Domestic Relations

I. Unmarried co-habitants
A.Agreements
1. Express agreements NY will enorce express !s "nless sole
consideration is sex
#. Implied agreements NY will not ind
$. %re-n"ptial agreements
a.&enerall' deal with mone' and children
b. (o"r iss"es)
i. *nl' +alid i reel' made ,no d"ress-
ii. ."st be in writing/ signed/ and ac0nowledged ,notari1ed-
iii. 2an3t pre-agree on di+orce
i+.Agreements can3t be "nconscionable ,wai+er o s"pport the
poorer part' as a p"blic charge welare-
c.Not enorceable "nless the co"ple gets married ,then binding-
4. Unmarried co-habitants and children
1. Non-marital children concei+ed b' and born to parents that
ha+e ne+er married
#. Determining who is the ather)
a.(iliation proceeding s"it to pro+e paternit'
i. 2an be bro"ght an'time "p to age ,child- #1
ii. E+identiar' iss"es)
,A- 5tandard clear and con+incing e+idence
,4- 4lood-t'ping onl' admissible when oered b' the De. 6o
r"le o"t paternit'
,2- DNA e+idence admissible b' either part'
,D- .other3s claim o sex"al access o the De. need not be
corroborated
,E- De.3s claim o sex"al access b' other men m"st be
corroborated
iii. 7hen it is established that De. is the ather/ it p"ts the child
in he same position as a marital child ,same legal obligations/ e.g.
inheritance-
2. .iscellaneo"s
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1. 9eart-balm actions
a.NY "sed to recogni1e tort ca"ses o action or heart balm/ b"t the'
ha+e been abolished ,and it is a elon' to ile a heart-balm
complaint-
i. (i+e t'pes
,A- 4reach o promise to marr'
,4- 5ed"ction o an "nmarried emale ,s"it b' ather-
,2- Alienation o aections ,t"rning married person against
spo"se-
,D- 2riminal con+ersion ,ci+il ca"se o action or ad"lter'
against spo"se3s lo+er-
,E- :actitation o marriage ,boasting o a non-existant marital
relation-
#. Deceit a 2*A or deceit still exists in NY i 'o" lie in order to
entice someone into co-habitation ,e.g. - arrange a bog"s marriage in
order to get someone into bed-
$. &its gits gi+en in contemplation o marriage can be reco+ered
i marriage alls thro"gh ,e.g. an engagement ring
a.doesn3t generall' appl' to gits while dating
II. &etting married in NY
A.2apacit' ,see declaration o n"llit'/ ann"lment-
1. 5anit'
#. Age
4. ."st obser+e ormalities
1. ;icense
a.No blood test re<"ired
b. ."st wait #= ho"rs ater getting license beore getting married
c.;icense expires ater >? da's
d. (ail"re to get license does not aect the +alidit' o the
marriage ,a director' re<"irement-
#. 5olemni1ation
a.."st ha+e a ormal moment when the marriage becomes eecti+e
i. 2eremonial marriage ceremon' is the ormal moment
,A- Need parties/ oicient ,an'one <"aliied to administer an
oath- and a witness ,onl' need one/ b"t # c"stomar'-
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ii. 2ontract"al marriage when parties are not in the same location/
each part' can sign a ! in ront o a witness in their respecti+e
locations in ront o a @"dge in NY ct
iii. .arriage at sea NY recogni1es marriage at sea
i+.2ommon law marriage NY does not recogni1e
,A- 9owe+er/ NY will respect common law marriages rom
other states
III. *nce married
A.5po"ses ha+e reciprocal d"ties to s"pport each other ,air and reasonable
s"pport-
1. (air and reasonable determined b' loo0ing at means o pa'or
,not needs o pa'ee-
a.*nl' loo0 at needs o pa'ee i recipient co"ld become a p"blic
charge
#. I not getting re<"isite s"pport/ can go to amil' co"rt and get a
s"pport decree ,w8o dist"rbing the +alidit' o the marriage-
4. (or all other p"rposes/ spo"ses are considered to be legall' separate
indi+id"als
1. 2an own propert' in own name
#. 2an ha+e separate domiciles
$. 2an engage in !s with one another
=. 2an commit torts8crimes against each other
A. 2an ha+e whate+er names the' want to ,no re<"irement to ta0e
the h"sband3s name-
IB. 6ermination o marriage
A.(i+e ca"ses o action
1. Declaration o n"llit' "sed b' parties in +oid relationships
,legall' +oid b8c serio"s capacit' problems parties want a piece o
paper ac0nowledging that the marriage doesn3t exist-
a.6wo gro"nds)
i. 4igam' ,alread' married- innocent part' ma' get declaration o
n"llit'
ii. Incest parties too closel' related
,A- 4lood relation onl' in NY ,ancestors/ descendants/ or
lineal relati+es "p or down 1 generation-
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,1- 2an marr' co"sins or adopted8step siblings
b. &ro"nds not wai+able
#. Ann"lment +oidable marriages ,+alid "ntil ann"lled-
a.(i+e gro"nds ,C1 additional gro"nd that post-dates marriage-
i. Non-age m"st be 1D to marr'/ 1> with consent o 1 parent/ 1=
with consent o 1 parent and 1 @"dge
,A- Ann"lment is discretionar' on the part o the co"rts
ii. ;ac0 o mental capacit' not l"cid at time o marriage
,A- I become l"cid and sta' in marriage/ 'o" wai+e the right
to ann"l
,4- &"ardian ,EcommitteeF- can see0 ann"lment on behal o
incapacitated person
iii. D"ress ph'sical threats/ etc
,A- I ater d"ress is remo+ed/ 'o" remain in the marriage/
'o" wai+e the right to ann"l
i+.(ra"d exists when prior to the marriage/ one iancee lied to the
other abo"t something that goes to a +ital element o the marriage
,A- 6hree t'pes o act patterns
,1- .isrepresentation concerning religion ,considered
+ital-
,a- 7ai+ed i sta'ed in marriage
,#- (ra"d relating to sex or procreation ,considered +ital-
,a- E.g. - l'ing abo"t abilit'8willingness to ha+e children
or abo"t sex"al expectations
,b- 7ai+ed i sta'ed in marriage
,4- 5tat"te o limitations three 'ears rom disco+er'
+. ;ac0 o ph'sical capacit' an inc"rable ph'sical condition that
pre+ents sae and normal sex"al interco"rse
,A- 6his gro"nd is based on the ass"mption that co"ples don3t
ha+e sex "ntil married
,4- (oc"ses on the abilit' to ha+e sex/ not the abilit' to ha+e
children
,2- No @"r' trial
,D- 5tat"te o limitations A 'ears
+i. (i+e 'ears o inc"rable insanit' m"st begin ater the
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marriage
,A- 6his is considered a separate gro"nd beca"se it is not
something that pre-exists the marriage.
,4- No stat"te o limitations
$. 5eparation and di+orce
a.5eparation does not terminate the marriageG allows parties to li+e
separatel'G ad@"dicates the rightso the parties and boils them down
to a co"rt order
i. 7h' separation inancial beneits ,5.5. Etc-G ethical reasons
,against di+orce-
ii. proced"re no @"r' trial
b. &ro"nds ,or separation and di+orce-
i. 2r"el and inh"mane treatment encompasses ph'sical and
mental ab"se
,A- ."st endanger the well-being o one spo"se ,s"b@ected
test can this %l. tolerate beha+ior or this the %l. well-being in
danger
,4- 5ex ater ab"se is actor in establishing a deense b"t is
not an absol"te deense
ii. Abandonment
,A- (o"r elements
,1- A +ol"ntar' depart"re o one spo"se rom the other
,#- Depart"re is witho"t the consent o the %l. spo"se
,$- Depart"re is witho"t @"stiication
,=- No intent to res"me cohabitation
,4- ;ength o abandonment
,1- 5eparation abandonment m"st be at least or one 'ear
,#- Di+orce no minim"m period
,2- 2onstr"cti+e abandonment
,1- %l. can establish abandonment i one part' lea+es the
relationship w8o ph'sicall' lea+ing the relationship ,e.g De.
is "nwilling to ha+e con+entional sex or is being
"ncomm"nicati+e-
,a- %l. m"st establish repeated re<"ests
iii. Ad"lter' an act o sex or de+iant sex with a person who
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not 'o"r spo"se
,A- Deenses
,1- Recrimination can3t get di+orced on gro"nds o
ad"lter' i 'o" 'o"rsel are an ad"lterer
,#- 2ondonation wai+er or orgi+eness ,i res"me co-
habitation ater-
,$- 2onni+ance entrapment ,spo"se was set "p to cheat-
,4- 5tat"te o limitations i+e 'ears
,2- %roced"ral aspects
,1- %leadings -answer in ad"lter' cases does not ha+e to be
sworn to ,generall' pleadings in NY m"st be sworn to-
,#- 5po"ses can onl' testi' to three things)
,a- 4oth spo"ses can testi' to acts o the marriage
,wen married/ etc-
,b- De. can testi' to den' ad"lter'
,c- %l. can testi' to dispro+e deense
,$- An'thing else m"st be pro+en thro"gh circ"mstantial
e+idence and third part' testimon'
,=- 6wo 0inds o witnesses whose testimon' m"st be
corroborated)
,a- Detecti+es
,b- %rostit"tes
i+.6hree 'ears o consec"ti+e imprisonment
c.&ro"nd ,or separation onl'-
i. (ail"re to s"pport separation order will ix amo"nt o s"pport
and set "p periodic pa'ments
d. &ro"nd or di+orce onl'
i. 2on+ersion di+orce NY does not ha+e tr"e no-a"lt di+orceG to
get a con+ersion di+orce/ co"ple m"st be ormall' separated or 1
'ear p"rs"ant to a separation agreement ,when both parties agree
to separate- or co"rt order ,when one part' has gro"nds or
separation-
,A- 5eparation agreements
,1- Analogo"s to pren"ptial ,a ! in contemplation o
di+orce-
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,#- 2"stomaril' deal with
,a- %ropert' di+ision
,b- %eriodic maintenance pa'ments
,c- 2hild c"stod'
,d- 6estamentar'
,i-(ormal re<"irements
."st be reel' madeG
In writingG and
Ac0nowledged
,ii- ."st ile with cler0
Does not need to be on ile or "ll 'ear
,iii- Ater exec"ted/ m"st be separate and apart or 1
'ear to get a con+ersion di+orce
2an3t cohabitate ,sex- with intent to reconcile ,this
rescinds agreement-
5ex witho"t intent to reconcile does not rescind
agreement
,4- 5eparation decrees ,co"rt ordered-
,1- 2an cohabitate witho"t aecting 1 'ear con+ersion
=. Dissol"tion o marriage when spo"se disappears
a.A @"dicial pres"mption o death
b. ."st show that spo"se has been missing witho"t tiding or A
'ears
i. ."st irst ma0e diligent search
ii. ."st p"blish re<"est that spo"se ret"rns or $ consec"ti+e wee0s
in English spea0ing newspaper
iii. %art' m"st ha+e li+ed in NY or 1 'ear or NY m"st ha+e
been matrimonial domicile at time o disappearance
4. %roced"ral iss"es ,or termination o marriage-
1. 5"b@ect-matter @"risdiction 1 spo"se m"st be a NY domiciliar'
,which can be accomplished almost o+ernight and %l. m"st meet
certain residenc' re<"irements
a.Residenc' re<"irements
i. I both parties li+e in NY and gro"nds occ"r there/ then
immediate access to NY co"rts
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ii. I onl' 1 part' li+es in NY/ can gain access ater 1 'ear residenc'
i one o certain pl"s actors is present
,A- %l"s actors
,1- *riginall' married in NY
,#- ;i+ed at one time in NY as a married co"ple
,$- &ro"nds occ"rred in NY
iii. I onl' 1 part' li+es in NY and no pl"s actors are present/
there is a two-'ear residenc' re<"irement to gain access to NY
co"rts
#. %ersonal @"risdiction in order to iss"e collateral orders ,re)
mone'/ children/ etc- m"st ha+e %: o+er De.
a.7a's to establish %:
i. De. is NY resident
ii. De. +ol"ntaril' appears
iii. .inim"m contacts/ etc
2. 5"bstance o co"rt orders
1. I there is a separation agreement/ the co"rt can simpl' enorce
the !. I not/ howe+er/ the co"rt m"st allocate mone'/ propert'/ and
c"stod' between the parties
a..one'
i. .aintenance ,alimon'- based on the needs o the recipientG
co"rt ixes based on a list o actors incl"ding marital a"lt
,A- Us"all' in the orm o periodic pa'ments
,1- 2an get order modiied i circ"mstances change ,m"st
be s"bstantial change e.g. pa'or gets laid o or pa'ee
inishes college earl'-
,4- I maintenance being paid "nder separation agreement
that was not merged into di+orce/ modiication is onl'
a+ailable in cases o extreme hardship
ii. 9ow long lastI
,A- As long as the order sa's it does "nless a"tomatic
termination which occ"rs i)
,1- 1 part' diesG
,#- recipient gets marriedG or
,$- recipient li+es openl' with another person as i married.
