Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1
Chapter 24
Liability, Defenses, and Discharge
VI. Answers to Critical Legal Thinking Cases
24.1 Transfer Warranty
No, the Pontiac State Bank is not liable to Matco for breach of a transfer warranty. A party who transfers
an instrument and receives value for the instrument warrants to the transferee that the transferor has good
title to the instrument or is authorized to obtain payment on behalf of one who does have good title. In
bank. Because of this chain of transfers, the only party who could sue Pontiac State Bank on a transfer
warranty claim was the payor bank. Matco Tools Corporation v. Pontiac State Bank. 614 F.Supp. 1059,
1985 U.S. Dist. Lexis 17234 (United States District Court for the Eastern District of Michigan)
24.2 Presentment Warranty
better title to the check than the warrantor.” The Bank of Azle did not have better title to the check than
the E.G. Smith Corporation, because E.G. Smith had not indorsed the check. Thus, the bank breached the
VII. Answer to Ethics Case
24.3 Ethics Case
(Grand Island) entered into this transaction in reliance upon the promise of both Mr. Humphrey and Mrs.
Humphrey that they would be liable and would pay the amounts so advanced. The state supreme court
held that Mrs. Humphrey was a co-maker on the line of credit promissory note and was therefore
2
