Quiz 23: Credit, Real Property Financing, and Secured Transactions


Facts of the Case The case is related to a company named IEI Company was a lease owner of an oil and gas property located in Duchesne County, Utah. LDE Company was given the contract to drill an oil well on the property. LDE then hired some related equipment for drilling from GFRT, Inc. GFRT Inc. gave LDE the bills associated with the equipment but LDE did not make any payment. GFRT Inc. then filed a notice of a mechanic's lien on the well on the tune of $ 19766. IEI Company which had paid LDE refused to pay GFRT Inc. GFRT Inc. then foreclose on its mechanic's lien. Issue concerning the case The issue in this case is whether GFRT won the case or not on its mechanic's lien. Findings and Decision of the Court GFRT contended that the company is liable to pay the damages to the tune of $30,433.93 under the following causes of action: • "imposition and foreclosure of a lien on the well, • unjust enrichment, and • failure to require a bond under Utah Code Ann. § 14-2-2, (1953, as amended)" The district court awarded GFRT a lien against the well and also foreclosure of the lein but rejected GFRT's unjust enrichment and contractor's bond claims. The court also conferred the attorney fees to the tune of $3798.75 to GFRT. Lastly the court did not find the matter related to Attorney fees to be clear, therefore remanded the district court to check the determination of the same Therefore, the rulings of district were "affirmed in part, reversed in part, and remanded for further proceedings" by Supreme Court.

In the given case, the judgement was given in the favour of plaintiff. The defendant did not have any duty for the proceeds generation by proposing the sale of the property. The property's subsequent sale by the defendant o third party was not a sale that is pursuant to foreclosure and under section 6204-A it did not make any "surplus." The court found that Mr P did not squarely increase the issue if section 6204-A is applicable to strict proceedings of foreclosure that are initiated after perfect statute date. Hence, any cause of action has not been created by the statute for recovery and accounting of surplus when the foreclosure is absolutely pursuant to section 6203(2).

No , the company S do not have security interest in Mack truck. The new Mack truck was kept as collateral for the borrowed amount of $19,747.56. The financial statement was intended to be filed for perfecting the security interest for the loan against that new truck. Yes , Mr T does have a liability to company S. He was hired for creating the security agreement which he failed to file. He had presented the security agreement as per instructions of Company S which made Company C liable for even future borrowings. But he failed in performing his duty and was negligent in his performance. Hence he can be held liable for the default.

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