Business Case Problem with Sample AnswerReading Citations. Assume that you want to read the entire court opinion in the case of Ryan Data Exchange, Ltd. v. Graco, Inc., $913$ F.$3$d 7$26$ ($8$th Cir. $2019$). Refer to the subsection entitled "Finding Case Law" in this chapter, and then explain specifically where you would find the court's opinion. (See How to Find Primary Sources of Law.)

• For a sample answer to Problem $1-5$, go to Appendix C at the end of this text.

Nancy Mahar was the office manager at Golden Years Nursing Home, Inc. She was given a signature stamp to issue checks to the nursing home's employees for up to $\$ 500$ as advances on their pay. The checks were drawn on Golden Years' account at First National Bank. Over a seven-year period, Mahar wrote a number of checks to employees exclusively for the purpose of embezzling funds for herself. She forged the employees' indorsements on the checks, signed her name as a second indorser, and deposited the checks in her personal account at Star Bank. The employees whose names were on the checks never actually requested them. When the scheme was uncovered, Golden Years filed a suit against Mahar, Star Bank, and others to recover the funds. Using the information presented in the chapter, answer the following questions.

With regard to signature liability, which provision of the Uniform Commercial Code (UCC) discussed in this chapter applies to this scenario?

A Question of Ethics-The Doctrine of Precedent. Sandra White operated a travel agency. To obtain lower airline fares for her nonmilitary clients, she booked military-rate travel by forwarding fake military identification cards to the airlines. The government charged White with identity theft, which requires the "use" of another's identification. The trial court had two cases that represented precedents.

In the first case, David Miller obtained a loan to buy land by representing that certain investors had approved the Loan when, in fact, they had not. Miller's conviction for identity theft was overturned because he had merely said that the investors had done something when they had not. According to the court, this was not the "use" of another's identification.

In the second case, Kathy Medlock, an ambulance service operator, had transported patients when there was no medical necessity to do so. To obtain payment, Medlock had forged a physician's signature. The court concluded that this was "use" of another person's identity. [United States v. White, $846$ F.$3$d $170$ ($6$th Cir. $2017$)] (See Sources of American Law.)

• Which precedent-the Miller case or the Medlock caseis similar to White's situation, and why?

• In the two cases cited by the court, were there any ethical differences in the actions of the parties? Explain your answer.

26-4. *Business Case Problem with Sample AnswerNegotiation. Sandra Ford signed a note and a mortgage on her home in Westwood, New Jersey, to borrow $\$ 403,750$ from Argent Mortgage Co. Argent transferred the note and mortgage to Wells Fargo Bank, N.A., without indorsement. The following spring, Ford stopped making payments on the note. Wells Fargo filed a suit in a New Jersey state court against Ford to foreclose on the mortgage. Ford asserted that Argent had committed fraud in connection with the note by providing misleading information and charging excessive fees. Ford contended that Wells Fargo was subject to these defenses because the bank was not a holder in due course of the note. Was the transfer of the note from Argent to Wells Fargo a negotiation or an assignment? What difference does that make? If Argent indorsed the note to Wells Fargo now, would the bank's status change? Discuss

Indorsements. Denise and Nick Purificato signed a note secured by real property in Florida. The note was transferred through several parties to Aurora Loan Services, LLC. The Purificatos defaulted on the payments. Aurora filed a suit in a Florida state court against them, seeking a judgment of foreclosure to recover the unpaid debt. While proceedings were pending, Nationstar Mortgage, LLC, succeeded Aurora and became the plaintiff in the suit. At trial, Nationstar provided a screen shot of the note and an allonge, which had been imaged as a single document before Aurora filed the complaint against the Purificatos. Nationstar also provided the original note and allonge, which ended in a blank indorsement. The allonge stated that it was "affixed and a permanent part of said note." Did this evidence establish that the allonge was sufficiently affixed to the note to prove Nationstar's status as the holder with the right to enforce it? Discuss.

Defenses. Damion and Kiya Carmichael took out a loan from Ameriquest Mortgage Co. to refinance their mortgage. They signed a note to make monthly payments on the loan. Later, Deutsche Bank National Trust Co. acquired the note. The Carmichaels stopped making payments and filed for bankruptcy. Deutsche asked the court to foreclose on the mortgage. The Carmichaels asserted that they had been fraudulently induced to make the loan and sign the note. Was the bank free of this defense? Explain.

Denton and Carlo were employed at an appliance plant. Their job required them to perform occasional maintenance work while standing on a wire mesh twenty feet above the plant floor. Other employees had fallen through the mesh, and one of them had been killed by the fall. When their supervisor told them to perform tasks that would likely involve walking on the mesh, Denton and Carlo refused because they feared they might suffer bodily injury or death. Because they refused to do the requested work, the two employees were fired from their jobs. Was their discharge wrongful? If so, under what federal employment law? To what federal agency or department should they turn for assistance? (See Employment at Will.)

Residents of the city of Madison, Wisconsin, became concerned about overconsumption of liquor near the campus of the University of Wisconsin (UW). The city initiated a new policy, imposing conditions on area bars to discourage reduced-price "specials" that were believed to encourage high-volume and dangerous drinking. Later, the city began to draft an ordinance to ban all drink specials. Bar owners responded by announcing that they had "voluntarily" agreed to discontinue drink specials on Friday and Saturday nights after $8:00$ P.M. The city put its ordinance on hold. Several UW students filed a lawsuit against the local bar owners' association, alleging violations of antitrust law.

