Requirements for HDC Status. Dennis Bowling was a friend and ...

[RODY.ELKHALIL]

Requirements for HDC Status. Dennis Bowling was a friend and neighbor of David Dabney. Bowling had no indication that Dabney was financially troubled. Indeed, by all evidence, Dabney was quite well off: he owned four grocery stores; he drove a Cadillac; his wife owned a new sports car; he had race horses and lived in an expensive home. In the fall of 1983, Dabney admitted to Bowling that he had cash flow problems and borrowed 40,000 from Bowling. At the same time, Dabney proposed they become partners in his grocery business, and discussions concerning this prospect ensued over the following weeks. At one point, Dabney asked Bowling for a signed blank check that would be deposited with a new grocery supplier as security and would never be used without Bowling's consent. If it was, Dabney promised, he would reimburse Bowling's account appropriately. Shortly thereafter, Dabney dated and filled out Bowling's blank check for 10,606.79 and gave the check to his major supplier and creditor, E. Bierhaus & Sons. Dabney owed Bierhaus more than 400,000 for past deliveries; and after having received ten to twenty bad checks from Dabney, Bierhaus required cash or cashier's checks from Dabney for any deliveries. Dabney had told Bierhaus about the supposedly imminent partnership with Bowling, and under those circumstances, Bierhaus's agent accepted the 10,606.79 check from Bowling in payment for a delivery of groceries. Bowling's check was returned to Bierhaus, as there were insufficient funds in Bowling's account to cover it. By this time, Dabney had filed for bankruptcy protection. Bierhaus sought to collect the amount of the check from Bowling. Is Bierhaus a holder in due course?

Question 2

Geary was an employee of U.S. Steel. His concerns about the safety of a new product were ignored by his superior. He went to higher management to let them know of the problem. The product was withdrawn from the market, but Geary was fired by his superior. Geary sued the company for wrongful dismissal. The Pennsylvania court held that Geary:
 a. wins because he was protecting the public against harm, which outweighs the private interest here b. wins because his employment rights can be lost only after due process
  c. wins because management agreed with Geary's assessment of the product; the supervisor was wrong d. loses because of the employment-at-will doctrine
  e. none of the other choices

[anyusername12131]

Answer to Question 1

Requirements for HDC status
Bierhaus was not a holder in due course on this instrument. The court reasoned that, although signing and delivering a blank check is such negligence which can expose the maker to liability to a holder in due course UCC 3-406, Bierhaus was not an HDC. To be accorded HDC status, the holder has the burden of proving that he was acting in accordance with reasonable commercial standards, or that he was acting in good faith and he was without notice. The previous bad checks from Dabney, the fact that Bierhaus's agent had never met Bowling and only knew about him from Dabney's representations, and the fact that he never contacted Bowling concerning the check, even though Bowling's name, address, and phone number were given on the face of the check, should have been sufficient notice to Bierhaus that the status of the check was problematic.

Answer to Question 2

d

[RODY.ELKHALIL]

Thank you

[anyusername12131]

No problemo