, this argument calls for the court to limit Article 20 (iii)(c) to apply only to cases where the buyer’s bank has actual notice of buyer’s default. The Rules serve the same function for international transactions that our UCC does domestically.
- The court here decided that the goals of the International Rules for Collection had the same purpose and policy as the corresponding provisions of the domestic UCC. Thus, the court concluded that a domestic financial institution should have the same obligations in international transactions as they would in domestic business. This holding fashions an equitable resolution of the present case. Some reading the decision might argue that it was unfair to hold NBC (the buyer’s bank) liable under either statute, since the debt was really owed by J & J (the buyers). The statutes, however, actually keep the burden on financial institutions quite low by requiring only that they communicate to seller’s bank that the buyer is having difficulty making payments. Like many of the rules governing documents of title, this kind of communication or notice requirement is necessary to prevent parties at various levels of complex transactions form avoiding liability simply by hiding their heads in the...
- ...an importer, arranged the deal. For this transaction, Edekabank—Rheinberg’s (P) bank—sent a letter of collection, bill of lading and invoices to J & J’s bank, Brooksfield National Bank of Commerce [“NBC”] (D). NBC (D) passed the letter, bill of lading and invoices on to J & J on March 27. The letter of collection stated that payment was due on receipt of the goods, which the invoices estimated would arrive early in April. The letter, in somewhat broken English, instructed NBC (D) to notify Sutton “in case of any difficulty of lack payment.” In fact, the wine arrived on March 31. J & J never told NBC (D) that the wine arrived. J & J told NBC (D) that they could not pay and asked NBC (D) to hold the letter while J & J got together the money. Sutton told NBC (D) that the wine was still unclaimed at Houston harbor in May. NBC (D), in turn, sought instructions from Edekabank. [The wine actually sat out in metal containers until U.S. Customs auctioned it off. If J & J had consumed it,...
- CASE VOCABULARY
- Appeal from a District Court decision holding that the American bank was not liable to German bank because the American bank had no duty to inquire about delivery of goods at issue.
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Coxall v. Clover Commercial Corp. 7 results (showing 5 best matches)
- The rebuttable presumption that a commercially unreasonable sale bars a creditor from seeking a deficiency judgment, unless the creditor proves that a reasonable sale would not have resulted in a higher price paid for the collateral, puts a higher premium on substance than on form. The creditor is not assured of any recovery after a commercially unreasonable sale, but is given an opportunity to show that the debtor was not harmed, because a reasonable sale would not have reduced the deficiency any more. In effect, the rebuttable presumption makes the proceeds of the sale the most important factor in judging a sale of collateral. A creditor will be asked to do no more than realize the highest price possible for the collateral.
- In addition, the sale of the car was not commercially reasonable. Commercial reasonableness is a question of fact, and a secured party who seeks a deficiency bears the burden of proving commercial reasonableness. Every aspect of the sale must be reasonable. New York courts have held that the test for commercial reasonableness is whether the secured party acted in good faith and to the mutual best advantage of the parties. Private sales, as opposed to public auctions, are encouraged, based on the assumption that a private sale will often result in a higher sales price, which benefits all of the parties.
- Coxall (P) is entitled to recover damages for Clover’s noncompliance. Revised Article Nine of the UCC does not allow a debtor in a non-consumer transaction to recover damages in cases in which the deficiency has been cancelled due to the creditor’s conduct. The Code does not explicitly bar such damages in consumer transactions, however, and prescribes minimum statutory damages of not less than “the credit service charge plus ten percent of the principal . . . or the time-price differential plus ten percent of the cash price.” The terms in the damage formulae are not defined, but are left to the construction of the court. According to the contract in this case, the time-price differential is $1,036.24, and ten percent of the cash price is $810, for a total of $1,846.24. Coxall (P) is entitled to recover this amount, even though he has not sustained any actual damages.
- (Battaglia, J.) No. In a consumer transaction, a secured party may not recover a deficiency judgment from the debtor if the sale of the collateral was commercially unreasonable, but the debtor may recover damages for the creditor’s failure to comply with the legal requirements for a sale. The absolute bar to collection of a deficiency is the rule in the Second Appellate Department of the New York court, and applies only to consumer transactions. The plurality rule (which also applies in the Second Department for non-consumer transactions) is that there is a rebuttable presumption that compliance with the legal requirements for the sale of repossessed collateral would have brought in proceeds from the sale sufficient to satisfy the secured debt. In the case at bar, the result would be the same
- Clover (D) did not present any evidence regarding any details of the sale: there was no evidence concerning the procedure for the sale, the identification of prospective buyers, the fair market value of the car, or any other details of the sale except for the price. There was no evidence that the sale was done according to the usual practices for selling repossessed automobiles. The price was the only evidence regarding the sale. Clover (D) received $1,500 for a car that had been purchased four months earlier for $8,100. A low-price sale is not automatically unreasonable, but should be scrutinized carefully by the courts to make sure that every aspect of the sale was commercially reasonable, especially where, as here, there is a potential for self-dealing. A low price may indicate depreciation in the value of the collateral, but in this case, Clover (D) acknowledged that the car had not sustained any physical damage in the time Coxall (P) possessed it. Clover’s (D) claim that the...
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- Although the primary issue in this case involved statutory construction of the damage provisions of
- [Playing semantic subterfuge with this court will get
- Case Vocabulary
- STAY ORDER: As used in bankruptcy proceedings, an order prohibiting any collection efforts or civil court proceedings against the debtor.
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- In keeping with the holding in this case, Official Comment 3 to
- Appeal of summary judgment in action for conversion.
- ...a debt in excess of $1,000.000. In 1991, Spartan (D) entered into a Wholesale Security Agreement with General Motors Acceptance Corporation (“GMAC”) (D). Under that agreement, GMAC (D) agreed to finance or “floor-plan” Spartan’s (D) inventory. This meant that GMAC (D) would advance funds to automobile manufacturers, distributors, or sellers on Spartan’s (D) behalf and Spartan (D) would reimburse GMAC (D) after Spartan sold the automobiles. Both agreements were duly perfected. In 1992, Spartan (D) purchased two Mercedes Benz automobiles with its own money and was reimbursed days later by GMAC (D). A few months later, GECC (P) sued Spartan (D) for the money due under the Inventory Security Agreement. GECC (P) also sued GMAC (D) to determine lien priority in the two Mercedes. Spartan (D) then filed bankruptcy. GMAC (D) sold the two Mercedes. GECC (P) accused GMAC (D) of converting the two Mercedes in violation of GECC’s (P) prior security interest. The trial court granted GECC’s...
- ...trade generally, and between GMAC (D) and Spartan (D) specifically. GMAC (D) was committed to advance funds to enable Spartan (D) to acquire the two cars and Spartan (D) could not have purchased the cars without GMAC’s (D) backing. The timing of the passing of title to Spartan (D) is not relevant. The fact that the Wholesale Security Agreement between GMAC (D) and Spartan (D) provides that GMAC (D) would advance the funds to automobile manufacturers, distributors, or sellers on Spartan’s (D) behalf is not determinative. Generally, the express terms of an agreement and a different course of dealing are considered consistent with each other. Here, GMAC’s (D) practice of sometimes reimbursing Spartan (D) and sometimes paying the seller directly are compatible with one another. In any event, the contract may have been modified by the parties’ post-agreement course of conduct. Therefore, GMAC (D) may retain the proceeds of the sale of the two Mercedes and is granted summary...
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Green Tree Servicing, LLC v. Duncan 5 results
- Mandatory arbitration clauses are common and often utilized as a tool to help prevent disputes from ending up in court. Due to the sovereign nature of Native American tribes in the U.S., the enforcement of mandatory arbitration clauses presents unique roadblocks. Tribal sovereign immunity is much broader than the sovereign immunity held by the federal and state governments and foreign nations and, as such, the Supreme Court has held in many cases that Native American tribes are not subject to suit in state court, even for breach of contract involving off-reservation commercial conduct. Because each tribe is independent, generalizing how tribes address disputes is challenging. However, if tribal law governs, which many arbitration clauses now state, both parties should ensure that they understand the process and structure of the tribal court system prior to engaging in dispute resolution.
- Duncan (D) bought a mobile home and executed a security agreement that contained a lengthy arbitration clause. Green Tree Servicing, LLC (“Green Tree”) (P) was the assignee of the agreement and began a repossession action against Duncan (D) for the mobile home. By signing the arbitration agreement, Duncan (D) unknowingly waived her right to file any court action and agreed to arbitrate any dispute with Green Tree (P). The agreement also stated that Duncan (D) waived her right to a jury completely, but agreed to allow Green Tree (P) to file a court action to repossess her mobile home. This case followed.
- (Yazzie, C.J.; Ferguson, and Black, A.J.) No. An arbitration clause in a consumer contract cannot be enforced if the contract does not contain clear and specific language explaining that the consumer understands that he or she is surrendering their rights to bring claims in court, but nonetheless is allowing claims against him or her to be brought in court. Under the Navajo Nation Code, contracts are not enforceable if they are “unconscionable.” The test for unconscionability is whether, in light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. The importance of the home in Navajo thought calls for scrutinizing the procedures here to ensure they protect a homeowner’s ability to maintain a healthy home and family. Considering all of the relevant factors, the arbitration clause in the financing contract...
- When Duncan (D) bought a mobile home, she executed a security agreement that contained a lengthy arbitration clause that waived her right to file a court action and her right to a jury trial, but that allowed Green Tree (P) to file a court action to repossess the mobile home.
- An arbitration clause in a consumer contract cannot be enforced if the contract does not contain clear and specific language explaining that the consumer understands that he or she is surrendering their rights to bring claims in court, but nonetheless is allowing claims against him or her to be brought in court.
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Information Leasing Corporation v. GDR Investments, Inc., d/b/a Pinnacle Exxon 6 results (showing 5 best matches)
- Finance leases are fundamentally different from typical, bilateral leases in that they involve three parties: the leasor, the lease, and the manufacturer/supplier. The lack of a structural equivalent to these three-party transactions in the UCC prompted the drafters of Article 2A to include provisions that specifically addressed finance leases. Section 2A–407, which explains the nature of the lessee’s duty to pay, enacts a standard provision that is sometimes referred to as a “hell or high-water clause” because it makes the lessee’s duty to pay under the lease “irrevocable” and “independent.” As demonstrated in this case, while many lessee’s may find this provision harsh, it functions by incentivizing leasors to provide the funding needed for lease transactions under the assurance that they will be paid.
- ...showed up to GDR’s (D) store to have “formality papers” signed before the ATM was to be delivered. Upon stating that he needed time to read the document, the CCC representative told Arora that his signature was a mere formality, at which point he signed the lease without reading it. CCC went bankrupt days later, which left GDR (D) stuck with an ATM under the lease with ILC (P) but with no provider to service the machine. GDR (D) tried to contact ILC (P) to remove the ATM. The terms of the lease prohibited cancellation for any reason and had an acceleration clause that indicated that if GDR (D) failed to pay ILC (P) under the lease, ILC (P) had the right to (1) terminate the lease; (2) sue GDR (D) for all past due and future payments, residual value placed on the equipment, and other charges owed to ILC (P); (3) repossess the ATM at GDR’s (D) expense; and (4) exercise any other right or remedy available. The trial court found that Arora owed nothing to ILC (P) and... ...court...
- CASE VOCABULARY
- Did the trial court err in failing to address the effect of the UCC’s provisions regarding finance leases on the issue of GDR’s (D) liability under the lease?
- UNCONSCIONABILITY: The doctrine that allows a court to refuse to enforce a contract due to extreme unfairness.
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St. Ansgar Mills, Inc. v. Streit 7 results (showing 5 best matches)
- ...(D) later refused delivery of the corn orally purchased on July 1, 1996. After he refused delivery, Streit (D) purchased corn on the open market at prices well below the contract prices. St. Ansgar (P) later told Streit (D) it should have followed up earlier with the written confirmation and had no excuse for not doing so. St. Ansgar (P) sued Streit (D) for breach of contract. It sought damages of $152,100, which was the difference between the contract price of the corn and the market price at the time Streit (D) refused delivery. Streit (D) moved for summary judgment, arguing that the oral contract was governed by the provisions of the Uniform Commercial Code, and was unenforceable as a matter of law under the statute of frauds. He also argued that the written confirmation delivered to his father did not satisfy the statute of frauds because he was not a merchant, and because the confirmation was not received within a reasonable time after the alleged oral agreement. The...
- Appeal from an order granting summary judgment.
- Was summary judgment appropriate on the issue of the reasonableness of the delay?
- e between an oral contract and a subsequent written confirmation is reasonable is ordinarily a question of fact for the jury. Generally, the reasonableness of particular conduct is a jury question. Summary judgment is appropriate only when the evidence is so one-sided that a party must prevail at trial as a matter of law.
- In this case, the district court relied upon the large amount of the sale, volatile market conditions, and lack of an explanation by St. Ansgar (P) for failing to send the written confirmation in determining St. Ansgar (P) acted unreasonably as a matter of law in delaying delivery of the written confirmation. Volatile market conditions, combined with a large sale price, would normally narrow the window of reasonable time, but they are not the only factors to consider. Other relevant factors reveal the parties had developed a custom or practice to delay delivery of the confirmation. They also maintained a long-time amicable business relationship and had engaged in many other similar business transactions without incident. There is also evidence to infer St. Ansgar (P) did not suspect the failure of Streit’s (D) father to follow his customary practice in July of stopping by the business was a concern. These factors reveal a genuine dispute, and make the resolution of the...
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Reed v. City of Chicago 4 results
- Rather than hold that the warranty in this case was, in effect, meaningless, the court extended its protections to users (or, in this case, those who misuse the product).
- More recently, the privity requirement has been abolished in cases in which the person claiming a breach of warranty is an employee of the ultimate purchaser of a product. The courts have held that an employee is essentially a third-party beneficiary to the sale, and that the employee’s safety is either explicitly or implicitly part of the basis of the bargain when the employer purchased the product. Similarly, in this case, Reed’s (P) son was the intended beneficiary of any warranty made by the designer and manufacturer of the gown. Cypress (D) contemplated that the gown would be used by jail detainees, and the safety of those detainees was a part of the bargain between Cypress (D) and Chicago (D). If protection is not provided to users like Reed’s (P) son, any warranty on the gown would have little, if any effect. Motion to dismiss denied.
- Case Vocabulary
- (Moran, J.) Yes. The former requirement that the plaintiff in a breach of warranty action be in privity with the manufacturer has been eliminated in Illinois. An action for breach of warranty may be brought a person who is the intended beneficiary of the warranty, regardless of whether that person is in privity with the maker of the warranty. The UCC lists specific exceptions to the privity requirement, but those listed exceptions are not intended to be exclusive. Privity is no longer required for buyers who claim a breach of warranty against a remote manufacturer, or in food and drug cases.
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In re Smith’s Home Furnishings, Inc. 5 results
- , is that the transfer enable the creditor to receive more than such creditor would receive if: 1) the case were a case under chapter 7 of this title; 2) the transfer had not been made; and 3) such creditor received payment of such debt to the extent provided by the provisions of this title.
- ...collateral. In 1994, Smith’s suffered a substantial loss, causing TCFC (D) to reduce Smith’s line of credit from $25 million to $13 million by August of 1995. Simultaneously, TCFC required substantial paydowns of Smith’s debt, and Smith’s paid TCFC (D) most of its available cash in a series of 36 payments totaling $12 million, between May 24 and August 22, 1995. On August 18, 1995, TCFC (D) declared a final default, accelerating the entire debt due from Smith’s and for the first time, required that Smith’s segregate the proceeds from its collateral. Smith initiated a chapter 11 bankruptcy proceeding on August 22, 1995, owing $10,728,809.96 to TCFC (D). TCFC (D) took possession of its collateral and liquidated it, receiving $10,823,010.58. On October 11, 1995, the case was converted to a chapter 7 liquidation and Michael Batlan (Batlan) (P) was appointed trustee. Batlan (P) discovered the $12 million in payments Smith’s had made to TCFC (D) during the 90 days before the petition...
- Appeal of a decision by the district court, affirming a decision by the bankruptcy court, which found that the trustee had not proved that specific transfers to a creditor were preferential.
- This case provides a good illustration of voidable preferences and the underlying policy of
- CASE VOCABULARY
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Anthony Pools v. Sheehan 5 results
- contract is a hybrid transaction which is in part a contract for services and in part a contract for the sale of goods. In determining whether the UCC applies to such hybrid transactions, a majority of courts use the predominant purpose test. This test asks whether the predominant factor, the thrust, or the purpose of a contract is a transaction of sale with labor involved, or vice versa. Under this approach, if the service aspect predominates, no warranties of quality are imposed in the transaction, even if the defect relates to the goods that were involved rather than to the services. The few reported cases involving whether
- Appeal from an appellate court’s ruling reversing the trial court’s directed verdict in favor of Anthony (D) on an implied warranty issue.
- ...was injured when he fell from the side of a diving board of his new backyard swimming pool designed and built by Anthony Pools (D). Anthony (D) also manufactured and installed the diving board as part of the transaction. The pool was “Grecian” in style, meaning that it had two curved alcoves on each side. The diving board bisects the alcove on the deep end of the pool. Sheehan (P) slipped from the right end of the diving board and struck the side of the pool. Sheehan (P) argued that the implied warranty of merchantability was breached, in that the skid resistant material on the top of the diving board did not extend to the very edge of the board. Sheehan (P) also tried to prove the board was defective, in that its position in the alcove made it unreasonably dangerous. The trial court directed a verdict for Anthony (D) on the warranty issue because the written contract between the parties provided that the express warranties it contained were in lieu of any other warranties,...
- Case Vocabulary
- The court here rejected the “predominant factor” test in favor of a more flexible “gravamen” test. If the injury or loss occurred because of a defect in the goods, the warranty of merchantability will apply even in a predominantly service-oriented transaction. Maryland
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Klingbiel v. Commercial Credit Corp. 2 results
In re I80 Equipment, LLC 2 results
- In this case the court determined that financing statements can be exceedingly broad. So long as there is an objectively verifiable method from which a reader can determine the collateral, such as by asking the parties for a copy of the security agreement, and the financing statement gives the third party enough information to do that, a financing statement will be held to adequately describe the collateral.
- UCC 9–502 requires that a financing statement “indicate the collateral covered by the financing statement.” UCC 9–504 lays out how a financing statement may do that, including under subsection (6) “any other method, if the identity of the collateral is objectively determinable.” The degree of specificity in a financing statement is much less than in a security agreement because the two documents serve different purposes. A security agreement lays out contractual terms, while a financing statement only exists to put third parties on notice of the contract. Other courts have held that exceedingly broad statements such as “all of the debtor’s property” were specific enough for a financing statement. In this case, the financing statement specifically told the third parties that there was a list in the security agreement, and named the document, the parties to the document, and the date of execution. A diligent third party would have taken that notice as reason to ask for a copy of the...
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- Appeal from the trial court’s ruling primarily in favor of Teradyne (P) on its breach of contract case.
- All of the remedies provided in the 2–700s should be read in light of § 1–106(1) which provides that remedies should be applied so that “the aggrieved party may be put in as good a position as if the other party had fully performed.” This principle prompted the justices in this case to ignore the language of § 2–708(2), which provides a “due credit for payments or proceeds of resale.” If the court were to take this sentence literally, Teledyne (D) would be given a credit of $98,400, because those were the proceeds Teradyne (P) received from its resale of the equipment to another buyer. Therefore, Teradyne (P) would not have lost any profits and would not be entitled to any damages. Most commentators agree that courts should simply ignore the “due credit” language in lost volume cases such as this one. Teradyne (P) was a “volume seller” because it would have made the sale to Teledyne (D), the breaching buyer, and to the party who purchased Teledyne’s (D) equipment. Therefore, it...
- ...that § 2–708(2) applies to this case. We concur in that agreement because § 2–708(2) applies only if the damages provided in § 2–708(1) are inadequate to put the seller in as good a position as performance would have done. Under § 2–708(1) the measure of damages is the difference between the contract price and the market price. Here the unpaid contract price was $97,416 and the market price was $98,400. Therefore, no damages would be recoverable under § 2–708(1). However, if Teledyne (D) had performed, Teradyne (P) would have had the proceeds of two sales, one to Teledyne (D) and another to the resale purchaser. The last sentence of § 2–708(2) provides a credit to the defaulting buyer for “proceeds of resale.” A literal reading of this sentence would suggest that Teradyne (P) recover nothing because the proceeds of the resale exceeded the contract price. However, because of the statutory history of this section, it is universally agreed that when the seller resells the goods...
