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Full-Text Articles in Law
The Risk Of Money Laundering Through Crowdfunding: A Funding Portal's Guide To Compliance And Crime Fighting, Zachary Robock
The Risk Of Money Laundering Through Crowdfunding: A Funding Portal's Guide To Compliance And Crime Fighting, Zachary Robock
Michigan Business & Entrepreneurial Law Review
With the recent passage of the Jumpstart Our Business Startups Act (“JOBS Act”) and proposed regulations, equity crowdfunding is poised to play an important role in fundraising for many types of emerging growth companies. A fundamental purpose of crowdfunding is to reduce economic barriers to capital markets for emerging growth companies, in part by relaxing rigorous information disclosure requirements currently mandated by the Securities and Exchange Commission (“SEC”). Relaxed regulation should help reduce the cost of fundraising, but it will also present certain risks. Investor fraud is a common concern, which is addressed at length in the JOBS Act and …
Private Equity & Private Suits: Using 10b-5 Antifraud Suits To Discipline A Transforming Industry, Kenneth J. Black
Private Equity & Private Suits: Using 10b-5 Antifraud Suits To Discipline A Transforming Industry, Kenneth J. Black
Michigan Business & Entrepreneurial Law Review
This note demonstrates why private equity will no longer be able to avoid private investor suits as it has (mostly) done in the past and explores the industry’s response to a growing number of investor suits. Notably, the industry has already begun to shift its strategy from regulatory avoidance to regulatory capture, at least in part to avoid investor suits. Given these changes, this note proposes that the best way to maintain discipline in the transforming private equity market is to protect the ability of investors to bring private suits.
Article 5 - Recent Developments, James J. White
Article 5 - Recent Developments, James J. White
Other Publications
I. Mitigation in Letter of Credit Transactions Assume a Buyer has procured a letter of credit to pay for contracted goods but no longer wants the goods. The Buyer and the Issuer would like to force the Beneficiary to mitigate. Assume that both the Issuer and Applicant repudiate their obligation or that the Applicant has failed and the Issuer repudiates its obligation to pay under the letter of credit. At the moment of repudiation the price for a gallon of the underlying oil that is the subject of the letter of credit is $.75 and that the letter of credit …
Letters Of Credit: Highlights Of Revised Article 5, Edwin E. Smith, James J. White
Letters Of Credit: Highlights Of Revised Article 5, Edwin E. Smith, James J. White
Other Publications
1. Under what circumstances is it bad faith for an issuer to honor a letter of credit in the face of an applicant's offer of proof of fraud by the beneficiary? 2. What is the issuer's obligation where there is a waiver by the applicant that the issue chooses not to honor? 3. What are the rights of transferees of transferable letters of credit and assigness of proceeds?
Article 5: Highlights Of The Proposed Revision, James J. White
Article 5: Highlights Of The Proposed Revision, James J. White
Other Publications
I. The Current Status of Article 5: Drafting, Approval and Promulgation--The Most Significant Changes or Clarifications -- II. The Most Contentious Issues in the Revision of Article 5 -- III. More Subtle Questions About Revised Article 5
Allocation Of Loss Due To Fraudulent Wholesale Wire Transfers: Is There A Negligence Action Against A Beneficiary's Bank After Article 4a Of The Uniform Commercial Code?, Robert M. Lewis
Michigan Law Review
This Note argues that where a bank reasonably should have known of a fraud but still pays out a wire transfer to an unauthorized recipient, common law negligence should provide a basis for recovery despite the absence of an explicit Code provision imposing liability on the bank. Part I examines the UCC's language itself and analyzes possible cases, under 4A and under articles 3 and 4 by analogy, and discusses the applicability of these other parts of the UCC to wire transfers. Part II examines how extra-Code regulatory systems and the common law would determine wire transfer liability. Part II …
Goldstein's Curse, James J. White
Goldstein's Curse, James J. White
Articles
ON April 16, 1980, a man using the name Marvin Goldstein opened a bank account at a Baltimore branch of Union Trust Company. He deposited $15,000 in cash. He told the branch manager that he planned to establish a Baltimore office of his father's New York business, "Goldstein's Precious Metals and Stones." Goldstein identified himself with a New Jersey driver's license and gave a bank reference from New York. On May 6, Goldstein deposited a check for $880,000 at another Union Trust branch near the branch where he had opened the account. Words on this check indicated that it was …
Bills And Notes-Negligent Conduct By Drawer Preventing His Claim That Drawee Paid On A Forged Indorsement, John S. Slavens S. Ed.
