Requirements for HDC Status. Pamela Haas, an employee of Trail ...

[elizabeth18]

Requirements for HDC Status. Pamela Haas, an employee of Trail Leasing, Inc, had access to her employer's blank checks. Over a period of about two and a half years, Haas used the firm's checks to fraudulently obtain cash from the firm's bank, Drovers First American Bank. She carried out her scheme by writing checks payable to Drovers First, having the checks signed by an authorized officer of Trail Leasing, and then taking the checks to the bank. There she would fill out a change order forma form used by bank customers to specify the coins and bill denominations in which they wished to take cash for business operationsand pocket the cash that she received. By the time the scheme was discovered (through a discrepancy in one of the change orders), Haas had negotiated fifty-five checks for a total of nearly 40,000. Trail Leasing sued the bank to recover the funds paid to Haas without its authorization, and the issue turned on whether the bank was a holder in due course of the checks delivered to it by Haas. Specifically, the issue was whether the bank had taken the checks for value. Trail Leasing argued that because the bank essentially paid Haas from Trail Leasing's funds (by debiting Trail Leasing's bank account), the bank had not given value for the instruments and therefore could not be an HDC. Will the court concur in this argument? Discuss.

Question 2

In Coelho v. Posi-Seal International, were an employee was fired without good cause despite explicit statements by the company president that the employee had job security, the supreme court of Connecticut held:
 a. there to be an express contract that was breached by the employer b. there to be an implied contract that was breached by the employer c. the employer violated an implied covenant of good faith
  d. that the employer violated public policy
  e. that the employee was at-will, so had no case

[kthug]

Answer to Question 1

Requirements for HDC status
No. The court did not agree with Trail Leasing's argument. The bank gave value for the checks and was a holder in due course. UCC 3-303 states that a holder takes the instrument for value to the extent that the agreed consideration has been performed or that he acquires a security interest in or lien on the instrument otherwise than by legal process. According to the court, this provision eliminated a conflict in prior law by making clear that merely a promise to the transferor is not value until the promise has been performed. Here, Drovers performed; it paid cash for the checks. In response to Trail Leasing's argument that the bank at most gave only conditional value because the bank retained and exercised the right to debit Trail Leasing's account, the court stated that the bank had first to pay out its own money before debiting Trail Leasing's account. Therefore, the bank had given value for the instrument and qualified as a holder in due course. (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

[elizabeth18]

Correct answers!

[kthug]

Great! Please up vote