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Azur v. Chase Bank, USA 3 results
- State agency law will determine whether apparent authority exists. Under Pennsylvania law, apparent authority is the power to bind a principal that the principal has not actually granted, but that the principal leads persons to believe he has granted. The test for determining whether an agent possesses apparent authority is whether a person of ordinary prudence, diligence, and discretion would have a right to believe and would actually believe that the agent possessed the authority the agent purported to exercise. Courts in the Second Circuit and the D.C. Circuit have, in cases very similar to this case, held that a cardholder’s negligent omission gave the fraudulent cardholder apparent authority. In
- Appeal from an order granting summary judgment.
- The lengthy discussion of apparent authority seems unnecessary. The court had already held that Azur (P) was not entitled to reimbursement for the payments on the fraudulent charges. On the other hand, TILA limits the cardholder’s responsibility for unauthorized charges, thus making the credit card company bear the risk of loss. The discussion of apparent authority helps clarify which charges truly are unauthorized.
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In re Estate of Rider 9 results (showing 5 best matches)
- In this case, while the Court of Appeals relied on book entry, we agree with Wife (P) that Wachovia (P) had a legal obligation to credit the securities to Wife’s (P) account.
- A significant body of case law has not developed for the indirect holding system, and the reported cases generally have applied whatever principles were necessary to protect an innocent investor. The securities industry did not want to use principles of bailment, agency, or trust law to describe the basic operations of the indirect holding system, even though agency law governs much in the relationship between the securities industry and its customers. One important goal in
- The probate court found the UCC controlled this securities transaction, that Husband’s June 17, 2005 directive was an “entitlement order,” and Wachovia (D) was a “securities intermediary.” The court agreed with Wife (P) that Husband’s entitlement order was “effective” upon its issuance to Wachovia (D), but reasoned it still had to be carried out by Wachovia (D), the securities intermediary, to be “effectuated,” and the UCC did not supplant the laws of property or agency, nor did it override the terms of the account agreement. The probate court noted Wachovia (D) received actual notice of Husband’s death on July 8, that the second transfer was posted to Wife’s (P) account that day, and that the third transfer was posted to Wife’s (P) account
- receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person’s securities account; or
- The Probate Court determined that a transfer of securities pursuant to an entitlement order was ineffective, because the transfer had not been completed before the transferee died.
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In re Western Iowa Limestone, Inc. 8 results (showing 5 best matches)
- The next question is whether Leinen (P) and Independent (P) satisfied the requirements of constructive possession. According to the BAP, under Iowa law a buyer has constructive possession of goods held by the seller only if the buyer takes “some visible and apparent step to inform the world of the change in possession from the [seller] to the [buyer].” Cases cited by the BAP referenced
- BANKRUPTCY APPELLATE PANEL (BAP): A panel of bankruptcy judges established in some U.S. circuit courts of appeal that hears appeals from bankruptcy courts. An appeal from an appellate panel is to the circuit court of appeals.
- Case Vocabulary
- Appeal from a decision of the Bankruptcy Appellate Panel reversing a decision of the Bankruptcy Court.
- Finally, United Bank (D) argues that even if Leinen (P) and Independent (P) took possession of the lime, they still are not entitled to BIOC status because the sales of the lime were not conducted in a manner that was customary in Western Iowa’s business or in the industry. The bankruptcy court found that although Western Iowa was new to the business of processing and selling lime through dealers, the sales to Leinen (P) and Independent (P) were conducted in a manner that was a usual and customary practice in the industry. The bankruptcy court’s finding in this regard is not clearly erroneous. Reversed.
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Audio Visual Artistry v. Tanzer 10 results (showing 5 best matches)
- To answer the case’s preliminary question, the appellate court conducted a detailed analysis of the UCC’s scope.
- The final billing brought the cost to an amount significantly higher than stated in the contract. Tanzer (D) disputed the final bill and AVA (P) sued for payment. After a second lightning strike, occurring after the action was filed, shut down the entire system, Tanzer (D) hired another contractor to make repairs. That contractor identified several significant problems with the installation.
- Because all four factors supported the trial court’s finding that the predominant purpose of the contract was the sale of goods, the appellate court affirmed the ruling that
- Whether goods predominate and labor is an incidental part of the transaction, or vice versa, is a question of fact. After examining two other cases,
- Are “smart homes” the wave of the future or a marketing strategy to entice consumers back into bricks-and-mortar stores? Major retailers like Best Buy and Home Depot suffer when consumers come into a store (think, high overhead) to see a product and shop, and then leave to buy the product over the Internet. By offering to figure out what products the customer needs and see them installed, retailers may be able to keep the sale of goods in-house. Does this point make it more likely that setting up the “smart home” is really a service? If you answer yes, consider
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Arabian Score v. Lasma Arabian Ltd. 4 results
- Appeal from order granting summary judgment in favor of Lasma Arabian Ltd. (D) and Lasma Corporation (D).
- ...is not a party to this suit. Paragraph 4 of the agreement provided that, for five years, Score would be a 2 Star Stallion, with Score’s foals being eligible for nomination to all sales sponsored by Lasma (D). Paragraph 4 of the contract also provided that if Lasma Star Stallion, Inc., in its sole discretion, determined that Score was not eligible to participate in the Star Stallion Program, Lasma (D) would, at Arabian’s (P) option, replace Score or refund the unused portion of the $250,000 earmarked for Score’s promotion. The contract also provided that Arabian (P) accepted Score “as is,” without any implied warranties, and that risk of loss passes upon closing. Arabian (P) subsequently obtained a mortality insurance policy insuring Score for his actual cash value. Score died shortly thereafter, and the insurance company went broke. Lasma (D) having expended only about $53,000 for the promotion of Score, Arabian (P) brought suit to recover the remaining $197,000. The trial court...
- There are various unexpected events that can take parties to a contract by surprise and render performance literally impossible. In other situations, performance may become extremely costly, time consuming, or otherwise impracticable, though not literally impossible. The traditional view was that performance would not be excused unless it was literally impossible, even when it was extremely burdensome and the burden was unforeseen. Many modern courts, however, tend to equate extreme impracticability with impossibility and will excuse performance as if it were literally impossible. The UCC is in accord with this modern view at least on the seller’s part.
- return of the unspent portion of the promotion funds because Lasma Star Stallion, Inc. is not a party to this suit, and there is no evidence that Lasma (D) controls the discretion of Lasma Star Stallion, Inc. Furthermore, since Lasma Star Stallion, Inc. has not declared Score to be ineligible for the Star Stallion Program, the condition precedent to Lasma’s (D) obligations under Paragraph 4 has not been satisfied. Even if it was within Lasma’s (D) discretion to declare Score ineligible for the Star Stallion Program, we could not say that its decision not to do so would be an arbitrary or capricious abuse of discretion since Lasma (D) regularly promotes deceased horses. This is done to enhance the owner’s reputation and to increase the value of the stallion’s progeny. Although the thought of spending $197,000 promoting a dead horse sounds bizarre, we must agree with the trial court’s dismissal of the complaint. Affirmed.
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Choice Escrow and Land Title, LLC v. BancorpSouth Bank 9 results (showing 5 best matches)
- Appeal from an order granting summary judgment.
- institution in the Republic of Cypress [sic]. BancorpSouth (D) accepted and executed the payment order. After attempts to recover the funds failed, Choice (P) sued BancorpSouth (D) for the lost funds, and BancorpSouth (D) counterclaimed for attorney’s fees based on an indemnification agreement that it had executed with Choice (P). The district court granted summary judgment to BancorpSouth (D) after concluding that Article 4A of the UCC allocated the risk of loss from the fraudulent payment order to Choice (P).
- The district court held that the above-quoted indemnification provision would create rights and liabilities that were inconsistent with Article 4A because the provision “could effectively require Choice (P) to pay back to [BancorpSouth (D)] those amounts that [BancorpSouth (D)] might owe to Choice (P) under [Article 4A].” But the section of the indemnification provision dealing with “damages, losses, [and] liabilities” is not at issue in BancorpSouth’s (D) counterclaim. BancorpSouth’s (D) counterclaim seeks attorney’s fees, not damages stemming from the fraudulent payment order, and Article 4A contains no provision allocating attorney’s fees between the bank and its customer in the event of litigation. We thus conclude that the portion of the indemnification provision relating to attorney’s fees is not inconsistent with Article 4A. BancorpSouth (D) may seek attorney’s fees from Choice (P) under this provision. Summary judgment affirmed; dismissal of the counterclaim reversed.
- ...no irregularities exist. Article 4A never mentions transactional analysis, but Choice (P) argues that because commercial reasonableness depends on the “size, type, and frequency” of a customer’s payment orders, a commercially reasonable security procedure must differentiate between payment orders based on these factors. Choice (P) further asserts that transactional analysis is the only way to achieve this differentiation. Article 4A does not, however, instruct the bank to consider the “size, type, and frequency” of each payment order it receives in determining if those payment orders are potentially fraudulent. Instead, it instructs the court to consider these factors in determining if a bank’s security procedure is commercially reasonable—in other words, that the commercial reasonableness of a bank’s security procedure depends on whether that procedure is adequate to screen payment orders of the size, type, and frequency normally issued to the bank. The concept of what is...
- Case Vocabulary
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Chemical Bank v. PIC Motors Corp. 7 results (showing 5 best matches)
- Appeal following entry of summary judgment in action to collect money due under contract of guarantee.
- TRIABLE ISSUE: A triable issue of fact will defeat a motion for summary judgment, so that the matter may proceed to trial.
- ...remain liable under the guaranty notwithstanding such release. Thus, the Bank (P) had the right to release the collateral without discharging the guarantor. Negligence or dishonesty on the part of the Bank’s (P) employees is irrelevant. There was no obligation under the terms of the guaranty to preserve and protect the collateral. Under the terms of the guaranty, the Bank (P) could release or surrender the collateral, and extend further credit to PIC (D1), without notifying or discharging Siegel (D2). Where the collateral is in the possession of the debtor, inaction by the creditor does not release a guarantor who has executed a waiver. A party may waive any obligation upon the part of a creditor, including the obligation of the creditor not to impair the security. The parties, by agreement, may determine the standards by which the fulfillment of the rights and duties of the secured party may be measured. [No amount of wrongdoing by others will help Siegel (D2) in this case.]...
- , formerly § 3–606, if the holder of a negotiable instrument, in this case the Bank (P), impairs the value of the interest in collateral, the obligation of the endorser or accommodation party is discharged to the extent of the impairment. The holder of the negotiable instrument has a duty to protect the collateral securing the debt. In this case, Siegel (D2) wanted to raise various defenses based upon the conduct of the Bank (P) and representations made, so that his obligation under the guaranty would be discharged. However, under subsection (i) of
- (Milonas) Summary judgment was not proper since there is an issue of fact as to whether the Bank (P) can be held liable for the tortious acts of its employees. Where the bank’s negligence has resulted in a breach of its duty to preserve and protect the collateral, a waiver will not be enforced so as to bar a viable setoff or counterclaim sounding in fraud, or where based upon the creditor’s negligence in failing to liquidate collateral upon the guarantor’s demand. To hold that a guarantor will always be bound on the underlying obligation, notwithstanding any negligent, fraudulent or tortious conduct on the part of the creditor, simply because a clause to that effect is inserted in the agreement undermines the spirit of the UCC.
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In re Motors Liquidation Company 3 results
- Appeal from an order granting summary judgment.
- ...Mayer Brown, JPMorgan (D), or its counsel, Simpson Thacher & Bartlett LLP, noticed the error. On October 30, 2008, General Motors (P) repaid the amount due on the Synthetic Lease. All three UCC–3s were filed with the Delaware Secretary of State, including the UCC–3 that erroneously identified for termination the Main Term Loan UCC–1. After General Motors (P) filed for chapter 11 reorganization, JPMorgan (D) informed the Committee of Unsecured Creditors that a UCC–3 termination statement relating to the Term Loan had been inadvertently filed in October 2008. JPMorgan (D) explained that it had intended to terminate only liens related to the Synthetic Lease and stated that the filing was therefore unauthorized and ineffective. On July 31, 2009, the Committee commenced the underlying action against JPMorgan (D) in the United States Bankruptcy Court for the Southern District of New York. The Committee sought a determination that, despite the error, the UCC–3 termination statement was...
- JPMorgan (D) argues that it did not intend to release the security interest relating to the Term Loan. In JPMorgan’s (D) view, it never instructed anyone to file the UCC–3 in question, and the termination statement was therefore unauthorized and ineffective. JPMorgan (D) reasons that it authorized General Motors (P) only to terminate security interests related to the Synthetic Lease. What JPMorgan (D) intended to accomplish, however, is a distinct question from what actions it authorized to be taken on its behalf. Mayer Brown prepared a Closing Checklist, draft UCC–3 termination statements, and an Escrow Agreement, all aimed at unwinding the Synthetic Lease but tainted by one crucial error: The documents included a UCC–3 termination statement that erroneously identified for termination a security interest related not to the Synthetic Lease but to the Term Loan. The critical question in this case is whether JPMorgan “authorize[d] [Mayer Brown] to file” that termination statement.
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- In contract action, appeal from summary judgment for Bayway (P).
- , by default, but apparently the buyer can avoid liability for the tax by registering with the I.R.S.) Bayway (P) did not send its General Terms with the acceptance. OMT (D) did not read the General Terms, and did not object. When OMT (D) did not pay the excise tax, Bayway (P) paid it ($464K). Bayway (P) then demanded repayment. OMT (D) refused. Bayway (P) sued, claiming OMT (D) was bound by the Tax Clause. OMT (D) defended, claiming it never assumed tax liability. At trial in District Court (on diversity jurisdiction), Bayway (P) moved for summary judgment. The court held for Bayway (P), finding (i) Bayway’s (P) failure to include the General Terms with its acceptance was immaterial, because OMT (D) could have asked for it, and (ii) under
- (Jacobs) Yes. When an acceptance adds a term to the offer, the party challenging the addition must prove the alteration “material.” A. This case must be decided under New York law, because Bayway’s (P) General Terms’ choice of law provision chose it, and OMT (D) agreed. The relevant provision is
- This case presents a well-organized roadmap for how to analyze “battle of the forms” problems on an exam, under
- Case Vocabulary
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Messing v. Bank of America, N.A. 6 results (showing 5 best matches)
- Appeal from dismissal of complaint after entry of summary judgment in action for declaratory relief and order for cessation.
- Messing (P) attempted to cash a $976 check at Bank of America (D), which was made out to him and drawn on a Bank of America (D) customer checking account. Although Messing (P) provided identification by means of a driver’s license and credit card, the Bank (D), upon learning that he was not a Bank of America (D) customer, required Messing (P) to provide a thumbprint signature, via an inkless fingerprinting device. Messing (P) refused, and the Bank (D) refused to cash the check. The thumbprint signature requirement for non-account holders was in accordance with the deposit agreement the Bank (D) had with its account holders. Messing (P) [feeling very indignant] sued the Bank (D) for declaratory relief, and sought a cease and desist order to prevent the Bank (D) from seeking thumbprint signatures. The court granted the Bank’s (D) motion for summary judgment, and dismissed Messing’s (P) complaint. Messing (P) appealed.
- defines and describes presentment, and § 3–502 describes dishonor. Dishonor of a check does not occur if the check was not properly presented for payment. In this case, Bank of America (D) had a deposit agreement with its customer, the account holder, which permitted the bank “to establish physical and/or documentary requirements” of payees who seek to cash a check drawn on the customer’s account. The court rejected Messing’s (P) argument that a thumbprint signature was not “reasonable identification,” since he had already provided a driver’s license and a credit card. The court also rejected Messing’s (P) argument that the bank “dishonored” the check upon presentment of the check for payment, because the check—having been improperly presented without a thumbprint signature—was never accepted by the Bank (D), and thus there was no “dishonor” of the check. Note that the drawer’s liability only comes into play if the check is first presented to the drawee bank and then dishonored by...
- Case Vocabulary
- DECLARATORY RELIEF: Action merely to have court declare one’s rights, such as under a contract or to specific property.
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Mydlach v. DaimlerChrysler Corp. 6 results (showing 5 best matches)
- Appeal from an order reversing a grant of summary judgment in favor of DaimlerChrysler (D).
- Case Vocabulary
- Courts have generally held that
- . states that express warranties are created in three ways. The first is by an affirmation or promise relating to the goods, which will create an express warranty that the goods will conform to the affirmation or promise. The second is by a description of the goods that becomes a part of the bargain, and the third is by a sample or model. Express warranties under the UCC state that the goods will conform to a standard, and the breach of such a warranty is the delivery of nonconforming goods. The warranty in the present case does not relate to the quality or description of the goods at tender. Instead, the warranty promises only that DaimlerChrysler (D) will repair or replace defective parts during the warranty period. The warranty is a “written warranty” under the Magnuson-Moss Act, but it is not express warranty under the UCC. It is thus not the type of warranty that can be breached on tender of delivery.
- ...last longer than the three years/36,000-mile warranty at issue in this case. If a consumer purchased a car with a five year/50,000-mile warranty, holding that the four-year limitations period commenced on delivery of the car would mean that the period for bringing an action for breach of warranty would run out before the warranty expired. Adoption of a rule that the limitations period began to run upon delivery would allow manufacturers to reap the marketing benefits of a longer warranty period, while escaping the obligations of that warranty by pleading the statute of limitations as a defense. DaimlerChrysler (D) argues that the limitations period for breach of limited warranty actions will be “limitless” and “uncertain” unless a tender-of-delivery rule is adopted. This argument is without merit. The promise to repair or replace is only good during the warranty period, so the latest a claim could accrue is at the very end of that period. Fact questions may arise as to the date...
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- Appeal of summary judgment on counterclaim for declaratory relief.
- The 1999 amendments to Article 9 overrule this case and adopt Sears’s (D) and Professor Shanker’s argument. Section 9–604 now provides that a creditor may enforce a security interest in fixtures by either removing the fixtures from the real property and reimbursing the mortgage holder for the cost of repair or by following real property law, including sale or other disposition of the property. Official Comment 3 states that the revised § 9–604 overrules cases such as this one that hold that a secured creditor’s only remedy is the removal of the fixtures from the real property. Thus, now a secured creditor may not be entitled to sell the real property, but it may probably claim the amount of the debt owed to it or the value of the fixtures out of the proceeds of a sale of the property.
- CASE VOCABULARY
- ) [purchase money security interest in fixtures has priority over conflicting mortgage], its lien was a purchase money security interest and, therefore, had priority over Maplewood’s (P) mortgage. The trial court dismissed Sears’s (D) counterclaim.
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- Appeal from an order affirming an award of summary judgment to Hafner-Milazzo (D).
- ...the authority of CBCC (P) or that it was raised or altered. Failure to give timely notice meant that the statement of account would be considered correct for all purposes and the bank would not be liable for any payments made and charged to the account of CBCC (P) .Hafner (D) worked as a secretary and bookkeeper for CBCC (P) until it was discovered that she had been forging checks on certain bank documents, including drawdown requests on the line of credit and checks paid from one of the accounts. Hafner (D) embezzled approximately $386,000 from 2008 through 2009. In 2010 CBCC (P) informed the bank of the thefts. The Bank (D) determined that an event had occurred that adversely affected CBCC’s (P) ability to repay its debts and declared all amounts due and payable. CBCC (P) sued Hafner (D) and also sued the Bank (D) to recover damages and to prevent the Bank from forcing repayment on the loans. The Bank (D) moved for summary judgment dismissing the complaint in that CBCC (P...
- CASE VOCABULARY
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- Appeal from summary judgment granted in favor of Herzog (P) on its breach of contract suit to enforce two promissory notes issued by McGowen (D).
