Friday, October 26, 2012

National Bank of Cleveland v. Erskine & Sons, Inc. case brief

Negotiable Instrument

National Bank of Cleveland v. Erskine & Sons, Inc.

158 Ohio St. 450, 110 N.E. 2D 598

FACTS
-The D gave mining equipment in exchange for a note.
-D claims that the equipment was defective.
-The note contains a default clause which states if the chattel mortgage securing the note is breached in any respect, the note shall immediately become due at the holder's option without demand or notice.

PROCEDURAL HISTORY
-Trial court: holds note is a negotiable instrument and submitted to the jury an issue of good faith of the plaintiff.
-Jury held for D, judgement entered.
-Court of appeals reversed. D appeals.

ISSUE
-Is the note negotiable?

HOLDING
Yes, the note is negotiable.

RULES
-If the note is not negotiable, than the endorsee takes it subject to all equities and defenses between the original parties.
-An instrument that is payable at a fixed date or before then at the option of the holder, or automatically payable conditioned upon the occurrence of specified acts or events that represent a kind of express or implied default by the obligor of such a nature as to indicate an increased risk to the holder that the instrument may not be paid at the date of ultimate maturity is negotiable.

ANALYSIS
-A promissory note that contains provisions stating that the holder of the note is empowered to declare the note due and payable before maturity in exercising his unrestrained option is non-negotiable.
---
Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?

No comments:

Post a Comment

The Ins and Outs of Class Action Lawsuits: A Comprehensive Guide

Sometimes, you may buy a product only to find it defective. To make it worse, your search for the product reveals mass complaints. You can ...