Secured Transactions Commons^™

Trust Receipts, Philip W. Thayer

Washington Law Review

A note published in 1927 expressed the hope that the course of legal development in the state of Washington would result in recognition of the trust receipt as "an' instrument sui generis, perfectly effective within its limits." Recent doubts as to the fulfilment of this hope make it desirable to examine the question more closely. The purpose of the present paper therefore is to inquire into the function of the trust receipt as an instrument of the law merchant, and to determine if possible how that function may be most satisfactorily exercised under existing conditions.

Principal And Surety - Construction Of Guaranty, Charles R. Linton

Michigan Law Review

Defendant's testator guaranteed the payment in full of a mortgage note for $8,000 "until such time as the sum of sixteen hundred (1600) dollars has been paid on the principal of said note." Upon default before the sum of $1,600 had been paid, the balance came due and the plaintiff foreclosed the mortgage, crediting the proceeds, which exceeded the sum of $1,600, on the note. Held, crediting the proceeds of foreclosure on the note did not, as the defendant contended, discharge the obligation of the guarantor, but merely amounted to a payment pro tanto for the benefit of both …

Contracts - Specific Enforcement Of An Executory Accord, Benjamin H. Dewey

Michigan Law Review

Sometime previous to the suit in question, defendant had executed a mortgage to the plaintiff, the loan secured by such mortgage to be repaid in installments. After having paid some but not all of the installments, defendant defaulted. As a result of negotiations between the parties and the Federal Land Bank of Omaha, it was agreed that the defendant should pay a lump sum in full satisfaction of the balance of the installments due under the mortgage. Performance was later tendered under this agreement, but the plaintiff refused to accept same, and subsequently brought suit in equity to foreclose the …

The Theory Of Field Warehousing, Anthony Kane

Washington Law Review

The system of "field storage warehousing" has been developed to provide a simple but safe means whereby the owner, manufacturer, producer or extractor can obtain credit on goods which cannot be readily moved or mortgaged. Field storage warehousing is fundamentally the same transaction as the pledge discussed above, except that now a bona fide warehouse company takes the place of the pledgee's agent and the pledgee has constructive possession of the goods by virtue of a warehouse receipt instead of actual possession as in an ordinary pledge. Warehouse companies specializing in "field storage warehousing" have developed this security device to …

Constitutional Law--Mortgages--Frazier-Lemke Act

Michigan Law Review

In 1922 and 1924 appellee mortgaged property worth $18,000 to secure a loan of $9,000 from appellant which was to be repaid in installments over a period of thirty-four years. Default being made on the covenants in the mortgage, the mortgagee declared the full amount due and brought a suit to foreclose. Proceedings were stayed when the appellee sought relief under Section 75 of the Bankruptcy Act, but he was unable to obtain the requisite majority in number and amount to the composition proposed. The state court entered a foreclosure judgment and ordered a sale. The mortgagor then sought relief …

Bills And Notes--Negotiable Paper Under Seal--Necessity Of Consideration, Herschel H. Rose Jr.

West Virginia Law Review

No abstract provided.

Conditional Sales And Chattel Mortgages, William F. Starr

Washington Law Review

The contract of conditional sale and the chattel mortgage perform a similar economic function. They are the principal devices by which the obligor may enjoy the use and possession of a chattel in winch a security interest is held by another. Either may serve to secure the payment to the vendor of the purchase money, while m Washington the chattel mortgage only may be employed to secure the repayment of a loan or the performance of other obligations. They arose out of different legal concepts, developed along different lines, gave rise to different rights and remedies, but in the form …

Banks And Banking - Power To Pledge Assets To Secure Private Depositors

Michigan Law Review

Plaintiff railway company deposited funds in the national bank of the defendant receiver. Dissatisfied with the guaranty of his deposits by surety bonds, the plaintiff demanded and received from the bank Liberty Loan Bonds, which were deposited with the trust officer of the bank to be held as security for the repayment, on demand, of the deposits. On the insolvency of the bank, the receiver refused to turn over the bonds, whereupon the plaintiff brought an action on the contract of pledge. Held, that the contract of pledge of the bank's assets to secure the private deposit was invalid …