- (Posner, J.) No. The notes would be enforceable if Herzog (P) were a holder in due course, but Herzog (P) concedes it is not. Herzog (P) argues that the parol evidence rule dictates that the unambiguous notes cannot be varied by extrinsic evidence. However, a holder of a promissory note who is not a holder in due course takes the note subject to all defenses which would be available on an ordinary contract action. One of these defenses, notwithstanding the parol evidence rule, is that the parties did not intend to create an enforceable contract. Some cases enforce the parol evidence rule more broadly in suits on promissory notes where the plaintiff is not a holder in due course. Despite these cases, the parties have tacitly agreed that the applicability of the parol evidence rule to this case is not governed by general contract law, but by a special doctrine that allows parol evidence to show that the negotiable instrument he is suing on was “for a special purpose.” Herzog (P),...
- ...since this case was decided. Under the revision, the outcome would likely be the same. Section 3–105(b) provides that “[a]n instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose is a defense.” Official Comment 2 to this section states that it “continues the rule that nonissuance, conditional issuance or issuance for a special purpose is a defense of the maker or drawer of an instrument” and “can be asserted against a person other than a holder in due course.” In addition, § 3–117 provides that “subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument.” This section goes on to provide that “[t]o the extent that an obligation is . . . nullified...
- ...to its wholly-owned subsidiary, Tru-Flex. The agreement required annual payments from Tru-Flex to McGowen (D) of $500,000 for five years. Later in 1989 two promissory notes were issued by McGowen (D) to Tru-Flex for the sum of $400,000. The parties disagree about the purpose of the notes. Herzog (P) claims it loaned McGowen (D) $400,000 and the notes are McGowen’s promises to repay that loan. McGowen (D) admits having received the $400,000, but argues that it was not a loan but rather a partial prepayment of the next year’s installment due under the asset purchase agreement. McGowen (D) believes that the only purpose of the notes it gave Tru-Flex was to enable McGowen (D) to postpone the realization of taxable income by making the $400,000 payment look like a loan. Herzog (P) soon refused to make further payments under the asset purchase agreement, and McGowen (D) brought an action against Herzog (P) in state court which remains pending. Tru-Flex has assigned McGowen’s (...
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Clark v. Missouri Lottery Commission 4 results
- Appeal from a grant of summary judgment in favor of Community Bank.
- CASE VOCABULARY
- In 2010, Clark (P) executed a consolidated loan agreement with Community Bank in which he granted a security interest in the “Missouri Lottery Payment Assignment” in exchange for a $713,670.96 loan. Under the 2010 loan agreement, Clark (P) agreed to make twelve installment payments of $500.00 and one final balloon payment of $708,170.96 on July 15, 2011. Clark (P) subsequently filed a petition for declaratory judgment in 2013, arguing that the “Missouri Lottery Payments” agreement constituted an unlawful assignment of lottery proceeds and, therefore, was void. Community Bank (D) denied that the assignment was unlawful and filed a counterclaim for declaratory judgment. The Circuit Court entered judgment in favor of Community Bank (D).
- The Texas Supreme Court in
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Jakowski v. Carole Chevrolet, Inc. 3 results
- Motion for summary judgment by buyer in breach of contract action.
- Jakowski (P) entered into a sales contract with Carole Chevrolet (D) for the purchase of a 1980 Chevrolet Camaro, Prior to delivery, the parties agreed that the car would be both undercoated and that its finish would have a polymer coating. The car was delivered to Jakowski (P) without the coatings. A few days later, Carole (D) notified Jakowski (P) of the mistake and instructed him to return the car for application of the coatings. While at Carole’s (D) dealership, the car was stolen and was never recovered. Carole (D) refused to provide a replacement auto or to refund the purchase price. Jakowski (P) sued for breach of contract and now moves for summary judgment.
- Case Vocabulary
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Galyen Petroleum Co. v. Hixson 4 results
- Appeal from summary judgment entered in action for money due on dishonored checks.
- , a “check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until he accepts it.” Furthermore, it is well established that a check, of itself, and in the absence of special circumstances, is neither a legal nor an equitable assignment of the drawer’s funds in the hands of the drawee. Therefore, the holder of the check has not right of action against the drawee, and no valid claim to the fund of the drawer in its hands, even though the drawer has on deposit sufficient funds. In this case, there are no special circumstances or agreements claimed. [Bank (D1) took the money just in time. Hixson (D2) went bankrupt.] Thus, Galyen (P) had no standing to bring a cause of action against the Bank (D1) for the dishonor of any of the three checks. Summary judgment was properly granted. Affirmed.
- ...on three checks presented to drawee Bank (D1) but which were refused even though the drawer Hixson (D2) had funds on deposit with Bank (D1). Hixson (D2) had an account with Bank (D1), but owed it money on promissory notes. Hixson (D2) issued three checks to Galyen (P) on different occasions, but they were returned unpaid for insufficient funds. The evidence showed that at the time of presentment, Hixson (D2) had funds in the account, but the funds were set off by the Bank (D1) to credit Hixson’s (D2) promissory note account. However, at that time the credited notes were not then due. [Bank (D1) wanted to make sure that it got its money from that untrustworthy Hixson (D2).] The notes provided that the Bank (D1), as payee of the notes, had the right of setoff against any deposit balances of Hixson (D2), the maker of the notes, and that it could apply the deposit balances against payment of the notes, whether due or not. Summary judgment was entered in favor of Bank (D1) and...
- Case Vocabulary
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In re Carrier IQ, Inc. 5 results
- Decision on a motion for summary judgment.
- The assets of Carrier IQ (D) were acquired by AT&T in 2015, so the company is defunct. In August 2016, the District Court approved a settlement in this case. The settlement calls for the payment of $9 million to purchasers of devices on which the Carrier IQ (D) software was installed.
- definition of mobile devices’ “ordinary purpose” finds some support in case law from courts in this District. However, the Device Manufacturers’ (D) argument that the Carrier IQ (D) software does not render the mobile devices unfit for the devices’ ordinary purpose simply because the devices could make and receive phone calls and perform other functions is overly simplistic and underinclusive. There are a number of examples of courts which have held that a defect can render a product unfit notwithstanding the fact the product at issue could, in a technical sense, perform its base function. These courts have found that the implied warranty can be breached when, although capable of performing its ordinary function, the product nonetheless fails in a significant way to perform as a reasonable consumer would expect.
- The Court finds that the consumers (P) have adequately alleged that the Carrier IQ (D) software rendered their mobile devices unmerchantable. While there is no dispute that the software did not make it impossible to make and receive phone calls, text messages, and the like on their devices, that alone is not dispositive. Users have a reasonable expectation that mobile devices, in general, will allow them to communicate with others without having a
- In determining if a defect rises to the level of rendering a product unfit for its ordinary purpose, the court must ask two questions. First, the defect in question must be “fundamental” in that it affects the core functionality of the product. In defining a product’s core functionality, a court should
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Carrigg v. General R.V. Center, Inc. 5 results
- Decision on motions for summary judgment.
- Were General RV (D) and Cornerstone (D) entitled to summary judgment?
- ...other language which in common understanding calls the buyer’s attention to the exclusion of warranties. To exclude or modify the implied warranty of merchantability, the disclaimer language must mention merchantability and must be conspicuous, and printed heading in capitals is conspicuous if larger than the contrasting type or color. In this case, the purchase agreement plainly includes language in bolded, capital letters warning that the RV is sold “as is” and that dealer disclaims all warranties express or implied. The disclaimer specifies the “as is” nature, specifically mentions merchantability, and is conspicuous in writing. Further, the same “as is” language was also in other documents that were signed by the Carriggs (P) and found that the multiple disclaimers were effective. It is a well-established rule that failure to read an agreement is not a valid defense to its enforcement, since a contracting party has a duty to examine a contract and know what they are signing....
- Cornerstone for breach of contract. General RV (D) and Cornerstone (D) each filed motions for summary judgment.
- In essence, warranties are promises about the quality or features of a product, and they are some of the most important terms in any contract. The law implies certain warranties in some contracts unless the seller expressly disclaims them. As a result, manufacturers often seek ways to exclude or disclaim implied warranties, like the warranty of merchantability. Under the UCC, a disclaimer of warranties must be conspicuous, but courts of different jurisdictions have adopted different standards for determining whether a disclaimer is conspicuous. Jurisdictional differences may relate to the heading, font, color, or style of the disclaimer, therefore sellers must carefully consider what is required under the laws of the relevant jurisdiction(s) if they wish to successfully disclaim the implied warranty of merchantability.
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- Appeal of summary judgment.
- .... The contract between Grand Beach and LBG (P) provided that the units would remain Grand Beach’s personal property notwithstanding their attachment to the real property. LBG (P) obtained a purchase money security interest in the 90 units. LBG (P) filed a financing statement identifying the debtor as “Grand Beach Inn, Inc., William J. DiBiase, Jr., President.” The statements were indexed under the name “Grand Beach Inn, Inc.” Nothing was indexed under DiBiase’s name. Later in June 1987, Key Bank (D) made another loan to DiBiase secured by a second mortgage on the same property. Key Bank’s (D) title search failed to disclose LBG’s (P) financing statement. In 1989, Key Bank (D) foreclosed on both the mortgages. LBG (P) was not joined as a party because Key Bank (D) did not know of LBG’s (P) interest in the units. LBG (P) filed this action seeking a declaratory judgment that its purchase money security interest in the units had priority over Key Bank’s (D) mortgages. The trial court...
- The court here made two key rulings. First, it decided that the heating and air conditioning units are fixtures. Next it decided that LBG’s (P) security interest was not properly perfected and that, therefore, LBG’s (P) purchase money security interest in the units did not have priority over Key Bank’s (D) mortgage. With respect to whether the units are fixtures, the court rejected out of hand LBG’s (P) argument that the agreement between LBG (P) and DiBiase specifically states that the units are to remain personal property. Instead, the court determined the parties’ intent by looking at how the units were attached to the real estate and the purpose for the attachment. With respect to the priority issue, pursuant to
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First Financial Bank, N.A. v. Citibank, N.A. 6 results (showing 5 best matches)
- The depositary bank sought summary judgment on its claim that the paying bank negligently handled the return of the invalid check.
- First Financial (P) sued Citibank (D), contending that Citibank (D) failed to give “timely and proper notice of nonpayment and return” of the check, a breach of Citibank’s (D) warranty obligations to First Financial (P). First Financial (P) filed a motion for summary judgment.
- The court focused on the returning bank’s duties arising from a decision to dishonor a check, which arise from federal Regulation CC, promulgated under the Expedited Funds Availability Act,
- For an ongoing review of relevant cases, see Eric C. Surette,
- On July 7, First Financial (P) sent an image of the check to Chase with a cash letter detailing the items being forwarded for payment. On Thursday July 8, Chase sent an image of the check to Citibank (D). Citibank (D) determined that the check was drawn on an invalid account and marked it as such. It also determined that First Financial’s (P) endorsement on the check was illegible, so it allegedly did not know which bank accepted the check for deposit. Significantly, the court determined that no reasonable jury would reach the same conclusion, and Citibank (D) should have returned the check directly to First Financial (P). Instead, Citibank (D) merely returned the check to Chase. Chase did not have a “downstream” agreement with First Financial (P), meaning it had not agreed to pass back checks that had bounced or were rejected.
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First National Bank of Chicago v. Standard Bank & Trust 6 results (showing 5 best matches)
- Appeal from judgment following granting of motion for summary judgment in action for declaratory judgment, and appeal from judgment on the pleadings.
- ...for the amount presented to them. On the following business day, Monday, November 22, Chicago (P) opted not to honor the checks and returned all of them to Standard (D). Standard (D) received notice of Chicago’s (P) decision on Tuesday morning, November 23. That afternoon, Standard (D) attempted to dishonor the checks it had received. Three of its bank officers dashed off to Chicago’s (P) Operations Processing Center carrying the checks. The checks were received by Chicago (P) at 3:58 p.m. that day, but Chicago (P) did not credit Standard’s (D) account for that sum. On November 30, Chicago (P) filed suit, seeking a declaration that Standard’s (D) return of the checks was not timely because it neither met the “midnight deadline,” nor any of the deadline exceptions laid out in the Federal Reserve Board (the Board) Regulations appurtenant to EFAA. Standard (D) argued the return was proper, and counterclaimed for prejudgment interest. The district court found that the checks were...
- DE NOVO: As used by courts of appeal to denote reviewing the entire record and making its decision anew, and without regard to lower court’s decision.
- Case Vocabulary
- MOTION FOR JUDGMENT ON THE PLEADINGS: Deciding the case as a matter of law based upon the allegations contained in the complaint.
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In re Dixon Ford 4 results
- Decision on a motion for summary judgment.
- Dixon-Ford (P) is alleging fraudulent inducement in connection with the origination of her mortgage. Under New Jersey law, fraud in the inducement is a personal defense to which holders in due course are immune. Summary judgment in favor of U.S. Bank (D) granted.
- In the present case, the note has been presented to the court. The note is facially free from any irregularity that would have alerted U.S. Bank (D) to the existence of a potential fraud. Failure to investigate inconsistencies regarding Dixon-Ford’s (P) income, without more, does not show bad faith sufficient to prevent U.S. Bank (D) from being a holder in due course. Moreover, it is undisputed that U.S. Bank (D) did not participate in the origination of the mortgage, nor is there evidence of collusion or communication between WSF (D) and U.S. Bank (D) regarding Dixon-Ford’s (P) mortgage.
- The transaction described in this case was not an unusual one for its time. “Stated income” mortgages were approved with little or no verification of the claims in the application. Mortgages were seldom held by the original mortgagor, but were packaged with hundreds of other mortgages and sold to investors. Often, it would be difficult or impossible for a mortgage holder to prove that it really did own a particular oft-sold mortgage.
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Decibel Credit Union v. Pueblo Bank & Trust Co. 7 results (showing 5 best matches)
- Appeal from judgment following the granting of a motion for summary judgment in action for breach of presentment and transfer warranties.
- A thief stole blank checks furnished by Decibel Credit Union (Decibel) (P) to one of its checking account customers. Over a 40-day period, the thief forged the customer’s signature on a series of 14 checks totaling $2,350. Each of the checks was cashed at Pueblo Bank & Trust Co. (Pueblo) (D), where the thief had a bank account, sometimes at the rate of more than one check per day. [Not surprisingly], the thief’s checking account did not have sufficient funds to cover the checks that were being cashed. Pueblo (D) processed the checks and Decibel (P) timely paid them. As soon as Decibel’s (P) customer discovered the forgeries, he notified Decibel (P). In turn, Decibel (P) then made demand upon Pueblo (D) for reimbursement, but Pueblo (D) declined. Decibel (P) filed suit against Pueblo (D), contending that Pueblo breached both the presentment and transfer warranties. After both parties filed motions for summary judgment, the court entered judgment for Decibel (P), and Pueblo (D) appealed.
- (Ruland) No. We hold that a presenting bank does not extend a presentment warranty to a drawee bank, which warrants all signatures to be genuine, and thus is not liable for amounts paid by drawee bank on forged checks. It is undisputed that under the UCC, a drawee bank is liable to its checking account customer for payment of a check on which the customer’s signature has been forged. Further, when the drawee bank honors the forged instrument, the payment is deemed final for a person who or an entity which takes the instrument in good faith and for value. Pueblo (D) asserts that in this case there were no presentment or transfer warranties made to Decibel (P). Presenting warranties appear in Section 4–208(a), which provides in subsection (1) that the warranty to a drawee assures only that there are no unauthorized or missing endorsements on the checks. If a warranty that all signatures were genuine applied, the final payment doctrine contained in
- Case Vocabulary
- COURT HOLDS THAT PRESENTING BANK DOES NOT BEAR THE LOSS FOR AMOUNTS PAID ON FORGED CHECKS
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In re PTM Technologies, Inc. 3 results
- PTM (P) moved for summary judgment, alleging that security interests had not been properly perfected.
- Decision on a motion for summary judgment.
- The same result flows from the results that occur when a “Standard RA9” search is conducted under the correct name of PTM Technologies, Inc. (P). The designation of the “Standard RA9” search alternative as “Standard” sufficiently identifies that search alternative as the one employing the standard search logic. A “Standard RA9” search thus also dictates a decision in favor of PTM (P) since the parties agree that a “Standard RA9” search does not reveal the defective financing statements. The parties also agree that a “Non-Standard RA9” search using the “sounds like” feature will reveal the financing statements. Given these results, in order for GE Capital (D) and Maxus Capital (D) to prevail on the merits, they would have to establish that the “Non-Standard RA9” search utilizes the “standard” search logic, while the “Standard RA9” search does no. This proposition that is illogical and contrary to the undisputed facts before the court. Summary judgment granted.
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Reeves v. Foutz & Tanner, Inc. 5 results
- A secured creditor has the right to accept the collateral in complete or partial satisfaction of the debt of the defaulting debtor. If everything is done in accordance with the Code, the creditor keeps the collateral, discharges the obligation, and abandons any claim for a deficiency. Note that this case involves a secured party who is in possession of collateral, as opposed to previous cases where the creditors must go after the collateral by repossession. The creditor in a case like this must send notice of intent to retain the collateral to the debtor, and if no objection is received within the necessary time period, the creditor may keep the collateral. If objection is made, then the creditor must follow the requirements of § 9–504 regarding sale and accounting to the debtor for any surplus. In this case, the court was required to determine whether the accounting requirement applies when the notice of intent to retain is sent but without a true intent to retain. As the holding...
- (Sosa) No. We hold that a secured party in possession of collateral, who sends notice of intent to retain collateral, does not have the right to sell the collateral in its regular course of business without having to account to the debtor for any surplus. Under the UCC, a secured party in possession of collateral has two options upon the default of the debtor. It may sell the collateral, but must account to the debtor for any surplus (and the debtor must account for any deficiency), if the security interest secures indebtedness. The second option allows the secured party the alternative of retaining the collateral in satisfaction of the obligation. However, in this case, the secured party must give written notice to the debtor that he intends to keep the collateral in satisfaction of the debt. The debtor has thirty days to object to the retention and require the sale of the property. As previous case law strongly suggests, the waiver of surplus and deficiency rights under § 9–505 [...
- Appeal to State Supreme Court from reversal by court of appeals of judgment in action for damages for failure to account for surplus from sale of collateral.
- Reeves (P1) and Begay (P2), uneducated Navajo Indians with limited ability to understand English and commercial matters, pawned jewelry with Foutz & Tanner, Inc. (Foutz) (D) for a money loan in return for a promise to repay in thirty days with interest. The jewelry was worth several times the amount borrowed. Upon default, Foutz (D) sent both Reeves (P1) and Begay (P2) a notice of intent to retain the collateral [probably figuring they wouldn’t know what it meant]. No objections were made by either Reeves (P1) or Begay (P2). Foutz (D) then sold the jewelry in the regular course of business, but did not provide an accounting to Reeves (P1) or Begay (P2) for any surplus. Reeves (P1) and Begay (P2) sued for the money due from the surplus of the sale of jewelry. The trial court found in favor of Reeves (P1) and Begay (P2), the court of appeal reversed and Foutz (D) appealed to the State’s Supreme Court.
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- ...may be appropriate where there is “uncertainty of valuing” the good since specific performance is reserved for instances where there is no adequate remedy at law. Under the UCC, the “test of uniqueness. . . must be made in terms of the total situation which characterizes the contract.” There is no support for Mirion’s (P) claim that the Sunpower’s (D) cryocooler is unique since, within the nuclear energy industry, cryocoolers are not unique or rare goods and are capable of being valued. In looking at the totality of the situation and considering the characteristics or attributes of the cryocoolers which were important to the parties and others in the relevant marketplace or industry, the court determined that Mirion (P) failed to provide evidence that showed that Sunpower (D) was uniquely able to produce a cryocooler that operates as it does and that also performs reliably. Mirion (P) showed only that Sunpower’s (D) cryocooler performed better than some other competitors, not...
- Generally, specific performance is disfavored by courts and granted only in situations where no other remedy at law will adequately compensate the injured party. Where a contract is for the sale of unique property or goods, mere monetary damages may not adequately compensate the injured party. In requirements contracts, damages may be difficult to estimate, and where a contract combines both unique and ordinary items, the entire contract may be specifically enforced. However, because specific performance is an equitable remedy left to the court’s discretion, a court may choose not to grant it even where it may be allowed.