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,4- %arties can pro+ide in separation agreement that pa'ments
will contin"e be'ond a"tomatic termination dates ,abo+e are
simpl' dea"lt r"les-
b. %ropert'
i. NY is an e<"itable distrib"tion state
,A- Assets are di+ided into $ categories
,1- 9"sband3s separate propert'
,#- 7ie3s separate propert'
,$- .arital propert'
,4- 5eparate +. .arital propert'
,1- 5eparate propert'
,a- An'thing owned prior to marriageG
,b- &its or inheritance that spo"se recei+ed d"ring
marriage in sole and separate nameG
,c- An'thing spo"ses agreed wo"ld be treated as
separate propert'G
,d- %ersonal in@"r' compensationG
,e- %assi+e appreciation on all o the abo+e
,i-An' appreciation ca"sed b' the acti+e eort o the
other part' ,both homema0ers and parents considered
acti+e participants/ i in pro+iding that ser+ice the'
reed "p time or the other spo"se to increase the +al"e
o the asset-
,#- .arital propert'
,a- An'thing that is not separate propert' is marital
propert' regardless o whose name the title is in
,incl"ding pension plans and ed"cational degrees-
,2- Di+ision
,1- 9"sband and wie get all o their respecti+e separate
properties
,#- .arital propert' di+ided e<"all'
,a- 2o"rt is not s"pposed to consider marital a"lt
,"nless egregio"s-
,b- 2o"rt can distrib"te assets in 0ind or in the orm o
cash mone' ,ta0ing into acco"nt tax concerns/ etc-
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,i-In distrib"ting license or degree/ co"rt will loo0 at
stream o income and re<"ire pa'ment o a distrib"ti+e
share
,c- 6he longer the marriage the more inclined the co"rt
is to gi+e a A?8A? split
c.2hildren
i. In general
,A- I 'o" don3t want them/ 'o" don3t ha+e to ha+e them
,1- Yo" ha+e constit"tional right to contraception and
abortion
,4- I 'o" want them/ then 'o" can ha+e them
,1- Artiicial insemination i married and h"sband
consents/ h"sband will be treated as ather ,donor has no
legal connection to child
,#- 5"rrogate parenting N*6 allowedG an' agreement
between s"rrogate mother and married co"ple is +oid
,$- Adoption
,a- An' ad"lt can adopt
,b- A minor can adopt i married and see0ing to adopt
spo"ses children
,c- ."st be loo0ing or a bona ide parent8child
relationship
,d- 2onsent to adopt
,i-Need child3s consent i o+er 1=
,ii- Need parent3s consent i child "nder 1D
%arents lose right to +eto adoption i)
i. s"rrender child to an adoption agenc'
ii. abandon child ,> months with no contact-
iii. Neglect ,1 'ear witho"t s"bstantial contact
i+. parent is mentall' incapacitated
2onsenting parents are gi+en a period to thin0 abo"t
gi+ing consent ,can re+o0e i the' change their
mind-
,e- 6here will be an in+estigation o the adopting home
,NY belie+es in religio"s matching where possible-
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,- Adoption order is iss"ed at a co"rt hearing
,g- *nce inal/ it creates the exact same relationship
between a bio parent and child
,2- I 'o" ha+e them/ 'o" m"st s"pport them
,1- 4oth parents m"st s"pport child thro"gh age #1 ,or
college grad"ation in special circ"mstances-
,#- Amo"nt is determined b' g"idelines/ tables/ and
orm"las ,+er' mechanical-
,a- 5"b@ect to modiications
,i-I child is see0ing modiication/ loo0 or changed
circ"mstances
,ii- I parent is see0ing modiication/ loo0 or se+ere
and "noreseen changes in circ"mstances
ii. 2hild c"stod'
,A- &enerall'/ i co"rt is going to gi+e c"stod' to 1 parent/ it
will do so Ein the best interests o the childF
,1- A co"rt will consider +ario"s actors in determining
what is in the child3s best interest
,#- No gender pres"mption
,$- In c"stod' battle between bio parent and non-parent/
there is a reb"ttable pres"mption that the child3s best
interests lie with the bio parent
,4- Bisitation
,1- 4io parent witho"t c"stod' is alwa's entitled to
+isitation
,a- It is not dependent on pa'ment o s"pport
,b- 6o interere with right to +iolation co"ld res"lt in
contempt
,#- Non-parents can petition or +isitation and it will be
granted i the co"rt determines it to be in the best interests o
the child
,a- 52*6U5) +isitation cannot be gi+en to grandparents
o+er ob@ection o bio parents
B. 2onlicts o laws ,(ederalism-
A..arriages a marriage +alid where contracted will be honored in NY
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"nless the r"le "nder which the marriage occ"rred +iolates a strong
p"blic polic' o NY
4. Di+orce
1. 4ilateral di+orce in another state +alid in NY ,no collateral
attac0-
#. Unilateral ,ex parte- di+orce in another state pres"mpti+el'
+alid ,can be collaterall' attac0ed-
$. 4ilateral di+orce in a oreign co"ntr' +alid in NY
=. Unilateral ,ex parte- di+orce in a oreign co"ntr' in+alid in NY
BI. Domestic relations s"pplement
A.NY will recogni1e di+orces +alid in other states e+en i that di+orce
wo"ld not ha+e been +alid in NY
1. Exception i gro"nds +iolate a strong p"blic polic' o NY
4. *"t-o-state di+orce
1. (o"r scenarios
a.4ilateral sister state di+orce granted "ll aith and credit in NY
b. Unilateral ,ex parte- di+orce respected b' state o NY b"t
non-participating part' can challenge the @"risdiction o the o"t-o-
state co"rt
c.4ilateral oreign di+orce recogni1ed b' NY "nder principle o
comit'
d. Unilateral ,ex parte- oreign di+orce Not recogni1ed
2. Interstate c"stod' order
1. 5cenario one parent mo+es to another state/ wants to get
c"stod' re-e+al"ated in new state
#. U22:A stat"te pro+ides that a co"rt onl' has @"risdiction in a
child c"stod' matter i it is the home state o the child ,state when
child has been li+ing with parent or > months prior to litigation-
a.No no home state/ @"risdiction belongs to the state with s"bstantial
contact with the child and s"bstantial e+idence is located
D.Interstate s"pport iss"es
1. A parent is obligated to pa' child s"pport/ mo+es to a new state/
as0s or a re-e+al"ation o s"pport
#. 5tate-le+el stat"te
a.UI(5A e+er' state m"st deer to the state that is the home state o
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the child recei+ing s"pport
$. 6wo ederal stat"tes
a.((225*A obligates e+er' state to gi+e "ll aith and credit to the
@"risdiction that initall' entered the s"pport order
b. 25RA i 'o" all 1 'ear or KA??? behind in child s"pport
pa'ments and 'o"r child li+es in another state/ 'o" ma' be sent to
prison.
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Criminal Law
I. Jurisdiction -state acquires jurisdiction to adjudicate a crime if tat state is
the legal situs of the crime (the conduct happened there or the results
happened there)
A.No jurisdiction just ecause a participant is a resident of a particular state
!. "mission # jurisdiction lies where act should ha$e een performed
II. %erger # generall& no merger of crimes
A.'or ar purposes( solicitation and attempt merge into the sustanti$e
offense
). Conspiring does not merge into the sustanti$e offense
III. *ssential elements of a crime
A.Act or omission
). Act # an& odil& mo$ement
a. +he following odil& mo$ements don,t qualif& for criminal liailit&
i. Conduct not product of own $olition (e.g. pushed into person
ii. -efle.i$e or compulsi$e acts (e.g. epileptic sei/ure)
iii. Acts performed while unconscious or asleep (e.g.
sleepwal0ing( not falling asleep at the wheel)
1. "mission # a legal dut& can arise in one of fi$e wa&s
a. !& statute (e.g. must file ta. return)
. !& contract (e.g. lifeguard)
c. !ecause of a relationship etween the parties (e.g. parent2child( etc)
d. 3here ) part& $oluntaril& assumes a dut& of care towards another
and fails adequatel& to perform it (e.g. - person is drowning( 4ef.
swims out to help( sees who it is( and swims ac0)
e. 3here &our conduct created the peril (e.g. pushed someone into a
pool that can,t swim)
!. %ental state
). 'our mental states
a. 5pecific intent # qualifies for additional defenses
. %alice # murder and arson (onl& 1 malice crimes)
c. 6eneral intent # catch all categor& (e.g. atter& and rape)
d. 5trict liailit& # no intent necessar&
1. 5pecific intent crimes
)2))
a. 5olicitation
. Conspirac&
c. Attempt
d. )
st
degree murder
i. 7%urder on the ar e.am means common law murder (1
nd
degree
murder in N8 # a malice crime)
ii. +he e.am will specif& if it is referring to )
st
degree murder
e. Assault # under attempted atter& theor& of assault (assault as a
threat is a general intent crime)
f. Larcen&
g. *me//lement
h. -oer&
i. !urglar&
j. 'orger&
9. %alice crimes
a. Arson
. %urder
:. 6eneral intent crimes
a. -ape
. !atter&
c. All other crimes unless the& qualif& under formula for strict liailit&
;. 5trict liailit& crimes
a. 'ormula # if statute is in the administrati$e( regulator&( or moralit&
area and &ou don,t see an& ad$ers in the statute (0nowingl&( etc)
then strict liailit& applies
. An& defense that negates intent is irrele$ant
<. +ransferred intent
a. If 4ef. tried to 0ill one person ut accidentall& hit another( he has
the requisite intent to e found guilt& of oth murder and attempted
murder
i. +hese crimes don,t merge ecause different $ictims
I=. Accomplice liailit&
A.Accomplices are liale for the crime itself and all other foreseeale
crimes
). >Ne$er gi$e an&one accomplice liailit& unless the& were in on the
12))
crime
a. +o e con$icted as an accomplice( the person must ha$e gi$en aid(
counsel( or encouragement with the intent to aid or encourage the
principal in the commission of the crime charged
1. N8 distinctions
a. Accomplice liailit& cannot enefit from a principal,s defense that
negates the mental state (e.g. if the principal is found insane(
accomplice can still e prosecuted)
. Accomplice cannot e charged with intentional murder if he did not
share intent
i. Accomplice is not asol$ed from liailit& e$en if the principal is
acquitted( immune( or not prosecuted
ii. A person ma& not e con$icted solel& on the uncorroorated
testimon& of an accomplice.
=. Inchoate offenses
A.+hree things
). 5olicitation
1. Conspirac&
9. Atttempt
!. 5olicitation # as0ing someone to commit a crime
). If person agrees( then conspirac& (and solicitation merges into
conspirac&)
C. Conspirac&
). +ip # people must e pursuing unlawful ojecti$e
1. 4oes not merge with sustanti$e offense
9. *lements
a. Agreement (does not ha$e to e e.press)
. Intent to agree
c. Intent to pursue the unlawful ojecti$e
:. Liailit& # each conspirator is liale for all of the crimes of the co-
conspirators if those crimes were committed in furtherance of the
conspirac& and were foreseeale
;. "$ert Act requirement
a. N8 and majorit& # in order to ground liailit& in conspirac&( the
4ef. must ha$e committed an o$ert act in furtherance of the
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conspirac& (an& little act will do # e.g. showing up at the place &ou
intent to ro)
. Common law and minorit& # can ground liailit& in agreement itself
(no o$ert act required)
<. Impossiilit& # no defense to conspirac&
?. 3ithdrawal # can ne$er withdraw from conspirac& itself ut can
withdraw from liailit& for co-conspirators, susequent crimes
@. Conspirac& in N8
a. "$ert act is required (o$ert act & an& conspirator( not each
conspirator)
. 8ou can conspire with a police officer (a unilateral approach to
conspirac&)
c. 8ou can withdraw from liailit& for conspirac& if &ou renounce
conspirac& and pre$ent commission of crime
d. "ne who merel& conspires to commit crime is onl& liale for
conspirac& (not the susequent crimes of co-conspirators)
i. Acquittal of co-conspirators does not affect charges of other co-
conspirators
4.Attempt
). Need specific intent A a sustantial step (e&ond mere preparation) in
the direction of the commission of the crime (act is done with
intention of committing the crime ut falls short of actuall&
committing crime)
=I. 4efenses to crime
A.Insanit& # a defense to all crimes including strict lialit& crimes
). +ests
a. %,Naughten test # at time of conduct( 4ef. lac0ed the ailit& to
0now the wrongfulness of his actions or understand the nature and
qualit& of his actions
i. N8 uses a similar test # a person is not criminall& liale for
conduct( if( at the time of the conduct( as a result of mental
disease or defect( he lac0ed the capacit& to 0now or appreciate
either the nature or consequences or that it was wrong.
