After reviewing the requirement for the Kane v. Kroll case, it was
obvious that Kane was a holder. Kane was a "holder of a complete
and authentic negotiable instrument" which was accepting the check
and providing Kroll with the cows. (Kubasek et al., 2020, p. 0634 -
0635). Kane met three of the requirements which also included
accepting the check in good faith, in hopes it would not bounce along
with accepting the check for value. When Grace Kroll gave Kane the
check for the product that was given to her son, Kane did not explain
any agreements if the check did not clear. He was satisfied with the
payment and did not specify the form of payment at the time of the
purchase. It did not indicate if there was an argument or
disagreement among the two parties which showed the transaction
was in good faith. Kane understood he was not receiving a payment
from Gerald Kroll Jr., who was purchasing the cows but instead it
was from his mother. Gerald was borrowing money from his mother
and would pay her back once he made a profit. Grace is the middle
person in this transaction since she was not receiving anything in
return other than her money back once Gerald would sell the hay.
Once the deal fell through with the hay, Gerald could not feed the
cows and would not be able to repay his mom. Grace would be losing
on her $6,100 payment since she did not receive a product or
installment.
Since the rules of law determined that Kane was the holder and an
innocent party making a sale, Judge Myse ruled in favor of payment
to Kane. The rules of law played into the court reasoning because it
proved Kane was accepting a form of payment from a consumer
which holders Grace Kroll responsible. It was made out to the
recipient and was not involved in the agreement of who Grace would
receive her money from her son. That was deal between two other
parties which did not involve Kane. Michael Kane held up his end of
the deal by providing Gerald with cows. The only ambiguities I found
that was presented in the rules of law was “The holder must take the
instrument without notice of defect.” (Kubasek et al., 2020, p. 0634 -
0635) This might not always apply in every situation which is why I
felt Kane did not meet that requirement. The check can be
considered defected since it was not cashable however it could be
interpreted as a cow being defected as well, whether they can’t
produce milk or reproduce which would be in favor for the other
party.
In conclusion, it was unethical of Grace to stop payment to a third
party when the payback agreement was between her and her son.
Kane delivered on his product.
Reference:
Kubasek, N., Browne, N. M., Herron, D., Dhooge, L., & Barkacs, L.
(2020). Dynamic Business Law (5th ed.). McGraw Hill.