Bills And Notes-Negligent Conduct By Drawer Preventing His Claim That Drawee Paid On A Forged Indorsement, John S. Slavens S. Ed.
Michigan Law Review
X and Y, owners of a joint savings account with the plaintiff bank, delivered their bankbook to Z with a withdrawal receipt signed by both depositors in the amount of $75. Z fraudulently altered the receipt, a form used only in paying directly to a depositor, by raising the amount to $5,000, and then presented the bankbook and altered instrument to a teller employed by plaintiff, asking for $5,000. The teller, unwilling to give Z the money, was then instructed to alter the receipt so as to give it the appearance of a check. Then on behalf of plaintiff, …
Bills And Notes-Negligence Of The Depositor-Right Of The Drawee To Charge The Account, Thomas Hartwell
Bills And Notes-Negligence Of The Depositor-Right Of The Drawee To Charge The Account, Thomas Hartwell
Michigan Law Review
A depositor in the defendant bank was a large firm with a payroll clerk who prepared the employees' checks for signing by the proper officer. The clerk prepared checks for employees not then on the payroll, which the officer signed without investigation. The clerk then indorsed as the named payee, signed in her own name as final indorser, and cashed the checks at various banks. Such conduct did not seem unusual to the banks, as she would frequently cash properly indorsed checks as a favor to other employees. The returned vouchers were not examined by the depositor to detect errors. …
Bills And Notes-Imposters In The Law Of Bills And Notes, Ralph W. Aigler
Bills And Notes-Imposters In The Law Of Bills And Notes, Ralph W. Aigler
Michigan Law Review
Two crooks, Baron and Brasch, now apparently residents of the New Jersey penitentiary, yielded to the temptation to acquire money by supposedly easy means. They selected as their victim a Miss Russell, a retired school teacher with more cash than is usual in the cases of people with her background. She seems to have had a strong leaning towards charitable contributions, and it was this trait which commended her to Baron and Brasch.
Chattel Mortgage--Validity Of Recorded Chattel Mortgage As Against Ordinary Purchaser--Possession Entrusted To Mortgagor-Dealer Regularly Engaged In Sale Of Similar Articles, Edwin F. Uhl S.Ed.
Chattel Mortgage--Validity Of Recorded Chattel Mortgage As Against Ordinary Purchaser--Possession Entrusted To Mortgagor-Dealer Regularly Engaged In Sale Of Similar Articles, Edwin F. Uhl S.Ed.