. Irresistile impulse test # 4ef. lac0ed the capacit& for self-control
and free choice
:2))
c. 4urham,s rule # 4ef.,s conduct was the product of mental illness
d. %BC test # 4ef. lac0ed the ailit& to conform his conduct to the
requirements of the law
!. Into.ication
). =oluntar& (includes addicts) # defense onl& to specific intent crimes
a. -educes )
st
degree murder to 1
nd
degree
1. In$oluntar& (e.g. someone slips something into &our drin0) # a defense
to all crimes including strict liailit& (a form of insanit&)
C. Infanc&
). Cnder the age of ?( no criminal liailit&
1. Cnder ):( reuttale presumption of no criminal liailit&
4.5elf-defense
). Non-deadl& force # a $ictim ma& use non-deadl& force in self-defense
an& time that a $ictim reasonal& elie$es force is aout to e used on
him
1. 4eadl& force # a $ictim ma& use deadl& force in self-defense an& time
the $ictim reasonale elie$es deadl& force is aout to e used on him
9. N8 and minorit& # onl& allows deadl& force if $ictim )
st
retreats to
wall (if safe to do so)
a. 9 e.ceptions
i. 8ou don,t ha$e to retreat out of &our own home
(A) -ecent case # home does not include hallwa&2lo& of
apartment house
ii. 8ou don,t ha$e to retreat if &ou are a $ictim of rape or roer&
iii. Bolice officers ha$e no dut& to retreat
:. 4o not gi$e ac0 to original aggressor the defense of self-defense
e.cept in e.treme circumstances (where original aggressor withdraws(
runs for the door( and communicates withdrawal to original $ictim)
*. 4efense of a dwelling # deadl& force ma& ne$er e used solel& to defend
&our propert& (spring gun e.ample)
'. 4uress
). "n multistate # defense to all crimes e.cept homicide
1. N8 distinction # duress is an affirmati$e defense to all crimes
including homicide
6.%ista0e of 'act
;2))
). %ental state of the crime charged
a. 5pecific intent # ne$er a defense >
. %alice or general intent # reduces )
st
degree murder to 1
nd
degree >
c. 5trict liailit& # an& mista0e( reasonale or not
D.Consent # for ar purposes don,t indulge in a consent of the $ictim
defense
I. *ntrapment
). =er& narrow e.ception
1. 6enerall& ne$er a$ailale ecause a predisposition on the part of the
4ef. negates the defense
9. *ntrapment is an affirmati$e defense in N8
=II. Common law of crimes
A.!atter& # a completed assault
!. Assault (two theories)E
). As an attempted atter& # a specific intent crime
a. %erges into atter&
1. As a threat # general intent crime
C. Domicide
). %iscellaneous tips
a. =ictim must e human
. 7%urderF on the ar e.am means common law murder (1
nd
degree
murder in N8 # malice crime)
i. +he e.am will specif& if referring to )
st
degree murder
1. %urder
a. A homicide is murder if &ou can showE
i. Intent to 0ill
ii. Intent to do odil& harm
iii. Dighl& rec0less murder (intentionall& doing something that
has sustantial li0elihood of causing death)
i$.'elon& murder
. )
st
degree murder
i. No degrees at common law
ii. "n multistate( e.am will either lael it as a )
st
degree or gi$e &ou
)
st
degree statute
c. %anslaughter
<2))
i. =oluntar& # 0illing out of passion (need some pro$o0ing e$ent)
ii. In$oluntar& # 0illing from criminal negligence (e.g. - falling
asleep at the wheel of a car)
d. N8 Domicide
i. %urder
(A) )
st
degree (narrow) # an intentional 0illing A one of the
special circumstances set out on p.; of the N8 distinctions
outline (including if intended = was a cop( 4ef. committed
murder for hire( or if committed in the course of the following
feloniesE roer&( )
st
or 1
nd
degree urglar&( 0idnapping( arson(
rape( sodom&( se.ual ause( escape( attempted 1
nd
degree
murder
(!) 1
nd
degree # an intentional 0illing wit special
circumstances( highl& rec0less murder( and felon& murder
(felon& G offense for which death or prison sentence of more
than one &ear ma& e imposed)
ii. %anslaughter
(A) )
st
degree # 0illing someone with the intent to do odil&
injur& or a pro$o0ed 0illing ($oluntar& manslaughter at
common law G 0illing out of passion)
(!) 1
nd
degree # 0illing from rec0lessness (not highl&
rec0less)
()) Into.ication is not a defense
(C) Negligent homicide # a 0illing from criminal negligence
(in$oluntar& manslaughter at common law)
e. 'elon& murder defenses
i. If 4ef. has a defense to underl&ing felon&( then he had a defense
to felon& murder
ii. If the felon& was independent of the 0illing
iii. If death was not foreseeale
i$."nce 4ef. reaches some point of temporar& safet&( susequent
deaths are not felon& murders (deaths caused while fleeing are
felon& murders)
$. 4ef. is not liale for death of co-felon as a result of resistance or
police
?2))
$i. 5pecial N8 defense (must pro$e all elements & a
preponderance of the e$idence)E
(A) 4ef. did not commit or aid in the commission of the
homicidal actH
(!) 4ef. was not armed with a deadl& weaponH
(C) 4ef. reasonal& elie$ed co-felons were not armed with
deadl& weaponsH and
(4) 4ef. reasonal& elie$ed that co-felons did not intend to
engage in conduct li0el& to result in death or serious odil&
injur&
4.Iidnapping
). %ultistate # requires a $ictim and a napping
1. N8E
a. )
st
degree # aduction A
i. held for ransomH
ii. restrained $ictim with intent to inflict injur&H or
iii. $ictim dies
. 1
nd
degree # all other aductions
c. It is a felon& murder to 0ill someone in the course of a 0idnapping
(an& degree)
*. 5e. offenses
). -ape # the slightest penetration completes the crime of rape
1. 5tatutor& rape # strict liailit& (consent of $ictim or mista0e of fact is
no defense)
'. Bropert& offenses
). Larcen&
a. *lementsE
i. A wrongful ta0ing (stealing) and
ii. Carr&ing awa& (e$en the slightest it) of
iii. +he personal propert& of another
i$.3ithout consent (consent otained out of fear or fraud is no
consent
$. 3ith the intent (at the time of ta0ing) to depri$e the owner
permanentl& of his interest in the propert&
. +a0ing propert& under the elief that it is &ours is not common law
@2))
larcen&
c. N8 points
i. Cnder N8 statute issuing of a ad chec0 in considered larcen&
ii. Larcen& is graded ased on $alue of propert& ta0en( and in some
instances & the manner in which acquired
1. *me//lement
a. Ie& # eme//ler alwa&s has lawful possession followed & illegal
con$ersion (e.g. trustee)
. *me//ler doesn,t ha$e to enefit himself
9. 'alse pretenses
a. 4ef. persuades owner to con$e& title & a false pretense (as to a
present or past fact)
i. A false promise to do something in the future is not grounds for
false pretense liailit&
6.-oer&
). Common law roer& # larcen& A assault
a. *lements
i. %ust ta0e from the person or his presence (e.g. tie up farmer in
arn and steal from house)
ii. %ust use $iolence (e$en the slightest) or put $ictim in fear (must
e threat of imminent harm( not future harm - 7&our mone&( or
&our lifeJF)
(A) *. # pic0 poc0eting is larcen& ut not roer&
(!) +hreat of future harm is e.tortion not roer&
. *.tortion $. roer&
i. +wo distinctions
(A) 4on,t ha$e to ta0e from person or his presence
(!) +hreat of future harm
c. N8 -oer&
i. 9
rd
degree # forcil& stealing propert& (no ph&sical injur& and no
firearm)
ii. 1
nd
degree # forcil& steal propert& A an& one of the following
aggra$ating factorsE
(A) 4ef. aided & anotherH
(!) 4ef. caused ph&sical injur&H
K2))
(C) 4ef. displa&ed firearm
iii. )
st
degree # 4ef. armed with deadl& weapon and caused
serious ph&sical injuries
D."ffenses against haitation
). !urglar&
a. Common law urglar& (elements)E
i. !rea0-inE
(A) Actual # with some force (howe$er slight)
()) At common law( if &ou entered through an open
door2window not rea0-in until &ou open an interior door
(!) Constructi$e # entering $ia fraud or deceit (e.g. - ser$ant
uses 0e& gi$en to him)
ii. *ntering (when an& part of od& crosses plane of dwelling)
iii. 4welling2house of another (not arn2commercial propert&)
i$.At night
$. 3ith the intent (at the time of the rea0-in) to commit a felon&
therein
. N8 urglar& (statutor&)
i. 9
rd
degree # includes rea0ing or entering or remaining ehind
insideH at an& time of da&H of an& structure (dwelling( office( etc)H
with the intent to commit an& crime inside
ii. 1
nd
degree # if an& one of the following is true
(A) In dwelling
(!) Injur& to non-participant
(C) An& urglar was armed
iii. )
st
degree # must e dwelling and either there was an injur&
to non-participant or urglar was armed
1. Arson
a. Common law arson # the malicious urning of the dwelling of
another
i. %ust e material wasting of the fier of the uilding & fire (e.g.
- setting carpet on fire and uilding doesn,t urn is not common
law arson)
. N8 statutor& arson # co$ers urning( e.plosion( smo0e damage(
water damage( etc of an& uilding of an&one (including &our own)
)L2))
))2))
Criminal Procedure
I. Exclusionary Rule remedy whereby victim of illegal search or coerced
statement can have that evidence excluded from subsequent proceedings
. Exceptions
!. Exclusion does not apply in the context of "randy #uries
$. Exclusion is not an available remedy in civil proceedings
%. In order to qualify for exclusion& search in question must violate
federal or state constitution or statute
'. Exclusion is not available remedy in parole revocation proceedings
(. "ood faith defense to exclusion)
a. *e will not exclude evidence where the police& in good faith relied
on a +udicial opinion that was later changed by other opinion
b. "ood faith reliance on a statute or ordinance later declared
unconstitutional
c. "ood faith reliance on defective search warrant
i. ,- distinction ,- does not recogni.e good faith reliance on
defective search warrants
/. Excluded evidence may be used for impeachment of 0ef.1s trial
testimony 2but not to impeach other 0ef. witnesses3
4. Expansion of the exclusionary rule)
!. 5ruits of the poisonous tree doctrine expands the exclusionary rule
by excluding evidence that is the fruit of unlawful police activity
a. % ways to brea6 the chain between the original unlawful police
activity and the evidence)
i. Independent source7
ii. Inevitable discovery7
iii. Intervening acts of free will of 0ef.
23 E.g. 8 0ef. is illegally arrested 5riday& let out 9onday&
hired attorney :uesday& voluntarily returns to police station and
confesses on *ednesday ; no exclusion
II. :he law of arrest
. rrest warrants
!. "enerally not required before arresting someone in public
$. non8emergency arrest of an individual in his own home requires an
!<!$
arrest warrant
%. =tation house detention police need probable cause in order to
compel a person to come to the police station either for interrogation
or fingerprinting
4. rrests in ,-
!. =liding scale of police authority 2from most minimal intrusion to most
intrusive3)
a. Request for information police can approach and request
information on a whim or caprice. :he individul asserting his right
not to respond and even to run away does not give police probable
cause to arrest him.
b. Common law right to inquire police must have founded suspicion
that criminal activity is afoot. :he police can as6 questions but the
detention must be brief. If the individual gives an explanation& the
police must release him.
c. =top and fris6 police must have reasonable suspicion.
d. rrest requires probable cause.
III. :he law of search and sei.ure
. 9odel for answering search and sei.ure questions
!. 0oes the person even have a '
th
mendment right>
a. "overnment conduct :he '
th
mendment only protects people
from government conduct
i. *hose conduct is government conduct
23 Publicly paid police 2on or off duty3
243 ny party acting at the direction of police
2C3 ,ot privately paid police unless deputi.ed with the power
to arrest
b. Reasonable expectation of privacy> 8 there are two instances where
there is not)
i. *here person have no standing to ob+ect to the illegality of the
search
23 % automatic categories of standing
2!3 -ou own the premises searched
2$3 -ou live at the premises searched
2%3 ?vernight guests
$<!$
243 $ categories that sometimes give you standing
2!3 -ou own property sei.ed
2$3 -ou are legitimately present when search ta6es place
2C3 5or the bar exam
2!3 ?vernight guests have standing
2$3 Passengers in cars who don1t claim to own evidence do
not have standing
2%3 n individual briefly on premises of someone else
solely for business purposes does not have standing
ii. *hen item that government wants to sei.e from you is something
that you hold out to the public 2and the sei.ure of which
implicates no privacy right3)
23 :he sound of your voice
243 :he style of your handwriting
2C3 Paint on the outside of your car
203 ccount record held by a ban6
2E3 :he location of your car on a public street or in your
driveway
253 nything that can be seen across an open field
2"3 nything that can be seen flying in public airspace
2@3 ?dors emanating from your luggage
2I3 "arbage set out on curb for collection
$. If the person is protected by the '
th
mendment& did the police have a
search warrant>
a. If yes& is the search warrant valid>
i. Elements of a valid search warrant)
23 Issued on a showing of probable cause
2!3 Ase of informants in ,- to be valid search warrant
based in part on an informant1s tip the warrant must)
2a3 =et forth sufficient underlying facts and
circumstances to permit the magistrate to 6now how the
informant got his information7 and
2b3 the affidavit must establish the reliability and
credibility of that informant 2e.g. 8 Bwe used this
informant twice in the past and both times the information
%<!$
led to a convictionC3
243 *arrant must state with particularity the place to be
searched and the things to be sei.ed
2C3 9ust be issues by a neutral and detached 2Bdetached from
the often competitive business of law enforcement3 +udicial
officer
2!3 =tate attorney general no
2$3 A.=. ttorney general no
2%3 Court cler6s yes
b. If no search warrant 2or invalid3 does the search fall into one of the
/ exceptions>
i. =earch incident to lawful arrest
23 Requirements
2!3 =earch must be lawful
2$3 =earch must be contemporaneous in time and place
with arrest
2%3 =cope the person and his wingspan 2areas where he
could reach and procure a weapon or destroy evidence3
2a3 ,- distinction officer must suspect that the
arrested person may be armed to search containers in the
wingspan
2'3 =cope when arrested in car =C?:A=) interior
compartment and everything in it but not the trun6 2even if
occupant has already been removed from the car
2a3 ,- distinction once occupant has been removed
from the car& police may not remove closed containers or
bags to loo6 for weapons or evidence.
ii. utomobile exception
23 Police need probable cause
2!3 Probable cause necessary to +ustify search can arise
after car is stopped 2e.g. 8 a traffic stop3 but must exist
before any person or thing is searched
243 If the police have probable cause& they may search the
whole car& including trun6& and any pac6age& luggage& or
container that may reasonably contain the item the police have
'<!$
the probable cause to sei.e
2C3 *hen arises> 8 when the police have probable cause to
believe that the car is involved in a crime but don1t have
probable cause to arrest the driver
iii. Plain view exception
23 Dey law enforcement officer must be legitimately
present where he does the viewing
iv.Consent
23 People can consent to warrantless searches
2!3 =tandard consent must be voluntary and intelligent
2a3 Police saying that they have warrant negates consent
2b3 Police do not have to warn you that you have a right
not to consent
2$3 uthority to consent where $ or more people have an
equal right to use a piece of property& any one of them can
consent to the warrantless search
v. =top and fris6
23 =tandard reasonable suspicion
243 =cope pat down of clothing
2!3 5inding a weapon if a police officer feels something
and it turns out to be a weapon& the weapon is always
admissible so long as the stop was reasonable.
2$3 5inding contraband if a police officer feels something
and it turns out to be contraband& whether it is admissible
depends on how obvious from outside of the clothing that
the ob+ect was a weapon or contraband
vi. @ot pursuit and evanescent evidence
23 @ot pursuit if police are in hot pursuit of a fleeing felon&
police can enter anyone1s home
2!3 @ow hot !( minutes not enough
2$3 ,o other limits once police enter a home in hot
pursuit& they can continue to search the house& loo6 for
accomplices& etc.
243 Evanescent evidence evidence li6ely to disappear in the
time it would ta6e to get a warrant
(<!$
2!3 E.g. blood sample in 0AI case7 scraping under finger
nails
4. *iretapping and eavesdropping
!. ll wiretapping requires a warrant
$. Everyone in this society assume the ris6 that the person they are
spea6ing to will consent to government monitoring or will be wired
IE. 9iranda rights
. Constitutional prerequisite to admissibility of any custodial
interrogation
4. In order for 9iranda rights to be required& there must be)
!. Custody if at any time you are not free to leave
a. Probation interviews and routine traffic stops are not custodial
$. Interrogation includes any conduct that police 6new or should have
6nown might result in a damaging statement 2this encompasses more
than +ust as6ing questions3
a. 9iranda warnings are not required prior to spontaneous statements
2BblurtsC3
C. :o have a valid confession& police must give a warning and get a
waiver
!. *aiver of rights must be voluntary and intelligent
a. ,o waiver from silence or should shrugging
E. (
th
mendment Right to Counsel
. =C?:A= created the (
th
amendment right to counsel for 0ef.s who&
upon hearing 9iranda warnings& as6 for an attorney 2thus indicating that
they want held in the interrogation process3
!. Right once 0ef. asserts his right to terminate the interrogation and
requests an attorney& reinitiation of interrogation by police without
attorney present violates his (
th
amendment right to counsel 2unless
0ef. reinitiates questioning3
a. ,ot offense specific the 0ef. may not be questioned for any crime
without his attorney present 2not +ust the crime he was ta6en in for3
EI. /
th
mendment right to counsel
. ll other times that a 0ef. requests an attorney 2other than directly
after hearing the 9iranda warning3 the /
th
mendment right to counsel is
invo6ed.
