Quiz 28: Kinds of Instruments, Parties, and Negotiability
Refer to the case Pelican Plumbing Supply v J.O.H Construction (653 So2d 699) to answer the question as below: Case Issue: The issue is whether the credit application signed by the defendant's company executive is a negotiable instrument, and whether the executive is personally liable for payment on it to the plaintiff. Trial court held for the executive, plaintiff appealed the decision. Relevant Terms, Laws, and Cases: UCC 3-104 - defines what provisions for something to be a negotiable instrument. It must be signed by the maker, payable to bearer or to order with a certain sum, at a definite time, and has no conditional statements on how and when payments will be made. Opinion: Higher court affirmed the decision. First the court noted that, the credit application was not a negotiable instrument , there was a lack of definite time, and wasn't payable to order or bearer. Hence, the credit application fell under contract law, and the court looked at whether the executive was liable under surety-ship, a third party guarantor to pay in a contract. The court argued in order for there to be surety-ship, it must be expressed and in writing, however, the court found no evidence of this intent; the executive is not personally liable.
Case summary: Ms. AAN signed a note that described that she has taken a loan of $5000 from Mr. GG on particular date (1-8-2002) at 6% interest rate a total of $10,000. The note did not mention a payment schedule by AAN or a time for repayment. AAN used this $10,000 as start-up money for her business and orally agreed to pay back this money with interest to GG with the sale of her first 1000 units. But she failed to make any repayment to GG. With time GG passed away and his son, an executor of his estate demanded AAN for the repay of $10,000 and also the interest of the same. AAN argued that she repaid the note as a care given to GG but the estate maintained the instrument was negotiable and was a promissory note made by AAN to GG and he is entitled to collect the due amount in cash. Conclusion: In this case, the estate (son of Mr. GG) is correct because the note that was signed by AAN is considered as an instrument and a promissory note on the basis of which it is necessary for AAN to repay the money back with the interest to the estate. Thus the estate is correct in this case and he is entitled to receive the money due on behalf of his father in cash.
Refer to the case Holly Hill Aces v Charter Bank of Gainesville (314 So2d 209) to answer the question as below: Case Issue: The issue is whether the bank had obtained a negotiable instrument. Trial court held for the bank that the note was negotiable. This decision was appealed by the opposing party. Relevant Terms, Laws, and Cases: UCC 3-104 - defines what provisions for something to be a negotiable instrument. It must be signed by the maker, payable to bearer or to order with a certain sum, at a definite time, and has no conditional statements on how and when payments will be made. Opinion: The higher court reversed the decision. The note is not negotiable. The court argued that the note was not negotiable because it used the terms "subject to" the mortgage conditions making it a conditional statement. Hence, it was not negotiable under their State's UCC. Alternatively, the court noted that mere reference that the note was for a mortgage would not have made it non-negotiable.