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Hutzler v. Hertz Corp. 3 results
- stems from the fact that the drawer’s only obligation to the payee, upon issuance of a check, is to see that the funds are in the bank. Moreover, in this case, Hertz (D) made the check payable to both the agent and to Hutzler (P), the creditor, which gave Hutzler (P) an added measure of protection by requiring the agent-attorney to expose himself to prosecution if he forged her signature to convert the proceeds. The party who should be required to bear the risk of unauthorized acts and loss is the creditor who selected the dishonest agent-attorney, not the drawer of the check. Hertz Corp.’s (D) liability was discharged upon payment of the settlement draft by the drawee bank, despite the forgery, and Hutzler (P) may not recover thereafter against Hertz Corp. (D). Amended judgment reversed and Hertz’s (D) motion for summary judgment granted.
- ...damages for personal injuries and wrongful death of her husband after an automobile accident. The parties settled and Hutzler (P) signed a general release in favor of Hertz (D). Hertz (D) mailed Hutzler (P) two checks. One of these checks totaled $10,929 and was payable to “Christina Hutzler (P) Individually And As Administratrix of the Estate of Michael E Hutzler and Daniel Yudlow as attorney.” Yudlow indorsed this check with his own signature, forged Hutzler’s (P) signature, and deposited the check into his own account. Yudlow subsequently closed this account and disappeared. Hutzler (P) tried to locate Yudlow to obtain her share of the settlement but could not find him; in the meantime, she retained another attorney who made oral and written demand on Hertz Corp. (D) for payment of the settlement check directly to Hutzler (P). Hertz Corp. (D) refused and Hutzler (P) sued for the amount of the settlement check. The court granted Hutzler (P) judgment against Hertz Corp....
- Issues of liability when an agent signs commercial paper are some of the most frequently litigated issues in commercial law. Several courts have ruled that a client is liable when their attorney signs the client’s name on a negotiable instrument. The reasoning is that, between the client and the debtor who issued the payment, the client should bear the risk of their own attorney’s defalcation. On the other hand, some commentators take an opposing view, arguing that, based on agency principles, the attorney had no authority to sign the client’s name and that the client did nothing to demonstrate apparent authority for the attorney to do so.
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Parr v. Security National Bank 3 results
- Other cases have reached the issue of reasonable accuracy without consideration of the bank’s computer system. For example, other courts have held that a 10-cent error in the amount of the check, plus the payee, check number and date, described it with sufficient accuracy to allow the bank to stop payment. However, in one case the opposite result was reached where the bank told the customer that a stop payment order would not be effective unless the exact amount of the check was provided. In the case before us, the Bank (D) does not contend that it gave Parr (P) such notice. In
- The issue presented here was what constitutes reasonable identification of the check so as to give a bank a reasonable opportunity to stop payment. Since Parr (P) had given the Bank (D) all the requested information, and there was only a one-digit error in the check, amounting to a fifty-cent difference, the court held that this was sufficient reasonable identification. The court imposed an objective standard, which ignores the bank’s procedures in determining whether or not a customer provided sufficient correct information. Note that the court suggested that an option for the banking industry was to seek legislative amendment in order to prevent this type of liability. This case was decided in 1984, and the 1990 revisions to the Code have made changes. The revised section requires that the item be described with reasonable certainty, and Official Comment 5 provides that the customer “must meet the standard of what information allows the bank under the technology then existing to...
- Case Vocabulary
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Hilliman v. Cobado 6 results (showing 5 best matches)
- The highest court of the State has defined breach of the peace as “a disturbance of public order by an act of violence, or by any act likely to produce violence, or which by causing consternation and alarm, disturbs the peace and quiet of the community.” The right of repossession is limited and exercisable only without a breach of the peace. It is not required that there be physical confrontation or the threat thereof to effect a breach of the peace. In this case, Cobado (D) engaged in conduct, which was likely to, and did in fact, produce violence, consternation and disorder. He ignored the order of the Szatas (P2) to desist and leave, ignored the admonition by the Lieutenant to desist, demonstrated contempt for all restraint by saying “to hell with this we’re taking the cows,” released, beat and herded the cows to the trucks, and ignored the warnings that continuation would result in arrest. This conduct is sufficient for us to find that the retaking of the cattle was a breach of...
- The case demonstrates that the courts will ignore a clause in a security agreement that authorizes repossession and requires the debtor to agree not to resist or interfere, if a breach of the peace occurs. It also sets forth the type of conduct that will constitute breach of the peace. Although there was no physical altercation, the conduct by Cobado (D) produced violence (by beating the cows), consternation, and disorder. Another significant point in the case is that the right of repossession, even when the agreement expressly provides for entry onto the premises, is limited and exercisable only without a breach of the peace. Note that the repossession here was done in the presence of the debtors, even though there was no default in payment.
- CASE VOCABULARY
- Order to show cause in trial court for injunctive relief seeking return of livestock following repossession.
- INJUNCTIVE RELIEF: Seeking a court order for an injunction to command an act or to prohibit or restrain an act.
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Dawda, Mann, Mulcahy & Sadler, P.L.C. v. Bank of America, N.A. 6 results (showing 5 best matches)
- The opinion excerpted in the case omits section 4, in which the court collects cases showing the continuing validity of the duty of inquiry. For example, the Seventh Circuit has held that when the duty is triggered, banks simply cannot become HDCs.
- For more than two years, Flaska, a partner of the law firm of Dawda, Mann, Mulcahy & Sadler, P.L.C. (Dawda) (P), presented checks drawn on Dawda’s (P) client trust account and made payable to the Bank of America’s (BOA) (D) order. BOA (D) deposited the checks in Flaska’s personal account. During the two years of embezzlement, Flaska deposited a total of $529,676.50. Even though Dawda (P) was not a customer and did not owe BOA (D) any money, BOA (D) accepted the checks for deposit without inquiring about them. Flaska went to jail; Dawda (P) sued BOA (D) in state court for (1) breach of the common-law “duty of inquiry”; (2) common-law conversion; (3) statutory conversion; and (4) negligence. BOA (D) moved the case to federal district court and Dawda (P) dropped counts two and three. BOA (D) then filed a motion to dismiss the remaining counts for failure to state a claim, contending it did not owe Dawda (P) any duty, and, in any event, it was a HDC.
- The court ruled that the circumstances of the transactions put BOA (D) on inquiry and it could not ignore the warning signs Flaska’s deposit of the trust-account checks presented. The motion to dismiss was denied.
- BOA (D) argued that the 1993 revision to the UCC abrogated the common-law duty of inquiry, but the court rejected that argument, noting that the UCC section that defines a HDC has language that obliquely refers to the duty of inquiry. To be an HDC, the instrument cannot bear evidence of forgery or alteration and cannot be irregular or incomplete so that it raises questions of authenticity. Checks written to a bank as a payee by a non-customer are likely to be irregular under the UCC.
- meant an irregularity in the instrument itself. The court disagreed. Although the comment explicitly refers to an irregularity on the face of the instrument, the language of the statute did not limit the irregularity to the instrument. Instead, the statutory language could refer to an irregularity in the circumstances of the transaction and such an irregularity could preclude the bank from becoming a HDC.
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Jones v. Approved Bancredit Corp. 2 results
- the normal remedy of withholding payment when there has been a misrepresentation or other valid reason to refuse payment. Many courts have solved this problem by denying holder in due course status to the finance company where it maintains a close business relationship to the dealer whose paper it buys. In such situations, the finance company should not be able to hide behind the UCC and obtain an unfair advantage over the purchaser. Other courts have justified this rule by arguing that a finance company is better able to bear the risk of the dealer’s insolvency than the buyer and is in a better position to protect its interests against unscrupulous dealers. The cases look to factors which show that the finance company cannot claim that it was a good faith innocent purchaser of the instrument. Relevant factors include whether the finance company approves the standards of the dealer, whether it has agreed to take all or a predetermined quantity of the paper that meets such standards,...
- This case is typical of those using the “close connection” doctrine to protect consumers from parties who might otherwise qualify as holders in due course. Today, the Federal Trade Commission has abolished holder in due course status for consumer notes. The FTC rule requires that leases and contracts for the sale of consumer goods display a notice that the holder of the contract is subject to all claims and defenses that the debtor could assert against the seller. Before the FTC adopted this rule, however, courts had to invoke the “close connection” doctrine to protect consumers. The doctrine was originally developed in consumer transactions, but has also been applied in purely commercial settings.
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Morgan County Feeders, Inc. v. McCormick 2 results
- This case illustrates that the classification of collateral determines the effect of the security interest. It also demonstrates how the same goods may be classified differently depending on the use to which they are put. For example, in this case, Allen used the cattle for recreational cattle drives. The court compared this to using cattle for rodeos or for feed, where the use of the cattle would be for a shorter period of time, and, therefore, would constitute inventory. The same goods may also be classified differently depending on who has possession of them. For example, milk in the hands of a farmer would be a farm product, whereas milk in a grocery store would be inventory. The same milk in a grocery store customer’s hands would be a consumer good.
- Allen purchased cattle to be used primarily for recreational cattle drives. Morgan County Feeders, Inc. (“Morgan”) (P) had a security interest in Allen’s cattle. Allen sold McCormick (D) 56 head of cattle. If the cattle were Allen’s inventory, they would pass to a business free of any security interest. Morgan (P) claimed the cattle were “equipment” and, therefore, McCormick (D) bought the cattle subject to Morgan’s (P) security interest. McCormick (D) claimed the cattle were “inventory” and that, therefore, they passed to him free of any security interest. The trial court held in Morgan’s (P) favor.
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- When a seller tenders goods, buyers may either accept or reject those goods. The failure of a buyer to act within a reasonable time results in technical acceptance. Prior to acceptance the burden is on the seller to show that a perfect tender was made under the UCC. As this case illustrates, courts have held that formal notice of rejection is not always required where the buyer gives the seller notice that it will not accept the goods until it can be determined that the goods function as intended.
- Appeal from the trial court’s judgment in favor of Maple Row (D).
- Did the trial court err in ruling that Maple Row (D) properly rejected the goods and that Koviack (P) was not entitled to recovery for the costs of those goods?
- ...the system. The pump was delivered late in the harvest season, so Maple Row (D) installed it the following spring. Come spring, Koviack (P) was unwilling to install the pump because Maple Row (D) had not paid for it or its operating panel, and Maple Row (D) was unwilling to pay until the pump and panel were installed and it could confirm that they worked as intended. Maple Row (D) hired another irrigation specialist to install the pump who informed Maple Row (D) that the pump would not work with the retention pond. Maple Row (D) purchased another pump that was compatible with the retention pond and irrigation system. Koviack (P) sued Maple Row (D) for breach of contract, account stated, and unjust enrichment. Maple Row (D) filed a counterclaim alleging that Koviack (P) failed to provide the proper pump for the irrigation system and that Koviack (P) refused to correct the problem. The trial court found that Maple Row (D) properly rejected the pump and its panel and that Koviack...
- ...Per Curiam) No. A buyer properly rejects nonconforming goods if the buyer gives the seller notice of intent to reject the nonconforming goods within reasonable time. Under UCC 2–602(1), rejection of goods must be within a reasonable time after their delivery or tender, and rejection is ineffective unless the buyer seasonably notifies the seller. After rejecting the goods, the buyer may not exercise any ownership over the goods. In addition, where the buyer is in physical possession of goods in which he has no security interest, the buyer has a duty after rejecting the goods to hold them with reasonable care for a time sufficient to permit the seller to remove them; beyond this, the buyer has no further obligations with respect to goods it rightfully rejected. “Reasonable time” under UCC 2–602(1) depends on the nature, purpose, and circumstances of the case. Where the goods are of a complex nature and the buyer depends on the seller’s expertise regarding whether the goods will...
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- In this case the court determined that the contract at issue would defeat the statutory purpose of UCC Article 7. The legislature had set limits on when a bailee would be held liable and when a bailee would not be liable for damages to the goods in the bailee’s custody. Although the statutory scheme allowed the parties to a contract to limit the amount of liability, it was a step too far to allow the parties to simply waive liability completely.
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In re Grabowski 4 results
- CHAPTER 11: 1. The chapter of the Bankruptcy Code allowing an insolvent business, or one that is threatened with insolvency, to reorganize under court supervision while continuing its normal operations and restructuring its debt. The vast majority of Chapter 11 cases involve business debtors. 2. A business reorganization conducted under this chapter.
- PRIORITY: The status of being earlier in time or higher in degree or rank; precedence. An established right to such precedence; especially, a creditor’s right to have a claim paid before other creditors of the same debtor receive payment.
- CASE VOCABULARY
- The financing statement and the security agreement are two different types of documents and serve two entirely different purposes. The security agreement is the contract between the lender and the borrower. It is important that both parties know exactly what is covered—especially in the case of an individual debtor, who may be waiving exemptions. A financing statement, on the other hand, is just a way of providing public notice of the existence of a lien. All of the terms of the agreement are not put on the statement, because the only part that must be disclosed is the existence of the agreement. Further inquiry, if any, is left to the subsequent creditor.
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Wilson v. Scampoli 4 results
- the court applies in this case.
- Case Vocabulary
- (Myers, J.) Yes. A seller may cure his nonconforming delivery by either repair or replacement of the nonconforming good. A retail dealer would certainly expect and have reasonable grounds to believe that merchandise like color television sets, new and delivered as crated at the factory, would be acceptable as delivered, and that, if defective in some way, he would have the right to substitute a conforming tender. Prior cases indicate that minor repairs or reasonable adjustments are frequently the means by which imperfect tender may be cured. Removal of the television chassis presents no great inconvenience to Buyer (P). Buyer’s (P) refusal to allow inspection essential to determine the cause of the defect defeated any effort by Seller (D) to provide timely repair, or if necessary, replacement. As such, Buyer (P) has failed to show a breach of warranty entitling him to a brand new set or to rescission. Reversed.
- ...a retail dealer, paying the total purchase price in cash. The sales ticket showed the purchase price and guaranteed replacement of any defective tube and parts for a period of one year. When the set was delivered to Buyer (P) two days later, it did not function properly. Two days later, a service representative on behalf of Seller (D) attempted unsuccessfully to repair the television set on site. The service representative advised that the television’s chassis would have to be taken to the shop for repair. Buyer (P) refused to allow the chassis to be removed, asserting that she wanted another brand new set, not a repaired set. Buyer (P) later demanded the return of the purchase price, but Seller (D) refused. However, Seller (D) renewed his offer to adjust, repair, or, if necessary, to replace the set. Buyer (P) ultimately initiated this suit against Seller (D) seeking a refund of the purchase price. The trial court granted rescission of the contract and directed the return of...
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Lindholm v. Brant 3 results
- According to news reports, in 2003 a Swedish court sentenced Malmberg to three years in prison for fraud and embezzlement for this transaction. That court also entered judgment on behalf of Lindholm (P) for $4.6 million. Interestingly, Brant (D) had owned “Red Elvis” before this transaction. He purchased the painting in 1969 while still in college for around $10,000, and sold it shortly thereafter for $35,000. In 2007, when this case was decided, the painting was reportedly worth as much as $25 million.
- ...a duty to take steps that would conform to reasonable commercial standards when he had doubts or questions regarding Malmberg’s authority to sell “Red Elvis.” Brant (D) did take extraordinary steps, such as investigating title and negotiating a formal contract of sale. Although Brant (D) was cautioned that the investigation was not conclusive, title searches of paintings are not customarily conducted and therefore provided some assurance that Lindholm (P) had no claims to the painting. In addition, the evidence was sufficient for the trial court reasonably to conclude that Brant (D) was dealing with honest, reliable, and trustworthy art dealers. Brant (D) established that it is customary to rely on the assurances of respected art dealers when conducting a transaction, and he had no reason to depart from this practice. The steps taken by Brant (D) were sufficient to conform to reasonable commercial standards for the sale of artwork. Brant (D) thus had status as a buyer in the...
- The customary practice in the art industry of not requiring a merchant buyer to obtain documentary proof whenever there are reasonable doubts or questions regarding ownership does impose risks on those who entrust art to a dealer. Courts must respect “the usual or customary practices in the kind of business in which the seller is engaged.” They are not entitled to impose a preferred type of business practice. Moreover, the evidence at trial established that documentary proof of ownership customarily is not required in order to protect the confidentiality of the parties to the transaction. Requiring supporting documentation of the ownership of a work would destroy the privacy and confidentiality that buyers and sellers have come to expect. Accordingly, only when circumstances surrounding the sale cast severe doubt on the ownership of the artwork are merchant buyers required to obtain documentary assurance that the seller has good title. Affirmed.
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Rinaldi v. Iomega Corp. 2 results
- Iomega Corp. (D) manufactures computer Zip drives (high-capacity floppy disks). In sales, Iomega (D) disclaims the implied warranty of merchantability through a document included
- ’s purpose, which is to “protect a buyer from unexpected and unbargained for . . . disclaimer.” Other courts upheld contractual terms shipped with the packaging, often because they found this was an efficient way of getting contractual terms to buyers.
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In re Howell Enterprises, Inc. 3 results
- , the court held that the debtor’s possession of the collateral (three cars) was sufficient for a security interest in the debtor’s inventory to attach. Here, on the other hand, the court held that the debtor’s possession of a letter of credit was not enough for a security interest in the debtor’s accounts receivable to attach. The difference between these two cases lies in the difference between the parties’ intents. In
- (Rosenbaum, J.) No. The facts of this case are complex, but most are not legally relevant. It is not relevant whether a letter of credit can ever be an account receivable. Under
- ...D) agreed to transfer the proceeds of the letter of credit to Tradax (P) once it matured. The companies’ names were used interchangeably throughout the transaction. Howell (D) listed the Bar Schwartz transaction as an account receivable on its books. After the rice was delivered to Bar Schwartz, Howell (D) received Bar Schwartz’s letter of credit. However, before the letter of credit matured, Howell (D) filed for bankruptcy. First National (D) claimed its perfected security interest in Howell’s (D) accounts receivable, including the Bar Schwartz letter of credit. Tradax (P) brought this action claiming that the Bar Schwartz letter of credit was not one of Howell’s (D) accounts receivable and, therefore, was not subject to First National’s (D) security interest. Tradax (P) argued alternatively that the letter of credit was subject to a constructive trust in Tradax’s (P) favor. The bankruptcy court held that First National (D) had a perfected security interest in the letter of...court
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In re Short 3 results
- . The other line of cases applies the “dual status” rule, holding that the new loan may be partially purchase-money and partially nonpurchase-money. This rule is in keeping with the language of
- sets forth how payments are allocated between the purchase-money and nonpurchase-money components of the loan. However, because this case involves consumer goods,
- CASE VOCABULARY
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- (Isicoff, J.) Yes. A financing statement that has an incorrect identification of a debtor is “seriously misleading” if the statement would not be found by a search of the records of the filing office under the debtor’s correct name using the filing office’s standard search logic. Formerly, courts used a reasonableness standard to determine if a misnomer in a financing statement was sufficient to identify a debtor. Recent revisions to Article 9 have been enacted to lessen the importance of fact-intensive, case-by-case determinations and simplify the filing system as a whole. A financing statement is effective if a computer search run under the debtor’s correct name produces the statement with the incorrect name. If it does not, the statement is ineffective as a matter of law. The rule strikes a balance between allowing flexibility for human errors and avoiding a rule that would place an inappropriate burden on searchers who would have to make searches under the correct name and under...
- . The court in that case held that the “reasonably diligent searcher” standard still applied in some part. A financing statement was thus not misleading because even though a search with the standard Florida search logic did not turn up the page with the statement, the searcher had only to push the “previous” button one time to see the statement. The court held, however, that the obligation to push the “previous” button is not limitless.
- Klein (D) is correct that there is no reasonableness requirement in the statute. He is not correct, however, when he argues that a searcher is required to scroll through the Registry until the nonconforming statement is located. When a statute is unambiguous on its face, it must be applied as written, unless doing so would produce an absurd result. If the result does in fact include more than the initial page, there is a reasonable limit to the search. That limit is no more than one page “previous” or “next” from the initial result screen. Summary judgment for the Trustee (P) granted.
- In this case, a search for “
- Is there a “reasonableness” requirement for searches? The court seems to imply that there could be, but the search that would have been required to find Klein’s (D) financing statement would not be within the limits of “reasonable.” Any reasonableness requirement takes away some of a creditor’s obligation to make sure a financing statement is accurate.