/<!$
4. *hen attached> 8 /
th
mendment right to counsel attached at all
adversarial proceedings 2arrest not enough formal charges must have
been filed3
C. ?ffense specific 0ef.1s attorney must only be present at
interrogation 2unless right is waived3 if 0ef. is being as6ed questions
related to the case for which the attorney was obtained
EII. Right to counsel in ,-
. n indelible right to counsel attaches)
!. *hen 0ef. is in custody and police are engaging in activity
overwhelming to the lay person and 0ef. requests counsel
$. t arraignment
%. Apon filing an accusatory instrument 2e.g. 8 indictment3
'. *hen there has been any significant +udicial activity
4. ?nce right to counsel attaches
!. *aiver of rights a waiver of rights may be obtained from a criminal
0ef. who is actually 6nown to be represented by an attorney in the
pending case only if counsel is present
C. Child confessions efforts to 6eep parent from child 2under !/3
held by police may invalidate child1s confession
!. ,o invalidation if no attempt to conceal child or deceive family
EIII. Pretrial identification
. $ substantive ways to attac6 pretrial identification
!. 0enial of right to counsel post charge lineups and show8ups give rise
to a right to counsel
a. Photographic lineups no right to have counsel present
$. 0enial of due process some pretrial identification techniques are so
unnecessarily suggestive and substantially li6ely to produce a
misidentification that they violate due process
4. Remedy exclusion of in8court identification
!. :he purpose behind such rules is to assure that the witness is
remembering the 0ef. from the crime and not +ust the person from the
proceedings
$. ,o exclusion if)
a. :he prosecutor can defeat the remedy by showing an adequate
independent source for the identification 2e.g. 8 the witness had
F<!$
ample time to see the 0ef. during the crime3
IG. 4ail
. 4ail issues are immediately appealable
4. Preventative detention is constitutional
G. "rand +uries
. ,o multistate issues because states don1t have to use "rand +uries
4. "rand +uries in ,-
!. Consist of between !/8$% people 2!$ of whom must concur in order to
indict3
$. witness who has been granted immunity may consult with counsel
but not in the grand +ury room
%. witness who waives immunity may be accompanied in a grand +ury
room by counsel
'. grand +ury indictment must be based on legally sufficient
2admissible3 evidence
(. ny witness who testifies before the grand +ury receives transactional
immunity 2can1t be prosecuted for any transaction about which they
testify3
/. If 0ef. requests the opportunity to testify before the grand +ury 2this is
rare3& he is entitled to do so provided that he waives immunity
GI. Prosecutorial duty to disclose exculpatory evidence)
. ,ot an issue for the multistate
4. ,- Rosario disclosures
!. ,- provides that upon demand& 0ef. may obtain for inspection and
copying)
a. @is own or co80ef.1s statement to law enforcement officer
2including grand +ury testimony3
b. :apes or bugged conversations intended to be used at trial
c. Relevant photos or drawings prepared by police
d. Reports of physical& mental& or scientific tests
e. ny other property obtained from 0ef.
f. pproximate time& date& and place of offense charged
g. nything that the state or federal constitution requires to be
disclosed to 0ef. by prosecutor prior to trial
h. ll specific instances of 0ef.1s conduct the prosecution intends to
H<!$
use at trial to impeach 0ef.1s credibility
$. 4etween time +ury is sworn in and prosecutor1s opening statement& the
prosecutor must give the 0ef. any prior written or recorded statements
of persons to be called as witnesses and the criminal records of the
prosecution1s witnesses
%. 0ef. must notify the prosecution withing %I days of a not8guilty plea&
if he plans to raise the insanity defense
'. *ithin $I days after arraignment& prosecution may serve 0ef. with a
demand for an alibi defense
a. 0ef. must reply with H days
(. 4efore 0ef.1s direct case& 0ef. must ma6e available any relevant prior
written or recorded statements by defense witnesses
/. 5ailure to ma6e Rosario disclosures results in reversal only if 0ef.
can show that there is a reasonable possibility that the non8disclosures
materially contributed to the result of the trial or other proceedings.
GII. Right to a +ury trial
. ttaches whenever the 0ef is tried for an offense& the maximum
authori.ed sentence for which exceeds / months
!. Criminal contempt if sum of sentence exceeds / months& alleged
contemptor can go bac6 and have a +ury trial
4. ,umber an unanimity of +urors
!. 9inimum / 2must be unanimous3
$. ,o federally protected right to a unanimous !$ person +ury verdict
a. =C?:A= has approved !I8$ and J8% verdicts
C. Preemptory challenges
!. It is unconstitutional for the prosecution or the defense to exercise
preemptory challenges on account of race or gender
GIII. Ineffective assistance of counsel
. Elements
!. 0eficient performance by counsel 2including conflicts of interest37 and
$. 4ut for such deficiency& the result of the proceeding would have been
different
4. ?n the bar exam set out the standard& deny relief 2unless you thing
the 0ef. was not guilty3
GIE. "uilty pleas and plea bargaining
J<!$
. "uilty plea waiver of right to +ury trial
!. "eneral trends
a. =C?:A= will not disturb guilty pleas after sentencing
b. =C?:A= has adopted the contract theory of plea8bargaining
i. :erms should be revealed on record and both sides held to terms
$. If the 0ef. pleads guilty& the +udge must address him personally about)
a. :he nature of the charge
b. :he maximum authori.ed sentence and any mandatory minimum
sentence
c. nd must tell 0ef. he has the right to plead not guilty and have a
+ury trial
d. Remedy for mista6e 0ef. my withdraw his plea and plead again
%. ttac6ing guilty plea after sentencing
a. 5our good bases for attac6 2despite above trend3)
i. Plea was involuntary 2e.g. 8 +udge didn1t tell 0ef. about minimum
sentence3
ii. Kac6 of +urisdiction
iii. Ineffective assistance of counsel
iv.5ailure of prosecutor to 6eep agreed upon plea bargain
GE. 0eath penalty
. =ummation
!. death penalty statute that does not give the 0ef. a chance to present
mitigating facts and circumstances is unconstitutional
$. :here can be no automatic category for imposition of the death
penalty
%. :he state may not by statute limit the mitigating factors7 all relevant
mitigating evidence must be admissible or state statute is
unconstitutional
GEI. 0ouble +eopardy
. *hen does double +eopardy attach
!. t a +ury trial when +ury is sworn in
$. t a +udge trial when !
st
witness is sworn in
%. In civil proceedings& +eopardy does not attach 2this is why you can be
charged criminally and sued civilly for the same crime3
4. 5our exceptions permitting retrial
!I<!$
!. #ury is unable to agree on a verdict 2in states requiring unanimous
verdict& etc3
$. 9istrial for manifest necessity 2e.g. 8 0ef. gets appendicitis3
%. Retrial after successful appeal
'. 4reach of an agreed upon plea bargain by the 0ef.
a. Rule when 0ef. breaches a plea bargain agreement& his plea and
sentence may be withdrawn and the original charges reinstated
against him
C. *hat constitutes the same offense>
!. "eneral rule $ crimes do not constitute the same offense if each
crime requires proof of an additional element that the other does not
a. E.g. 8 0ef. may be charged with manslaughter and hit L run arising
out of the same set of facts because manslaughter requires 6illing
2while hit L run does not3 and hit L run requires running 2while
manslaughter does not3
b. ,- distinction all criminal offenses arising from the same
transaction must be tried together
$. Kesser included offenses 2e.g. robbery M larceny N assault3
a. 4eing put in +eopardy for lesser offense bars retrial for greater
offense
i. Exception if put in +eopardy for battery and victim dies& can be
tried for murder
%. =eparate sovereigns
a. 0ouble +eopardy applies to the same sovereign only
i. =tate and federal not same
ii. $ different states not same
iii. =tate and locality 2e.g. county3 same
GEII. (
th
mendment privilege against self8incrimination
. *ho can assert> ny body 2witness& party& etc3 as6ed a question
under oath in any 6ind of case 2civil& criminal& administrative&
congressional& etc3 the response to which might incriminate
!. 9ust assert the first time as6ed under oath or you waive the right for
all subsequent criminal proceedings
4. =cope of privilege
!. Protects us from compelled testimony 2can1t ma6e us ta6e lie detector
!!<!$
tests or undergo police interrogation3
$. 0oes not prevent government from using body to incriminate 2can be
forced to give hair& blood& urine samples& etc3
C. It is unconstitutional for prosecution to ma6e a negative comment
regarding 0ef.1s failure to testify or his remaining silent upon hearing
9iranda rights
0. Elimination of (
th
mendment privilege
!. :hree ways
a. "rants of immunity
i. Common law) use and derivative use immunity can1t use
immune testimony to convict but can use evidence that it can be
shown was possessed prior to granting immunity
ii. ,- distinction transactional immunity) can1t be prosecuted for
any transaction about which you testify
b. ,o possibility of prosecution 2e.g. statute of limitations has run3
c. *aiver
i. criminal 0ef.& by ta6ing the stand& waives the privilege as to all
sub+ects on cross8examination
!$<!$
Evidence
I. Relevance
A. Threshold question is the evidence relevant?
1. Logical relevance if the evidence has the tendency to make a
material fact or roosition more ro!a!le or less ro!a!le than
"ithout the evidence then that evidence is relevant.
a. #arning signs if the evidence comes from some time$ event$ or
erson other than that directly involved in the litigation itself$
then it may !e too remote to !e relevant %see !elo"&.
'. (iscretionary)ragmatic)olicy*!ased relevance even if evidence
is logically relevant$ a trial court may e+clude the evidence if its
ro!ative value it su!stantially out"eighed !y the danger of,
a. unfair re-udice
!. confusion of the issues
c. misleading the -ury
d. undue delay
e. "aste of time
f. cumulative evidence
g. #hat.s missing from this list? * unfair surrise %may ossi!ly get
an ad-ournment !ut not an e+clusion&
/. 0 situations "here the evidence concerns some time$ even$ or
erson other than that directly involved in the litigation itself$ and yet
is still admissi!le.
1. To rove causation in comlicated situations
a. E+amle 1l. got sick after eating at 2c(onald.s3 can resent
evidence that other 2c(onald.s atrons also got sick to rove that
2c(onald.s caused the sickness
!. 1rior accidents or claims
i. 1rior accidents or claims !y 1l. generally not admissi!le
%A& E+cetions,
%1& 4ommon lan or scheme of fraud %e+. claims sho"
attern of fraud
%'& If relevant on issues of damage to 1l. %e+. in-ury
caused !y revious accident$ not this accident&
ii. 1rior accidents involving instrumentality of (ef. 1l. may
introduce evidence of other accidents involving the same
1)'5
instrumentality that occurred under the same or similar
circumstances %e+. 6 other drivers drove into the same !ridge
suort that 1l. did&.
%A& Rationale could should kno"ledge !y (ef.$ or defect
in instrumentality
c. If intent or state of mind is an issue
%A& E+. in a gender discrimination case$ 1l. can sho" that
other qualified "omen "ere also denied a -o! in order to
rove (ef..s state of mind.
d. To re!ut defense or claim of imossi!ility
e. 4omara!le sales to esta!lish value %rovided that same kind$
time$ and geograhic area&
f. 7a!it evidence
i. #hat constitutes ha!it?
%A& 89T disosition disosition of a erson is generally
not admissi!le to sho" that a erson acted in accordance
"ith that disosition.
%/& 89T secific acts of conduct ast conduct of a erson
is generally not admissi!le to infer erson acted in the same
"ay.
%4& 7a!it is...
%1& :ecific detailed conduct
%'& Recurrent must occur often enough to say it is
ha!itual %e+actly ho" many times is u to the discretion
of the court&
%;& E+am ti, "ill use "ords like <invaria!ly< or
<routinely< to indicate ha!it.
ii. 8= (istinction 8= is stricter than >ederal Rules in terms of
admission of ha!it evidence.
%A& Evidence of ha!it in rofessional or !usiness conte+t is
admissi!le.
%/& 7a!it is not admissi!le to sho" that a arty used care
%or failed to use care& in a negligence situation.
%1& E+cetion ha!it evidence "ill !e admitted if
relevant to sho" 1l..s use)misuse of a roduct in a
roducts lia!ility suit.
g. Industrial or !usiness routine %like ha!it$ !ut here "e are talking
')'5
a!out a !usiness$ cororation$ entity$ etc.&
h. Industrial custom as evidence of the standard of care %not
conclusive evidence&
i. Evidence may !e offered to sho" "hat other in the same trade
or !usiness have done %erhas as evidence of "hat this
!usiness should have or could not have done&.
ii. E+. In a negligence action against a !us comany$ 1l. may
introduce evidence that other !us comanies have devices that
do not allo" !uses to move "hile the door is a-ar.
4. Rules !ased on discretionary)olicy*!ased relevance
1. Lia!ility insurance evidence of lia!ility insurance is not
admissi!le as any kind of indication of fault or a!ility to ay %or
a!sence of lia!ility insurance as indication of ina!ility to ay&.
a. :till admissi!le,
i. To sho" o"nershi or control "hen in disute
ii. #here relevant to imeach the credi!ility of a "itness !y
sho"ing !ias or motive to misreresent
'. :u!sequent remedial measures not admissi!le to sho" negligence
or cula!le conduct
a. :till admissi!le
i. to sho" o"nershi or control "hen disuted3
ii. To re!ut or sho" feasi!ility of recautionary measure "hen
disuted
!. :trict lia!ility cases,
i. >ederal rule evidence of su!sequent remedial measures is
also not admissi!le to sho" any of the forms of strict lia!ility
%failure to "arn$ defective design$ defective roduct&
ii. 8= (istinction 8= does not allo" the use of evidence of
su!sequent remedial measures to sho" failure to "arn or
defective design$ !ut does allo" use of such evidence to sho"
defective roduct %manufacturing defect&.
c. Evidence of su!sequent remedial measure !y non*arties is
admissi!le if relevant.
;. :ettlements evidence of settlements is not admissi!le as any
indication of fault$ lia!ility$ or damages
a. This includes an offer to settle a claim that it disuted as to either
lia!ility or damages.
;)'5
!. Also includes offers to lead guilty$ no contest$ etc. in a criminal
case %and "ithdra"al of such leas&
c. An admission of fact)lia!ility)fault)damages made in course of
offer to comromise a claim is not admissi!le either to rove
lia!ility or amount of damages.
d. Limitations,
i. There must !e a claim %e+. * (ef. ?oes to neigh!or and asks if
he is the one that "as !itten !y (ef..s dog3 it then occurs to the
neigh!or to !ring a la"suit&
ii. There must !e a disute as to lia!ility or amount
e. 9ffers to ay hosital or medical !ills not admissi!le %even
though it doesn.t qualify as offer to settle !ecause ayor gets
nothing in return&
i. Ad admission of lia!ility made in the course of an offer to ay
hosital or medical e+enses is admissi!le.
(. 4haracter evidence,
1. @ reliminary considerations,
a. #hat is the urose for the use of character evidence?
i. 1ossi!le uroses,
%A& 4haracter as direct evidence character itself is a
material issue
%/& 4haracter as circumstantial %disosition& evidence
character is used to infer conduct at time of litigated event
%4& 4haracter to imeach
!. 7o" is character roven?
i. /y secific acts of conduct3
ii. /y oinion testimony3
iii. /y reutation %the only 8= "ay&
c. #hat kind of case %civil or criminal&?
d. 4haracter for "hat trait?
i. 4haracter evidence must !e offered to rove a trait that is
su!stantively at issue in the case.
