On July 1, Roger Walsh, a sole proprietor operating a grocery, was involuntarily petitioned into bankruptcy by his creditors. At that time, and for at least 90 days prior to that time, Walsh was unable to pay current obligations. On June 16, Walsh paid the May electric bill for his business. The trustee in bankruptcy claimed that this payment was a voidable preference. Was the trustee correct? Explain.
> Francis Gagnon, an elderly gentleman, signed a power of attorney authorizing his daughter, Joan, “ to sell any of my real estate and to execute any document needed to carry out the sale ... and to add property to a trust of which I am grantor or benefici
> Real estate broker Donald Alley Sr. had a listing contract that gave him the exclusive right to sell Wayman Ellison ’ s farm for at least $200,000. Ellison was told that a buyer was found. The buyer, Cora Myers, who had been paid $585,000 for her small f
> Fred Schilling, the president and administrator of Florence General Hospital, made a contract, dated August 16, 1989, on behalf of the hospital with CMK Associates to transfer the capacity to utilize 25 beds from the hospital to the Faith Nursing Home. S
> Martha Christiansen owns women ’ s apparel stores bearing her name in New Seabury, Massachusetts; Lake Placid, New York; Palm Beach, Florida; and Palm Springs, California. At a meeting with her four store managers, she discussed styles she thought approp
> Lew owns a store on Canal Street in New Orleans. He paid a person named Mike and other individuals commissions for customers brought into the store. Lew testified that he had known Mike for less than a week. Boulos and Durso, partners in a wholesale jewe
> Tillie Flinn properly executed a durable power of attorney designating her nephew James C. Flanders and/or Martha E. Flanders, his wife, as her attorney in fact. Seven months later, Martha Flanders went to the Capitol Federal Savings and Loan Association
> The Holzmans signed an exclusive listing agreement with the Blum real estate brokerage firm. The con- tract provided that the Holzmans had an obligation to pay a commission “ if they enter into a written agreement to sell the property to any person durin
> Record owned a farm that was managed by his agent, Berry, who lived on the farm. Berry hired Wagner to bale the hay and told him to bill Record for this work. Wagner did so and was paid by Record. By the summer of the following year, the agency had been
> Paul Strich did business as an optician in Duluth, Minnesota. Paul used only the products of the Ply- mouth Optical Co., a national manufacturer of optical products and supplies with numerous retail outlets and some franchise arrangements in areas other
> Lloyd and Mario Spaulding entered into a contract to purchase property from Richard and Robert Krajcir. The two Spaulding brothers signed a promissory note to the Krajcir brothers with the following language: “ The amount of $10,000 [is] to be paid selle
> Carriage Way was a real estate development of approximately 80 houses and 132 apartments. The property owners were members of the Carriage Way Property Owners Association. Each year, the association would take care of certain open neighboring areas, incl
> Ken Jones, the number-one-ranked prizefighter in his weight class, signed a two-year contract with Howard Stayword. The contract obligated Stayword to represent and promote Jones in all business and professional matters, including the arrangement of figh
> Ernest A. Kotsch executed a durable power of attor- ney when he was 85 years old, giving his son, Ernie, the power to manage and sell his real estate and personal property “ and to do all acts necessary for maintaining and caring for [the father] during
> Compare authorization of an agent by (a) appointment and (b) ratification.
> How does an agent differ from an independent contractor?
