Whom do you think the jury will favor, Zuzzane or the bank

Part 1

The Case of the Disputed Deere

FACTS

At a farm auction in Georgia, Dick Perez and Anna Lara bid against each other on a Deere II tractor, and Dick bought it for $65,000. At a second auction the same day, Dick bought some equipment that he wanted to add to the tractor. He again encountered Anna, and the two agreed that Anna would install the new equipment. Anna took the tractor to her place of business to work on it.

Later, Dick came to the shop and paid $6,000 for Anna to do the work. Anna, in fact, was a dealer in farm machinery. She regularly bought such equipment at auctions, then repaired and sold it. Dick testified though that Anna’s shop appeared to him to be a repair shop and not a sales store.

Jorge’s Auction Services had done business with Anna in the past on a regular basis. Jorge’s wanted to buy the Deere II tractor in Anna’s store for the next auction. Anna executed a standard pre-auction document declaring that she owned the Deere II tractor. The state of Georgia does not require ownership papers for a tractor. Jorge’s bought the Deere II tractor from Anna for $30,000. When Dick learned of this, he demanded the tractor back, but Jorge’s refused.

AT TRIAL

Dick argued that Jorge’s never acquired good title to the Deere II tractor as Anna was never given title to the tractor. Anna was entrusted with the tractor for the purpose of repairs. Jorge’s argued that they had frequently purchased equipment from Anna under the same terms and conditions as when they bought the tractor. Therefore, they owned the tractor.

QUESTIONS

Who owns the Deere tractor at time of trial?

Why? What is the legal theory(ies) used to win the case?

Is there anything the loser in this case could have done differently at the time of the transactions that might have made them the winner?

Part 2  only reply to below questions

THE CASE OF THE DISHONORED CHECK

Zuzzane, as an individual, had an option to purchase a valuable piece of land for $500,000, provided she exercised the option by a certain date by mailing a deposit check for $50,000. This land was appraised at $600,000 and she intended to build housing for her family and her elderly mother on it. She drew a check for $50,000 on her personal checking account she had at First American Bank and mailed it to the landowner. Zuzzane had this checking account for 10 years. At the time she drew the check, she verified electronically that she had $60,000 in this personal account. However,s he owed the bank $30,000 for a collateralized loan that was 60 days overdue. That loan was taken out by her Limited Liability Company and secured with collateral from it. That loan had been taken out two years ago. The bank refused to honor the $50,000 check and spent $750.00 handling the resulting paperwork. As a result of the dishonorment, Zuzzabe’s option became void, and the landowner sold the land to someone else for $550,000, resulting in a severe loss to Zuzzane. She sued the bank for damages.

The Trial

At trial, Zuzzane’s attorneys proved the value of the land, her losses, and the fact that she had always paid the bank on time, except for the most recent payment that was overdue. The bank’s attorneys proved that Zuzzane was over sixty days late on her last LLC loan payment and that it was their practice not to notify customers that there might be insufficient funds in their accounts to cover all checks written, as doing so would place an undue burden on the banking system.

The Arguments at Trial

Zuzzane’s attorneys argued that a bank has no right to dishonor a check except for the normal reasons permitted by law, such as a suspected forgery, an improper endorsement, and so forth. They further argued that the bank, based on its relationship with Zuzzane, should have contacted her before dishonoring the check so that she could have taken other action to prevent her loss of the land and that she did not have an automatic deduction from her personal account for the business loan. The bank’s attorneys argued that Zuzzane’s being overdue on her last loan payment indicated she was in financial trouble, that they had a right to seize her account to cover the overdue payment, and that instead they simply refused to honor checks on her account until the overdue loan was paid. They further argued that based on banking industry customs, it is the responsibility of the customer and not the bank to make sure there are sufficient funds to cover checks written. They were losing money each day that the loan was unpaid.

Questions to Discuss

Whom do you think the jury will favor, Zuzzane or the bank? Why?

If you feel Zuzzane should win, what will her damages be? If you feel the bank should win, what will their damages be?

Under what circumstances, if any, should a bank be able to offset a loan to a customer against any bank account on which the customer’s name appears?