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In re Wood 3 results
- This case protects the security interest of an attorney who does not regularly take assignments of accounts. However, the court leaves open the question of how to decide whether an assignment is “casual and isolated.” What if Larkin (P) had taken five assignments in his 20 years of practice? What if he had taken 20? Similarly, under the “percentage” test, what percent of an assignor’s accounts must be assigned for the assignment to constitute a “significant” portion? Pursuant to § 9–309(2) Official Comment 4, the exemption from filing covers only transactions so isolated or insubstantial that “no one would think of filing.” The best advice is, when in doubt, file a financing statement. Because filing is relatively easy and inexpensive, close cases should be resolved against the creditor, and the creditor should have the burden of proving that § 9–309(2) applies.
- [now § 9–309(2)] provides that filing a financing statement is not required to perfect a security interest in an assignment of accounts which does not transfer a significant part of the assignor’s outstanding accounts. Official Comment 5 [now Official Comment 4] explains that the section seeks to protect assignees who do not regularly take assignments. Courts use a “percentage test” and/or a “casual and isolated transaction” test to determine whether a “significant part” of the assignor’s outstanding accounts have been assigned. Under
- Larkin (P) and Wood (D) were attorneys. On March 15, 1977, Larkin (P) loaned $10,000 to Wood (D). Wood (D) executed a demand promissory note, but did not make any payment on the note for five years. On June 3, 1982, Wood (D) agreed to pay Larkin (P) $1000 to be applied to the accrued interest and that subsequent payments would be applied first to interest and then to principal. In the agreement, Wood (D) assigned to Larkin (P) his right to receive contingency fees in two litigation matters. On September 9, 1983, Wood (D) filed for bankruptcy. Wood (D) [a typical attorney] sought to avoid Larkin’s (P) security interest in the contingency fees. The Bankruptcy Court found for Wood (D), holding that Larkin’s (P) security interest was not perfected and was not exempt from filing under
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- The court in the present case agreed with the trial court’s finding that Machlett (D) had accepted the goods by signifying its willingness to take the tanks despite their nonconformities. However, the facts as reported reveal that Plateq (P) promised to remedy the defects prior to delivery, which seems to signify that Machlett (D) did not intend to pick up defective goods, but was expecting conforming goods on the delivery date. Nevertheless, Machlett (D) could have taken delivery of the tanks and revoked its acceptance shortly thereafter by showing a substantial impairment of the value of the tanks to him, assuming Plateq (P) was unable to cure the defect. Alternatively, Machlett (D) would have had a breach of warranty action, provided that he notified Plateq (P) of the breach within a reasonable time. An important question is the effect of a cancellation notice that did not specify the defects. Failure to specify the defects prevented Plateq (P) from making any needed repairs.
- (Peters, J.) Yes. A buyer’s general acquiescence in the seller’s proposed tender, despite possible remaining minor defects, constitutes an acceptance of the goods by the buyer. The trial court determined that, pursuant to
- Case Vocabulary
- ...Plateq Corp of North Haven (P) two lead-covered steel tanks to be constructed by Plateq (P) according to specifications supplied by Machlett (D). The tanks were specially designed for the purpose of testing x-ray tubes and were required to be radiation proof according to federal standards. The contract provided that the tanks would be tested for radiation leaks after their installation on Machlett’s (D) premises and would be corrected at Plateq’s (P) expense. When the tanks were substantially completed, Machlett (D) noted some remaining deficiencies. Plateq (P) promised to remedy these defects by the next day in time for delivery. Machlett (D) indicated that it would pick up the tanks within a day or two. Instead, Machlett (D) sent a notice of total cancellation, but failed to particularize the grounds upon which cancellation was based. Plateq (P) brought suit to recover the purchase price and incidental damages, and Machlett (D) counterclaimed. The trial court held for Plateq (P...
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Webster v. Blue Ship Tea Room, Inc. 5 results
- places greater emphasis on the knowledge and expectations of the buyer and the seller. It seems in this case that the court concluded that Blue Tea (D) did not breach the implied warranty of merchantability under
- Ms. Webster (P), a native New Englander, ordered a bowl of fish chowder at the Blue Ship Tearoom, a quaint Boston restaurant owned by Blue Ship Tearoom, Inc. (D) (Blue Ship). Blue Ship (D) promptly served Ms. Webster (P) a hot and hearty bowl of chunky fish chowder. Ms. Webster (P) stirred the fish chowder a bit to cool it down and then proceeded to eat. No sooner had she taken four spoonfuls, however, when she began to choke on a fishbone which had lodged in her throat. Ms. Webster (P) was quickly transported to Massachusetts General where doctors had to perform two esophagoscopies in order to remove the bone. Ms. Webster (P) sued Blue Tea (D) for damages, alleging that Blue Tea (D) had breached an implied warranty of merchantability when it served her fish chowder with bones in it. The case was first submitted to an auditor who found for Ms. Webster (P). The case was then tried before a judge and jury, and the jury also returned a verdict in Ms. Webster’s (P) favor. Blue Tea (D)...
- ...products. The implied warranties of merchantability and fitness of the Uniform Commercial Code (UCC) are not meant to assure a consumer that a product will be free of hazards or imperfections which the consumer should reasonably anticipate. Here, Ms. Webster (P) is a native New Englander who is presumably accustomed to eating fish chowder and, specifically, the hearty variety of this region. It is well known that New England chowders are not thin, watered-down broths of the sort served to hospital convalescents. Rather, our chowders are thick and chunky and full of natural ingredients which have not been rendered into insipid simulacrums of their former selves through factory processing. A New England restaurant patron who orders genuine New England fish chowder in a quaint Boston restaurant, as Ms. Webster (P) did here, should be prepared to cope with the hazards of fish bones, the occasional presence of which in chowders is, it seems to us, to be anticipated. This case is...
- Case Vocabulary
- Appeal from trial court’s refusal to direct a verdict in favor of the defendant.
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- One important duty that the issuer of a letter of credit must recognize is the duty to properly inspect the presentation documents before making payment on the letter of credit. In carrying out this duty, the issuer makes sure that the documents are in order and that the seller of the goods and beneficiary of the letter has acted in conformance with the terms and conditions of the letter of credit. As this case makes clear, if the issuer does not carefully perform this important duty, it can be held liable for any losses that result to the buyer and applicant for the letter. On a different note, the
- ...to comply with the terms and conditions of the letter of credit. In this case, in the letter itself the parties adopted the Uniform Customs and Practices for Documentary Credits 500 (UCP), a compilation of internationally accepted commercial practices, as the governing authority. Accordingly, we must look to the UCP for guidance in analyzing whether BOC’s (D) actions were appropriate. BOC (D) claims that its August 11 telex to TCB constituted notice of refusal under UCP Article 14(d). Voest (P) disagrees, arguing that there is no clear statement of refusal. According to Article 14(d), if the issuing bank chooses not to honor the presentation documents, it must provide a notice of refusal within seven banking days of receipt and the notice must reference all discrepancies and state the disposition of the rejected documents. Here, BOC’s (D) notice is deficient because it does not state that it is actually rejecting the documents or refusing to honor the letter of credit. This...
- CASE VOCABULARY
- Decision of the United States District Court for the Southern District of Texas following a 5-day bench trial.
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The Bank/First Citizens Bank v. Citizens and Associates 6 results (showing 5 best matches)
- In this case, the issue is one of negligence. Section 3–406(a) provides protection for any person who pays in good faith or takes an instrument for value or collection in good faith. However, if the person paying in good faith asserts § 3–406(a), then under subsection (b) that person must exercise ordinary care in paying the instrument; if not, subsection (c) provides that the loss is allocated between the person precluded and the person asserting the preclusion under subsection (a). The burden of proving failure to exercise ordinary care under subsection (a) is on the person asserting the preclusion, and the burden of proving failure to exercise ordinary care under subsection (b) is on the person precluded. Thus, by affirming the trial court’s judgment, the court of appeals held that the Bank (D) did meet its burden and proved that Citizens (P) failed to exercise ordinary care.
- Case Vocabulary
- COURT DETERMINES BANK’S LIABILITY BASED UPON “SUBSTANTIALLY CONTRIBUTES” TEST UNDER SECTION 3–406
- ...–406, The Bank (D) must prove that Citizens (P) failed to exercise ordinary care, defined as “observance of reasonable commercial standards, prevailing in the area in which the person is located, with respect to the business in which the person is engaged.” Both Wilburn and his partner were very experienced businessmen, with Wilburn making investments and loans for over 37 years, and both of them holding realtor’s licenses. Given their experience, we agree with the trial court that they failed to exercise ordinary care by delivering the checks to Gray without having any written documentation and without ever verifying her authority or the terms of the alleged agreement with Allied. It has often been held that a drawer is negligent or fails to exercise ordinary care when he entrusts a third party to deliver a check to the payee, and fails to adequately investigate the transaction. There is no evidence to negate the finding that Citizens (P) engaged in negligent and careless...
- ...and observed the operation, with Allied’s name on the door and with Gray as the Branch Manager. They decided to purchase a franchise and, over a one-month period, Wilburn wrote three checks made payable to Allied, which totaled $50,000.00. He had called Gray for the mailing address and she volunteered to “overnight” it for him to Texas. Someone on Gray’s behalf picked up the check from Wilburn’s office. [Can you guess what happened next?] The checks were not forwarded to Allied’s office, but deposited by Gray in her personal bank account with endorsements which read “Allied Mortgage Co. #259” or “Allied Mortgage Branch #259.” The Bank (D) delivered them to another bank for credit of the funds deposited into Gray’s account, and the other bank paid over the money and debited the same from Citizen’s (P) account. The trial court relied upon Section 3–406 [customer who fails to exercise ordinary care regarding unauthorized signatures is precluded from asserting the forgery... ...court...
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- With regard to the burden of loss, the District Court imagined that the one action either party could have taken to prevent the loss was for State Security (P) to have withheld payment until the check cleared. The trial court concluded that State Security chose not to delay the payment because it earned a fee from cashing the check, and that in so doing, it ran the risk that the check may be dishonored. Simply put, that conclusion does not comport with sustainable “ordinary care” analysis. That a business charges a fee for the utilization of its services is not determinative of whether the conduct of that business on the occasion in question lacked “ordinary care.” Under the circumstances of this case, the trial court’s reasoning seems directed more towards the “good faith,” rather than the “ordinary care,” requirement. We have already rejected, however, American General’s (D) claim that State Security’s (P) taking the check lacked “good faith.” More significantly, the trial court’s...
- The default allocation of loss in cases involving imposters is that the drawer of the instrument bears the risk of loss, because the drawer dealt directly with that party. The drawer, therefore, is in the best position to avoid the fraud.
- he District Court held in favor of American General (D), explaining that State Security (P) could have taken steps to prevent the loss, but it had not exercised
- Was the District Court correct in holding that State Security (P) bore the risk of loss?
- Fast approvals of loans were common, especially in the highly competitive market that existed before the 2008 financial crisis. Many of those loans were made by non-bank lenders, such as American General (D). Non-bank lenders were not subject to the close regulation that traditional banks work under, and they are also competing with other similarly situated lenders for the same business. The remarkable thing about this case is that transactions such as this one did not happen more often.
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Winter & Hirsch, Inc. v. Passarelli 3 results
- ...The question here is whether the defense of usury is available to the Passarellis (D) where Winter & Hirsch (P) claims to be a holder in due course of the note and thus takes it free of such defenses. The Passarellis (D) argue that Winter & Hirsch (P) knew of the usurious interest rate being charged and thus could not have become a holder in due course. The Passarellis (D) point out that Winter & Hirsch’s (P) name is on the loan application and that they were told by Equitable that Winter & Hirsch (P) might give them the $10,000. Also, the monthly payments on the note were to be made to the office of Ralph Brown, an attorney for Winter & Hirsch (P). The most compelling fact to this court is that Winter & Hirsch (P) issued its check to Equitable on February 18, ten days before the money was given to the Passarellis (D). Thus, Winter & Hirsch (P) gave the money to Equitable before the Passarellis (D) executed the note which Winter & Hirsch (P) claims to have bought from Equitable...
- Case Vocabulary
- This case rejects Winter & Hirsch’s (P) “head in the sand” argument. While there is no duty for a holder to investigate the facts surrounding an instrument that appears normal on its face, a party cannot intentionally remain ignorant of facts that would make the transaction illegal. Here, the face of the document itself put Winter & Hirsch (P) on notice that the loan was usurious, so it cannot claim lack of notice. The “good faith” requirement is also missing here. Winter & Hirsch (P) cannot claim to have taken the note in “good faith” when it advanced the funds for the usurious loan before the Passarellis (D) even signed the note.
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Ward v. Federal Kemper Insurance Co. 4 results
- This case examines who is considered the owner of the money presented by way of a check. The answer requires a determination of when a check is considered accepted for payment. The holding of the case shows that mere possession is not sufficient. There must be presentment of the check for payment. The court noted that the relationship between drawer and drawee is one of creditor and debtor, and the drawer does not own the funds it has on deposit with the drawee. Under former
- ...an automobile liability policy to Ward (P) and he paid the premium in full. After Ward (P) changed vehicles, Insurance Co. (D) sent him a refund check for overpaid premium in the amount of $12.00 drawn on Citizens National Bank (the Bank). Although Ward (P) received the check, he never negotiated it. Soon thereafter, the Insurance Co. (D) realized that it had made a mistake in the amount of the refund due Ward (P). It had sent Ward (P) [the whopping sum of] $7.50 too much. Ward (P) did not pay, nor does he recall receiving, the bill. Insurance Co. (D) cancelled the policy. Approximately one month later, Ward (P) was involved in an automobile accident. Ward (P) and others involved in the accident sustained injuries and property damage. Insurance Co. (D) declined to provide coverage. Ward (P) sued seeking a declaratory judgment as to coverage. The trial judge treated the cross motions for summary judgment as a hearing on the merits and issued a declaratory judgment in favor of...
- Case Vocabulary
- ] provides that in the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid. Moreover,
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Rheinberg-Kellerei GmbH v. Vineyard Wine Co. 6 results (showing 5 best matches)
- This case examines the seller’s duties to the buyer under § 2–504 and when a risk of loss passes under a shipment contract pursuant to
- paragraph (c) . . . is a ground for rejection only if material delay or loss ensues.” [A sinking ship constitutes a material delay or loss!] We agree with the trial court’s conclusion that the failure of the seller, Rheinberg (P), to notify Vineyard (D) of the shipment until after the sailing of the ship and the ensuing loss, was not “prompt notice” within the meaning of Section 2–504. Therefore, the risk of loss did not pass to Vineyard (D) upon delivery of the wine to the carrier pursuant to
- ...) (D) agreed to purchase cases of wine from a West German wine producer and exporter, Rheinberg-Kellerei GmbH (Rheinberg) (P), through its importing agent/broker, Frank Sutton (Sutton). Vineyard (D) had received confirmation of the sale orders from the agent Sutton. For the next three to four months, Vineyard (D) made telephone inquiries to the agent concerning when the wine would be shipped and/or arrive. In late November, 1978, Rheinberg (P) issued notice to its agent Sutton of the date of shipment, port of origin, vessel, estimated date of arrival and port of arrival. Vineyard (D) was not given this information. The purchase contract did not request Rheinberg (P) to deliver the wine to any particular destination. Rheinberg (P) gave notice to its agent Sutton of the shipment of the wine, but Vineyard (D) was not given such notice. Vineyard (D) did not learn that the wine had been shipped until some weeks later when documents were sent from the bank to collect the invoice from...
- Case Vocabulary
- Appeal from judgment following court trial seeking damages for breach of contract.
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R & J of Tennessee, Inc. v. Blankenship-Melton Real Estate, Inc. 7 results (showing 5 best matches)
- Lack of reasonable notice of the sale is another factor in determining the commercial reasonableness of a sale. Blankenship (D) argued that he should have received actual notice of the sale before it could proceed. The UCC requires that notification must be “reasonable.” It is left to the court to determine, on a case-by-case basis, whether “reasonable” requires a second try after a secured party sends notice and learns that it was not delivered. Reasonable notice affords a debtor a reasonable opportunity to avoid the sale by discharging the debt, or to see that the collateral brings a fair price. A notice that does not give this opportunity is not reasonable, and a sale under it is not commercially reasonable. Ordinarily, sending
- In addition, R & J (P) did not advertise the sale in a newspaper, and an experienced auctioneer was not used. R & J (P) was the only bidder at the sale and also valued the collateral, instead of using an independent appraiser. Although an independent appraiser is not required in every case, the lack of one in the case at bar is an additional factor showing that the sale was not commercially reasonable.
- WHAT CONSTITUTES A REASONABLE TIME FOR NOTIFICATION OF DEFECTS DEPENDS ON THE CIRCUMSTANCES OF THE CASE
- Johnny Melton testified that he used his previous experience in banking and mobile home sales to assess the value of each item of collateral. After the sale, R & J (P) brought an action against Blankenship (D) for a deficiency judgment of $13,388.40, pursuant to the guaranty. The general sessions court found for Blankenship (D), and R & J (P) appealed to the circuit court. After a
- R & J’s (P) failure to provide adequate notice of the sale may allow Blankenship (D) to recover damages from R & J (P). When a creditor conducts a commercially unreasonable sale of collateral, there is a presumption that the debtor is damaged to the extent of the deficiency claimed. A commercially unreasonable sale does not, however, extinguish the deficiency. The presumption shifts to the creditor the burden of proving the amount that should have been recovered from the sale. If R & J (P) can rebut the presumption, it will be entitled to recover the deficiency. Here, there is insufficient evidence in the record to determine the actual value of the collateral sold. On remand, the trial court must determine whether R & J (P) has presented sufficient evidence to rebut the presumption; if so, the court must determine whether the deficiency should be offset by any damages due Blankenship (D) for the improper sale. Reversed and remanded.
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- ...not only the identity of Lessels, but also his authority to sign on behalf of Jennie (D), the bond owner. If the broker represents an individual, he guarantees not only the genuineness of the owner’s signature, but also that the seller is really the owner of the securities. The rule protects purchasers from fraud by persons who do not really own the securities they offer for sale. Purchasers from corporate sellers need the same protection. If a broker’s indorsement does not guarantee that the seller has really authorized the sale, then the guarantee is worthless. Brokers acting on behalf of corporate owners of securities are obliged to know their clients and to determine who in the corporation has the power to authorize transfers. It is no excuse that this may take time or delay completion of a securities sale. In the present case, Jennie (P) was not obligated by Lessels’s actions because Lessels acted beyond the scope of his authority by signing the power of attorney authorizing...
- accurately reflects the law as it is currently codified in § 8–306. The person guaranteeing the signature still guarantees both that the signature is genuine and that the person signing was authorized to sign. The guarantor remains liable to a person dealing with the security who suffers a loss as a result of the inauthenticity of the signature. This case also gives one a practical example of the importance of registering securities. Only the registered owner, here the Jennie Clarkson Home for Children, could redeem the bonds or their coupons or sell the bonds. Fortunately for the Jennie Clarkson Home, the registration and guarantee of signature rules gives it an opportunity to recover its losses, since the case seems to indicate that Lessels successfully absconded.
- CASE VOCABULARY
- Appeal from an Appellate Division decision affirming a trial court judgment that a transfer agent was liable to the issuer when transfer agent incorrectly guaranteed the identity of a party claiming authority to transfer securities.
- ...Board of Directors, did not have Jennie’s (P) seal, and was not signed by Jennie’s (P) secretary. Lessels also forged a power of attorney authorizing transfer of the bonds. Lessels signed the power of attorney on behalf of Jennie (P). The power of attorney was witnessed by H. Knickerbocker & Co.’s cashier, and was signed for H. Knickerbocker & Co. by Gibson (D). Gibson (D) had these documents sent to the Railway (D), whose transfer agent changed the registration to Bearer. Gibson (D) sold the bonds for Lessels. Lessels absconded with the proceeds of the sale. Jennie (P) sued the Railway (D) for improperly transferring the bond registrations. The Railway (D), in turn, sought relief from Gibson (D) on the grounds that the stock exchange had a rule that an indorsement by a member of the exchange guarantees the signature of the security owner. The trial court held that Gibson (D) was liable to the Railway (D). The Appellate Division affirmed. On appeal, Gibson (D) argued that as a...
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- A person who buys new technology runs the risk that the market will not accept it, even if it is an objectively better product, and that it will be discontinued. In this case, the court noted that the competition between Sony and Toshiba (D) was well-documented in the media. In that context, the Buyer (P) should have been aware that efforts at marketing could be intensified. Toshiba (D) was entitled to compete in the marketplace, and its efforts to do so should not subject it to breach of warranty claims.