> Gilbert Church owned Church Farms, Inc., in Manteno, Illinois. Church advertised its well-bred stallion Imperial Guard for breeding rights at $50,000, directing all inquiries to “ Herb Bagley, Manager. ” Herb Bagley lived at Church Farms and was the only
> Vallot was driving his farm tractor on the highway. It was struck from the rear by a truck, overturned, exploded, and burned. Vallot was killed, and a death claim was made against All American Insurance Co. The death of Vallot was covered by the company
> Carman Tool & Abrasives, Inc., purchased two milling machines, FOB Taiwan, from the Dah Lih Machinery Co. Carman obtained ocean marine cargo insurance on the machines from St. Paul Fire and Marine Insurance Co. and authorized Dah Lih to arrange for the s
> Amador Pena, who had three insurance policies on his life, wrote a will in which he specified that the proceeds from the insurance policies should go to his children instead of to Leticia Pena Salinas and other beneficiaries named in the policies. He die
> Marshall Produce Co. had insured its milk- and egg- processing plant against fire. When smoke from a fire near its plant permeated the environment and was absorbed into the company ’ s egg powder products, cans of powder delivered to the U.S. government
> Atlas Capital, LLC ’ s sole member and manager was Weston Wade Sleater. Mr. Sleater signed two promissory notes totaling $4,000,000 as the maker of the notes. The signature blocks of the notes read, “ Weston Wade Sleater & Atlas Marketing Group, L.C, ” b
> Collins obtained from South Carolina Insurance Co. a liability policy covering a Piper Colt airplane he owned. The policy provided that it did not cover loss sustained while the plane was being piloted by a person who did not have a valid pilot ’ s certi
> Margrethe and Charles Pyeatte, a married couple, agreed that she would work so that he could go to law school and that when he finished, she would go back to school for her master’s degree. After Charles was admitted to the bar and before Margrethe went
> Baurer purchased a White Freightliner tractor and agreed that his son-in-law, Britton, could use it in the trucking business. In return, Britton agreed to haul Baurer ’ s hay and cattle, thus saving Baurer approximately $30,000 per year. Baurer insured t
> Linda Filasky held policies issued by Preferred Risk Mutual Insurance Co. Following an injury in an automobile accident and storm damage to the roof of her home, Filasky sustained loss of income, theft of property, and water damage to her home. These thr
> Arthur Katz testified for the U.S. government in a stock manipulation case. He also pled guilty and testified against three of his law partners in an insurance fraud case. He received a six-month sentence in a halfway house and a $5,000 fine. Katz was pl
> Dr. George Allard and his brother-in-law, Tom Rowland, did not get along after family land that was once used solely by Rowland was partitioned among family members after the death of Rowland ’ s father. Rowland had a reputation in the community as a bul
> From the United Insurance Co., Rebecca Foster obtained a policy insuring the life of Lucille McClurkin and naming herself as beneficiary. McClurkin did not live with Foster, and Foster did not inform McClurkin of the existence of the policy. Foster paid
> Gerhard Schillers was assisting his friend J.L. Loethen in removing a transmission from the bed of the Loethens ’ truck on the Loethens ’ property. While Schillers was carrying the transmission down the driveway, he fell and was seriously injured. J.L. w
> Cecil Usher owned Belize NY, Inc. (Belize), a small construction company doing business in New York City. Belize purchased a commercial general liability insurance policy from Mount Vernon Fire Insurance Co. The policy ’ s first page, entitled “ Policy D
> Anderson Development Co. (ADC) manufactures organic materials at its plant in Adrian, Michigan. The Environmental Protection Agency (EPA) sent ADC a formal notification that it was considered a “ potentially responsible party ” (PRP) for the release of h
> Northwest Harvest Products, Inc., fell behind on its trade account with Major Products Company, Inc., and Major requested a note for the debt. Northwest sent a $79,000 corporate note. The balance on the note was incorrect, and Northwest sent a second cor
> Spector owned a small automobile repair garage in rural Kansas that was valued at $80,000. He purchased fire insurance coverage against loss to the extent of $48,000. The policy contained an 80 per- cent coinsurance clause. A fire destroyed a portion of
> Mr. Keyes was injured on April 30, 2010, when he fell off Ms. Thibodeaux ’ s roof. Mr. Keyes was cleaning and measuring the roof in preparation for painting when, unbeknownst to him, Ms. Thibodeaux sprayed a section of the metal roof with water. Mr. Keye
> When Harriet went away for the summer, Landry, a house painter, painted her house. He had a contract to paint a neighbor’s house but painted Harriet’s house by mistake. When Harriet returned from vacation, Landry billed her for $3,100, which was a fair p
> TLC was an Atlanta rhythm, blues, and hip-hop band that performed at clubs in 1991. The three- woman group signed a recording contract with LaFace Records. The group ’ s first album that LaFace produced, Ooooooohhh on the TLC Tip , sold almost 3 million