'. 4haracter in civil cases
a. 89 character evidence is admissi!le in civil cases as
circumstantial evidence to infer conduct at time of litigated event
%urose ' a!ove&
!. 4haracter evidence is admissi!le in civil cases "hen character
@)'5
itself is a material issue %urose 1 a!ove these cases are very
rare&
i. 4an rove in any of three "ays %secific acts$ oinion$
reutation&
ii. 4haracter evidence can also !e used for uroses other than to
infer conduct %2I2I4 motive$ intent$ 2.9.$ common lan$
identity&
;. 4haracter in criminal cases
a. 4riminal cases never involve urose 1
!. 4haracter as circumstantial evidence to sho" conduct %urose '
a!ove&
i. /asic rule * the rosecution may not initiate the resentation of
!ad character evidence %rior acts$ crimes$ convictions$ !ad
oinion$ !ad reutation$ etc.& to sho" the (ef..s criminal
disosition to commit the crime charged unless the (ef. >irst
sho"s good character evidence in order to infer innocence
%(ef..s testifying to the facts first sho"s good character to infer
innocence %(ef..s testifying to the facts is not enough !ut this
"ould su!-ect the (ef. To imeachment like any other
"itness&.
%A& 7o" does (ef. :ho" good character?
%1& 4all "itness to testify to character trait that is
su!stantively at issue in the case %e+. eacefulness in
assault case&
%'& :ecific acts of conduct 8ot allo"ed in >ederal or
8=
%;& 9inion testimony allo"ed in >ederal !ut not in
8=
%@& Reutation testimony allo"ed in >ederal and 8=
%/& If (ef. Introduces good character evidence$ ho" can
rosecution resond?
%1& 1rosecution can cross*e+amine the (ef..s "itness !y
inquiring as to any secific acts that "ould tarnish the
reutation of the (ef. %in order to test the "itness.s
kno"ledge of the (ef..s reutation&
%'& E+amle 1 <7ave you heard the (ef. #as arrested
6 times for ro!!ery?<
5)'5
%;& E+amle ' <(o you kno" that the (ef. #as
arrested 6 times for ro!!ery?< %8= distinction can.t ask
<do you kno"< in 8=&
%a& 1rosecution must take the ans"er of the "itness
even if he says no.
%!& 1rosecution can call !ad oinion or !ad reutation
"itness.
%c& 8= (istinction rosecution can only call !ad
reutation "itness.
%4& 8= only,
%1& 1rosecution may also resond !y sho"ing any
convictions for crimes that involve the ertinent trait or
character.
ii. 4haracter of victim,
%A& >ederal rule if victim.s character is relevant to
defense$ then (ef. 4an take initiative to sho" !ad character
of victim %e+. (ef. is arguing self*defense and "ants to
offer evidence of victim.s aggressive nature& through oinion
testimony or reutation %no secific acts&
%1& 1rosecution can re!ut !y sho"ing the good character
of victim or !ad character of the (ef. %through oinion
testimony or reutation no secific acts&
%/& 8= Rule 8o character evidence may !e offered to
sho" the disosition of the victim
%4& Rae :hield la"s %>ederal and 8= can.t use character
of victim to sho" consent in rae cases
c. :ecific acts used to sho" things other than disosition
i. :ecific acts %evidence of ast acts$ crimes$ convictions$ etc.&
are only inadmissi!le if offered to sho" (ef..s disosition to
commit the crime.
ii. They can !e offered to rove other elements such as %2I2I4&,
%A& 2otive
%/& Intent or state of mind
%4& 2istake$ a!sence of mistake
%(& Identity
%E& 2odus oerandi
%>& 4ommon lan or scheme
6)'5
@. Additional "rinkles,
a. Trial -udge.s discretion to e+clude the aforementioned evidence
"hen its ro!ative value is out"eighed !y unfair re-udice
!. ' narro" e+cetions to the rule that the rosecution may not offer
!ad character evidence until the (ef. offers good character
evidence, %1& child molestation cases and %'& se+ual assault cases.
i. >ederal rule in civil or criminal cases "here the (ef. is
charged "ith child molestation or se+ual assault %even if (ef.
"as not convicted or even rosecuted for the act& may !e
offered !y the rosecution %or 1l. in civil cases& regardless of
"hether (ef. has offered good character evidence.
ii. 8= Rule this e+cetion does not e+ist in 8=. A
II. #ritings and documentary evidence,
A. Authentication,
1. ?eneral rule a "riting is not admissi!le unless authenticated %the
court needs reliminary roof that the "riting is "hat it urorts to
!e&
a. ?enerally$ "ritings are not self*authenticating
!. 7o" to authenticate?
i. (irect evidence,
%A& Admission %e.g. this is my signature on the contract&
%/& Eye "itness e.g. someone "ho sa" the erson sign
the contract&
%4& 1roof of hand"riting
%1& "ith lay "itness anyone familiar "ith the erson.s
signature
%'& "ith e+ert "itness !y comarison
%;& !y -ury comarison if there is genuine secimen
admitted
ii. 4ircumstantial evidence,
%A& :ome tyes of circumstantial evidence have !een
indoctrinated
%1& Ancient document rule a "riting is admissi!le if
%a& It is 'B years or older %;B years in 8=&3
%!& It is regular on its face %no evidence of erasure&3
and
%c& It is found in a lace of natural custody.
C)'5
%'& :olicited rely doctrine a disuted "riting is
admissi!le if it comes in resonse to a rior
communication
iii. 7o" strong does roof of genuineness have to !e?
%A& Rule a arty need only resent sufficient evidence to
-ustify a -ury finding of genuineness %"hether the document
is in fact genuine is an issue for the -ury to decide&
iv.:elf*authenticating "ritings,
%A& 4ertified coies of !usiness or u!lic records3
%/& 9fficial u!lications %!ooks and amhlets that urort
on their face to !e from a u!lic authority&3
%4& 8e"saers and eriodicals3
%(& Trade inscrition or la!els %"hich are fi+ed in the
course of !usiness urorting to indicate control or
o"nershi&3
%E& Ackno"ledged documents %certificate of
ackno"ledgment attached&3
%>& :ignatures on commercial documents in accordance
"ith the D44.
v. 1hotograhs authentication only requires that any "itness
look at the hotograh and state that it is a fair and accurate
ortrayal of the eole)o!-ects ortrayed.
%A& The only situation "here admissi!ility of hotograhs
is questiona!le is "hen you don.t have a "itness to state that
it is a fair and accurate ortrayal %e.g. hoto from a
surveillance camera&
%1& In such cases$ testimony regarding "hether the
camera "as oerating roerly$ ho" the film "as handled$
etc. is necessary to authenticate
/. /est evidence rule
1. 8arror rule alies only to "ritings %li!erally defined to include
films$ hotos$ +*rays$ and recordings&
a. E+resses a reference for the original document !y requiring
that a arty seeking to rove the content of a "riting either,
i. 1roduce the original document3 or
%A& 1u!lic records certified coy "ill do %don.t need to
roduce the original !ecause can.t get original&
0)'5
%/& Eoluminous document modification "hen original
document is so voluminous that is can.t conveniently !e
e+amined in court$ roonent may rove its content !y use
of a summary$ chart$ or calculation if,
%1& The voluminous originals themselves "ould !e
admissi!le %not hearsay$ etc.&3 and
%'& The oonent is given access to the voluminous
originals
%;& E.g. ersonnel records that sho" a attern of age
discrimination
%4& (ulicates
%1& >ederal rule dulicates %counterarts roduced !y
any rocess or technique that accurately reroduces the
original and avoids casual error3 e.g. * fa+es$ coies$ etc.&
are admissi!le -ust like the original unless,
%a& A genuine question is raised a!out the validity of
the original3 or
%!& It "ould !e unfair %e.g. contract is '5B ages$
roduce coy of ' sentences taken out of conte+t&
%'& 8= Rule hotocoies are admissi!le if the coies
are made$ ket$ or recorded in the ordinary course of
!usiness.
ii. Account satisfactorily for its a!sence %in "hich case a coy or
oral testimony may !e used to rove the content of the "riting&
!. #hen alies?
i. #hen the "riting is a legally oerative document %creates of
destroys a legal relationshi that is at issue in the case&
%A& E.g. deed$ contract$ divorce decree
ii. Anytime the "itness.s sole kno"ledge of a fact is gleaned from
the document %no ersonal kno"ledge&
%A& E.g. * 7 is arrested and tried for murder of #. 7 claims
he didn.t do it$ he loved his "ife and had no motive to kill
her. 1olice find anonymous note in 7.s ossession "hich
said that # "as having se+ "ith another man. 1olice officer
"ants to testify to content of the letter to esta!lish motive.
c. #hen doesn.t the /est Evidence Rule aly?
i. #here the fact to !e roven has an e+istence indeendent of
F)'5
the "riting %you have a "itness "ith ersonal kno"ledge and
the fact haens to !e in "riting as "ell&
%A& E+amle 1 can testify to !irth)death "ithout
certificate
%/& E+amle ' the issue in the case is "hether : made
ayment. The "itness "ants to testify and say <I sa" : make
the ayment and get a receit.< %/est Evidence Rule not
imlicated&
%4& E+amle ; :ame "itness testifies that he kne" :
made the ayment !ecause he sa" the receit %/est
Evidence Rule Imlicated sole kno"ledge gleaned from
receit&
ii. 4ollateral documents e+cetion /est Evidence Rule does not
aly to "ritings of minor significance
III. #itnesses
A. 4ometency of "itnesses,
1. /asic testimonial qualifications,
a. 1ercetion %"itness must have o!served something&3
!. 2emory %"itness must remem!er something o!served&3
c. 4ommunication %"itness must !e a!le to communicate "hat he
sa"&3
d. :incerity %"itness must demonstrate an areciation for the
o!ligation to tell the truth&.
'. >ederal rules,
a. #itness must
i. 7ave communica!le ersonal kno"ledge3
ii. Take oath or affirmation.
!. Infancy no automatic disqualification
i. 8= distinction,
%A& 4ivil cases all testimony must !e s"orn and all
"itnesses must !e a!le to understand the oath %thus a child
might not !e a!le to testify&
%/& 4riminal cases children under 1' or anyone "ith a
mental defect that does not understand the oath can still
testify if the "itness has the intelligence to -ustify the
recetion of the evidence %!ut this evidence can.t !e the sole
!asis for a conviction&
1B)'5
c. 2any common la" reasons for disqualification no longer aly,
i. Religion of "itness no" irrelevant
ii. Gudicially declared incometence not automatically
disqualified if erson can give helful testimony
iii. 4onvictions for crime not grounds for automatic
disqualification
iv.4onflicts of interest not grounds for automatic
disqualification$ !ut,
%A& (ead 2an :tatute,
%1& >ederal rule there is no (ead 2an Act in the
>ederal Rules$ !ut a state Act "ill aly in federal cases
"here state la"$ under the Erie doctrine$ rovides the rule
of decision %e.g. diversity cases&
%'& 2ost states requirements,
%a& Interested "itness %direct stake in outcome of
litigation&3
%!& #itness must testify against decedent %or
incometent& or their reresentatives3
%c& A!out communications or transactions "ith the
decedent %or incometent&3
%d& 4ivil cases only3
%e& There can !e "aiver %if decedent.s testimony
someho" gets !efore the -ury deosition of decedent$
etc.&
%;& 8= (ead 2an :tatute an interested survivor may
not testify for his)her interests against a decedent or
incometent or their reresentatives a!out a
communication or transaction "ith the decedent or
incometent in a civil case$ unless there is a "aiver.
%a& Rationale fear of er-ury %if decedent "as alive$
could offset lies$ !ut if he is dead$ alive arty has the
advantage&
%!& E+cetion an interested survivor may testify
regarding facts %!ut not communications after"ards& of
negligence or contri!utory negligence in accident
arising out of oeration of automo!ile$ lane$ or !oat.
/. E+amination of "itnesses
11)'5
1. It is the "itness not the la"yer "ho should testify
'. 2ust !e an interrogative not a narrative$ !ut
a. 8o leading questions questions that suggest ans"ers to "itness
"ho is likely to use the suggestion
i. A la"yer may use leading questions in the follo"ing situations
%A& 9n cross*e+amination3
%/& 9n direct e+amination as to reliminary matters %non*
crucial&3
%4& #hen having difficulty eliciting ans"ers !ecause the
"itness is handicaed %old$ young$ immature$ dum!$
forgetful$ etc.&3
%(& #hen e+amining an adverse arty %or someone under
control of adverse arty& or a generally hostile "itness.
!. 8o misleading)comound)argumentative questions kind of
questions "hich assume as true something that is still in disute.
;. Dse of "riting to aid oral testimony
a. /asic rule "itnesses are not suosed to read in court %they are
suosed to testify from their o"n recollection of events&
i. E+cetions
%A& Refreshing recollection %<resent recollection revived<&
any "riting %or even any thing, song$ scent$ etc.& can !e
used to -og the memory of a "itness.
%1& >oundation "itness must say <I can.t remem!er.<
%'& (oesn.t have to !e authenticated !ecause it is not
!eing offered into evidence %thus can !e hearsay$ or not
!est evidence$ etc.&
%;& 9osing counsel must !e allo"ed to see and use the
item %and can ut into evidence if so desired&
%/& Recorded recollection %<ast recollection recorded<& if
"itness can.t remem!er to !e refreshed$ "riting can relace
recollection of "itness.
%1& E.g. * "itness can remem!er "hat "as taken in
!urglary ' years ago$ !ut such information is contained in
a list "hich the "itness reared for the olice at the time
of the !urglary.
%'& 4an get the list$ etc. into evidence rovided you lay
the roer foundation,
1')'5
%a& At one time "itness had ersonal kno"ledge3
%!& 2ust sho" "riting "as made !y "itness$ under
suervision of "itness$ or adoted !y "itness at the
time it "as made3
%c& #riting must have !een timely made %"hen fresh
in memory of "itness&3
%d& 2ust sho" "riting is accurate)relia!le3
%e& 8ecessity "itness must !e una!le to remem!er
all or art of the details
%;& 7o" it comes into evidence? * it is read to the -ury$
!ut does not go to the -ury.
%@& 7earsay? yes$ !ut ast recollection recorded is an
e+cetion to the hearsay e+clusion
4. 9inion testimony
1. Lay oinions admissi!le if,
a. 9inion is rationally !ased on the ercetion of the "itness
%"itness has ersonal kno"ledge&3 and
!. 9inion is helful to the trier of fact %not legal oinions like <(ef.
"as negligent<&.