Michigan Law Review
Plaintiffs purchased from a retail dealer, in the ordinary course of trade, automobiles which were subject to properly recorded mortgages given by the dealer to defendant finance company. The certificates of title which the mortgage-dealer had been permitted to retain indicated that the vehicles were free from lien. Claiming default in payments by the dealer, the defendant seized the automobiles. Plaintiffs brought actions seeking repossession and damages. As the evidence clearly disclosed, defendant anticipated that the dealer would make no disclosure of the encumbrance at the time of sale, but rather expected that the lien would subsequently be discharged with …
Banks-Fiduciary Duty-Guilty Participation In A Breach Of Trust, Robert O. Hancox
Banks-Fiduciary Duty-Guilty Participation In A Breach Of Trust, Robert O. Hancox
Michigan Law Review
The fiduciary relation which "involves a duty on the part of the fiduciary to act for the benefit of the other party to the relation as to matters within the scope of the relation" is of broad scope, including not only the more strictly defined relations such as those involving trustees, guardians, and executors, but also the more loosely knit relations such as found in the corporate field; i.e., directors and stockholders, promoters and subscribers to stock and the like. In contrast to the confidential relation, where to set aside a transaction between the parties there must be shown fraud, …
Waiver Of Protest: A Comparative Study, Raúl Olivera Y Borges
Waiver Of Protest: A Comparative Study, Raúl Olivera Y Borges
Michigan Law Review
Parallel to the study of protest, it is pertinent to consider the nature and legal effects of exempting clauses which, while not essential, may be found in bills of exchange. Waiver of protest appears to have been introduced by the practice in France during the first third of the nineteenth century. It is generally used to moderate the consequences of non-payment, by a drawer who lacks confidence in the solvency of the drawee, or who fears that he may not be able to provide the necessary funds before maturity. The drawer can thus spare the susceptibilities of a drawee who …
Auditing Standards And Procedures In The Light Of Court Decisions, Frederick K. Rabel
Auditing Standards And Procedures In The Light Of Court Decisions, Frederick K. Rabel
Michigan Law Review
Ever since the Securities and Exchange Commission announced its amended rule 2-02 and required the accountant's certificate to include a statement as to compliance with generally accepted auditing standards, the accounting profession has been confronted with the problem of how to state those heretofore undefined standards. In the meantime, the committee on auditing procedure of the American Institute of Accountants requested the assistance of all practicing certified public accountants and all state accounting societies in taking prompt action toward defining auditing standards, and two members of the profession have since gone on record by courageously submitting tentative lists of proposed …
Bills And Notes - Rule Of Price V. Neal - Application To Nonnegotiable Instruments And Money Orders, Edward W. Adams
Bills And Notes - Rule Of Price V. Neal - Application To Nonnegotiable Instruments And Money Orders, Edward W. Adams
Michigan Law Review
From a Mississippi post office, B stole fifty-five postal money order blanks. Notice of the theft was sent by the Post Office Department to all post offices. B filled in twelve of the blanks, making them appear genuine in all respects, and presented them to be cashed at defendant bank. In reliance on a confirmation of the validity of the money orders, received by calling a branch post office, defendant cashed them, giving B cash and travelers checks and starting a bank account for the balance. Defendant presented the orders at the main post office, and they were paid without …
Fraudulent Conveyances - Executory Consideration As "Fair Consideration" Under The Uniform Fraudulent Conveyance Act, Robert Kneeland
Fraudulent Conveyances - Executory Consideration As "Fair Consideration" Under The Uniform Fraudulent Conveyance Act, Robert Kneeland
Michigan Law Review
Plaintiff, a purchaser of mortgaged realty, claimed that there had been a series of conveyances of this property originating with a remote grantor, fraudulent as to said grantor's creditors. At the time plaintiff learned of this, he had already paid taxes on the property and paid $4605 on the purchase price, leaving a balance of $2986 due on his contract. Since, allegedly, plaintiff would have been subject to an action of the creditors to have the conveyance to him set aside/ plaintiff sought to join all creditors and defrauders in an attempt to clear the title, or, if the transaction …
Fraudulent Conveyances - Contingent Creditors - Bank Stockholders' Double Liability, Charles V. Beck Jr.
Fraudulent Conveyances - Contingent Creditors - Bank Stockholders' Double Liability, Charles V. Beck Jr.
