He defends against the note on the grounds of duress and counterclaims for the return of the $1,500 and the cancellation of the uncashed $500 check. Who should prevail? Explain.
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Frank Berryessa stole funds from his employer, the Eccles Hotel Company. His father, W. S. Berryessa, learned of his son’s trouble and, thinking the amount involved was about $2,000, gave the hotel a promissory note for $2,186 to cover the shortage. In return, the hotel agreed not to publicize the incident or notify the bonding company. (A bonding company is an insurer that is paid a premium for agreeing to reimburse an employer for thefts by an employee.) Before this note became due, however, the hotel discovered that Frank had actually misappropriated $6,865. The hotel then notified its bonding company, Great American Indemnity Company, to collect the entire loss. W. S. Berryessa claims that the agent for Great American told him that unless he paid them $2,000 in cash and signed a note for the remaining $4,865, Frank would be prosecuted. Berryessa agreed, signed the note, and gave the agent a cashier’s check for $1,500 and a personal check for $500. He requested that the agent not cash the personal check for about a month. Subsequently, Great American sued Berryessa on the note. He defends against the note on the grounds of duress and counterclaims for the return of the $1,500 and the cancellation of the uncashed $500 check. Who should prevail? Explain. |
Explanation
Individual WB's contention is not right because the promissory note of $2,186 was first given to the hotel company to hide the fraud done by the son, which goes against public policy.
Besides that, the demand of the refund of the $1,500 note and to cancel the $500 note by Individual WB is also not correct because both notes were given as a substitute to the previous note of $2,186 without any duress and threat from the insurance company.
Verified Answer
Individual WB's claim is not correct because the previous note was provided to the hotel company to hinder the actions of the son, which is illegal.
Individual WB's claim is not correct because, later, two promissory notes were provided to the insurance company since previous substitutes and prosecution were a threat to the son.
