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Chapter 26
VI. Answers to Critical Legal Thinking Cases
26.1 Lien
Graco Fishing and Rental Tools, Inc. (Graco), the materialman, wins. The court held that Graco had
properly perfected its materialman’s lien and could foreclose on the lien when it was not paid the rental
charges for the equipment rented by Lantz Drilling and Exploration Company, Inc. (Lantz). Utah law
provides “Contractors, subcontractors, and all persons performing any services or furnishing or renting
any premises in any manner shall have a lien upon the property upon or concerning which they have
26.2 Foreclosure
Camden National Bank wins and may retain the proceeds in excess of the mortgage which were obtained
in the sale of the mortgaged property under strict foreclosure. The State of Maine recognizes the doctrine
of strict foreclosure. Under this doctrine, upon default by the mortgagor, title to the secured real property
reverts to the mortgagee, who may keep or sell the property in full satisfaction of the debt. The mortgagor
is given no right to any surplus. Thus, when Atlantic Ocean Kampgrounds, Inc. (Atlantic) defaulted on
26.3 Redemption
No, Hans cannot be forced to execute a quitclaim deed prior to the foreclosure sale concerning the subject
property. The State of Illinois recognizes the doctrine of equitable redemption. The equitable right of
redemption arises at the time of default and generally lasts until such time as there is a foreclosure sale.
26.4 Deficiency Judgment
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property securing a loan is not sufficient to pay off the loan. The court stated: “The fact pattern set out
above is a side effect of Wyoming’s “boom or bust” economy. The appellant executed a promissory note
secured by a mortgage when land prices and interest rates were high. She defaulted and the mortgage was
foreclosed upon when land values were low. As a result, the mortgagee’s bid on the property at the
VII. Answers to Ethics Cases
26.5 Ethics Case
when she signed the form admitting Mrs. Lynch to the hospital. Thus, Mrs. Sales is personally liable for
the moneys owed by Mrs. Lynch to the hospital. There could be some question whether Mrs. Sales acted
unethically when she denied liability as the guarantor for Mrs. Lynch’s medical expenses. Mrs. Sales did
sign the admission form including the guaranty agreement, but what would have happened to Mrs. Lynch
(Court of Appeals of North Carolina)
26.6 Ethics Case
Valentine wins since the loan violated the Truth-In-Lending Act. The TILA requires that a creditor make
certain disclosures to a debtor in connection with a covered extension of credit. Covered creditors include
the finance charge was never discussed by the use of the term “Finance Charge.” The loan agreement also
failed to include a full description of the security interest involved. The paperwork did not specify
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