Trust Receipts

Michigan Law Review

That the conflict between the convenience of business and the rigidity of the law continually brings about modifications and expansions of legal doctrine is nowhere better illustrated than in the field of commercial financing. A merchant wishes to purchase goods; he has no funds or available unencumbered property for security; his general credit is too poor to warrant either the manufacturer or a bank in making advances without security. How can the manufacturer give the merchant possession and power of sale of the goods and yet retain a legal hold on them or their proceeds as security for the payment …

Pledge - Liability Of Pledgee For Depreciation Of Corporate Stock

Michigan Law Review

The plaintiff brought suit to recover the value of a promissory note for which the defendant had pledged corporate stock as collateral security. Defendant filed a counterclaim for the depreciation in value of the stock between the time he had requested the plaintiff to sell and the time of bringing the suit. Held, that plaintiff was not liable for the depreciation of the stock since the pledgor had made no offer to pay pledgee such sum as would together with the price for which the stock could have been sold satisfy the note. People's Nat. Bank & Trust Co. …

The Principal's Warranty And Offset Claims Against The Creditor As Defenses To The Surety, Victor Levine

Michigan Law Review

When a buyer seeks to purchase goods on credit, the seller often refuses to make the sale unless the buyer procures some third person to become liable for the price; and the seller also exacts the privilege of suing either the buyer or the third person or both in the event that payment is not made on the date the price falls due. In a three-party transaction of this sort, the buyer, after the goods are delivered, is commonly called the principal, the seller the creditor, and the third person the surety.

Suretyship--Fraud Of Principal On Surety--Principal As Agent Of Creditor

Michigan Law Review

The plaintiff manufactured medicines, selling to peddlers who operated as independent contractors. Menning, a peddler, signed a new contract with plaintiff for operations for the ensuing year, the contract also covering payment of existing debts ($1,794) to plaintiff. The defendant, induced by Menning and relying on his statement that there was no existing debt, signed the contract as surety, the guaranty reciting a consideration of $1 received by defendant and an extension of time on any debts. This contract was terminated after seven weeks, and plaintiff sued for $1670, the balance due. The defendant claimed that Menning was plaintiff's agent …

Suretyship-Discharge Of Guaranty By Payment Of Amount To Which Liability Is Limited

Michigan Law Review

Defendant wrote a letter to plaintiff, "Kindly extend credit to A for materials to the amount of $250, and I hereby become security for the same." Relying on this letter, plaintiff for several years sold goods to A. By reason of A's defaults, defendant paid plaintiff $71.80 on one occasion and $197.10 on another. Later, A became indebted to plaintiff to the amount of $464.22 and this action was brought to recover on the guaranty the sum of $250. The court construed the guaranty as a continuing one, but held that that fact did not impose a continuing liability on …

Cases And Materials On The Law Of Sales, Harold C. Havighurst

West Virginia Law Review

No abstract provided.

Suretyship-Application Of Payments From Principal To Creditor-Equity Of Surety In Building Contract Funds

Michigan Law Review

A building contractor's bond, with professional surety, promises to see that all laborers and materialmen assisting upon a certain construction job are fully paid. With moneys received from work upon this building, the contractor pays a certain sum to a materialman without applying it to any particular debt. The contractor owes the materialman upon two separate debts: one for materials furnished upon this very job, and covered by this surety bond; and a pre-existing debt, in no way connected with the present contract. Is the surety able to insist that the materialman use this payment to discharge the debt on …

Rights Of Holder Of Bill Of Exchange Against The Drawee, Ralph W. Aigler

Articles

“If the question were put to the average layman whether the holder of a check...had any effective rights against the drawee bank, it is believed that the almost universal response would be to the effect that of course the holder may insist upon payment by the bank, if there are funds on deposit to cover the amount. And if the same question were propounded to the average lawyer, the reply generally would be--at least if the lawyer had in mind the provisions of the Uniform Negotiable Instruments Law--that the holder had no rights against the bank. It is the purpose …

Recognition Of New Types Of Negotiable Instruments, Ralph W. Aigler

Articles

“The expression ‘negotiable instrument’ is one of variable meaning, and what is meant thereby often can be determined only by the context… Primarily ‘negotiable’ indicates transferability with a certain facility…..