> Steven and Teresa Hornsby are married and have three young children. On May 25, 1993, the Hornsbys filed a voluntary Chapter 7 petition. They had by that date accumulated more than $30,000 in debt, stemming almost entirely from student loans. They wanted
> Samson Industries ceased doing business and is in bankruptcy proceedings. Among the creditors are five employees seeking unpaid wages. Three of the employees are owed $3,500 each, and two are owed $1,500 each. These amounts became due within 90 days prec
> Sonia, a retailer, has the following assets: a factory worth $1 million; accounts receivable amounting to $750,000, which fall due in four to six months; and $20,000 cash in the bank. Sonia ’ s sole liability is a $200,000 note falling due today, which s
> D. Erik Von Kiel obtained loans from the U.S. Department of Health & Human Services so that he could complete his education as an osteopathic physician. He works at the International Academy of Life (IAL) in Orem, Utah, for no salary but receives gifts f
> Kentile sold goods over an extended period of time to Winham. The credit relationship began without Winham ’ s being required to furnish a financial statement. After a time, payments were not made regularly, and Kentile requested a financial statement. W
> Jane Leeves declared voluntary Chapter 7 bankruptcy. The trustee included the following property in her bankruptcy estate: • Jane ’ s wedding ring • Jane ’ s computer for her consulting business that she operated from her home • Jane ’ s car payment f
> George S. Avery signed a letter regarding the unpaid balance on a $20,000 promissory note owed to Jim Whitworth in the form of a letter addressed to Whitworth stating: “ This is your note for $45,000.00, secured individually and by our Company for your s
> Harold McClellan sold ice-making machinery to Bobbie Cantrell ’ s brother for $200,000 to be paid in installment payments. McClellan took a security interest in the ice machine but did not perfect it by filing a financing statement. The brother defaulted
> Orso, who had declared bankruptcy, received a structured tort settlement in a personal injury claim he had pending. The settlement would pay him an annuity each year for 30 years because the claim was the result of an auto accident that left him permanen
> Hall-Mark regularly supplied electronic parts to Peter Lee. On September 11, 1992, Lee gave Hall-Mark a $100,000 check for parts it had received. Hall-Mark continued to ship parts to Lee. On September 23, 1992, Lee ’ s check was dishonored by the bank. O
> Dozier and his wife, daughter, and grandson lived in the house Dozier owned. At the request of the daughter and grandson, Paschall made some improvements to the house. Dozier did not authorize these, but he knew that the improvements were being made and
> Place the following in order for a bankruptcy proceeding: a. Order of relief b. Collection of bankrupt’s estate c. List of creditors d. Petition e. Evaluation of claims f. Voidable preferences g. Discharge
> Three general unsecured creditors are owed $45,000 as follows: A , $15,000; B , $5,000; and C , $25,000. After all other creditors were paid, the amount left for distribution to general unsecured creditors was $9,000. How will the $9,000 be distribute
> Carol Cott, doing business as Carol Cott Fashions, is worried about an involuntary bankruptcy proceeding being filed by her creditors. Her net worth, using a balance sheet approach, is $8,000 ($108,000 in assets minus $100,000 in liabilities). However, h
> Okamoto owed money to Hornblower & Weeks- Hemphill, Noyes (a law firm and hereafter Horn- blower). Hornblower filed an involuntary bankruptcy petition against Okamoto, who moved to dismiss the petition on the ground that he had more than 12 creditors and
> Cook sold Martin a new tractor truck for approximately $13,000, with a down payment of approximately $3,000 and the balance to be paid in 30 monthly installments. The sales agreement provided that “ on default in any payment, Cook [could] take immediate
> NationWide Check Corp. sold money orders through local agents. A customer would purchase a money order by paying an agent the amount of the desired money order plus a fee. The customer would then sign the money order as the remitter or sender and would f
> A borrowed money from B and orally agreed that B had a security interest in equipment that was standing in A ’ s yard. Nothing was in writing, and no filing of any kind was made. Nine days later, B took possession of the equipment. What kind of interest
> On April 18, 2000, Philip Purkett parked his car, on which he owed $213 in payments, in his garage and locked the garage. Later that night, TWAS, Inc., a vehicle repossession company, broke into the garage and repossessed the car without notice to Purket
> In 1987, the Muirs bought a motor home. In 1988, the Muirs created and Bank of the West acquired and perfected a security interest in the motor home. In 1992, the Muirs entered into an agreement with Gateleys Fairway Motors by which Gateleys would sell t