- Case Vocabulary
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Triffin v. Dillabough 2 results
- ...money orders. American Express (D) does not argue that Gerstner’s signature was affixed to the money orders for any reason other than to authenticate them. Therefore, the first requirement for negotiability is met. American Express (D) argues the second requirement is lacking because the money orders do not contain an unconditional promise or order to pay. American Express (D) claims the legend on the back of the money orders qualifies the otherwise unconditional order on the front directing the drawee to “PAY THE SUM OF” a specified amount “TO THE ORDER OF” the payee. The legend on the back provides as follows: “Do not cash for strangers. This money order will not be paid if it has been altered or stolen or if an endorsement is missing or forged. Be sure you have effective recourse against your customers.” We do not agree with American Express (D) that this language renders the order to pay conditional on the money order not being stolen, altered, or forged. In a similar case...
- (Castille, J.) The money orders contained express conditional language which precludes a finding of negotiability. The statute distinguishes implied conditions and express conditions. An express condition renders an instrument non-negotiable. The use of the word “if” clearly and explicitly conditions payment on the money orders not being stolen, altered, or forged. The majority’s reasons for departing from the statutory language are strained. The majority relies on a Louisiana case decided before the UCC was adopted. A decision by an intermediate Louisiana court interpreting French legal principles should not override the explicit language of a Pennsylvania statute. The majority supports its conclusion by claiming that the conditions on the back of the instruments merely reflect other provisions of the law rather than create a condition. The statutory defenses are ineffective against holders in due course. The language at issue here is operative even against holders in due course....
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- The court says that the interest in goods that a debtor must have before a security interest may attach is more than “mere possession,” but may be less than ownership. The question then becomes, what does the creditor get? In this case, it is not clear whether there would be enough evidence to conclude that Anderson (D) had a claim to ownership of the cattle he raised. If Anderson (D) is ultimately found not to be the owner of the cattle, Border State (P) will have a security interest in his “right” to raise the cattle and sell it on behalf of Johnson (D).
- Border State (P) sued Bagley Livestock Exchange (D) and Johnson (D), alleging that they converted Border State’s perfected security interest in the cattle sold. Johnson (D) brought a third-party complaint against Anderson (D) seeking indemnity on the conversion claim. Anderson (D) counterclaimed for breach of contract. After Border State (P) presented its case to the jury, Johnson (D) and the Exchange (D) moved for a directed verdict. The trial court granted the motion, finding that Johnson (D) did not grant Anderson (D) an ownership interest in the cattle. Anderson’s (D) counterclaim was submitted to the jury, and the jury found that the contract between Johnson (D) and Anderson (D) had been modified, and that Johnson (D) breached the contract. Johnson’s (D) motion for judgment notwithstanding the verdict was denied.
- CASE VOCABULARY
- A security interest attaches to collateral when value has been given, the debtor has rights in the collateral or the power to transfer rights, and the debtor has signed a security agreement that contains a description of the collateral. The parties all agree that Anderson (D) signed a security agreement and that value was given. The parties also do not dispute the validity of the description of the collateral. What is disputed is whether Border State’s (P) security interest attached to the calves sold. The trial court held that the cattle-sharing contract did not grant Anderson (D) an “ownership interest” in the calves, and specifically found that the modifications testified to by Anderson (D) did not modify the terms of the agreement to grant an ownership interest. The trial court apparently determined that, for Border State’s (P) security interest to attach, Johnson (D) would have had to grant Anderson (D) an interest equivalent to ownership. This is an incorrect statement of the...
- On remand, the trial court must initially determine whether the cattle-sharing agreement is ambiguous. There is a suggestion of ambiguity because the agreement states that the cattle provided by Johnson (D) would continue to be “owned” by Johnson (D), but the agreement also required only that the calves bred from the cattle would be sold in Johnson’s (D) “name.” The parties whose interests are affected by this determination should have a full opportunity to argue whether the cattle-sharing contract is ambiguous. Reversed and remanded.
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Waddell v. L.V.R.V., Inc. 4 results
- does not explicitly state that a seller must be given an opportunity to cure defects before acceptance is revoked. In this case, the court seems to infer such an opportunity, based on the buyer’s obligation to act “in good faith.” Many consumer warranty laws, such as state motor vehicle “lemon laws,” explicitly require that the seller be allowed to attempt repairs before there is any obligation to make a refund. Those laws often place a limit on the number of repair attempts required, so that the buyer is not strung along indefinitely, waiting for promised repairs to be effective.
- Waddell (P) filed a complaint to revoke acceptance of the motor home in June 2000. The court found that the motor home had nonconformities that included defective air conditioning and heating, failure of the batteries to stay charged, and a tendency of the engine to overheat. The court held that these nonconformities substantially impaired the RV’s value to Waddell (P), and also held that Waddell (P) revoked acceptance within a reasonable time.
- (Gibbons, J.) Yes. A buyer may revoke acceptance of goods when a nonconformity impairs the value of the goods to the individual buyer, taking into account the needs and circumstances of the individual buyer. The test has two parts. The first part is a subjective inquiry into the needs and circumstances of the buyer who seeks to revoke. The court does not consider the “average” buyer. The second part of the inquiry is whether the nonconformity does in fact impair the value of the goods to the buyer. It is an objective inquiry, and requires evidence that shows the buyer’s needs were not met because of the nonconformity.
- ...not be allowed to revoke acceptance because the revocation was not made within a reasonable time. The trial court found that Waddell (P) noticed the defects immediately after the purchase. Waddell (P) always took the RV to Wheeler’s (D) whenever he noticed a defect, and Wheeler’s (D) always attempted to repair the defect. The RV was in Wheeler’s (D) service department for seven of the eighteen months Waddell (P) owned the RV. Although a seller is entitled to try to cure a nonconformity before acceptance may be revoked, the seller may not continually postpone revocation by making repair attempts. Furthermore, a seller’s attempts to cure do not count against a buyer regarding timely revocation. Tolling the reasonable time for revocation of acceptance is appropriate, given the buyer’s obligation to act in good faith, and it also gives the seller a reasonable opportunity to cure defects. Waddell (P) gave several opportunities to repair, and when Wheeler’s (D) was unable to make the...
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- (1) A bailee is liable for the unexplained loss of goods for which he has issued a warehouse receipt. (2) When the date of loss or conversion of bailed goods cannot be established, damages are the highest market value of the goods between the date of bailment and the date that bailor becomes aware of the loss or conversion.
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Lincoln Co. v. Detroit Diesel Corp. General Insurance 7 results (showing 5 best matches)
- Courts have taken three approaches to the economic loss doctrine. The majority approach is a bright-line rule that precludes recovery in any tort case where a product damages itself without causing personal injuries or damaging other property. Damage to a defective product is merely the failure of the product to meet the buyer’s expectations. The parties have the opportunity to allocate risk through contract negotiations and the purchase of insurance. The cost of personal injuries may be an overwhelming misfortune that a person is not prepared to meet. Permitting recovery in tort could also subject a manufacturer to unlimited liability, while the damages for breach of warranty are limited.
- Case Vocabulary
- Certified question from the U.S. District Court.
- The economic loss doctrine somewhat arbitrarily limits recovery based solely on the type of loss sustained. The actual defect is not considered. In this case, it is fortunate that no one was injured and that no property other than the bus was damaged. It was not just fortunate, but somewhat surprising. A fire on a bus travelling on the highway would normally be expected to cause severe personal injuries. Had there been such injuries, the suit against Prevost (D) and Detroit Diesel (D) might have proceeded.
- (Holder, C.J.) Yes. There is no exception to the economic loss doctrine for damages to a defective product when an inherent defect makes the product unreasonably dangerous and causes the damages by a sudden, calamitous event. The economic loss doctrine is implicated when a defective product injures itself without causing personal injury or damaging other property. The loss is defined generally as the diminution in value of the product because it is of an inferior quality and does not function for the purpose for which it was sold. There are two types of economic loss: direct, which may be measured by the cost of repairing or replacing the product; and consequential, which includes damages from the owner’s inability to use a product. Tennessee courts have never explicitly adopted the doctrine, but have expressed agreement with the principles behind it.
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Ramirez v. Autosport 4 results
- , the buyer may revoke acceptance only if the nonconformity substantially impairs the value of the goods to him. This provision protects the seller from revocation for trivial defects. However, because this case involves rejection of goods, we need not decide whether a seller has a right to cure substantial defects that justify revocation of acceptance. Because of a seller’s right to cure, rejection does not automatically terminate the contract. However, after rejection, the buyer may cancel the contract pursuant to
- The court here is willing to interpret the “perfect tender” rule of
- Case Vocabulary
- ...the van including scratched paint, missing hubcaps, and missing electric and sewer hookups. Several more weeks passed, and Autosport (D) finally notified the Ramirezes (P) that the van was ready. On August 14, the Ramirezes (P) went to Autosport (D) to accept delivery. At that time, workers were still touching up paint and cushions inside were rain soaked. The Ramirezes (P) again refused delivery. Between August 15 and September 1, Autosport (D), in response to the Ramirezes’ (P) inquiries, constantly advised that the van was not ready. When the Ramirezes (P) returned to Autosport (D) on September 1, as instructed to do by Autosport (D), they were still unable to pick up the van. In October, the Ramirezes (P) requested the return of their trade-in. The Ramirezes (P) eventually sued Autosport (D) seeking rescission of the contract. Autosport (D) counterclaimed for breach of contract. The trial court ruled that the Ramirezes (P) rightfully rejected the van and awarded them the fair...
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- ISSUER: The issuer is an entity—a corporation (in the case of equity securities), organization, municipality—that creates securities and offers them for sale; in the case of registered securities, the issuer or issuer’s transfer agent must record registration changes.
- governs this case.
- CASE VOCABULARY
- to the fraud artists to continue producing forged bonds as long as they could find buyers. This, the dissent implies, potentially harms not only the issuer, but more purchasers as well. The dissent raises two issues that are worth considering. First, if the dissent’s holding that lack of genuineness is a complete defense, even when the forged securities contained authorized signatures, were to stand, innocent purchasers likely would be left completely unprotected in those cases in which the forger was insolvent or had absconded. Second, the dissent’s conclusion that the church should not have been liable for the duplicate bonds implies that the church did nothing wrong in this case. The majority opinion, however, asserts that the church was not completely blameless because it allowed Hayes to use facsimile signatures. Nothing in § 8–210 or § 8–250 indicates that the issuer’s negligence or diligence should have any effect on liability, but here again we see the human faces of judges...
- ...Institutional was able to sell only $45,000 of the bonds to Church members. In July 1964, Institutional’s President Lawrence Hayes [“Hayes”] borrowed $25,000 from First American National Bank [“First American”], using $27,000 worth of the Church’s bonds as collateral. In February 1965, Hayes fraudulently had $25,000 worth of numbered Church bonds printed. These bonds had the same numbers as those securing Hayes’s bank loan. Also in February 1965, Hayes had larger denomination Church bonds printed for sale to Christian Foundation Life Insurance Company [“Christian Life”]. Hayes’s fraud was discovered when the duplicate bonds were presented for payment at the Church’s bank, Union Bank of Mena [the “Bank”]. UCC § 202–3(c) states: “Except as otherwise provided in the case of certain unauthorized signatures on issue (Section 8–205), lack of genuineness of a security is a complete defense even against a purchaser for value and without notice.” Section 8–205 provides that good faith...
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State Bank of Piper City v. A-Way, Inc. 8 results (showing 5 best matches)
- Appeal to State Supreme Court from court of appeal’s reversal of trial court’s dismissal of complaint seeking enforcement of security interest.
- DECREE IN CHANCERY: Equivalent to a judgment in a court of law, but rendered in a court of equity.
- State Bank of Piper City (Piper) (P) sued A-Way, Inc. (D) to enforce its security interest in grain and the proceeds from the sale thereof stored by A-Way (D) in a warehouse on account for Brenner, a debtor of Piper (P). Piper (P) had previously obtained a judgment against Brenner in the sum of $131,083.01 for default on promissory notes, secured by grain owned by Brenner and stored in A-Way’s (D) warehouse. In a proceeding to enforce the judgment, Piper (P) learned that A-Way (D) was storing in its warehouse 5,141.20 bushels of grain on behalf of Brenner. Piper (P) sought and obtained a court order requiring A-Way (D) to pay Piper (P) $5,141.20, as partial satisfaction of the judgment. Piper (P) made a mistake and confused the 5,141.20 as the value of the bushels of grain, when actually it was the number of bushels. A-Way (D), acting upon the court order, sold the grain for $11,310.64, remitted $5,141.20 to Piper (P) and applied the balance to the outstanding charges due A-Way (D)...
- CASE VOCABULARY
- MOTION TO DISMISS COMPLAINT: Challenging the right of the court to entertain the matter before it on various legal theories.
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Benedict v. Ratner 6 results (showing 5 best matches)
- (Brandeis, J.) No. An assignment of accounts that provides that the assignor retains complete dominion over the proceeds is fraudulent in law. Under New York Law, a transfer of property as security that reserves to the transferor unrestricted control and dominion over the property is void as to creditors. The question in this case is whether this rule, which applies to chattels, also applies to an assignment of intangible book accounts. Although the New York Court of Appeals has not considered the question, we believe that the rule applies whether the collateral is accounts or chattels. If a party purports to transfer ownership of such items while at the same time retaining all the incidents of ownership, i.e. the ability to dispose of the property or to use the proceeds as he sees fit, the transfer is void as to creditors. Such a transfer creates the illusion that the party is the legal owner of the property, while in fact he is not. This is akin to the doctrine of ostensible...
- This case is actually much simpler than it appears. The arrangement between Ratner (D) and the company created a
- ...he did so, the company was allowed to use the monies it collected on the accounts in any way it deemed necessary. Hub continued to carry on its ordinary business and to incur indebtedness with no efforts made to repay the loans. There was no requirement that Hub make any effort to repay the loan or to account to Ratner (D) in any way unless Ratner (D) made an appropriate demand upon it. The arrangement was supposed to be kept secret. On September 17, 1921 Ratner (D) demanded that the proceeds of certain accounts be paid over to him and the company complied. On September 26, 1921, the company was adjudicated bankrupt in involuntary proceedings. Benedict (P) was named first as receiver and then as trustee. He began collecting the payments on the accounts receivable. Ratner (D) filed a petition with the court demanding that Benedict (P) turn over all the payments collected on the accounts, claiming that the monies belonged to him under the Agreement. Benedict (P) filed a cross...
- CASE VOCABULARY
- Grant of certiorari to examine an appellate affirmation of a District Court decision holding that the assignment of accounts was valid and was not fraudulent as to other creditors.
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Columbia Nitrogen Corp. v. Royster Co. 3 results
- (Butzner, J.) Yes. Columbia (D) argues that the district court erred in excluding all evidence on usage of trade and course of dealing between the parties. It offered testimony at trial that because of uncertain weather and other conditions, the price and quantity terms in contracts in the fertilizer industry are mere projections subject to adjustment. Columbia (D) also offered testimony of its past dealings with Royster (P). Royster (P) was generally the buyer in these transactions rather than the seller, and evidence was offered to show that there was often substantial deviation from the contract terms. Columbia (D) asserted that the total variance was more than $500,000 in reduced sales, and that these past experiences were the basis on which the contract was negotiated. The trial court excluded the evidence finding that course of dealing is not admissible to contradict the plain language of a valid contract. Virginia case law provides that extrinsic evidence cannot be used to...
- Case Vocabulary
- Course of dealing evidence is allowed, to supplement or explain the language in a writing. Such evidence shows how the parties themselves interpreted their own deal. In this case, the dealings between the parties supposedly showed a history of deviation from the terms of the contract. Royster (P) was the buyer in these transactions rather than the seller. Even though the status of the parties was reversed in these past transactions, they were still admissible and relevant to show what the parties intended in the contract at issue. Columbia (D) also sought to introduce evidence of usage of trade. Generally, a party relying on usage of trade must show that the behavior has such regularity as to justify an expectation that it will be observed in the transaction in question. Unless the contract expressly negates it, there is a presumption that the parties intended to incorporate widespread practices in the trade.
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- ...Operating Co. (“Veritev”) (D) was a business-to-business distributor of packaging, facility solutions, print and publishing services. The parties had regularly done business together for a decade. Veritev (D) would initiate the parties’ transactions by electronically sending purchase orders that contained Veritev ‘s (D) Terms and Conditions of Purchase, which included choice of law and forum selection provisions in the “Miscellaneous” section. Those provisions stated that the laws of Delaware would govern the transaction, without giving effect to its principles of conflicts of law, and that “Seller agrees to subject itself to the courts of Delaware and such venue shall be exclusive regarding disputes arising out of these Terms.” Upon receipt of a purchase order, Ultraflex (P) would promptly transmit to Veritev (D) a sales order confirmation that included a copy of its own terms and conditions of sale, one provision of which stated: “This agreement is governed by New... ...courts...
- (Hammer, J.) Yes. Conflicting terms within the parties’ form contracts are knocked out and not included in the resulting contract. The first step is to resolve the battle of the forms under Section 2–207 UCC to decide whether the case should be transferred to Delaware.
- At common law, to form a contract, the terms of the acceptance had to mirror exactly the terms of the offer. This was called the “mirror image rule.” The drafters of the UCC included Section 2–207 to address some of the shortcomings of common law and, in doing so, crafted language that allowed for the formation of contracts in spite of the parties’ exchange of nonmatching forms. Today, most courts hold that Section 2–207(1) invalidates the mirror image rule with regard to different or boilerplate terms, but not with regard to negotiated terms, which must still match.
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Aptix Corp. v. Quickturn Design Systems, Inc. 7 results (showing 5 best matches)
- Quickturn (P) claimed that the secured loan was a fraudulent transfer. The district court agreed, finding that Mohsen (D) lent money that Aptix (D) used to pay employee salaries and essential creditors, and that Mohsen (D) would receive the money back on demand. The district court found that the secured loan was a fraudulent transfer.
- Appeal from an order of the district court voiding a security interest.
- The district court found the existence of three badges: The security interest was granted to an insider; the interest was granted shortly before a substantial judgment was to be entered against Aptix (D); and Aptix (D) was insolvent when it granted the security interest. The district court rejected Mohsen’s (D) argument that he was simply lending money to Aptix (D) so it could continue as a going concern, saying that the arrangement was not as innocent as Mohsen (D) suggested, because it allowed Aptix (D) to pay unsecured creditors as it saw fit, while effectively avoiding its obligations to a judgment creditor that held a judgment lien.
- (Gajarsa, J.) Yes. A transfer is fraudulent if the transfer was made with the actual intent to hinder, delay, or defraud a creditor. Actual intent to hinder or defraud can be shown by a number of factors or “badges of fraud.” The badges of fraud were not codified when the district court made its order, but California law now sets out the following nonexclusive list of badges of fraud:
- Fraudulent intent will seldom, if ever, be shown by direct proof. Instead, courts rely on what amounts to circumstantial evidence—the “badges of fraud”—from which a fraudulent intent is inferred. Mohsen (D) may have been acting with the best of intentions, but the circumstances of his loans and the security agreement showed otherwise. The California
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Chapter Five. Terms of the Contract 2 results
- When Duncan (D) bought a mobile home, she executed a security agreement that contained a lengthy arbitration clause that waived her right to file a court action and her right to a jury trial, but that allowed Green Tree (P) to file a court action to repossess the mobile home.
- An arbitration clause in a consumer contract cannot be enforced if the contract does not contain clear and specific language explaining that the consumer understands that he or she is surrendering their rights to bring claims in court, but nonetheless is allowing claims against him or her to be brought in court.