“It may be not without interest to consider how instruments gain the negotiable quality and to trace, sketchily perhaps, the process of recognition.”

Commercial Instruments, The Law Merchant And Negotiability, Ralph W. Aigler

Articles

“Until recently apparently no serious attempt had been to make a comprehensive examination into the origins and history of commercial instruments or to explain the special doctrines attached to negotiability….

“The bill of exchange, it is said, developed as a bit of machinery to give effect to the medieval contract of cambium which was concerned with the special case of the exchange of money for money. With the growth of foreign trade the difficulties and dangers of payments multiplied. Naturally those whose business it was to exchange monies were resorted to in this connection. They, in turn, out of necessities …

Interest On Claims In Receivership Proceedings, Ralph E. Clark

Michigan Law Review

Outside the cases of receivership, the Supreme Court of the United States has said: "We reach the conclusion that whatever may have been the English and early American rule, the tendency in Virginia as elsewhere in this country, is to allow interest on contracts to pay money from the date that the debt becomes due."'

Termination Of A Continuing Guaranty, Edgar N. Durfee

Articles

Several persons jointly and severally guaranteed to a bank the present and future obligations of a customer, stipulating that "the bank may grant extensions without lessening the liability" of the guarantors, that "this shall be a continuing guaranty, and shall cover all the liabilities which the customer may incur or come under until the undersigned, or the executors or administrators of the undersigned, shall have given the bank notice in writing to make no further advances on the security of this guaranty," and that "this guaranty shall not be affected by the death of the undersigned." One of the guarantors …

Bill Of Lading As Collateral Security Under Federal Laws, Frederick Thulin

Michigan Law Review

The desirability of the bill of lading as collateral security has been recognized in business transactions for many decades. The foregoing fact arises from the inherent nature of the financing of transactions of foreign or domestic trade.

Recent Important Decisions, Michigan Law Review

Michigan Law Review

Adverse Possession--Hostile Character--Possession Under Executory Contract for Sale; Bills and Notes--Bona Fide Purchase--Effect of Taking After Maturity; Bills and Notes--Bona Fide Purchase--Payment of Forged Check--Recovery of Payment; Bills and Notes--Invalidity of Note--Recovery Upon Original Consideration; Constitutional law--Due Process of Law--Situs of Ship for Purposes of Taxation; contracts--Sufficiency of Typewritten Signature; Copyright--Moving Pictures as Dramatization of Book; Corporations--Stockholder's Meetings--Effect of Withdrawal of Stockholders; Courts--The New Commerce Court--Jurisdiction--First Decision; Covenants Running with the Land--Building Restrictions; Damages--Excessiveness--Personal Injuries--Remittitur; Dead Bodies--Burial Determination of Place; Easements--Merger--Use by Owner of Servient Estate--Adverse Possession; Homicide--Burden of Proof When Insanity is a Defense; Intoxicating Liquors--Illegal Sale--"Dispensing"; Judgment--Collateral Attack--Defective …

Note And Comment, Paul S. Dubuar, Arthur Clarke, J. Fred Bingham, Dan B. Symons, Lloyd T. Crane

Michigan Law Review

Effect of Taking Possession of Mortgaged Property Under a Chattel Mortgage as Against a Junior Mortgagee; The Effect of the Reunion of the Cumberland Presbyterian Church With the Presbyterian Church in the United States of America Upon the Property of the Former; The Exclusive Use of Part of Railroad Station Grounds by Hackmen; Conflict of Jurisdiction in Bankruptcy Cases Between Federal and State Courts; Right of the Legislature to Amend Corporate Charters Under the Reserved Power; Can A Purchaser From a Tenant Acquire Title by Adverse Possession?; Can a Mortgagor After the Execution of the Mortgage Create an Easement in …

The Position Of A Trustee In Bankruptcy With Reference To Unfiled Or Unrecorded Chattel Mortgages And Conditional Sale Contracts, Ralph W. Aigler