'. E+ert oinions @ requirements for e+ert testimony,
a. The su!-ect matter must !e aroriate for e+ert testimony3
i. Relevance oinion must fit facts of case3
ii. Relia!le methodology underling the oinion must !e
scientifically valid %e.g. * (8A tests&
%A& #ho determines relia!ility
%1& >ederal it is u to the -udge "hether the
methodology used !y the e+ert is acceta!le.
%'& 8= %?eneral Accetance Test& methodology must
have gained general accetance in the scientific
community
!. The "itness must !e qualified as an e+ert %qualifications need
not !e formal or academic3 can !e an e+ert !y e+erience only&3
i. 2ust !e esta!lished to satisfaction of -udge !y reonderance
of the evidence.
c. The "itness must ossess reasona!le certainty or ro!a!ility
regarding the oinion %more than mere seculation&3
d. The oinion must !e suorted !y a roer factual !asis
1;)'5
i. ; kinds of facts "hich can suort an e+ert.s oinion,
%A& facts "ithin the ersonal kno"ledge of the e+ert3
%/& facts in evidence in case "hich are sulied to the
e+ert in court %usually via a hyothetical question&
%4& facts of the tye that e+erts in the field "ould rely
uon in making out of court rofessional decisions %e.g. *
general doctor can rely on radiologist.s reort&.
(. Learned te+ts or treatises
1. >ederal rule may use te+t or treatise in suort of o"n e+ert
"itness
a. 7earsay ro!lem? learned treatise e+cetion
i. 2ust esta!lish relia!ility in 1 of @ "ays
%A& If oonent.s e+ert relied on it in his testimony3
%/& Eliciting an admission of cross that is it relia!le3
%4& /y calling o"n e+ert to testify to its relia!ility3
%(& Gudicial notice %if so "ell*kno"n that -udge may take
-udicial notice of its relia!ility&
!. Limitations
i. There must !e an e+ert on the stand %information is filtered
through the e+ert$ o"n$ or oosing.&
ii. Te+t is only read to -ury$ not given to -ury.
'. 8= Rule no hearsay e+cetion %thus can.t offer to rove truth of
the matter therein&$ !ut can offer to imeach oonent.s e+ert.
a. 2ust esta!lish relia!ility in 1 of @ "ays,
i. If oonent.s e+ert relied on it in his testimony3
ii. Eliciting an admission on cross that it is relia!le3
iii. /y calling o"n e+ert to testify to its relia!ility3
iv.Gudicial notice %if so "ell*kno"n that -udge may take -udicial
notice of its relia!ility&
E. 4ross*e+amination
1. =ou are entitled as of right to cross*e+amine any "itness "ho
testifies live against you.
a. :coe limited to scoe of direct e+amination and testing the
credi!ility of the "itness
!. 4ollateral 2atters (octrine no e+trinsic evidence is allo"ed to
contradict a "itness as to collateral matters
i. 4ollateral matters anything that is only relevant to sho"
1@)'5
contradiction
>.4redi!ility and Imeachment
1. /olstering your o"n "itness,
a. Rule you cannot !olster the credi!ility of your o"n "itness
unless there has !een an imeachment attack against him %!ad
!efore good&
i. 1rior consistent statements included in this rohi!ition
%A& E+cetion rior statements of identification !y a
"itness
%1& :cenario 1 "itness identifies (ef. in court$ and then
testifies to revious I( he made %e.g. * lineu&
%a& >ederal allo"ed
%!& 8= allo"ed
%'& :cenario ' "itness Ids (ef. in court$ and then
olice officer testifies to that "itness.s rior identification
%a& >ederal allo"ed
%!& 8= not allo"ed %"hen "itness makes in court
I($ only that "itness can testify to rior I(&
%;& :cenario ; "itness can.t I( (ef. in court %(ef.
looks different$ etc.&$ so olice officer testifies to that
"itness.s rior I(
%a& >ederal allo"ed
%!& 8= allo"ed %;rd arty can testify only "hen eye
"itness "ho made identification lacks resent
recollection&
%@& :cenario @ erson "ho made rior I( is
unavaila!le so olice officer testifies to that erson.s rior
I(
%a& >ederal not allo"ed %hearsay !ecause e+cetion
for rior consistent statements only alies to Ids made
!y a "itness$ an unavaila!le erson is not a "itness&
%!& 8= not allo"ed
'. Imeaching o"n "itness,
a. >ederal you may freely imeach your o"n "itnesses "ith no
conditions %e.g. call to stand$ goes !adly$ no" need to imeach&.
!. 8= can.t imeach o"n "itness e+cet !y a rior inconsistent
statement "hich is in "riting and signed or given under oath.
15)'5
;. Imeaching adversary.s "itness,
a. 5 techniques,
i. 1rior inconsistent statement sho"ing that "itness at some
time made a statement different from or inconsistent "ith a
material ortion of that "itness.s in*court testimony
%A& Admissi!le for its truth$ or only to imeach the "itness?
%1& >ederal a rior inconsistent statement that "as
given under oath and "as given as art of a formal trial$
hearing$ roceeding$ or deosition comes in for its truth as
"ell as to imeach %e+cluded from the definition of
hearsay&
%'& 8= only admissi!le to imeach
%/& E+trinsic evidence %or only cross*e+amination?& *
e+trinsic evidence allo"ed
%1& >oundation %must you give "itness oortunity to
e+lain or deny making the inconsistent statement !efore
using e+trinsic evidence&?
%a& >ederal "itness should have the oortunity to
e+lain or deny$ !ut there is no time requirement %thus
could introduce the e+trinsic evidence and then give the
"itness an oortunity to e+lain or deny&
%!& 8= yes3 and must first give "itness oortunity
to e+lain or deny
%4& Ti, if it is a rior inconsistent statement !y a arty$ it is
an admission and needs no foundation %falls under arty
admission e+cetion to hearsay&
ii. :ho"ing !ias$ interest$ or motive to lie
%A& E+trinsic evidence? * yes
%1& >oundation yes
iii. 1rior conviction of crime
%A& >ederal rule
%1& Any crime$ felony or misdemeanor$ involving
dishonesty or false statement is usa!le to imeach
%a& 1u!lic olicy relevance %Rule @B; ro!ative
value& does not aly %admissi!ility is automatic$ no
discretion for -udge&
%!& #hat is a crime of dishonesty? involves deceit or
16)'5
false statement %not ro!!ery$ not ordinary larceny$ yes
larceny !y trick&
%'& A felony not involving dishonesty is usa!le to
imeach !ut is discretionary %Rule @B; alies&
%;& Remoteness even if the crime falls into the a!ove '
categories$ it may not !e used to imeach if more than 1B
years has elased since release from confinement %or
conviction if no confinement&
%@& E+trinsic evidence? yes
%a& >oundation? yes
%/& 8= Rule any crime %felony$ misdemeanor$ etc.& can !e
used to imeach at the discretion of the -udge
%1& E+trinsic evidence? yes
%a& >oundation? yes
iv.:ecific acts of misconduct %"hich do not amount to a
conviction&,
%A& >ederal rule must concern act of deceit or lying
%1& 2ust have a reasona!le !asis for !elieving the act
"as committed
%'& E+trinsic evidence? * no %cross*e+amination only&
%/& 8= Rule any secific acts of misconduct can !e used
%immoral$ etc.&
%1& 2ust have a reasona!le !asis for !elieving the act
"as committed
%'& E+trinsic evidence? no %cross*e+amination only&
v. /ad reutation for truth or veracity
%A& E+trinsic evidence? yes %only "ay is !y calling
"itness&
%/& >ederal rule "itness can testify as to reutation or
give his oinion %!ased on ersonal kno"ledge of
reutation&
%4& 8= Rule reutation only %"ill allo" oinion only if
!ased on reutation&
@. Reha!ilitation,
a. 2ethods,
i. ?ood reutation for truth and veracity can !e sho"n only
"hen there has !een a direct character attack on your "itness
1C)'5
%imeachment techniques ;$ @$ and 5 a!ove&
ii. 1rior consistent statement can only !e used to re!ut a charge
of recent fa!rication !ecause of imroer !asis or motive %!y
sho"ing that "itness gave a consistent statement !efore that
motive e+isted&
%A& E+cluded from the definition of hearsay$ thus can !e
used for its truth as "ell as to reha!ilitate the "itness
%/& 4an.t !e used to reha!ilitate a "itness "ho "as
imeached !y rior inconsistent statement.
IE. 1rivileges
A. Alica!le la",
1. >ederal federal rivilege la" is determined !y reference to the
common la" %-udge*made&
'. :tate state rivilege la" is determined in accordance "ith state
statutory la"
/. E+cetions %that aly to all rivileges&,
1. >uture %and continuing& crime)fraud e+cetion3
'. At issue e+cetion %no rivilege if client affirmatively uts in issue
the communication made to attorney$ doctor$ etc.&3
;. (isutes !et"een the rofessional and the client)atient.
4. Attorney*4lient rivilege confidential communications !et"een
attorneys and their clients made during the rofessional)legal
consultations are rivileged from disclosures unless "aived !y the
client %or reresentatives of the deceased client the rivilege survives
the death of the client&.
1. 8o rivilege for statements made in the resence of ;rd arty.
'. 8o rivilege for hysical evidence or re*e+isting documents.
;. 2ust have intent to esta!lish a rofessional)legal relationshi
%casual advice to neigh!or is not covered&.
@. Includes things you say to an attorney in retainer negotiations even
if you don.t ultimately retain that attorney.
5. E+cetions %secific to attorney*client rivilege&,
a. If ' or more clients communicate together "ith an attorney a!out
a matter of common interest$ no rivilege e+ists !et"een or
among these -oined arties.
!. 8o rivilege for information regarding rearation$ e+ecution$ or
revocation "hen ersons are claiming through a deceased client.s
10)'5
"ill or trust in actions regarding ro!ate$ validity$ or construction
of the "ill or trust %assumes if client "ere alive he "ould have
"aived rivilege&.
(. 1hysician*1atient rivilege %includes sychiatrists& the atient
has a rivilege against the disclosure of confidential information
acquired !y a hysician in a rofessional relationshi entered into for
uroses of o!taining treatment.
1. 1atient must !e seeking treatment %not doctor that e+amining for
uroses of litigation or court ordered evaluations$ etc.&
'. 1atient*litigant e+cetion does not aly in any case "here erson
sues or defends !y utting hysical)mental condition at issue.
;. >or test uroses,
a. It is not clear that the hysician*client relationshi even e+ists in
federal court %though it is clear that the sychiatrist*atient
relationshi does&
!. Thus$ test makers "ill usually give a reason for it not to aly.
E. :ousal rivileges
1. :ousal immunity rivilege one souse cannot !e forced to give
adverse testimony against the other in a criminal case %"itness
souse holds this rivilege can testify if "ants to&
a. Rationale rotects the sta!ility of e+isting marriages.
!. Requirements,
i. 2ust !e married at the time of trial %even if concerns are re*
marital events&
ii. 1rotects against all testimony3
iii. 7older is "itness souse
iv.9nly alies in criminal cases
c. 8= this rivilege does not e+ist
'. 4onfidential marital communications rivilege a hus!and or "ife
shall not !e required or$ "ithout the consent of the other$ shall not
!e allo"ed to disclose a confidential communication made !y one to
the other during marriage.
a. Rationale encourages oen marriages
!. Requirements,
i. 2ust !e married at the time of communication3
ii. 1rivilege outlasts the marriage3
iii. Alies only to confidences %not all testimony&3
1F)'5
iv.7older is either souse %not -ust "itness souse thus !oth
must agree to "aive&3
v. Alies in !oth civil or criminal cases
;. 8either rivilege alies in intra*family in-ury cases.
E. In federal court$ "hat la" alies as to matters of evidence?
A. #hen federal su!stantive la" alies %federal question cases$
etc.& >ederal rules of evidence aly
/. #hen su!stantive state la" alies %diversity cases$ etc.&
generally federal rules of evidence aly e+cet state evidence rules
aly "ith regard to,
1. !urdens of roof and resumtions3
'. rules regarding the cometence of "itnesses %this is ho" a state.s
dead man statute can aly in federal court even though the federal
rules don.t have such a statute&3
;. rivileges.
EI. 7earsay
A. (efinition of 7earsay,
1. ?eneral definition an out*of*court statement$ "hich is offered for
the urose of esta!lishing the truth of the matter contained in the
statement.
'. 4ast of characters,
a. :cenario 1 declarant makes out*of*court statement3 "itness
testifies that he)she heard declarant make the statement.
!. :cenario ' declarant makes out*of*court statement in "riting3
"riting is resented in court.
c. :ame ro!lem in !oth declarant is unavaila!le to take the stand
and !e cross*e+amined.
;. Rationale,
a. #hen offered to roof truth of the matter ro!lematic !ecause it
denies oonent the oortunity to cross*e+amine the declarant in
order to test the declarant.s ercetion$ memory$ sincerity$ etc.
!. #hen offered simly to rove that defendant said those "ords
not ro!lematic !ecause the erson "hose ercetion$ memory$ or
sincerity is at issue is the "itness.s$ "ho is on the stand to !e
cross*e+amined.
@. 8ot hearsay
a. Eer!al acts %legally oerative facts& those "ords "hich !y their
'B)'5
mere utterance carry legal significance.
i. E+amle 1 "itness testifies, <I heard declarant accet the
offer.<
ii. 9ther e+amles,
%A& "ords of contract in contract suit3
%/& "ords of defamation in defamation action3
%4& "ords of !ri!ery in !ri!ery action3
%(& "ords of consiracy in a consiracy action3
%E& "ords of cancellation3
%>& "ords of misreresentation3
%?& "ords of "iver
!. #ords offered to sho" affect on mind of listener)reader offered
to sho" "hy listener)reader acted the "ay they did3 reaction
c. :tatements offered as relevant circumstantial evidence to sho"
(eclarant.s o"n sate of mind$ "hich must !e relevant to case
5. #hen "itness and declarant are the same erson,
a. can still !e hearsay %thus inadmissi!le if offered for the truth of
the matter& even this goes against the rationale a!ove
!. :tatements e+cluded !y fiat %though they meet hearsay
definition&,
i. 1rior consistent statement given under oath in rior roceeding
%see a!ove&3
ii. 1rior consistent statement offered to re!ut charge of recent
fa!rication !ecause of imroer influence or motive %see
a!ove&3
iii. 1rior statements of identification admissi!le for truth %see
a!ove&
/. E+cetion %!ecause of secial relia!ility&,
1. Admission of a arty a declaration of a arty offered against that
arty3 arty*oonent.
a. :ecial relia!ility there isn.t any
!. E+cetion or non*hearsay?
i. >ederal non hearsay
ii. 8= e+cetion
c. (eclarant doesn.t need ersonal kno"ledge %e.g. * airline
resident says <negligent againH< in resonse to ne"s of a crash$
even though he doesn.t kno" any of the facts of the accident.&
'1)'5
i. This comes in even though that same airline resident "ould
not have !een a!le to testify to the statement !ecause it is a
legal conclusion
d. #ho is a arty?
i. Eicarious admission %does ost*accident declaration of
emloyee !ind emloyer?&,
%A& >ederal a statement made !y an emloyee concerning
a matter in scoe of emloyment is admissi!le against
emloyer if made during the emloyment relationshi
%!efore fired&.