> Lockovich borrowed money from a bank to purchase a motorboat. The bank took a security interest in it but never filed a financing statement. A subsequent default on the loan occurred, and the debtor was declared bankrupt. The bank claimed priority in the
> While Clara Novak was sick, her daughter Janie helped her in many ways. Clara died, and Janie then claimed that she was entitled to be paid for the services she had rendered her mother. This claim was opposed by three brothers and sisters who also render
> Benson purchased a new Ford Thunderbird auto- mobile. She traded in her old car and used the Magnavox Employees Credit Union to finance the balance. The credit union took a security interest in the Ford. Subsequently, the Ford was involved in a number of
> First Union Bank of Florida loaned money to Dale and Lynn Rix for their purchase of Ann ’ s Hallmark, a Florida corporation. First Union took a security interest in the store ’ s equipment, fixtures, and inventory and filed the financing statement under
> Consider the following cases and determine whether the financing statements as filed would be valid under Article 9. Be sure to consider the standard of “ seriously misleading ” under Revised Article 9. a. In re Thriftway Auto Supply, Inc. , 159 B.R. 94
> McLeod purchased several items from Sears, Roebuck & Co. on credit. The description of the items, in which Sears took a purchase money security interest, was as follows: “ MITER SAW; LXITV- RACDC [a television, videocassette recorder, and compact disc sp
> In 1983, Carpet Contracts owned a commercial lot and building, which it operated as a retail carpet outlet. In April of 1983, Carpet Contracts entered into a credit sales agreement with Young Electric Sign Corp. (Yesco) for the purchase of a large electr
> The state of Alaska was a tenant in a large office building owned by Univentures, a partnership. The state made a lease payment of $28,143.47 to Uni- ventures with state treasury warrant No. 21045102. Charles LeViege, the managing partner of Univentures,
> Is the following instrument negotiable? I, Richard Bell, hereby promise to pay to the order of Lorry Motors Ten Thousand Dollars ($10,000) upon the receipt of the final distribution from the estate of my deceased aunt, Rita Dorn. This negotiable instrume
> Richard Schewe and others placed personal property in a building occupied by Winnebago County Fair Association, Inc. Prior to placing their property in the building, they signed a “ Storage Rental Agreement ” prepared by the County Fair Association, whic
> Motorola manufactured cell phones for Nextel of Mexico at its facility in Plantation, Florida. Nextel used Westwind International to arrange transporta- tion of the cell phones. Westwind utilized Transpro Logistics to administer the transportation proces
> Doyle Harms applied to his state ’ s Public Utilities Commission for a Class B permit authorizing performance as a common carrier. Doyle testified that it was not his intention to haul in a different direction than he was already going, stating in part:
> Compare warehouse receipts and bills of lading as to negotiability.
> Compare the limitations of the liability of a ware-house and of a hotelkeeper.
> Compare the liens of carriers, warehouses, and hotels in terms of being specific.
> Ronald Sadler, a California resident, owned a helicopter distribution company in West Germany, Delta Avia. This company distributed U.S.-made Hughes civilian helicopters in western Europe. Sadler’s German firm purchased 85 helicopters from Hughes Aircraf
> American Cyanamid shipped 7,000 vials of DPT — a vaccine for immunization of infants and children against diphtheria, pertussis, and tetanus — from its Pearl River, New York, facility to the U.S. Defense Department depot in Mechanicsburg, Pennsylvania, b
> What social forces are involved in the rule of law governing the liability of a common carrier for loss of freight?
> Tate hired Action-Mayflower Moving & Storage to ship his belongings. Action prepared a detailed inventory of Tate ’ s belongings, loaded them on its truck, and received the belongings at its warehouse, where they would be stored until Tate asked that the
> Frosty Land Foods shipped a load of beef from its plant in Montgomery, Alabama, to Scott Meat Co. in Los Angeles via Refrigerated Transport Co. (RTC), a common carrier. Early Wednesday morning, December 7, at 12:55 A . M ., two of RTC ’ s drivers left th
> When de Lema, a Brazilian resident, arrived in New York City, his luggage consisted of three suitcases, an attaché case, and a cylindrical bag. The attaché case and the cylindrical bag contained jewels valued at $300,000. De Lema went from JFK Airport to
> On March 30, Emery Air Freight Corp. picked up a shipment of furs from Hopper Furs, Inc. Hopper ’ s chief of security filled in certain items in the airbill. In the box entitled ZIP Code, he mistakenly placed the figure “ 61,045, ” which was the value
> Garrett and his wife checked into the St. Louis Air- port North Holiday Inn on March 29, taking advantage of the hotel ’ s “ Park and Fly ” package, which provided one night of lodging to individuals, provided a shuttle service to Lambert International A