Michigan Law Review

Since the enactment of the first bankruptcy act the courts have very frequently been called upon to consider the precise position of the trustee in bankruptcy, with reference to his ability to raise the question of the invalidity of transfers or liens made or created by the bankrupt prior to the proceedings in bankruptcy. The phase of this question indicated by the title of this article is possibly of more interest than the rest of the general subject, because of the changes, or to be more exact, the supposed changes, through which the law has passed. And if the law …

Note And Comment, Harry B. Hutchins, Edson R. Sunderland

Michigan Law Review

What is the Practice of Medicine?; The Extent of the Land to Which a Mechanics' Lien Attaches; May a Murderer Acquire Property From His victim by Descent or Devise?; One Way to Prevent Some of the "Law's Delays";

Recent Important Decisions, Michigan Law Review

Michigan Law Review

Bankruptcy--Concealment of Property--Bankruptcy Schedules Inadmissible Against Bankrupt on Trial for Concealing Property; Bankruptcy--Jurisdiction--Recovering Excessive Counsel Fees; Bills and Notes--Extension of Time of Payment--Release of Lien of Trust Deed; Carriers--Error in Ticket--Ejection of Passenger; Carriers--Free Pass Within Statutory Prohibition; Constitutional Law--Judgment of Sister State--Full Faith and Credit; Corporations--Promoters--Sales to Corporation; Discovery--Personal In juries--Power of Court to Compel Physical Examination of Plaintiff; Divorce--Defense--Connivance; Elections--Primary Elections--Canvassing of Votes; Eminent Domain--Interest on Award Against the Government; Eminent Domain--"Private Property"--Owner's Remedy--Injunction; Evidence--Burden of Proof--Fraudulent Conveyances; Fire Insurance--Forfeiture of Policies--"Other Insurance"; Insurance--Subrogation--Accident Insurance; Judgment--Conclusiveness of Decision of United States Commissioner on Collateral Attack; Master and Servant--Disobedience …

Effect Of Foreign Chattel Mortages Upon The Rights Of Subsequent Purchasers And Creditors, Marion Griffin

Michigan Law Review

Should the title or lien of a foreign mortgagee be protected against the claims of creditors and innocent purchasers in the state to which the mortgaged property is removed? It is sometimes said that the chattel mortgage creates a mere lien by the law of the state where made, which is not entitled to recognition in any other state. The weight of authority is otherwise. It is a transfer of the, property itself as a security for the debt. There are some states in which a mortgage of personal property creates no title in the mortgagee, but a mere lien; …

Selected Cases On The Law Of Negotiable Instruments, Robert E. Bunker

Books

The cases appearing in this volume have been selected primarily for the use of students pursuing the study of Negotiable Instruments and particularly for students in the Law Department of the University of Michigan. They are arranged in order to conform to the plan of instruction now pursued in that Department. The plan to which reference is made is sufficiently indicated by the Table of Contents infra. In brief, it involves a study of the law of Negotiable Instruments on the basis of the contract of the several parties as that law has been declared by the courts and, …

The Negotiable Instruments Law With Annotations, Robert E. Bunker

Books

"The Negotiable Instruments Law was enacted by the Legislature of Michigan at its 1905 session and on this 16th day of September, 1905, becomes a law of the State.

Soon after the approval of the Act -- June 16, 1905, -- I undertook the work of annotating the statute and of explaining its origin, scope and purpose in such particulars as seemed to invite explanation....

I submit the result of my work -- undertaken in the hope that it might help the profession and the bankers and the business men in dealing with this statute -- to all who may …

Foreign Voluntary Assignments For The Benefit Of Creditors, Edson R. Sunderland

Articles

AlI laws concerning property rights are based upon the broad - doctrine that every person who owns property may dispose of the same as he sees fit. The right of disposal of property is inseparably united to the right of property itself, and indeed is an essential element of the concept of property. It might even serve as a definition of property, viewing property as that which one may dispose of,-a definition too general, it is true, for practical purposes, but undoubtedly a correct and valuable metaphysical theorem