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Floor v. Melvin 4 results
- be construed as one for collection or payment. Other cases have held that a guarantee of payment exits from the following language: “I hereby guarantee this loan,” “I guarantee payment of the within note at maturity,” and agreeing to pay the note if the maker did not “retire” it at maturity. However, the language in these cases is different from the language in the case before us [and poor Ms. Floor (P) is therefore out of luck]. In our opinion the language of the guarantee in this case should be construed as for collection. Although the word “collection” was not used, the guarantee as against “loss” by reason of nonpayment is in effect a guarantee of collection. In another case with similar language, whereby the defendant agreed to indemnify the plaintiff against “any loss on account of any monies,” it was held to be one for collection rather than payment. We also reject Floor’s (P) contention that a subsection of
- , now § 3–419(d), provides that an accommodation party is liable on the instrument in the capacity in which he signed the instrument. In most cases, that capacity will be either a maker or an endorser of a note. A guarantor is an accommodation party. The guarantee does not add anything to the obligation under the instrument unless the surety has guaranteed collection. If so, the guarantor is given extra protections. These protections, in the form of limitations, are set forth in subsection (d) and require that there be a determination as to whether the guarantee is one for collection or payment. As this case illustrates, if it is a guarantee for collection, one must first attempt to collect from the maker of the note before suit may be brought against the guarantor.
- Case Vocabulary
- The trial court granted Melvin’s (D) motion to dismiss for failure to state a cause of action and Floor (P) appeals.
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- The dispute was submitted to arbitration, but was ultimately remanded for trial. At the trial, the court concluded that Proseeds (D) had breached the contracts. When the trial court awarded Peace River (P) its damages, it concluded that Peace River (P) had an “obligation to mitigate damages” and was “not entitled to recover damages in an amount greater than actually incurred.” Accordingly, the trial court awarded Peace River (P) the lesser of two measures of damages: the difference between the unpaid contract price and the market price or the difference between the contract price and the resale price. Both parties sought reconsideration. The trial court acknowledged that Peace River (P) previously had submitted its calculation of market price damages and had proven those damages, but the court also directed the parties to calculate damages to account for any seed that had been resold. Proseeds (D) then submitted its analysis of damages based on
- The trial court awarded Peace River (P) damages using the resale price measure of damages as calculated by Proseeds (D).
- Appeal from an order of the Court of Appeals reversing and remanding for a recalculation of damages.
- Commentators and courts have taken two different approaches to this issue. We conclude that the text, context, and legislative history of the sellers’ remedies provisions support a seller’s right to recover either market price damages or resale price damages, even if market price damages lead to a larger recovery.
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Cherwell-Ralli, Inc. v. Rytman Grain Co. 4 results
- illustrates this leniency by limiting the buyer’s right to reject installments (or to cancel the entire contract) to those occasions where the value of the installments is substantially impaired (or where the defect in the installment substantially impairs the value of the whole contract). Problems arise, however, since the UCC does not specify how to determine whether a defect substantially impairs the value of the installment or the whole contract. Likewise, the court in the present case fails to adequately discuss the factors relevant in making such a determination other than to say it is a question of fact.
- Case Vocabulary
- ...Shortly before the last shipment, Buyer (D) became concerned about Seller’s (P) ability to perform under the contract but was assured by Seller (P) that deliveries would continue so long as Buyer (D) continued to make its payments. Buyer (D) sent Seller (P) a check but later stopped payment on it after a truck driver unaffiliated with Seller (P) told him that Seller’s (P) future deliveries were in jeopardy. Buyer (D) made no further payments, either to replace the stopped check or to pay for the nineteen accepted shipments for which balances were outstanding. Seller (P) made no further deliveries after the stopped check. Due to its inability to deliver the goods, Seller (P) was forced to close its plant. Seller (P) sued for the money due and owing for the accepted deliveries, and Buyer (D) counterclaimed for damages arising out of Seller’s (P) refusal to deliver the remaining installments under the contract. The trial court rendered judgment in favor of Seller (P) and dismissed...
- . What constitutes impairment of the value of the whole contract is a question of fact, and the record below amply sustains the trial court’s conclusion in this regard. Conduct by a Buyer (D) that is sufficiently egregious can constitute substantial impairment of the value of the whole contract and a present breach of the contract as a whole. An aggrieved Seller (P) is expressly permitted by § 2–703(f), upon breach of a contract as a whole, to cancel the remainder of the contract with respect to the whole undelivered balance. Further,
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Knop v. Knop 3 results
- property and give it to the donee. While there may be donative intent, the issue lies in whether the gift was delivered to the children (P). Virginia law states that delivery of a certificated security occurs when the “. . .purchaser acquires possession of the security certificate[.]” Since the language of the statute is clear and unambiguous, the plain meaning of the text is considered to determine the means of delivery valid in this case. Since there was no actual deliver of the gift, the children (P) must show that there was constructive delivery. Constructive delivery can be shown through steps taken by the donor to surrender power and control of the gift. The children (P) argue that the statements on the taxes show that there was constructive deliver of the ownership interests, but that argument is not valid. The statements made were for tax purposes, not for relinquishing power and control over the ownership interests. Therefore, the trial court was correct in determining that...
- .... This interest was record in the 2004 taxes, but the stock certificates were never prepared to show the transfer in ownership interest. Years later, Father (D) wanted to give property to create a scenic easement, but the children (P) were against it. According to the corporate bylaws, the sale of real property requires 90% approval. Father (D) claimed that the gifts made to the children (P) were not completed because he did not prepare and deliver the stock certificates, and therefore, their ownership interests were the same as they were in 1987. The Virginia Stock Corporation Act states that an owner of over two-thirds can convert a corporation into a new entity. With this in mind, and 72.76% ownership of the company, Father (D) converted Ticonderoga from a corporation to an LLC. The new operating agreement gave Father (D) full control of the company, including the transfer of real property. The children (P) alleged in court that they owned 14.687% each and Father (D) did not...
- The children’s (P) equitable estoppel argument also fails. To enforce equitable estoppel, the children (P) must show that there was (1) a representation, (2) reliance, (3) change of position, and (4) detriment. While the children can show evidence of elements (1)–(3), they cannot show evidence of a detriment. There was no evidence to show that there was any penalties or consequences from the showing of an increased ownership interest on their taxes. The children argue that there may be a theoretical possibility of detriment, but there is no showing of an actual detriment. Therefore, there is no basis to require the court to exercise equitable estoppel over Father (D). Affirmed.
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James H. Rice Co. v. McJohn 2 results
- The main question on the appeal of this case involved appointment of a receiver. McJohn (D) died before the case was resolved, and the administrator of his estate had a receiver appointed to collect rents. The McJohns (D) had defaulted on Rice’s (P) original action to set aside the conveyance, and there was no serious dispute on that question.
- Case Vocabulary
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Larson v. Burton Construction, Inc. 6 results (showing 5 best matches)
- ...the manufacturer—and a title. Based on the language of the Contract, confirmed by assurances from Larson’s realtor, it was expected that Burton (D) would deliver a title at closing and therefore settlement statements were prepared indicating that no sales tax was due from Larson (P). When Larson’s (P) agent arrived at closing, she discovered Burton (D) had provided an MCO instead of a title, which added $1,806 in sales tax to Larson’s (P) purchase obligation. After Larson’s (P) agent made this discovery, she called Larson (P) who was outside the building. Upon learning of this additional obligation, Larson (P) cancelled the closing before Burton (D) arrived and refused to complete the sale. The same day, Larson (P) sent a letter to Burton (D) requesting the return of his earnest money and declaring the Contract null and void due to, among other things, Burton’s (D) failure to deliver a title. Burton (D) brought suit in circuit court for breach of contract, seeking either specific...
- In many cases, even where a commercial seller offers imperfect tender, a buyer may still opt to go through with the deal. These cases arise when the seller is uniquely placed as one of only a few sellers in the market who can offer the particular goods for which the parties contracted. However, where the buyer is able to source the goods from another dealer, the buyer may have more incentive to reject the goods and look elsewhere. Generally speaking, a seller has the right to remedy, or “cure” the situation in order to salvage the deal. Further, any interference by the buyer with the seller’s right to cure may operate as a breach of contract on the buyer’s part. Overall, the law provides more flexibility to both the buyer and seller at the earlier stages of performance of a contract for the sale of goods in order to protect the rights of both parties and preserve the original agreement into which the parties entered.
- On appeal from the district court’s decision in favor of Burton (D).
- Did the district court err when it found that Larson (P) breached the contract before Burton Construction’s (D) performance was due?
- (Kautz, J.) There was no mutual mistake, and the parties had an enforceable contract. The evidence establishes their intent. However, the language in the contract regarding the documents to be transferred was not unambiguous. The Contract required Burton (D) to deliver title at closing, but under the statutes, Burton (D) could not have done this. Burton (D) instead used the appropriate document for a dealer to transfer a new mobile home—an MCO. While the court determined that the perfect tender rule permitted Larson (P) to reject the transaction and terminate the contract, other sections of the UCC show that in this circumstance, Larson (P) was required to accept the MCO.
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Hook Point, LLC v. Branch Banking and Trust Company 9 results (showing 5 best matches)
- On December 23, Hook Point (P) filed suit alleging several causes of action against BB & T (D). Hook Point (P) admitted to being $70,000 in arrears on interest, but argued that the terms of the agreement did not permit BB & T (D) to draw the full amount of the LC if that exceeded the amount of interest due. It also sought an ex parte temporary restraining order preventing First Reliance from honoring a draft on the LC by BB & T (D), which the court granted. After a hearing, the court also granted a preliminary injunction against drafts on or honor of the LC beyond amounts of accrued interest, requiring extension of the LC for one year, and requiring Hook Point (P) to post a $50,000 bond with the court.
- A letter of credit is a financial instrument designed to reduce the need for the parties in a transaction to trust one another by adding an intermediary bank to the transaction. This intermediary bank extends credit to one party so that the other need not do so. The usefulness of a letter of credit depends on its being the virtual equivalent of cash. This understanding is embodied in the independence principle. That principle states that courts recognize that the obligations created in the letter of credit are independent of the obligations of the underlying contract. Nevertheless, courts have carved out a very narrow exception to the independence principle. Aside from permitting the intermediary bank to refuse to honor forged documents presented in order to draw on the letter of credit, courts will enjoin the payment of LCs for “fraud in the transaction” when the conduct of the beneficiary of the LC has so vitiated the entire transaction that the legitimate purposes of the...
- If an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation or grant similar relief against the issuer or other persons only if the court finds that:
- CASE VOCABULARY
- The UCC incorporates this doctrine into Article 5, governing letters of credit. Article 5sets forth the conditions under which a court may enjoin honor of a letter of credit as follows, in relevant part:
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Sea Air Support, Inc. v. Herrmann 4 results
- Case Vocabulary
- Appeal after trial court dismissed Sea Air’s (P) action to collect a gambling debt.
- PER CURIAM: An opinion from the whole court rather than one written by an individual justice.
- ...the common law of gambling as stated in the Statute of 9 Anne. The Statute provides that notes drawn for the purpose of repaying any money lent for gaming are “utterly void, frustrate, and of none effect.” Even though gambling in Nevada is legal, this court has long held that debts incurred or checks drawn for gambling purposes are unenforceable. If the law is to change, it must be done by the legislature. Herrmann’s (D) check was clearly drawn to repay money advanced for gaming and is void and unenforceable. Sea Air (P) seeks to avoid this defense by claiming to be a holder in due course. Sea Air (P) took the check from the casino and promised to take “such legal action as may be necessary to enforce collection.” The promise to perform services in the future does not constitute taking for value under the UCC. Furthermore, Sea Air (D) had constructive notice of a defense against collection because the check was payable to a casino, and Sea Air (P) knew the check was dishonored....
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Twin City Bank v. Isaacs 4 results
- Case Vocabulary
- MOTION FOR NEW TRIAL: Motion made post verdict or post decision by court to have the matter tried again.
- actual damages were awarded for dishonor of checks, and part of the actual damages awarded was attributed to mental suffering for the embarrassment and humiliation suffered from having been turned down for credit for the first time. Other cases have permitted damages for financial embarrassment. In the case before us, the evidence showed that prior to the check forgeries, the Isaacs’s (P) credit was impeccable, and the freezing of their funds had a traumatic effect on their lives. They lost their credit standing with the Bank (D) and were unable to secure credit with other institutions because of it. They did not have use of their $2,000 for four years, they lost the ability to purchase a home due to the dishonor of an earnest money check, the financial strain resulted in marital difficulties, and they lost equity in two vehicles repossessed due to the withholding of their funds. We hold that damages for mental suffering and other intangible injuries are recoverable under
- provides that a “bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved. . . .” The holding of this case shows that damages flowing from wrongful dishonors tend to produce intangible injuries of the kind that are difficult to assess with exactness. When damages for mental suffering are sought, it is not necessary to prove the damages with exactness. Thus, the evidence presented to the jury was sufficient to allow the Isaacs (P) to recover for the loss of their money, loss of equity in their vehicles, the humiliation and embarrassment of losing their credit, and the emotional upset resulting from loss of ability to purchase a home and marital difficulties. Note that
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In re Motors Liquidation Company Part 2 4 results
- This case illustrates the importance of secured parties taking care in their review of their UCC filings and the need to make sure that the party understands which security interests it is releasing by filing a termination statement. A mistake by the secured party, or by its counsel, will not excuse an erroneous filing, especially if the party and its counsel have the opportunity to review and sign off on the statement prior to filing. As a result of the painful lesson learned from this case, many legal practitioners argue that the best practice for secured lenders is that they take sole responsibility for completing and filing their UCC forms in order to help avoid harsh results like the one reached here.
- Appeal from judgment of the Bankruptcy Court in favor of JPMorgan (D).
- ...careful in reviewing UCC filings so that they might have a way to avoid the consequences of the filing. The better rule is that subjective intent of the secured party is not required for a UCC termination statement filing to be effective, which encourages the secured party to carefully review any UCC filings and make sure that it understands the security interest being released. In this case, it was clear that JPMorgan (D) did not intend to release the term loan financing statement. However, JPMorgan authorized the filing. After the Closing Checklist was prepared and the UCC–3 termination statements were drafted, copies were sent for review to a Managing Director at JPMorgan (D) who supervised the synthetic lease payoff and who had signed the term loan documents on JPMorgan’s (D) behalf. Copies were also sent to JPMorgan’s (D) counsel to ensure the parties agreed as to the documents required to complete the payoff. Neither JPMorgan (D) nor its counsel expressed any concerns with...
- ...the lenders to be repaid and to release their interests in GM’s property. A paralegal working for counsel mistakenly included the primary UCC financing statement for the term loan with the statements for the synthetic lease. Counsel prepared a Closing Checklist and UCC–3 termination statements that included terminating the term loan financing statement. JPMorgan (D) and its attorneys approved the documents, and the UCC–3 termination statements were filed. No one at GM, JPMorgan (D), or either of their law firms noticed the error. GM later filed for bankruptcy, at which point JPMorgan (D) discovered the mistake and told the Committee of Unsecured Creditors (“the Committee) (P) that the termination statement for the term loan was mistakenly filed and therefore unauthorized and ineffective. The Committee (P) commenced an action against JPMorgan (D) in the bankruptcy court, seeking a determination that, despite the error, the UCC–3 termination statement was effective to terminate the...
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- Navy FCU (D) has no defenses to payment in this case. It received full payment for the check, and any other defenses, such as Nation’s Auto being out of business, or that payment already was made, belong to Peeso.
- Decision on an appeal de novo from the General District Court.
- Nation’s Auto seems to have gone out of business quite quickly, which may mean that it was on shaky ground to begin with. Knowing, or suspecting, what kind of financial state Nation’s Auto was in may have made Navy FCU (D) reluctant to take checks presented by it. Of course, if Nation’s Auto had not gone out of business, the whole case may never have come up: Patriot (P) could have successfully reversed the credit to the Nation’s Auto account, and Nation’s Auto would have been paid by the second check.
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- CASE VOCABULARY
- ...sold milk to Land O’ Lakes Dairy. In exchange for waiving its lien, Farm Credit (P) entered into an assignment agreement whereby Land O’ Lakes would pay Farm Credit (P) $4333 per month from the Bonneprises’ milk proceeds. In August 1988, the Bonneprises switched dairies and began selling milk to F&A Dairy (“F&A”) (D). The Bonneprises refused to enter into an assignment agreement requiring F&A (D) to pay Farm Credit (P). In August 1988, Farm Credit (P) sent F&A (D) a letter demanding $4333 per month and enclosing a product lien notification statement and a copy of the filed financing statement. Four days later, Farm Credit (P) notified F&A (D) of its perfected security interest and enclosed a copy of the security agreement. F&A (D) refused to pay Farm Credit (P) during August, September, October, and November. The trial court held that Farm Credit (P) had a perfected security interest in the milk and that, under § 1631 of the Food Security Act, F&A (D) bought the milk subject to...
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In re Fabers, Inc. 3 results
- CASE VOCABULARY
- problem—the retailer appears to be the unfettered owner of goods that actually belong to someone else. Furthermore, some consignments are not really consignments. Instead they are disguised secured transactions. That was the problem in the instant case. The dealer (P) in
- .... The agreement also states that Fabers holds the proceeds of sales in trust for the dealer (P). But a trustee has legal title to the property in trust. If Fabers had legal title to the rugs, this was not a true consignment, but rather a secured transaction. Aside from the agreement, the dealer’s (P) main argument is that this transaction falls within an exception to the Article 9 requirements. A consignment for security purposes is termed by the Code a “sale or return” and goods so consigned are ordinarily subject to the claims of creditors. There are three ways a consignor can protect itself from the claims of the consignee’s creditors, however. It can either comply with a state sign law (which would indicate that the goods were on consignment), it could establish that the consignee was “generally known by his creditors to be substantially engaged in selling the goods of others,” or it could comply with Article 9’s filing provisions. The dealer (P) in the instant case did...
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Price v. Neal 2 results
- The rule from this old English case remains in force today. It assures an innocent presenter of a draft finality once the presenter has received payment from the drawee. This finality puts an end to the transaction and defines the parties’ liabilities. The drawee bank is presumed to know the drawer’s signature, even in light of a perfect forgery job. The rule of
- Case Vocabulary
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Any Kind Checks Cashed, Inc. v. Talcott 6 results (showing 5 best matches)
- The policy reason behind the holder in due course doctrine is to secure easy negotiability of checks. This policy cannot outweigh the reasons for caution in this case. Loose application of the objective requirement of good faith would make check-cashing businesses the easy refuge of scam artists. In most cases, verification of the identity of the payee will not be necessary to preserve the holder in due course status of check-cashing outlets. The verification requirement may slow down some transactions, but that requirement serves an important goal. The need for unquestioned negotiability has given way to the desire for reasonable commercial fairness. Affirmed.
- Case Vocabulary
- The court takes some pains to note the limited nature of its opinion. The decision here was very fact-specific, holding that the trial court did not err in finding that the circumstances of the $10,000 check were suspicious and required further investigation. Most legitimate business transactions do not require large amounts of cash. When a broker claims to need a $10,000 check cashed for a client’s investment, alarm bells should go off. For the usual run of business of a check-cashing store, nothing probably will need to change: regular
- cashing industry. The court entered judgment for Any Time (P) on the $5,700 check, but found for Talcott (D) on the $10,000 check.
- In the context of this transaction, the trial court did not err in finding that the $10,000 check was suspicious. Checks of that size are not often cashed at check-cashing outlets. In addition, Guarino (D) was not the typical customer of a check-cashing business. Because of the fees charged, most businesspeople cash checks at banks. In addition, Guarino (D) did not have a history of cashing such large checks without incident. The need for speed in cashing such a large check is consistent with the payee’s fear that payment on the check will be stopped. Fair dealing required some degree of caution before a $10,000 check was cashed.
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- CASE VOCABULARY
- is defined in UCC § 554.9306, now § 9–102(a)(64), as “whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral.” Co-Op (P) relies upon the “other disposition of collateral” to argue here that the hogs are “proceeds” of the feed. The court did not agree. Co-Op (P) also attempted to assert that the feed commingled with the hogs, became lost in the “mass,” and thus the security interest continues in the mass under former UCC § 554.9315(1), now § 9–336. The court noted that feed lost through “ingestion” is not a proper interpretation of § 554.9315.
- MOTION TO ADJUDICATE: Requesting that the court make a decision on the legal issues and render a judgment.
- of the feed, relying upon a UCC section that defines “proceeds” to include “whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds.” A previous court decision has held that cattle consuming the collateral does not equate to proceeds to which the security interest may attach. Thus, ingestion of feed is not a type of “other disposition” within the meaning of the UCC. Co-Op (P) also argues that it should prevail over Bank (D) because the feed became commingled with the hogs. It relies upon another UCC section which provides that if a security interest in goods was perfected and the goods become part of a product or mass, the security interest continues in the product or mass if “the goods are so manufactured, processed, assembled or commingled that their identity is lost in the product or mass. . . .” The previous court decision also held that cattle are neither a “product” nor a “mass,” and once the feed is eaten, it does not become...
