Question

Scubbivii Forum A Question of Ethics-Promissory Notes.Clarence Morgan, Jr, owned Easy Way Automotive, a car dealership in D'Lo, Mississippi. Easy Way sold a truck to Loyd Barnard, who signed a note for the amount of the price payable to Trustmark National Bank in six months. Before the note came due, Barnard returned the truck to Easy Way, which sold it to another buyer. Using some of the proceeds from the second sale, Easy Way sent a check to Trustmark to pay Barnard's note. Meanwhile, Barnard obtained another truck from Easy Way, financed through another six-month note payable to Trustmark. After eight of these deals, some of which involved more than one truck, an Easy Way check to Trustmark was dishonored. In a suit in a Mississippi state court, Trustmark sought to recover the amounts of two of the notes from Barnard. Trustmark had not secured titles to two of the trucks covered by the notes, however, and this complicated Barnard's efforts to reclaim the vehicles from the later buyers. [Trustmark National Bank v. Barnard, 930 So.2d 1281 (Miss.App. 2006)] (See Types of Negotiable Instruments.) 1. On what basis might Barnard be liable on the Trustmark notes? Would he be primarily or secondarily liable? Could this liability be discharged on the theory that Barnard's right of recourse had been impaired when Trustmark did not secure titles to the trucks covered by the notes? Explain.

Answer 1

Refer the below images for the above mentioned case, in a detailed way of explanation.

Requirement 0% Barnard is liable on the trust main notes as there matler marer has primary liability. A primarily licht party is absolutely required to pay an instrument - the liability is not contingent and a holder of the note (trust mark in this cole) does not have to proceed against any collacterul (the trucks) to enface payment. A primarily trable party is unconditionally obligated to pay onless he cox) She has a valid defense against payment. & discharge of liability can occor under ucc 3-605 party's right of recourse is impaired. A right of . is a right to seek reimbusement. An indorser of a note has a right of recourse aqcanst prior indor sevs, a makes and accomodation parties. If a holder of the note affects the indorser's sight to seek reimbursement from of these parties, the indorser is not liable on the note. As noted in the text, this can occor it a hader agrees not to sue a party against whom the indor sex has a right of recourse. Barnard asserted this defense against Trustmaric's claim. The court distributed the liabitty on both notes between Trustmark and Barrard on princaples of equity" and Trust man k appealed to a state intermediate appellate court, which reversed the lower court's decision and remanded the case to calculate the proper amount owned and enter a judgement for interest and attorney's fees due under the notes". The appellate court Panted out that th the maker of a note is not entitled to discharge of his atigations because of impairement of collateral by the lender. Instead, under [ucc 3-605] only indorsers and accomodation parties , which Barnard was neither can obtain a discharge ok kablity of a note Upon a Showing of impairement of collacteral Barnard's liability on the trust mark. note was that of a maker. The maker has primary liability, and the obligation to pay is unconditional.

: Requirement Ethics focuses on the application of moral prinaples in everday life. Business ethics focuses on the application of these prinaples in the context of business. An understanding of business ethics is important to the long ron viability of a business, the well being of its owners, operators, officers directors and managers, and the welfare of its employees. In this case, morgan, Barnard, and trust mark were each involved in business. If morgan and Barnard had acted more ethically in their transactions with trustmark, the lender might have been more accomodating when the note) come due and payment was not forthcoming. In that event, morgan might not have committed suicide and Barnard might not have become embroiled in litigation with the lender and the later buyers. If trost mark had been more diligent in monitoring the deals that it was financing - despiste Barnard's arguments to the contrary, trustmark was not legally required to review morgan's book keeping with respect to the tracks covered by the unpaid notes at the heart of this case – Easy way might have remained a viable concern and Barnard's credit rating might have remained unaffected.