(a) The first group will identify the grounds on which the plaintiffs might base their claim for relief and formulate an argument on behalf of the plaintiffs.

(b) The second group will determine whether the defendants are exempt from the antitrust laws.

(c) The third group will decide how the court should rule in this dispute and provide reasons for the ruling.

Motion for Summary Judgment. Rebecca Nichols drove a truck for Tri-National Logistics, Inc. (TNI). On a delivery trip, Nichols's fellow driver, James Paris, made unwelcome sexual advances. Paris continued to make advances during a subsequent mandatory layover. Nichols reported this behavior to their employer. TNI nevertheless left her with Paris in Pharr, Texas, for another seven days with no alternative form of transportation before sending a driver to pick her up. She filed a suit in a federal district court against TNI, alleging discrimination on the basis of sex in violation of Title VII of the Civil Rights Act. Disputed facts included whether Nichols subjectively felt abused by Paris and whether their employer was aware of his conduct and failed to take appropriate action. Could TNI successfully file a motion for summary judgment at this point? Explain. [Nichols v. Tri-National Logistics, Inc., $809$ F.$3$d $981$ ($8$th Cir. $2016$)] (See Pretrial Procedures .)

The Brown family owns several companies, including the J. H. Stevedoring Company and Penn Warehousing and Distribution, Inc. Many aspects of the companies' operations and management are intertwined. Dennis Bishop worked for J. H. and Penn for more than ten years before he became the financial controller at J. H. His responsibilities included approving invoices for payment and reconciling the corporate checkbook. In December of the following year, Bishop began stealing from Penn and J. H. by writing checks on the corporate accounts and using the funds for his own benefit (committing the crime of embezzlement). Several members of the Brown family signed the checks for Bishop without hesitation because he was a longtime, trusted employee. Over the next two years, Bishop embezzled more than $\$ 1.2$ million. He used $\$700,000$ to buy horses from the Fasig-Tipton Company and Fasig-Tipton Midlantic, Inc., with Penn and J. H. checks made payable to those firms. When Bishop's fraud was revealed, J. H. and Penn filed a suit in a federal district court against the Fasig-Tipton firms (the defendants) to recover the amounts of the checks made payable to them. Using the information presented in the chapter, answer the following questions.

What method was most likely used to negotiate the instruments described here?

The Brown family owns several companies, including the J. H. Stevedoring Company and Penn Warehousing and Distribution, Inc. Many aspects of the companies' operations and management are intertwined. Dennis Bishop worked for J. H. and Penn for more than ten years before he became the financial controller at J. H. His responsibilities included approving invoices for payment and reconciling the corporate checkbook. In December of the following year, Bishop began stealing from Penn and J. H. by writing checks on the corporate accounts and using the funds for his own benefit (committing the crime of embezzlement). Several members of the Brown family signed the checks for Bishop without hesitation because he was a longtime, trusted employee. Over the next two years, Bishop embezzled more than $\$ 1.2$ million. He used $\$700,000$ to buy horses from the Fasig-Tipton Company and Fasig-Tipton Midlantic, Inc., with Penn and J. H. checks made payable to those firms. When Bishop's fraud was revealed, J. H. and Penn filed a suit in a federal district court against the Fasig-Tipton firms (the defendants) to recover the amounts of the checks made payable to them. Using the information presented in the chapter, answer the following questions.

Suppose that all of the checks issued to the defendants were made payable to "Fasig-Tipton Co., Fasig-Tipton Midlantic, Inc." Under the Uniform Commercial Code, were the instruments payable jointly or in the alternative? Why is this significant?

A Question of Ethics-The IDDR Approach and Priorities. Roger Rand loaned funds to Frank Welte to buy farm equipment. Security agreements were executed for the loans, and under these agreements, Welte could not transfer the equipment without Rand's consent. Rand perfected his security interest in the collateral by filing a financing statement with the office of the Iowa secretary of state. Welte later sold two tractors bought with the funds to his son Matthew for about $20$ percent of the tractors' market value. Rand died several years later. On behalf of his estate, the Security National Bank of Sioux City, Iowa, filed a petition in an Iowa state court to obtain possession of the equipment that secured the loan to Welte. Regarding the tractors in Matthew's possession, Welte argued that his son had acquired them free of Rand's interest under an implied course of dealing with the lender that allowed Welte to sell equipment in which Rand had a security interest without Rand's permission.

(a) Use the IDDR approach to evaluate the ethics behind Welte's argument that his "course of dealing" with Rand allowed him to sell collateral for much less than its market value.

(b) Suppose that First State Bank had loaned Matthew the funds to buy the tractors in exchange for a purchasemoney security interest. Could Welte successfully assert that this interest was superior to any interest Rand might have in the tractors? Explain.

On Evans's motion for summary judgment, what evidence did the opposing parties emphasize? Based on this evidence, what did the court conclude?

Suppose that the name Red Rhino Market Group, LLC, had not been included on the note. Would Evans have been personally liable for its payment? Discuss.