- .... . . .” In late 1983 and early 1994, Cockrum entered into several purchase money security agreements with Farmers Cooperative Elevator Co. (Co-Op) (P) for livestock feed. Co-Op (P) filed with the Secretary of State, for each transaction, a financing statement, which stated that it covered collateral described as “all feed sold to Debtors . . . and the proceeds of any described Collateral.” Cockrum defaulted on his obligations to Bank (D) and Co-Op (P). Co-Op (P) sued Cockrum for possession of collateral. Bank (D) filed a statement of indebtedness and requested that its security interests be established as a first security lien on Cockrum’s hog inventory and any sale proceeds therefrom. Co-Op (P) amended its petition to join Bank (D) as a defendant and alleging that its right to the hogs was superior to Bank’s (D). [Since the hogs ate the collateral, Co-Op (P) wanted the hogs.] The district court ruled that Bank’s (D) security interest in the hogs was prior and superior to Co-Op...
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Ellig v. Molina 4 results
- The case went to trial before a federal judge.
- Case Vocabulary
- Molina (D) also argued that the letter did not contain other essential terms of the agreement, such as the requirement that the return be made within a year, and the date from which the year began to run. Nor did the letter indicate whether the buy-back promise applied to the whole ring or just the 10-carat stone at its center. The court concluded that the letter was “sufficient to confirm the contract” because it contained the terms essential to Molina’s (D) promise to buy back the stone, which was the point at issue in the litigation. The court entered a verdict for the Elligs (P).
- The letter Molina (D) wrote after the Elligs (P) sought to return the ring confirmed Molina’s (D) oral promise to refund 110% of the purchase price. Molina (D) made several arguments to avoid having to pay. The main argument was that Article 2 requires a written contract and the letter was not “sufficient” as a writing. The court disagreed. A “sufficient” writing is one that “(1) indicates that an agreement with obligations exists between the parties, (2) is signed, and (3) specifies a quantity of goods.” Molina (D) himself drafted and signed the writing, which conceded that an agreement existed and that the version of events Mrs. Ellig (P) wife stated was correct. The price was set forth in the series of invoices and documents evidencing wire transfers from Mr. Ellig (P) to Molina (D). Although the payment documents were signed, they carried “indicia of reliability” to meet the statutory requirements.
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J.B.B. Investment Partners, Ltd. v. Fair 3 results
- Case Vocabulary
- Fair (D) argued that his printed name did not satisfy UETA, because no communication between the parties had authorized an electronic signature. J.B.B. (P) and Rabic (P) argued that Fair’s (D) printed name complied with UETA section 1633.7, subd. (d). which states that “[i]f a law requires a signature, an electronic signature satisfies the law.” The trial court concluded that there was a settlement and that Fair was not under duress but “knew exactly what he was doing.” The motion to enforce was granted.
- Electronic commerce has changed many things, but it has not changed the fundamental principle that contracts are based on the intent of the parties to be bound to the agreement. Applying that principle can lead to spending much time narrowly parsing what someone was thinking to herself at some time in the past. There are also issues about how much credence to give to recollections of that intent—as the trial court noted, Fair (D) does have credibility problems here. Requiring explicit showings of intent may be frustrating, and may go against what we conclude from the circumstances, but it is the only way to be certain we know in the future what someone intended today.
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- Case Vocabulary
- Motion to dismiss complaint in trial court concerning action to recover money on promissory notes.
- ...endorsers signing on the back of the note. An additional two notes were thereafter executed by Dolly (D1), and endorsed on the back by two individuals in lieu of the second promissory note. Five checks payable to Makel (P) were executed simultaneously with the most recent two notes. One of the checks was returned unpaid and the other four were never deposited. Finally, two additional corporate checks were given to Makel (P) by Dolly (D1), one of which was paid [weird methods for repaying loan]. At the end of trial, one individual defendant was dismissed, and judgment was entered against Dolly (D1) who offered no defense. The motion to dismiss the complaint by the individual endorsers on the notes, defendant Goldberg (D2) and defendant Kushner (D3), is before the court for determination. The grounds for the motion to dismiss are: 1) the promissory notes of the corporation had never been presented for payment and thus the obligation of the endorsers, Goldberg (D2) and Kushner (...
- , the obligations of the endorser and the drawer may not be enforced unless the endorser or drawer is given notice of dishonor of the instrument, or notice is excused. The court held that the notice of presentment and dishonor was not required for Goldberg (D2), because it would be a useless gesture to advise him of a fact with which he was already familiar. In other words, the requirements were excused because they were completely unnecessary. Kushner (D3) was in a different category because he, unlike Goldberg (D2), was only an endorser and there was no evidence that he had knowledge of the corporation’s affairs. Accordingly, he was entitled to presentment and notice of dishonor.
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- Case Vocabulary
- Appeal from a decision of the state court of appeals affirming dismissal of a third-party complaint.
- A minority of courts have found the buyer-seller contractual relationship under the UCC insufficient to give rise to an indemnity action. Under this view, Central’s (P) claim would be a claim for breach of contract, and would be barred by the UCC’s four-year limitations period for contract claims. The majority of the courts that have considered this issue have, however, ruled that the buyer-seller contractual relationship is sufficient to give rise to an implied right of indemnity. There is a substantial difference between an instance where a product fails and a situation where the product fails and causes injury to a third-party.
- The dissent makes the claim that the four-year period in UCC is a statute of repose rather than a statute of limitation. A statute of repose says, in essence, there is no actionable wrong, while a statute of limitations says that the time for bringing an action on a wrong has elapsed. In any case,
- .... Central (P) contracted with McCormack Engineering (D) to purchase the refrigeration coils for the installation. McCormack (D) specially manufactured the coils according to Central’s (P) specifications. The coils were delivered in August 1987 and installed in the cold storage rooms. The orchard experienced problems with the rooms from the start. After several repair attempts and an intervening bankruptcy by the orchard, the orchard defaulted on payments to Central (P), and Central (P) sued for payment. In March 1989 the orchard counterclaimed for damages against Central (P). In May 1992, over four-and-a-half years after the coils were delivered, Central (P) filed a third-party complaint against McCormack (D) alleging the coils were defective. The third-party complaint sought contribution or indemnity from McCormack (D) for any damages Central (P) was obligated to pay to the orchard. The lower courts held that, to the extent Central’s (P) claim was contractual or for...
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Clovis National Bank v. Thomas 3 results
- CASE VOCABULARY
- The court here did not consider § 1–205(4), which provides that the express terms of an agreement and a course of conduct are to be construed as consistent with one another. When they cannot be so construed, the express terms control.
- ....” Bunch or his son acquired cattle that were branded Swastika K. No security agreement was given by Bunch or his son to Clovis (P) for these cattle. Clovis (P) thereafter requested that Bunch sell the remainder of his cattle, including the Swastika K cattle. With Clovis’s (P) knowledge, Bunch trucked cattle to Thomas’s (D) place of business. Clovis (P) told Thomas (D) that it had an interest in the cattle. After the cattle were sold, Clovis told Thomas (D) that it would be “nice” if the check for the cattle would be made payable to the Bunches and to Clovis (P). Clovis (P) did not demand payment or ask Thomas (D) not to pay Bunch. Bunch Jr. demanded payment from Thomas (D) and Thomas (D) paid him. Clovis (P) first sued Bunch and Bunch Jr. for garnishment, but that suit was unsuccessful. Clovis (P) then sued Thomas (D) for conversion. The trial court held for Thomas (D) on the grounds that (1) Clovis (P) consented to the sales of the W D Bar cattle and to the receipt by Bunch of...
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Fitl v. Strek 3 results
- REASONABLE TIME FOR NOTIFICATION OF DEFECTS DEPENDS ON THE CIRCUMSTANCES OF THE CASE
- Strek (D) offered no evidence at trial. Judgment was entered against him for $17,750. The court disagreed with Strek’s (D) argument that Fitl (P) should have determined the authenticity of the card immediately after he purchased it.
- (Wright, J.) Yes. The determination of whether a seller received notification of a defect in goods is a factual question and depends upon whether the policies behind the notice requirement—allowing the seller to correct the defect, prepare for negotiation and litigation, and protect against stale claims—were unfairly prejudiced. In this case, even if Fitl (P) had notified Strek (D) immediately that the card was worthless, there was no evidence that Strek (D) could have done anything to correct the defect or minimize liability. There is also no evidence that earlier notification of the defect would have allowed Strek (D) to pursue the party who provided him with the defective card. In addition, any issues Strek (D) could raise with the source of the card were separate from his transaction with Fitl (P).
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Chapter Fifteen. Electronic Banking 1 result
- ...Fentress (D) was not a licensed plumber, and his promised performance under the contract is illegal and bars the Currency Exchange’s (P) claim for payment. Illegality arises under a variety of statutes and is left to local law. However, it is only when an obligation is made entirely “null and void” under local law that illegality exists as a real defense to defeat the claim of a holder in due course. Historically, this court has recognized illegality to arise only when there is a statute affecting both the underlying contract and the instrument exchanged upon it. A transaction which is void negates the obligation to pay arising from it between the contracting parties. However, unless the instrument memorializing the obligation is also made void by statute, an innocent third party may claim payment of it against the maker. Our legislature has declared that any instrument involving gambling or the payment of gambling debts is void. The existence or absence of a legislative...
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Chapter Three. Contract Formation 1 result
Gray1 CPB, LLC v. SCC Acquisitions, Inc. 4 results
- The California Court of Appeals reviewed an order denying a judgment creditor’s motion for additional attorney’s fees made after the judgment debtor delivered a check purporting to satisfy the judgment.
- Because the cashier’s check was equivalent to cash, Gray1 (P) had two options: accept the check and forgo the motion for additional fees, or reject the check and file the motion. Gray1 (P) could not both have the check and prevail on the motion. The trial court’s order denying Gray1’s (P) motion was affirmed.
- SCC and Elieff (D) contested the motion, relying on a California statute requiring that a motion for post-judgment costs, including attorney’s fees, must be filed before the judgment debtor fully satisfies the judgment. The trial court concluded that the judgment was satisfied upon the acceptance of the cashier’s check and denied Gray1’s (P) motion.
- an obligation. In the instant case, Gray1 (P) in fact conceded that if SCC’s and Elieff’s (D) attorney arrived at Gray1’s (P) attorney’s office with a briefcase full of cash and the attorney had accepted it, the judgment clearly would have been satisfied.
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- Appeal from an order of the District Court granting Huntington’s (D) motion to dismiss in favor.
- Did the court err in determining that the Agreement was lawful?
- ...checks that were debited from the business account and which totaled $3,973.96. Within 24 hours of discovering the fraud, McNeil contacted Huntington (D) and requested reimbursement, however Huntington (D) sent him a letter stating that, because he declined to use their fraud prevention services, it would not reimburse the account for the fraud. On November 20, 2015, McNeil filed a putative class action alleging that Huntington (D) breached its obligations under UCC 4–401 when it made unauthorized payments from four fraudulent checks not properly payable, and unreasonably shifted all liability to Majestic (P) and improperly disclaimed its responsibility to act in good faith and exercise ordinary care by incorporating the fraud prevention products and services terms into the Agreement in violation of UCC 4–103. The District Court granted Huntington’s (D) motion to dismiss, holding that the Agreement was not manifestly unreasonable and that the terms and conditions of the Agreement...
- .... The default rule may be varied by the parties by agreement, but the parties cannot disclaim the bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. Notwithstanding, the parties may determine by agreement the standards by which the bank’s responsibility is to be measured if those standards are not manifestly unreasonable, but a bank’s attempts to contract out their duty of ordinary care is considered manifestly unreasonable. The District Court determined that, because the Agreement contained other provisions that acknowledged Huntington’s (D) duties or ordinary care and good faith, the provision that disclaimed the bank’s responsibility to recredit the account was lawful. However, in order to survive a motion to dismiss, the plaintiff must allege that the standards regulating Huntington’s (D) responsibility to monitor the account for fraud were manifestly unreasonable. Majestic (P) stated...
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- Certified question from the U.S. Court of Appeals for the Second Circuit.
- the debt was incurred within the 910-day [sic] preceding the date of the filing of the petition, and the collateral for the debt consists of a motor vehicle acquired for the personal use of the debtor. The Bankruptcy Court and held that the term “purchase money security interest” (PMSI), as set forth in New York’s Uniform Commercial Code, did not include
- . The Ninth Circuit agreed with the dissenters here that financing negative equity is payment of an antecedent obligation, not part of the purchase price. The Supreme Court denied certiorari in
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Chapter Fourteen. Wrongdoing and Error 2 results
- Drawee bank, Decibel (P), sued presenting bank, Pueblo (D), for breach of presentment and transfer warranties, but court of appeal held that Pueblo (D) was not liable.
- When there is doubt as to whether an instrument has been forged or merely altered, the court will assume that the instrument was altered.
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Sztejn v. Henry Schroder Bank Corp. 3 results
- Motion to dismiss a state court action on the ground that the plaintiff has failed to state a cause of action.
- ...case was decided well before the UCC was drafted, but presents the second of the two most litigated issues in the area of letters of credit. The most important exception to the independence principle—the notion that a letter of credit is wholly separate from the underlying commercial transaction—relates to enjoining payment of drafts drawn on a letter of credit on the ground of fraud by the beneficiary. It is obvious that the whole point of letters of credit is to generate the expectation that payment will be made upon the presentation of documents. Thus, a broad reading of the fraud exception threatens the commercial viability of letters of credit. Section 5–109 now addresses the issue of fraud. It allows, but does not require, an issuing bank to refuse payment if the documents are forged or materially fraudulent, or in order to prevent the beneficiary from perpetrating a material fraud on the issuer or the applicant. But the section requires the issuer to pay the draft if it is...
- have adjudicated their dispute. Because this court must assume that Chartered Bank (D) is not a holder in due course, the motion to dismiss is denied.
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Helms v. Certified Packaging Corp. 1 result
Chapter Two. Basic Concepts 1 result
- This case demonstrates a classic “battle of the forms” where each side is using its own form contracts. The seller’s forms are written to give the seller an advantage, and the buyer’s forms are drafted to give the buyer an advantage. The forms naturally diverge. Here, Metal-Matic (D) conditioned its acceptance of Krack’s (D) offer on Krack’s (D) assent to the additional terms, the disclaimer of liability. Krack (D) never specifically assented to the additional terms, and the parties acted as if there was a contract and continued doing business. Therefore,
- which does away with the last shot rule. In a case like this, the seller is most responsible for introducing ambiguity into the contract. If Metal-Matic (D) truly wanted its additional terms to become part of the contract, it must obtain a specific and unequivocal expression of assent to the additional terms from the buyer. Metal-Matic (D) could have protected itself by not shipping additional tubing until it obtained that assent from Krack (D). Affirmed.
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Auto Sision, Inc. v. Wells Fargo 1 result
- The law of conversion is used to make sure that actors are not fraudulently handing instruments. This law imposes the duty of ordinary care on those who may be taking, paying, or examining these instruments. If a third party, in this case, a bank, exercises ordinary care, it cannot be held liable for the actions of the person who is responsible for the fraud. If the responsible party is an employee of another business, the employer cannot go after a bank for the actions of its employee.
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Smith v. AFS Acceptance, LLC 3 results
- Smith (P) and Rashai (P) also allege a state law claim of intentional infliction of emotional distress against Equitable (D). To state a claim for intentional infliction of emotional distress, plaintiff must show that: “(1) defendant’s conduct was extreme and outrageous; (2) the defendant intended to inflict severe emotional distress or knew that there was at least a high probability that his conduct would inflict severe emotional distress; and (3) the defendant’s conduct did cause severe emotional distress.”
- Under Illinois law, breach of the peace “connotes conduct which incites or is likely to incite immediate public turbulence, or which leads to or is likely to lead to an immediate loss of public order and tranquility.” Whether a given act provokes a breach of the peace depends upon the facts of each particular case.
- AFS (D) argues that Count II of the complaint against it, which alleges a violation of the Repossession Statute, should be dismissed because Smith (P) failed to allege facts establishing an agency relationship between AFS (D) and Equitable (D). Under the Repossession Statute, a secured party, after default, has the right to take possession of the collateral without judicial process so long as the secured party “proceeds without breach of the peace. Comment 3 to the Repossession Statute states, “In considering whether a secured party has engaged in a breach of the peace, however, courts should hold the secured party responsible for the actions of others taken on the secured party’s behalf,
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- Section 3–104 of the UCC explains the conditions that must be met in order for something to be deemed a negotiable instrument and lays the guidelines for what negotiable instruments are and the types of transactions in which they are used. In transactions where a person promises to pay, Section 3–104 explains whether that promise is considered a negotiable instrument subject to the UCC, or if it is more properly considered another type of promise subject to, for instance, contract law. As seen in this case, the issue of whether an instrument is negotiable will determine whether and what kinds of defenses are available to the debtor. That issue does not, by itself, determine whether the instrument is enforceable. Non-negotiable does not mean invalid, it simply means that Article 3 of the UCC does not apply.
- ...and clarity of the note itself in setting forth the parties’ obligations, and the clarity and completeness of the reference. A mere reference to a separate writing does not preclude a note from being deemed a negotiable instrument, since a mere reference does not, on its face, suggest that the promise to pay is subject to additional terms or conditions. On the other hand, a “disqualifying” reference is one that indicates a need to examine a separate document to determine the parties’ rights and duties, and the existence of the requirement that another writing be consulted to determine the parties’ rights and duties under the instrument may be sufficient to destroy negotiability. In this case, the reference in the note, in and of itself, defeated negotiability. It did not merely reference the Advancement Agreement for context, but it indicated the separate agreement had “additional terms,” which is akin to a disqualifying statement. Further, nothing about the reference to the...
- ...note that had been transferred to DZ Bank (P). DZ Bank (P) brought an enforcement suit against McCranie (D), and McCranie (D) defended on the grounds that DZ Bank (P) was not actually a holder of the loan in due course because the note was not negotiable and could not be enforced. McCranie (D) argued that the reference to the Advancement Agreement which stated “ADDITIONAL TERMS: See Agreement for Advancement of Loan dated October 30, 2000” defeated negotiability because the reference indicated the existence of unidentified additional terms. DZ Bank (P) argued that the Advancement Agreement created no additional rights for DZ Bank (P) and imposed no additional duties on McCranie (D) other than those permissible under law. DZ Bank (P) argued in the alternative that the quoted reference is a mere reference indicating the existence of a separate agreement. The federal district court ruled in favor of DZ Bank (P), finding that the note was negotiable and that McCranie (D) defaulted...
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Sullivan v. United Dealers Corp. 2 results
- The same facts that call a party’s “good faith” into question may also give the party “notice” that the instrument has a problem. These factors are separate but related. A party with notice of possible defenses to an instrument cannot be said to take the instrument in “good faith.” The focus in this case seems to be the relevant time when a party must have notice. The notice must arise at the time of the taking or at the time the instrument is negotiated. Notice arising subsequently is ineffective.
- ...work had been performed on the house. They further argue that United (P) knew about the construction contract, and they were put on notice that there might be a defense on the note because of the faulty construction. Notice, in order to prevent one from becoming a holder in due course, means notice at the time the instrument was negotiated. To be effective, notice must be given in a time and manner to give the purchaser a reasonable opportunity to act on it. A close business association between the payee and the purchaser has been used to deny the purchaser holder in due course status. The insulation the holder in due course doctrine provides is primarily intended to protect finance institutions acting independently to supply credit rather than a manufacturer who finances its own sales or through a controlled agency. In this case, there is no allegation of fraud, or any claim that any fact existed that United (P) could have discovered that would have indicated a problem with...
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- Publication Date: September 8th, 2021
- ISBN: 9781636594835
- Subject: Commercial Law
- Series: High Court Case Summaries
- Type: Case Briefs
- Description: This title contains briefs for each major case in Whaley's casebook on Commercial Law. These briefs will help you identify, understand, and absorb the core knowledge points from each case. They are followed by legal analysis, providing contextual background about each case, and connecting the case to the broader concepts developed throughout the casebook. This title also supplies case vocabulary, with definitions of new or unusual legal words found throughout the cases.
