Requirements for HDC Status. Stacey Dillabough presented two ...

[eruditmonkey@yahoo.com]

Requirements for HDC Status. Stacey Dillabough presented two money orders for payment to Chuckie Enterprises, Inc, a check-cashing service in Philadelphia. Dillabough was known as a previous customer, the orders were presented within thirty days of the date on them, and there was nothing to indicate that they were not valid. Chuckie obtained photo identification from Dillabough, cashed the orders, and submitted them to the issuer, American Express, for payment. American Express recognized the orders as stolen and refused to pay. Chuckie assigned its right to payment to Robert Triffin, who filed a suit against American Express to collect. One of the issues was whether Chuckie was a holder in due course. One of the requirements of HDC status is good faith. Did Chuckie take the money orders in good faith? Discuss.

Question 2

Andrea has been working very hard for her employer, Bill. Two weeks before Andrea is due for a bonus payment, Bill fires her for no reason. Andrea could make a case that:
 a. her at-will employment rights have been violated
  b. the implied covenant of good faith and fair dealing has been violated c. the express covenant of good faith and fair dealing has been violated d. Andrea cannot make any kind of case against Bill
  e. none of the other choices are correct

[braelync]

Answer to Question 1

Requirements for HDC status
The Pennsylvania state court in which Triffin filed the collection suit issued judgments against Dillabough and Lynn, but entered a verdict in favor of American Express. On Triffin's appeal, the state intermediate appellate court reversed the decision of the lower court, holding that the money orders were negotiable instruments and that Triffin had the status of a holder in due course. American Express appealed to the Supreme Court of Pennsylvania, which affirmed the decision of the intermediate appellate court. The state supreme court applied the requirements of negotiability to the money orders and concluded that they were negotiable. The court acknowledged that under the UCC the defense of unauthorized completion discharges a party from liability to any person other than a holder in due course (HDC). So the question was whether Triffin was an HDCwhich meant that because a transferee acquires whatever rights the transferor had, even if the transferee is aware of the defenses to enforcement, the question was whether Chuckie's was an HDC. Chuckie's took the money orders for value, in good faith, and there was no evidence presented that Chuckie's had any notice that the Dillabough and Lynn money orders were stolen when he cashed them. Chuckie's was an HDC, and thus Triffin was an HDC, and American Express cannot enforce the defenses against him. Accordingly, American Express is liable to Triffin for the face value of the money orders. (This case was decided under the unrevised Article 3, but the result would likely be the same under the revised Article 3.)

Answer to Question 2

b

[eruditmonkey@yahoo.com]

TYSM

[mohan]

Excellent