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Copy of First State Bank of Sinai v. Hyland
Transcript of Copy of First State Bank of Sinai v. Hyland
The notes remained unpaid on their due date. On October 20, 1981, Randy went to the Bank and requested an extension. Buck agreed, but on condition that Randy’s father, Mervin act as cosigner. Randy was given the note for the purpose of obtaining his father’s signature.
Mervin had transacted business with the Bank since 1974. He was a good customer and always paid his notes on time.
Randy returned to Bank one week later. Mervin had signed the note and the note had a new due date of April 20, 1982.
On April 20 the note remained unpaid. On May 5, Randy appeared at the bank. He brought a check signed by Mervin to cover the interest owed on the unpaid note and asked for another extension. The Bank agreed to a second extension again on the condition that Mervin act as cosigner.
Randy did not secure his father’s signature because his father refused to sign the new note. On June 22, 1982, Randy filed for bankruptcy which later resulted in total discharge of his obligation on the note.
On December 19, 1982, the Bank filed suit against Mervin. Mervin said he was not liable since he had been incapacitated by liquor at the time he signed the note. He had been drinking heavily throughout this period, and had been involuntarily committed to an alcoholism treatment hospital twice during the time of these events. *Incapacitated Person temporarily or permanently impaired by mental and/or physical deficiency, disability, illness, or by the use of drugs due to the extent he or she lacks sufficient understanding to make rational decisions or engage in responsible actions. DECISIONS TRIAL COURT APPEALS COURT The trial court ruled in favor of the defendant (Hyland), saying he was not liable for the note’s payment. They cited that at the time the note was signed Hyland was not competent to sign such a document as he was under the influence of alcohol and ,due to that fact, did not subsequently ratify the obligation. Thusly the court concluded that the Hyland’s obligation to pay the note was void. The Bank then proceeded to appeal the decision. The appeals court reversed and remanded the trial court’s decision. They claimed that even though Hyland may very well be a connoisseur of spirits there was not substantial evidence that he was under the influence when signing the note. Not to mention the fact that during Randy Hyland’ bankruptcy hearing on December 9th 1982, Randy testified to the fact that his father knew he was signing the note. The court ruled that “a void contract could only exist if Mervin was ‘entirely without understanding’ (incompetent) when he signed the note.” They therefore decided to overturn the ruling of the trial court due to insufficient evidence of incompetence at the time the note was signed. SOURCES http://scholar.google.com/scholar_case?case=9646538788520684587&q=First+State+Bank+of+Sinai+v.+Hyland+&hl=en&as_sdt=2,48&scilh=0
http://scholar.google.com/scholar_case?case=4683065918573252462&q=Christensen+vs.+Larson+&hl=en&as_sdt=2,48 IMPACT -Banks may not offer extensions without some sort of actual
-If an extension is offered based on co-signing, banks may have both parties come in and sign the note in person and in the presence of a bank representative.
-Banks may decide not to offer more than one extension per loan.
-The process to get a loan may be a lot more difficult in order to avoid loaning to financially unfit persons.
-Banks may be quicker to take legal action against debtors in hopes of gaining their money back as quickly as possible. POINTS OF VIEW BANK PLAINTIFF AND APPELLANT -Wants their money
-Felt obligated to their money RANDY HYLAND DEFENDANT AND APPALED MERVIN HYLAND ECONOMIC
-Felt that he did not have to pay, his father did.
-Denies signing the notes
-Does not feel obligated to pay for his son’s debts.
-Randy was trying to keep his farm going and by doing so turned to the bank. Incapacity terminates Contract may not be ratified Contract may be disaffirmed May expressly or implied ratify contract Contract may be disaffirmed Reasonable
time Contract ratified by nondisaffirmance -Was Mervin Hyland truly drunk when he signed the note?
-If Mervin Hyland was intoxicated to fully understand the transaction, should he be awarded to not paying his dues?
-Is the contract void or avoidable?
ISSUES RELATED CASES
Bank of Hoven v. Rausch
Heward vs. Sutton On December 14, 1951, James Sutton, by a contract of sale, sold a metal press to George Cook for $2,500. The metal press was of the value of $4,500 at the time of sale, according to the findings of the trial court.
On March 27, 1952, Gilbert Sutton, gave notice in writing to Cook of rescission of said contract of sale and of demand for return of the press. The press was not returned and thereafter Cook sold his interest in the contract to Heward. This action was then commenced against both Cook and Heward, but Cook is not a party to this appeal.
Heward's main contention on this appeal relates to the sufficiency of the evidence to support the finding that James Sutton was on December 14, 1951 mentally incompetent to enter into the contract of sale.
Appellant's claim of offset unrelated to any act of respondent or of respondent's guardian in his representative capacity is without merit.
As to each appeal the judgment is affirmed. Each party will pay his own costs on appeal. In early April of 1978, Harlan Rausch asked appellee, Bank of Hoven, to lend him $We conclude there was no ratification of this 1982 note because it was not a renewal note and ratification is the affirmance by a person of a prior act, which did not bind him. As to preclusion, there is no evidence upon which the trial court could possibly find that William was equitably estopped from denying the 1982 note, as the documents relied upon by the court predated the 1982 note.
-Bank informed Harlan that his credit was not sufficient to acquire the loan unless his father, William Rausch, cosigned the promissory note.
-On April 18, 1978, a note was executed and Harlan received the loan he requested.
-At trial, a promissory note bearing William's signature was admitted as evidence of the loan. William testified that it was not the note he signed, since it did not also bear his son Harlan's signature.
-William did, however, acknowledge signing a promissory note for $75,000 on April 18, 1978, but contended that he signed merely as a cosigner or guarantor and that his obligation was short-term, existing only until his son received a loan from the Farmers Home Administration. Minors vs. Incompetent MINORS INTOXICATION A minor who signs a contract can void a contract at any time or honor it.
When a minor turns 18 he or she and has done anything with the contract (ratify or terminates) then he or she must honor the contract, with in a reasonable time after becoming 18.
Those who are under the influence of alcohol have to hold their obligations.
BUT… sometimes a person is so far from reality that they do no not understand the nature and or consequences of their actions of agreement and the other party takes advantage of the situation.
CONCEPTS Minor - Person who is under the age of majority (usually eighteen years)
Liability on Contracts - Minor's contracts are voidable at the minor's option
Liability for Necessaries - A minor is liable for the reasonable value of necessary items (those that reasonably supply a person's needs.
Liability for Misrepresentation of Age - Prevailing view is that a minor may disaffirm the contract.
Liability for Tort Connected with contract - If a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract, the minor is not liable in tort.
Person Under Guardianship - Contracts made by a person placed under guardianship by court order are void.
Mental Illness or Defect - A contract entered into by a mentally incompetent person is voidable.
Intoxicated Persons - A contract entered into by an intoxicated person is voidable.