Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

تمرين 13

Silicon Valley Bank v. Miracle Faith World Outreach, Inc.
Appellate Court of Connecticut, 140 Conn.App. 827, 60 A.3d 343 (2013).
company profile Miracle Faith World Outreach, Inc., a Connecticut religious corporation, was founded by Bobby and Christine Davis in 1964. The Miracle Faith World Outreach Church started with prayer meetings in Christine's mother's home in Stamford. As its numbers grew, the church expanded first into the basement of a three-family house and later into churches in Springdale and Stamford before buying a new facility in Monroe. The twenty-acre property included a two-story church building and a fellowship hall totaling more than twenty thousand square feet.
BACKGROUND AND FA CTS?Miracle Faith World Outreach borrowed $1,962,000 to buy the buildings and land in Monroe, and signed a note payable to Silicon Valley Bank in Santa Clara, California. In the seventh year of the note's ten-year term, with more than $1,600,000 owing on the principal and almost $60,000 owing on unpaid interest, Miracle Faith defaulted. Silicon Valley filed an action in a Connecticut state court to foreclose. Eugene Wong, an associate at the bank, provided the court with only a copy of the note. Wong said that he had looked for the original at several of the bank's offices and at a third-party storage facility, but was unable to find it. On appeal from a judgment in the bank's favor, Miracle Faith argued that "the court abused its discretion by determining that the plaintiff was the owner and holder of the note" even though the bank could produce only a copy.
In The Language Of The Court
beach, J. [Judge]
* * * * A bill or note is not a debt; it is only primary evidence of a debt; and where this is lost, impaired or destroyed bona fide, it may be supplied by secondary evidence * * *. The loss of a bill or note alters not the rights of the owner, but merely renders secondary evidence necessary and proper. [Emphasis added.] The Uniform Commercial Code * * * addresses situations * * * where the instrument sought to be enforced is unavailable, by creating an exception to the general rule that one must hold an instrument in order to enforce its payment. General Statutes Section 42a-3-309(a) [Connecticut's version of UCC 3-309(a)] provides:
"A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process."
Here, the court found that the plaintiff had sustained its burden of showing that the note was lost and that the copy it produced was authentic.
The plaintiff established that it had entered into a transaction including a promissory note secured by a mortgage, a term loan agreement, and a mortgage with the defendant. Wong testified that ordinarily the original note would have been kept in the plaintiff's California headquarters. After a period of time, it would have been sent to a third-party storage facility. Wong testified that he checked "all the places where the note could possibly be," but he was unable to locate it. Although the original was lost, a copy of the note had been kept in the plaintiff's credit file for the subject loan. Although the defendant takes issue with the admission of the copy of the note, it does not claim that the copy was in any way inaccurate. The court, therefore, did not abuse its discretion in admitting a copy of the note. DECISION AND REMEDY?A state intermediate appellate court concluded that the lower court did not abuse its discretion in admitting a copy of the note and affirmed the judgment. A note is not a debt-it is
Silicon Valley Bank v. Miracle Faith World Outreach, Inc.
Appellate Court of Connecticut, 140 Conn.App. 827, 60 A.3d 343 (2013).
company profile Miracle Faith World Outreach, Inc., a Connecticut religious corporation, was founded by Bobby and Christine Davis in 1964. The Miracle Faith World Outreach Church started with prayer meetings in Christine's mother's home in Stamford. As its numbers grew, the church expanded first into the basement of a three-family house and later into churches in Springdale and Stamford before buying a new facility in Monroe. The twenty-acre property included a two-story church building and a fellowship hall totaling more than twenty thousand square feet.
BACKGROUND AND FA CTS?Miracle Faith World Outreach borrowed $1,962,000 to buy the buildings and land in Monroe, and signed a note payable to Silicon Valley Bank in Santa Clara, California. In the seventh year of the note's ten-year term, with more than $1,600,000 owing on the principal and almost $60,000 owing on unpaid interest, Miracle Faith defaulted. Silicon Valley filed an action in a Connecticut state court to foreclose. Eugene Wong, an associate at the bank, provided the court with only a copy of the note. Wong said that he had looked for the original at several of the bank's offices and at a third-party storage facility, but was unable to find it. On appeal from a judgment in the bank's favor, Miracle Faith argued that "the court abused its discretion by determining that the plaintiff was the owner and holder of the note" even though the bank could produce only a copy.
In The Language Of The Court
beach, J. [Judge]
* * * * A bill or note is not a debt; it is only primary evidence of a debt; and where this is lost, impaired or destroyed bona fide, it may be supplied by secondary evidence * * *. The loss of a bill or note alters not the rights of the owner, but merely renders secondary evidence necessary and proper. [Emphasis added.] The Uniform Commercial Code * * * addresses situations * * * where the instrument sought to be enforced is unavailable, by creating an exception to the general rule that one must hold an instrument in order to enforce its payment. General Statutes Section 42a-3-309(a) [Connecticut's version of UCC 3-309(a)] provides:
"A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process."
Here, the court found that the plaintiff had sustained its burden of showing that the note was lost and that the copy it produced was authentic.
The plaintiff established that it had entered into a transaction including a promissory note secured by a mortgage, a term loan agreement, and a mortgage with the defendant. Wong testified that ordinarily the original note would have been kept in the plaintiff's California headquarters. After a period of time, it would have been sent to a third-party storage facility. Wong testified that he checked "all the places where the note could possibly be," but he was unable to locate it. Although the original was lost, a copy of the note had been kept in the plaintiff's credit file for the subject loan. Although the defendant takes issue with the admission of the copy of the note, it does not claim that the copy was in any way inaccurate. The court, therefore, did not abuse its discretion in admitting a copy of the note. DECISION AND REMEDY?A state intermediate appellate court concluded that the lower court did not abuse its discretion in admitting a copy of the note and affirmed the judgment. A note is not a debt-it is only evidence of a debt-and its loss does not alter the rights of the owner. The bank showed that the note was lost and that the copy it produced was authentic.
THE legal environment DIMENSION Wong testified that he had looked for the note at a third-party storage facility. If the note had been found there, would that mean that the note had been " transferred" to the facility, making the storage company the holder of the instrument? Explain.
THE technological DIMENSION If a note is the best primary evidence of the existence of a debt, what might be the best evidence of the amount of the debt and the interest calculation?