%/& 8= a matter of agency %"as emloyee authoriIed to
seak for the comany?&
ii. #hen ne+t of kin sue$ statements !y the decedent are not
admissi!le %unless some other e+cetion alies& !ecause the
decedent is not a arty.
iii. Eictim is not a arty in a criminal action.
'. >ormer testimony "itness testified live in roceeding 1 !ut is not
availa!le in roceeding '.
a. :ecial relia!ility made under oath
!. Admissi!le under e+cetion if,
i. There "as a meaningful oortunity to cross*e+amine the
"itness in roceeding 1.
%A& 8ot grand -ury testimony %!ecause no cross&
%/& Issues must !e the same in the t"o roceedings
%4& 2ust !e certain of identity of arties %offered against
same arty as in roceeding 1 or arty in rivity "ith that
arty& "ho had oortunity to cross*e+amine.
%1& E+amle 1 A and / are assengers in-ured in !us
accident3 each sues !us comany3 "itness to !us accident
testifies against the !us comany in A.s trial !ut is
unavaila!le for /.s trial %testimony comes in under
e+cetion !us comany had oortunity to cross*
e+amine in A.s trial&.
%'& E+amle ' A and / are assengers in-ured in !us
accident3 each sues !us comany3 "itness to !us accident
testifies for the !us comany in A.s trial !ut is unavaila!le
for /.s trial %testimony is e+cluded !ecause / did not have
'')'5
oortunity to cross*e+amine in A.s trial and / is not in
rivity "ith A&.
ii. Dnavaila!ility
%A& death3
%/& a!sence from -urisdiction3
%4& hysical)mental illness3
%(& includes refusal to ans"er or failure of memory.
;. :tatement against interest a declaration of a erson$ no"
unavaila!le as a "itness$ against that erson.s monetary$ rorietary$
or enal interest or that "ould e+ose declarant to defeat of a civil
claim at time statement is made.
a. :ecial relia!ility? * likely "ouldn.t say unless true
!. Limitation %re, ;rd arty confessions& statement against enal
interest offered to e+culate the accused is not admissi!le unless
there are corro!orating circumstances clearly indicating
trust"orthiness of the statement.
c. (ifferences from admission of arty*oonent,
i. Against interest at time made %admission is normally against
interest at time of trial&3
ii. 4an !e made !y anyone %admission must !e made !y and
offered against a arty&3
iii. 1ersonal kno"ledge required %declarant must kno" "hat
he is talking a!out&3
iv.Dnavaila!ility is required %admission requires availa!ility
!ecause must !e a arty&
@. (ying declaration statement made under sense of imending death
a. :ecial relia!ility no motive to lie
!. >our !asic asects
i. :tate of mind requirement must !e made under sense of
imending death %for e+am fact attern must indicate
declarant kne" he "as going to die saying and then dying is
not enough&3
ii. (eath requirement?
%A& >ederal declarant need not die %!ut must !e
unavaila!le at time of trial&
%/& 8= declarant must die
iii. #hat tyes of cases?
';)'5
%A& >ederal homicide cases and any civil cases
%/& 8= homicide cases only
iv.4ontent limitation must concern the cause or circumstances
of the imending death.
5. ?rou of e+cetions %unavaila!ility not required3 rationale "hat
declarant said !ack then might !e more relia!le than "hat declarant
might say no"&,
a. (eclaration of then resent state of mind "hich is at issue in the
case3
!. (eclaration of resent intent to do something in not too distant
future admissi!le to infer that the intended future act "as
carried out.
c. E+cited utterance
i. ; requirements,
%A& :tartling event
%/& :tatement must !e made under stress of the e+citement
%can.t think$ thus can.t lie&3
%1& There can.t !e a time lase$ deending on "hat.s
going on during that lase.
%4& :tatement must concern the facts of the startling event3
d. 1resent sense imression declarant is descri!ing something at
very moment it is haening.
i. E.g. * mother calls victim3 victim says <hold on a second$
someone.s at the door. I can.t talk it.s :.< Eictim is then found
dead. 2other can testify to "hat victim said at :.s trial
ii. 8= corro!oration requirement content of statement must !e
corro!orated
e. (eclaration of resent hysical condition admissi!le !y anyone
"ho hears it.
f. (eclaration of ast hysical condition admissi!le if made to
medical ersonnel for uroses of diagnosis or treatment
%including diagnosis solely for uroses of giving testimony&
i. (oes not e+ist in 8=
6. /usiness records
a. :ecial relia!ility emloyees have incentive to !e accurate in
o!serving$ reorting$ etc. !ecause they may !e fired if they are
not.
'@)'5
!. >unction allo"s record to su!stitute for "hat emloyees could
say live
c. Requirements,
i. Entry must !e germane to !usiness3
ii. Information in record must come from someone "ho has duty
"ithin scoe of !usiness to accurately record %information in
record that came from outsider "ho reorted it to the comany
and emloyee ut the information in a !usiness record
doesn.t fall under e+cetion !ecause emloyees couldn.t testify
to this live, ' levels of hearsay so you need ' e+cetions&.
%A& ;rd arty source dou!le level hearsay %!oth levels
must have an e+cetion&
%1& E.g. * olice reorts,
%a& 9!servations of officer in under !usiness record
e+cetion
%!& :tatement of "itness questioned !y officer
inadmissi!le !ecause t"o levels
%c& :tatement of (ef. taken !y olice hearsay !ut
admissi!le !ecause of !usiness records and arty
admission e+cetions
4. Recurring fact questions on e+am,
1. #ho decides reliminary questions of fact uon "hich admissi!ility
deends?
a. Gudge determines$ !ut -udge is not !ound !y the rules of evidence
%can use hearsay$ unauthenticated documents$ etc.&
i. E.g. * -udge can use letter from declarant saying he is
unavaila!le even if it is unauthenticated and hearsay.
'. 4an imeach credi!ility of hearsay declarant like any live "itness
a. E.g. * dying declaration or e+cited utterance !y declarant "ho
later contradicts himself3 "itness testifies as to hearing the first
statement3 can imeach "itness "ith rior inconsistent statement.
;. #itness "ants to testify as to "hat he hear on a recording
a. Recording itself must not !e inadmissi!le hearsay
!. /est Evidence 1ro!lem %!ecause "itness.s sole kno"ledge comes
from "hat he heard on the tae&
i. 2ust e+lain "hy recording itself "as not roduced
'5)'5
New York Practice
I. SM jurisdiction
A.Ct must have SMJ (competence) to hear the tpe o! controvers "rou#ht
"e!ore it
$. NY Supreme Ct % the on& ct in NY that has #enera&' ori#ina& SMJ
a. (ne "ranch in each o! )* counties
". +n&imited monetar jurisdiction (no min. or ma,.)
c. -u&& e.uit jurisdiction (speci!ic per!ormance' injunctions' etc)
d. /,ceptions
i. 0here !edera& &aw con!ers e,c&usive jurisdiction to !edera& cts (e#
1 "ankruptc' patents' copri#hts)
ii. C&aims !or 2 dama#es in tort o! 3 a#ainst the State (not municipa&
#overnment) o! NY (must "e "rou#ht to NY Ct o! C&aims)
e. NY Supreme Ct has e,c&usive SMJ over4
i. Matrimonia& actions
ii. CP56 Art. 78 proceedin#s
iii. 9ec&arator jud#ment actions
*. A&& other cts 1 characteri:ed " &imited monetar jurisdiction
;. Appea&s cts 1 hi#hest ct inNY is the Ct o! Appea&s' and the
intermediate appe&&ate ct is the Appe&&ate 9ivision
II. Statute o! &imitations
A.An a!!irmative de!ense "ased on passa#e o! time
<. 0hen does So5 "e#in# to run=
$. >enera& ru&e4 when CoA accrues
a. P.I.?prop. dama#e 1 when impact occurs
". <reach o! 3 1 date o! "reach
c. In!ant injured in utero 1 chi&d has no CoA un&ess "orn a&ive' then
date o! "irth
C. @o satis! So5' action must "e commenced not &ater than &ast da o!
prescri"ed period
$. Supreme and Count Cts 1 process !i&ed "e!ore &ast da
*. A&& other cts 1 process served on 9 on or "e!ore &ast da
9.So5s
$. P.I. % ; rs
$?*$
*. 0ron#!u& death 1 * rs
;. <reach o! 3' not +CC Art. * 1 ) rs
A. <reach o! 3' +CC Art * 1 A rs
B. Intention tort to person 1 $ r
). Art 78 proceedin# 1 A mos.
7. Medica& ma&practice 1 * C rs (!rom date o! ma&practice)
a. Suin# hospita& on theor o! respondeat superior 1 same * C rs
". Suin# hospita& !or ne#&i#ent hirin# 1 ; rs !rom date o! hirin#
c. @wo e,ceptions
i. Continuous treatment ru&e 1 * C rs a!ter termination o!
treatment
ii. -orei#n o"ject ru&e 1 not intended to "e &e!t "ehind' * C rs !rom
operation or $ r !rom discover or shou&d have discovered
(whichever &on#er)
(A) Not !orei#n o"jects 1 chemica& su"stances (e# 1
medicine)' prosthetic device' !i,ation device (interna& sutures'
pacemaker' diaphra#m)
8. (ther pro!essiona& ma&practice (architects' en#ineers' accountants'
attornes)
a. So5 1 ; rs !rom termination o! particu&ar services
i. /# 1 architect a!ter comp&etion o! "ui&din#
ii. I! P.I. Invo&ved' then ; rs a!ter injur
(A) 5e#is&ation 1 i! P.I. C&aim a#ainst architect?en#ineer
"rou#ht D$E rs a!ter comp&etion
(I) P must serve notice on 9 at &east FE das "e!ore suit
(II) 9 ma o"tain discover !rom potentia& P durin# FE da
period
(III) I! 9 moves !or summar jud#ment' then P must make
evidentiar showin# o! su"stantive "asis that 9 ne#&i#ence
was the pro,imate cause o! the injuries
F. Products &ia"i&it
a. Ne#&i#ence 1 ; rs !rom date o! injur (as a#ainst a&& 9s in chain o!
distri"ution)
". Strict products &ia"i&it 1 same as a"ove
c. <reach o! warrant 1 +CC A r So5 (when particu&ar 9 so&d
*?*$
product)
$E. Indemnit and contri"ution
a. ) r So5 runnin# !rom date o! pament o! jud#ment
$$. /,posure to to,ic su"stances
a. ; rs !rom date injur is or shou&d have "een discovered " P
". @o,ic su"stance 1 an inherent& harm!u& to,in that has &atent or
s&ow deve&opin# e!!ects (e.#. % 9/S' as"estos' GIH)
c. /,posure 1 assimi&ation into oneIs "od or prop. ' inc&udin#
imp&antation ("reasts)
/. @o&&in# and e,tensions
$. @o&& !or 9Is a"sence
a. I! 9 not in NY when CoA accrues' the So5 does not run unti& 9
comes to NY
". I! 9 is in NY when CoA accrues "ut &eaves and is continua&&
a"sent !or A mos. ' then to&& app&ies to entire period o! a"sence
c. /,ception 1 neither to&& !or a"sence i! P has "asis !or PJ over 9 such
that 9 cou&d "e va&id& served outside o! NY
*. PIs in!anc or insanit (&e#a& disa"i&ities)
a. In!ants (under $8) or insane Ps ma sue w?i re#u&ar So5 throu#h
competent adu&t representative "ut ma a&so #et "ene!it o! a to&&
". I! P is in!ant?insane at time CoA accrues' the So5 is to&&ed unti&
disa"i&it ends
i. Insanit 1 an menta& disorder that causes an overa&& ina"i&it to
!unction (need not have #one throu#h !orma& ct proceedin#)
c. 0hen disa"i&it ends' how &on# does P& have to sue=
i. I! ori#ina& So5 #reater than or e.ua& to ; rs 1 ; rs
ii. I! ori#ina& So5 &ess than ; rs 1 period o! ori#ina& So5
d. $E r outside time &imit
i. -or in!anc to&& 1 c&aim !or medica& ma&practice must "e
commenced no &ater than $E rs !rom date o! accrua&
ii. -or insanit to&& 1 a&& c&aims time "arred a!ter $E rs !rom date o!
accrua&
;. @o&&s !or death
a. Potentia& P death
i. Surviva& c&aim 1 an CoA P herse&! wou&d have "rou#ht i! she
;?*$
was a&ive
(A) So5 1 i! under&in# c&aim sti&& time& on date o! death' P
#ets time remainin# on decedentIs c&aim or $ r !rom date o!
death (whichever &on#er)
ii. 0ron#!u& death c&aim 1 a tort c&aim !or the pecuniar dama#es o!
decedents statutor distri"utees (survivin# spouse' chi&dren' etc)
(A) So5 1 * rs !rom date o! death' i! at time o! death'
decedents under&in# PI c&aim wou&d sti&& "e time&
". Potentia& 9 death
i. I! occurs "e!ore So5 e,pires' mos. are a&was added to re&evant
&imitations period
A. Si, month #race period
a. I! a NY action is time& commenced' "ut is therea!ter dismissed
"e!ore tria& AN9 at the time o! dismissa& the So5 e,pired or &ess
than ) mos. remainin#' P #ets si, mos. !rom date o! dismissa& to
re!i&e same action and serve process on same 9
i. A tpes o! dismissa& not app&ica"&e
(A) on merits
(<) vo&untar discontinuance " P&
(C) P&Is ne#&i#ence to prosecute
(9) &ack o! PJ
B. @he J<orrowin# StatuteJ
a. I! the CoA arises outside o! NY' a choice o! &aw pro"&em e,ists i!