Michigan Law Review
A holder of bank stock conveyed real estate to her daughter in consideration of love and affection, leaving the grantor with no other assets than the bank stock. At the time, the bank stock had a market value of eleven dollars a share, and the bank was advertising for depositors; there was nothing in the record to indicate insolvency. About two years later the bank closed, and the superintendent of banks assessed the stockholders the amount of their statutory double liability. When the transfer was discovered the superintendent brought action to set aside the conveyance as fraudulent to the creditors …
Banks And Banking - Duty Of Depositor To Determine Status Of His Account, James D. Ritchie
Banks And Banking - Duty Of Depositor To Determine Status Of His Account, James D. Ritchie
Michigan Law Review
Plaintiff's bookkeeper, who, as defendant bank admittedly knew, had authority only to indorse and deposit commission checks to plaintiff's account, embezzled considerable money between 1926 and 1931 by taking some of the proceeds in cash or drafts. In the passbook and in defendant's own records only the net transactions, not the total amount of the checks, were recorded. Plaintiff discovered the fraud in 1936 and now sues the receiver five years after the bank closed. Held, that plaintiff, charged with constuctive knowledge of the fraud, which reasonable examination would have revealed, is guilty of negligence and therefore barred from …
Criminal Law And Procedure - Interpretation Of Statute, Michigan Law Review
Criminal Law And Procedure - Interpretation Of Statute, Michigan Law Review
Michigan Law Review
Convicted of the statutory crime of falsely uttering a bank check, defendant appealed on the ground that the instrument in question was a promissory note. It was in appearance and form a check except for the substitution of "will pay" for "pay" and the addition of the words "payable at" before the name of the bank. Held, affirmed, the court construing the instrument as a check. State v. Doudna, (Iowa, 1939) 284 N. W. 113.
Principal And Agent - Imputing Knowledge Of Agent To His Principal, Michigan Law Review
Principal And Agent - Imputing Knowledge Of Agent To His Principal, Michigan Law Review
Michigan Law Review
Harriman, acting for himself, by fraudulent misrepresentation obtained some collateral from the plaintiff. He pledged these securities through a dummy corporation to the Harriman National Bank & Trust Co., of which he was president at that time, and over which he exercised considerable control. The loan was formally approved by the loan committee of the bank. Held, plaintiff could recover his collateral because the agent's knowledge of the fraud was imputed to the bank. Munroe v. Harriman, (C. C. A. 2d, 1936) 85 F. (2d) 493, affirming (D. C. N. Y. 1935) 16 F. Supp. 341.
Principal And Surety - Fidelity Bonds - Effect Of Failure To Make Disclosures Regarding Bonded Employees, Francis T. Goheen
Principal And Surety - Fidelity Bonds - Effect Of Failure To Make Disclosures Regarding Bonded Employees, Francis T. Goheen
Michigan Law Review
The defense on a fidelity bond given by the cashier was the failure of the officers of the obligee bank to disclose that prior to the execution of the bond the bank examiner had discovered and advised the officers that the cashier had, without the knowledge and consent of the officers and directors, become indebted to the bank in the. sum of $889.60 by paying his own checks drawn on the bank. When the overdraft was called to his attention the cashier immediately repaid the bank. The surety insisted that despite the fact that the officers of the bank may …
Banks And Banking - Bank Stock Holding Company As Fraud On Double Liability Statute
Banks And Banking - Bank Stock Holding Company As Fraud On Double Liability Statute
Michigan Law Review
The question as to when, to prevent evasion of a statutory liability, a court will look behind a corporate entity in order to hold individual stockholders liable has been raised in two recent cases. The first, a federal case, involved the Detroit Bankers Company, a Michigan corporation formed for the purpose of holding and investing in bank stocks. Each corporate stock certificate of the holding company contained an "agreement" that the holder of the stock would be liable for his pro rata share of any assessment for which the corporation might become liable as a result of the failure of …
Bills And Notes - Incorporation By Reference - Clause In Mortgage Limiting Bondholder's Right To Sue On Bond
Michigan Law Review
Plaintiff, a holder, sued for the principal of and interest on matured bearer bonds which were part of an issue secured by a trust mortgage. Each bond, which was otherwise negotiable, recited that it was secured by a mortgage, "to which indenture reference is hereby made for a statement of the rights of the holders of said bonds." The mortgage provided that all rights of action on the bonds were vested in the trustee and that no bondholder could sue on the primary indebtedness until he had fulfilled certain prerequisites relative to giving the trustee an opportunity to sue. These …
