Case: Indianapolis Car Exchange v. Alderson
Issue:
When doing an evaluation of any case, you should always look at all the relevant facts and issues involved before jumping to conclusions. As for this case, Mike Thurmond, the operator of Top Quality Auto Sales, a used car dealership, has financed his dealerships inventory of vehicles by creating a financing arrangement with Indianapolis Car Exchange (ICE). ICE then filed a financing statement that listed Top Quality’s inventory as collateral for the financing. After this, Top Quality sold a Ford truck to Bonnie Chrisman, who was also a used car dealer. Chrisman paid Top Quality for the truck and then proceeded to sell it Randall and Christina Alderson, who paid Chrisman for the vehicle. In
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First, when a creditor (ICE) extends credit to a debtor (Top Quality) and takes a security interest in some property of the debtor, Top Qualities inventory in this case, it is called a secured transaction. The inventory is then considered collateral for the financing that ICE provided for Top Quality, which was made clear in the financing statement that ICE filed. Any secured transactions where personal property is used as collateral is governed by Article 9 of the Uniform Commercial Code. The UCC was revised in 2001 to better adhere to modern times, and since this case took place from 2007 to 2009, we will be applying the revised edition. There are many sections of Article 9 that should be considered when examining this case. First, the filing of a financing statement, form UCC-1 in Article 9, should be confirmed as filed with the appropriate state office. Once this has been done, confirming the attachment of Top Quality’s inventory to ICE, we can then look to confirm that the initial sale to Chrisman was paid in full to Top Quality, which it was. If this were not the case, ICE would be entitled to the remaining sale proceeds. Now we move on to the requirements of a buyer in the ordinary course of business, per Article 9 of the UCC. According the textbook, “A buyer in the ordinary course of business who purchases goods from a merchant takes the goods free of any perfected or unperfected security interest in the merchant’s inventory, even if the buyer knows of the existence of the security interest” (Cheeseman). The textbook then continues to explain that this rule is necessary because buyers would be reluctant to purchase goods if the merchant creditors could recover the goods if the merchant defaulted on the loans owed to secured creditors. These statements come from the Revised Article 9, section 320(a). This is based on the idea that the buyer purchases in good faith, meaning that they are
Shelly Zumaya (2220 East Hennepin Avenue, Minneapolis, MN 55413) is the president and sole shareholder of Kiwi Corporation (stock basis of $400,000). Incorporated in 2003, Kiwi Corporation’s sole business has consisted of the purchase and resale of used farming equipment. In December 2011, Kiwi transferred its entire inventory (basis of $1.2 million) to Shelly in a transaction described by the parties as a sale. According to Shelly and collaborated by the minutes of the board of directors, the inventory was sold to her for the sum of $2 million, the fair market value of the inventory. The terms of the sale provided that Shelly would pay Kiwi Corporation the $2 million at some future date. This debt obligation was not evidenced by a promissory note, and to date, Shelly has made no payments (principal or interest) on the obligation. The inventory transfer was not reported on Kiwi’s 2011 tax return, either as a sale or a distribution. After the transfer of the inventory to Shelly, Kiwi Corporation had no remaining assets and ceased to conduct any business. Kiwi did not formally liquidate under state law. Upon an audit of Kiwi Corporation’s 2011 tax return, the IRS asserted that the transfer of inventory constituted a liquidation of Kiwi and, as such, that the corporation recognized a gain on the liquidating distribution in the amount of $800,000 [$2 million (fair market value) - $1.2 million (inventory basis)]. Further, because Kiwi Corporation is devoid of assets, the IRS assessed a tax due from Shelly for her gain recognized in the purported liquidating distributi...
Our decision was based on determining if there was contract formed and if the terms of said contract were performed by both parties. We found that Abigail placed an advertisement with the intent to lead readers to believe that she was selling “purebred toy breed puppies” for $100, “quoted for immediate acceptance”. Alex responded to Abigail’s advertisement and accepted her offer by submitting the required $100 payment to the P.O. Box, as stipulated in the advertisement, and inquired about when he could pick up
... incident related to misuse of inventory to the manager. He can also be charged of planning to join the scheme later due to which he didn’t reported about the fraud.