> Glen Smith contracted with Dave Watson, a com- mon carrier, to transport 720 hives of live bees along with associated equipment from Idabel, Oklahoma, to Mandan, North Dakota. At 9:00 A . M . on May 24, 1984, while en route, Watson ’ s truck skidded off
> Buffett sent a violin to Strotokowsky by International Parcel Service (IPS), a common carrier. Buffett declared the value of the parcel at $500 on the pick-up receipt given him by the IPS driver. The receipt also stated: “Unless a greater value is declar
> Charles and Nicolette went to Italy in November 2008, where Charles proposed marriage and presented Nicolette with a diamond ring. She accepted the proposal and the ring. On the same day, Nicolette asked Charles where he had purchased the ring. She becam
> Able Time Inc. imported a shipment of watches into the United States. The watches bore the mark “TOMMY,” which is a registered trademark owned by Tommy Hilfiger. U.S. Customs seized the watches pursuant to the Tariff Act, which authorizes seizure of any
> Newman underwent physical therapy at Physical Therapy Associates of Rome, Inc. (PTAR), in Rome, Georgia, for injuries sustained in an auto accident. At a therapy session on February 6, it was necessary for Newman to take off two necklaces. She placed one
> Rhodes parked his car in the self-service park- and-lock lot of Pioneer Parking Lot, Inc. The ticket that he received from the ticket meter stated the following: “notice. This contract limits our liability. Read it. We rent space only. No bailment is cre
> John Hayes and Lynn Magosian, auditors for a public accounting firm, went to lunch at the Bay View Restaurant in San Francisco. John left his raincoat with a coatroom attendant, but Lynn took her new raincoat with her to the dining room, where she hung i
> Schroeder parked his car in a parking lot operated by Allright, Inc. On the parking stub given him was printed in large, heavy type that the lot closed at 6:00 P . M . Under this information, printed in smaller, lighter type, was a provision limiting the
> Baena Brothers agreed to reupholster and reduce the size of the arms of Welge ’ s sofa and chair. The work was not done according to the contract, and the furniture when finished had no value to Welge and was not accepted by him. Baena sued him for the
> Martin Acampora purchased a shotgun at a garage sale years ago, never used the weapon, and did not know of any defects in it. His 31-year-old son Marty borrowed the shotgun to go duck hunting. As Marty attempted to engage the safety mechanism, the shotgu
> New York ’ s banking law provides that a presumption arises that a joint tenancy has been created when a bank account is opened in the names of two persons “ payable to either or the survivor. ” While he was still single, Richard Coddington opened a savi
> In 1971, Harry Gordon turned over $40,000 to his son, Murray Gordon. Murray opened two $20,000 custodial bank accounts under the Uniform Gifts to Minors Act for his minor children, Eden and Alexander. Murray was listed as the custodian of both accounts.
> Arthur Grace, a world-renowned photo-journalist, had an agreement with Sygma-Paris and Sygma-New York whereby Grace turned well over 40,000 of his photographic images to Sygma, and Sygma agreed to act as Grace ’ s agent to license the images and administ
> Joyce Clifford gave a check for $5,000 to her nephew Carl to help with living expenses for his last year of college. The face of the check stated, “ As a loan. ” Years later, Carl wrote to his aunt asking what he should do about the loan. She responded o
> Sensor, a Netherlands business organization wholly owned by Geosource, Inc., of Houston, Texas, made a contract with C.E.P. to deliver 2,400 strings of geophones to Rotterdam by September 20, 1982. The ultimate destination was identified as the USSR. The
> On March 6, Colt Manufacturing Co., a handgun manufacturer, sponsored a farewell dinner for one of its officers, Marc Fontane. At the dinner, two Colt officials presented Fontane with a .45-caliber Colt revolver. After the presentation an agent of Colt ’
> Charter Apparel, Inc., supplied fabric to Marco Apparel, Inc., in December to manufacture finished articles of clothing at its Walnut Grove, Mississippi, facilities. The fabric arrived just before the Christmas holiday shutdown and was stacked on cutting
> Ruth and Stella were sisters. They owned a house as joint tenants with right of survivorship. Ruth sold her half interest to Roy. Thereafter, Stella died, and Roy claimed the entire property by survivorship. Was he entitled to it?
> Joe obtained a box of antique Lenox china dishes that had been left at the Mashpee town dump. He supplemented the sizable but incomplete set of dishes with other Lenox pieces found at antique dealers. At dinner parties, he proudly told of the origin of h
> Soden, a contractor, made a contract to build a house for Clevert. The sales contract stated that “ if either party defaults in the performance of this contract, ” that party would be liable to the other for attorneys ’ fees incurred in suing the default
> Wassenaar worked for Panos under a three-year contract stating that if the contract were terminated wrongfully by Panos before the end of the three years, he would pay as damages the salary for the remaining time that the contract had to run. After three