Banks And Banking-Liability Of Drawee Bank For Payment On Forged Indorsement
Banks And Banking-Liability Of Drawee Bank For Payment On Forged Indorsement
Michigan Law Review
Plaintiff's depositor gave to A a check, payable to A and B, in return for a chattel mortgage and a note, both signed by A and B. The check was indorsed and presented to the defendant bank for collection. The plaintiff paid the check, debiting the drawer's account. Two years later, when the note came due, it was found that B's name had been forged to the note, the mortgage, and the check. Plaintiff then credited its depositor's account with the amount of the check, and now seeks to recover from the defendant. The court held that …
Quasi-Contracts -- Sufficiency Of Technical Benefit
Quasi-Contracts -- Sufficiency Of Technical Benefit
Michigan Law Review
A brokerage house, the R. Co., having purchased stock on margin for the plaintiff, requested a payment of $1100 in order to protect themselves in carrying the account. Doubting the financial stability of R. Co. the plaintiff decided to transfer the account to another firm, the defendant, and accordingly delivered to R. Co. a personal check naming the defendant as payee, at the same time orally directing R. Co. to transfer the stock and check to the defendant and from them receive payment in full. R. Co., however, falsely represented that the check was really theirs and that the plaintiff …
Bills And Notes-Holders In Due Course-Good Faith Taker
Bills And Notes-Holders In Due Course-Good Faith Taker
Michigan Law Review
The plaintiff bank sued the defendant maker on his promissory note which with several others had been given as collateral by the payees for a loan made to them by the bank. The defendant alleged fraud and that the bank did not take in good faith as required by the Uniform Negotiable Act, Gen. Laws 2921 (N. I. L., sec. 52) because of the following circumstances: inconsistent property valuation reports, knowledge of the slight financial responsibility of one of the makers of the note, insufficient investigation of financial status of one of the guarantors and the lack of a financial …
Bills And Notes - Is One Assuming Liabilities To The Creditors Of His Transferor A Holder In Due Course
Michigan Law Review
The plaintiff entered into an agreement whereby it was to receive all the assets of an insolvent bank as consideration for the assumption of certain specified liabilities. Among the assets was a note upon which the plaintiff is now suing a prior indorser. Although it was the intention of the defendant to indorse as agent in accordance with the request of the insolvent bank, on the face of his endorsement he indorsed individually. Held, that since the plaintiff was not a holder in due course, the note was subject to the same defenses in the hands of the plaintiff …
Bills And Notes - Post-Dated Checks - Criminal Liability
Bills And Notes - Post-Dated Checks - Criminal Liability
Michigan Law Review
The defendant was indicted for violating a statute which prohibited the drawing of a check with knowledge that funds were insufficient for payment. (Laws of S. D., 1923, c. 121.) The statute provided for abatement of any criminal prosecution upon the defendant's showing that he had an account with the drawee bank thirty days before the check was delivered and had no intent to defraud, and also paid the amount of the check and costs. It was also provided that the statute was inapplicable if the drawee honored the check. The defendant had drawn what is known as a post-dated …
Bills And Notes-Checks-Effect Of Alteration Before Acceptance Upon The Acceptor
Bills And Notes-Checks-Effect Of Alteration Before Acceptance Upon The Acceptor
Michigan Law Review
The plaintiff, drawee, sued to recover money paid to the defendant on a certified check in which the name of the payee had been cleverly altered, and which had been indorsed and negotiated by the substituted payee. The plaintiff had certified the check prior to the negotiation to the defendant, an innocent purchaser for value. Held, that under sec. 62 of the N. I. L. the acceptor "engages that he will pay it [the instrument] according to the tenor of his acceptance; and admits, * * * 2. The existence of the payee and his then capacity to indorse"; …
Bills And Notes -- Principal And Agent--Payment To Agent Of Drawer Upon Indorsement Forged By The Agent
Michigan Law Review
A was an agent of P for the purpose of securing applications for loans and disbursing the money to the borrowers. The custom was for P, after approving the application, to send to A a check drawn on D bank, payable to the joint order of A and the borrower. It was also the custom for A, in following out the course of dealing outlined by P, to secure the borrower's indorsement, add his own, deposit the check to an agency account in X bank, and then pay out the money to the borrower by personal checks on his agency …