Answer: Aldo cannot recover the $1,000 balance from Rafael. It’s because Aldo shipped 10 refrigerators to Rafael pursuant to a sales contract under which title to the goods and risk of loss would pass to Rafael upon delivery to Fleet Railroad. When the refrigerators were delivered via Fleet Railroad, Aldo is not held liable to the
Friganim Importing Co. v. B.N.S. International Sales Corp. Facts: Friganim Importing Company sued B.N.S. claiming that B.N.S. breached warranties in two contracts that they had entered into. In the first of the two contracts, Frigalimnet had agreed to sell 75,000 pounds of 2.5 to 3 pound chickens and 25,000 pounds of 1.5 to 2 pound chickens. The second contract consisted of 50,000 pounds of 2.5 to 3 pound chickens and 25,000 pounds of 1.5 to 2 pound chickens. (smaller chickens where priced slightly higher in this contract than the first agreement)
Palgo Holdings Pty Ltd carried on a business of making small secured loans. Each borrower would sign a two-part document. The first part of the document, titled “Secured Loan Agreement”, recorded the amount of the loan and the date on which the principal and interest was due. The second part of the document, titled “Bill of Sale/Goods Mortgage”, was made as a deed between the borrower as mortgagor and the lender as mortgagee. It also recorded that the terms of the bill of sale were set out in the schedule of terms attached.
In order to be charged under s. 163 of the criminal code, the materials sold,
I was assisting Vince in a deal with a new potential buyer. He offered a structured deal stating that he would authorize his company to pay a higher price, if we report selling the product for a lower price. I don’t want to get caught doing this, because I know it is unlawful. Vince reassured me it was not an uncommon deal, and that the product would still be going for a good price. We even had a solid plan on what to say in the event that people suspected us of doing such a thing. The buyer could get half the money, Vince and I could split the other half and no one would ever know.
The court had reason that appellants may have been guilty of fraudulent conversion, or of larceny by bailee if the theory is accepted that a vendor retaining possession of goods sold by him becomes constructively a bailee of the purchaser, and criminally culpable for a failure to deliver them to his purchaser. Appellants were indicted for larceny only, and of that they clearly were not guilty.
...useless car to a junk yard to recover some loss, but the difference of the re-sale of the junk-car would be a significant loss. Though there were no adequate assurances to the contract, anticipatory repudiation is the only probable remedy for Jack. However, the outcome would weigh on the predominant factor test, which is met because Tom is covered as a merchant because he is operating in his usual daily business, and Jack is the buyer. The sole purpose of the contract was for Tom to sell Jack a car, and for Jack to buy a car from Tom. The UCC, though less stringent than the statute of frauds, does effectively regulate commercial transfers allowing the free market to operate without diminishing the integrity of trade.
In 1949, a state-wide law was passed in Pennsylvania that required public school students to read scriptures from the Bible and recite the Lord’s Prayer everyday in class. This law stayed intact until Edward Schempp challenged it nine years later. Pennsylvania wasn’t the first or the only state to enforce law making it mandatory for students to read from the Bible during school. Twenty-five additional states had laws allowing “optional” reading for the Bible. But in eleven of the twenty-five states, courts had decided those laws were unconstitutional.
Weld, L. G., Bergevin, P. M., & Magrath, L. (2004). Anatomy of a financial fraud. The CPA
- Once goods are identified, this is when UCC 2-401 is applied to the passage of tittle. In mostly all of UCC 2-401 the words “unless otherwise explicitly agree” appear, meaning that any explicit understanding between the buyer and the seller determines when tittle passes. If both parties do not come to an outright agreement than the tittle passes to the buyer at the time and the place the seller performs by delivering the goods.
Edmond’s was a suspect fraud investigator that worked for Discover credit card. He called to report his company flagged some purchases made on a Discover credit card with the cardholder being James Frank Boucher. Edmond was aware James Frank Boucher was issued a second Discover credit card due to previously reported fraud activity on the previous account. Discover contacted James Frank Boucher via telephone on 09/03/2016 at 1100 hours. Discover questioned James Frank Boucher about 3 transactions made on 09/02/2016. James Frank Boucher denied using his credit card for the 3 transactions. All 3 transactions were committed on 09/02/2016. 1) Circle K located at 111 E. Walnut St. Murphysboro, Illinois in the amount of $8.64 at 1241 hours. 2) Wal-Mart located at 6495 Country Club Rd. Murphysboro, Illinois in the amount of $73.40 at 0104 hours. 3) Walgreens located at 503 Walnut St. Murphysboro, Illinois in the amount of $1.94 at 0952 hours. The suspect attempted to make a cash advance at Circle K and Walgreens, but was declined. Edmond indicated the reason for the report to the local authorities was due to James Frank Boucher having a second report of fraud and believed it was necessary for the authorities to investigate. Discover reimbursed James Frank Boucher’s account after learning the 3 transactions listed above were fraudulent. I advised Edmond there was a report on file
the state is bound as a bailee in such cases even in the absence of contract for such a purpose. In case where the authorities have acted on mere suspicion and have seized the goods according to the procedure established under criminal procedure code. Then until the final decision of the court is declared the authorities have to act as a bailee of goods and the burden of proof is upon bailee to show that he has exercised reasonable care.