Author Question: A QUESTION OF ETHICS Raymond and Joan Massengill borrowed money from Indiana National Bank (INB) to ... (Read 93 times)

waynest · **on:** Jun 24, 2018

A QUESTION OF ETHICS
Raymond and Joan Massengill borrowed money from Indiana National Bank (INB) to purchase a van. Toward the end of the loan period, the Massengills were notified by mail that they were delinquent on their last two loan payments. Joan called INB on a Saturday and said that she did not agree with the amount that INB said was due. It was arranged that the Massengills would go to the bank the following Monday morning and take care of the matter. In the meantime, INB had made arrangements for the van to be repossessed. At 1:30 A.M. Sunday, two men appeared in the Massengills' driveway and began to hook up the van to a tow truck. Raymond, assuming that the van was being stolen, went outside to intervene and did so vociferously. During the course of events, Massengill became entangled in machinery at the rear of the tow truck and was dragged down the street and then run over by his towed van. The repo menthose hired by INB to repossess the vanknew of Raymond's plight but sped away. The trial court granted summary judgment for the bank, ruling that the bank was not liable for the injuries caused by the repossession company. On appeal, however, the court ruled that the bank could be liable for the acts of the repossession company and remanded the case for the determination of damages.

Question 2

Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. Meg enters into a contract with the office supply vendor in Emile's name. Because the office supply vendor is a friend, Emile has always negotiated these contracts and he is angry with Meg when she tells him that she signed the contract. In this case, Emile is:
a. not bound by Meg's actions
b. bound by Meg's actions by operation of law
c. bound by Meg's action apparent or actual authority
d. not bound by Meg's actions because in this case there was no emergency to justify Meg's behavior e. bound by Meg's action by rectification

steff9894 · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

A QUESTION OF ETHICS
1. A principal who hires an independent contractor as an agent is not ordinarily liable for harm caused to another by the acts of the independent contractor, because the principal does not have the right to control the details of performance. For this reason, it seems unfair to hold a creditor liable for the acts of its independent contractor in undertaking a repossession. Exceptions to this general rule exist, however, in some circumstances, such as blasting opera-tions, in which a principal is not shielded from liability merely by using an independent contractorstrict liability is imposed. Self-help repossession arguably borders on the edge of illegality if not carried out carefully. For this reason, it could be argued that it is fair to hold a creditor liable for the acts of its independent contractor in undertaking a repossession.
2. Self-help repossession simplifies the process of repossession for creditors and re-duces the burden on the courts. It may also be noted that under a security agreement, the property that serves as the collateral belongs to the creditor on the debtor's default, and thus, it can be argued that self-help repossession is only a creditor's taking possession of what is legally his or hers.
3. Repossession often occurs during the night or the early morning hours, because it is then that the effort is least likely to be observed. At those times, confrontation with debtors is more likely to be avoided. All confrontations cannot be avoided, howeverwhether or not repossession is confined to daylight hours, there will be occasional abuse and violence resulting from self-help repossessions. This is the tradeoff in protecting the rights of creditors to collect on their debts quickly and without legal proceedings.

Answer to Question 2

c