So5 o! other state di!!erent. <orrowin# statute prevents !orum
shoppin# " non%resident Ps seekin# &on#er So5 in NY
i. I! P was non%resident o! NY when out%o!%state c&aim arose 1 a
NY ct wi&& app& other So5 i! shorter
(A) I! &on#er' then app& NY So5
ii. I! P was a N resident when out%o!%state c&aim arose 1 a NY ct wi&&
a&was app& NY So5
III. Persona& Jurisdiction
A.(verview
$. In addition to SMJ' ; additiona& jurisdictiona& e&ements re.uired !or ct
to render va&id jud#ment (en!orcea"&e in NY and !u&& !aith K credit
e&sewhere
A?*$
a. Proper commencement o! action
". Proper service o! process on 9
c. Proper "asis o! jurisdiction over person?prop. invo&ved in the action
<. Proper commencement o! the act
$. Gow
a. 5ower civi& cts 1 servin# process on 9 (a summons and comp&aint
or summons on notice)
". Supreme Ct and Count cts 1 !i&in# process w? ct c&erk (!i&in# must
"e accompanied " pament o! !ee !or purchase o! an inde, num"er
L=M and is !o&&owed " service o! process on 9(s))
i. I! served on 9 w? ($=)*E das N commencement O va&id
(A) Ct has discretion to e,tend the period upon showin# o!
#ood cause (due di&i#ence) or in the interest o! justice
(<) I! 9 wants to cha&&en#e time&iness o! service o! process' 9
must make mtn to dismiss !or untime& service and ct ma
determine whether there e,ists #ood cause !or e,tension and
#rant it retroactive&
C. Proper service o! process
$. -orm
a. Summons and comp&aint 1 summons advises 9 that P is suin# in
particu&ar ct. Comp&aint is PIs c&aim and speci!ies transaction or
occurrence that is the su"ject matter o! the action and spe&&s out
essentia& e&ements o! PIs CoAP (6
". Summons w? notice 1 when not comp&aint' must have su!!icient
JnoticeJ inscri"ed on !ace or $ pa#e attachment
i. Notice must consist o!4
(A) <rie! statement o! nature o! action
(<) Nature o! re&ie! "ein# sou#ht
(C) I! P is seekin# dama#es' must speci! amount
c. Conse.uence o! service o! naked summons
i. It is a de!ect in PJ and action is su"ject to dismissa& !or this
reason a&one
*. Methods o! servin# process
a. <asic points
i. 0ho ma serve= Person $8 or o&der and not a part
B?*$
ii. Process ma "e served on an da o! the week (inc&udin#
ho&idas) e,cept4
(A) Sunda
(<) Saturda (i! P knows 9 is a Saturda Sa""ath o"server)
". @raditiona& methods o! servin# natura& persons
i. Persona& de&iver to 9e! 1 " process server N comp&ete
ii. 5eave and mai& 1 process server &eaves w? person o! suita"&e a#e
and discretion at 9Is actua& dwe&&in# or p&ace o! "usiness P5+S
mai& a cop " re#u&ar mai& to 9 at his p&ace o! "usiness or &ast%
known residence w?i *E das o! &eavin#
(A) Securit #uard 1 (3
(<) Mu&tip&e 9s 1 i! &ive?work at same &ocation' need to &eave
and mai& separate copies
(C) Service is comp&ete $E das a!ter proo! o! service !i&ed (an
a!!idavit " process server descri"in# detai&s o! service' e#
time' date' p&ace' description o! person served' mai&in#' etc)
(I) @his is when 9Is response time wi&& "e#in to run in such
cases
(a) PIs !ai&ure to !i&e proo! o! service does not cause
jurisdictiona& de!ect and is not #rounds !or dismissa&
(") @he on& conse.uence o! !ai&ure or de&a is the
postponement o! 9Is response time
iii. A!!i, and mai& 1 process server ma a!!i, process to the
door o! 9Is actua& dwe&&in# or p&ace o! "usiness P5+S mai& a
cop " re#u&ar mai& to 9 at 9Is p&ace o! "usiness or &ast%known
residence (a!!i,in# and mai&in# must "e per!ormed w?i *E das o!
each other)
(A) <+@ process server must $st e,ercise due di&i#ence in
attemptin# to serve 9 direct& or to &eave w? a person o!
a#e?discretion (servera& attempts' on di!!erent das' at di!!erent
times)
(<) Service comp&ete $E das a!ter PoS !i&ed
iv./,pedient service 1 i! !ore#oin# methods are not practica"&e' P
ma make an e, parte mtn to ct !or an order a&&owin# improv
method (some reasona"&e a&ternative appropriate under
)?*$
circumstances 1 e.#. service on &ia"i&it insurer)
v. A#ent speci!ica&& desi#nated " 9 to receive process 1 part
e,press& (in written 3' etc) speci!ies a#ent upon whom process
ma "e served in dispute arisin# !rom 3
vi. Servin# in!ants and the menta&& incapacitated
(A) In!ants 1 9Is name on summons "ut served on e&i#i"&e
adu&t
(I) /&i#i"&e adu&t 1 parent' #uardian' custodian' or &ive%in
spouse
(II) I! over $A' process served on e&i#i"&e adu&t and in!ant
(<) Menta&& incapacitated person w? ct apptId #uardian 1
process must "e served on #uardian and 9
(I) I! not #uardian' then norma& service and >A5 &ater
apptId " ct.
vii. Service outside o! NY 1 same methods (assumin# there
e,ists a "asis !or out%o!%state service)
(A) 0ho ma serve=
(I) An NY resident authori:ed under NY &aw
(II) Process server authori:ed in the other state
(III) 5 &icensed in other state
c. @raditiona& methods o! servin# corps
i. Persona& de&iver (anwhere in +.S. Assumin# "asis o! NY
jurisdiction over corp) to an o!!icer' director' desi#nated a#ent' or
mana#in# a#ent (corp emp&oee w? supervisor responsi"i&it)
ii. Service on NY Sec. (! State
(A) 9omestic corp or &icensed !orei#n corp 1 * copies o!
process served on the NY Sec o! St (sec wi&& mai& $ cop "
certi!ied mai& to corp at address on !i&e
(<) +n&icensed !orei#n corps 1 de&iver $ cop to NY Sec o! St
and P mai&s $ cop to corp " certi!ied mai&
d. Non%traditiona& methods !or persons?corps
i. Service " $st%c&ass mai& p&us acknow&ed#ment 1 enc&ose
statutor acknow&ed#ment !orm and a return enve&ope' posta#e
prepaid' addressed to sender. Service wi&& on& "e e!!ective i! 9
si#ns and returns !orm to P w?i ;E das a!ter 9 receives it.
7?*$
Service comp&ete upon 9 mai&in# !orm.
(A) I! 9 doesnIt return' traditiona& method must "e used "ut 9
pas !or second tr.
(<) 9Is return o! acknow&ed#ed !orm is not a concession that
ct has jurisdiction (just acknow&ed#ment o! receipt o! process)
9.<asis o! jurisdiction over 9Is person
$. @erritoria& connection "etween 9 and state o! NY (ena"&es jud#ment
!or 2 dama#es to "e en!orced in !u&&)4
a. Presence in NY 1 persona& de&iver to a 9 whi&e that 9 is phsica&&
present in NY esta"&ishes a "asis o! PJ
". 9oin# "usiness in NY 1 a domestic corp or &icensed !orei#n corp or
un&icensed corp doin# "usiness 1 ct has PJ no matter where CoA
arose
i. <est evience 1 NY o!!ice
ii. Ads?so&icitation in NY not enou#h
iii. @ransient presence o! o!!icer 1 not enou#h (even i! served
persona&& whi&e in N)
c. 9omici&e 1 NY has jurisdiction over a&& 9s who are domici&iaries at
time action commenced
i. 9omici&e vs. residence 1 domici&e 1 permanentP residence 1
where u sta Q
d. 5on#%arm jurisdiction 1 $ o! B cate#ories o! NY re&ated activit
i. <usiness transaction in NY
ii. 3 !or #oods?services to NY
(A) (ne%shot order not enou#h
(<) 3 to pa 2 in NY not enou#h
iii. @ortious act w?i NY
(A) 9e!amation c&aims e,c&uded
iv.@ort injur in NY plus4
(A) 9 so&icits "usiness in NY
(<) <usiness in NY is su"stantia& part o ! revenue
(C) @ort in NY !oreseea"&e R su"stantia& revenue !rom
interstate commerce
(I) Purpose!u&& inc&ude NY (!or due process)
(9) Notes
8?*$
(I) A phsicianIs medica& services are inherent& &oca& N
no &on#%arm jurisdiction
(II) 9e!amation c&aims e,c&uded
v. C&aim arises !rom 9Is rea& prop. in NY
vi. /,am tip 1 in essa .uestions' !irst discuss whether !acts o!
PIs case !a&& w?i $ or more o! the B &on#%arm cate#ories. @hen'
"rie!& discuss whether particu&ar assertion o! jurisdiction wou&d
satis! due process
(A) @est !or 9P 1 9 purpose!u&& directed "usiness to NY N
shou&d reasona"& anticipate PJ
e. Non%resident motorist statute (actua&& non%domici&iar) con!ers PJ
over an accident c&aim arisin# on NY roadwa
i. (ver&aps w? &on#%arm jurisdiction method S; "ut * uni.ue
!eatures
(A) P serves process on 9 " servin# one cop on Sec. (! St.
p&us mai&in# *d cop to 9 " certi!ied mai& to 9Is out%o!%state
residence.
(<) A&&ows !or jurisdiction over carIs owner i! driver w?
permission
!. Consent 1 parties to a 3 ma consent in advance to PJ in NP in a
!orum se&ection c&ause. Such c&ause is #enera&& en!orcea"&e a"sent
!raud' overreachin#' or unreasona"&eness
/. Matrimonia& jurisdiction
$. Supreme Ct is on& ct w? SMJ over these actions
*. 9onIt need PJ over 9 !or separation' divorce' or annu&ment
;. P must "e a domici&iar o! NY (in rem Lownin# prop. =M % marita&
status deemed to "e in NY)
A. I! seekin# 2 support' etc' must have PJ over 9 spouse
a. Matrimonia& &on#%arm statute 1 where P spouse is a resident o! NY'
&on#%arm jurisdiction can "e ac.uired over 9 spouse i!4
i. NY was matrimonia& domici&e o! P and 9 prior to separation
ii. 9 a"andoned P in NY
iii. 9Is monetar o"&i#ation accrued under an a#reement
e,ecuted in NYP or
iv.9Is monetar o"&i#ation accrued Junder the &aws o! NYJ
F?*$
B. Servin# process 1 P cannot use J&eave and mai&J or Ja!!i, and mai&J w?
o!irst #ettin# ct order
). /vent i! PJ over 9' check PIs durationa& re.uirements "ecause i!
insu!!icient N dismissa& on merits (su"stance o! case' not ct
jurisdiction' see 9om 6e&)
IH. Henue
A.Actions in which jud#ments wou&d a!!ect tit&e or possession to rea& prop.
1 proper venue is NY count where &and is
<. A&& other actions 1 proper venue is an count in NY in which an one o!
the parties resides at commencement (i! no part resides in NY' then an
count is proper venue)
$. 9 must serve a demand on P !or chan#e o! venue
*. <e!ore or w? answer
;. P can just consent to chan#e
A. (r i! P o"jects?is si&ent' 9 must make mtn !or chan#e (which must "e
#ranted at a matter o! ri#ht i! the P chose an improper venue and 9
chose a proper venue)
H. 9Is response
A.6esponse to summons and comp&aint
$. 9 can response in * was4
a. Serve an answer' or
i. Contests a&&e#ations or raises a!!irmative de!enses (waived i! not
p&ead)P a&so counter%c&aim(s) and cross%c&aim(s) (a#ainst other 9Is
and can "e nased on an other tpe o! c&aim that 9 has a#ainst
other 9(s)) /ach part must serve cop o! p&eadin# on a&& other
parties who have appeared in the action
ii. Service o! answer (and other inter&ocutor papers) 1 done " $st
c&ass mai& and served on 5 !or the other part(ies) (deemed made
upon mai&in#' not receipt)
iii. @ime &imits !or servin# answer4
(A) I! 9 was served " persona& de&iver w?i NY 1 9 must
serve answer w?i *E das o! de&iver
(<) I! 9 served " $st c&ass mai& and acknow&ed#ment (and 9
rep&ied) 1 w?i *E das o! returnin# acknow&ed#ment !orm
(C) 9 served under other circumstances 1 9 must serve
$E?*$
answer w?i ;E das !rom when service process was comp&ete
iv.A!!irmative de!enses not raised in answer are waived e,cept4
(A) Non%joinder o! necessar part
(<) -ai&ure to state cause o! action
(C) 5ack o! SMJ
". Make a mtn to dismiss under CP56 ;*$$
i. @here are 8 #rounds4
(A) 9ocumentar evidence as "asis !or de!ense
(<) (ther action pendin# "etween same parties on same CoA
(C) 0ant o! capacit (e.#. % P is an in!ant suin# w? oproper
representative' or P is "ene!iciar suin# on "eha&! o! trust
(9) Non%joinder o! necessar part
(/) -ai&ure to state CoA 1 prima !acie insu!!icient in &i#ht
!avora"&e to non%movin# part
(-) A!!irmative de!enses under CP56 (SPA6/6I<S)4
(I) So5
(II) Pament
(III) Ar"itration award
(IH) 6e&ease
(H) /stoppe& (co&&atera&)
(HI) 6es judicata
(HII) In!anc o! 9
(HIII) <ankruptc dischar#ed
(IT) So-
(>) 5ack o! PJ
(I) Improper commencement (de!ective summons)
(II) Improper service
(III) 5ack o! "asis o! jurisdiction
(G) 5ack o! SMJ
ii. Procedura& aspects
(A) mtn made "e!ore service o! answer
(<) Mtn e,tends time to answer ($E das a!ter denia& o! mtn)
(C) 9 has to state a&& possi"&es #rounds in $ mtn to dismiss
(9) 0aiver 1 a mtn on an #round &isted in ;*$$ does not
prec&ude raisin# an other #round in answer' e,cept &ack o! PJ
$$?*$
de!ense4
(I) Gow to preserve PJ de!enses
(a) <e!ore servin# answer' make ;*$$ mtn to dismiss
and inc&ude &ack o! PJP or
(") Make no ;*$$ mtn on an #round and inc&ude &ack
o! PJ in answer
(c) Note4 i! 9 p&eads improper service' must &ater move
!or summar jud#ment w?i )E das o! servin# answer
<. 6esponses to summons w? notice
$. @o avoid de!au&t' 9 must serve
a. a demand !or comp&aint' or
". Notice o! appearance
*. @ime &imits (!or either a"ove) 1 same as w? respondin# to summons
and comp&aint
;. /!!ect o! a"ove 1 P re.Id to serve comp&aint w?i *E das
a. Assumin# that P time& serves comp&aint' 9 has *E das !rom such
service to either answer or make a ;*$$ mtn to dismiss
". P !ai&ure to do so a&&ows 9 to move to dismiss "ased on PIs non%
comp&iance (!ai&ure to prosecute). @o avoid dismissa&' P must show
reasona"&e e,cuse !or a de&a and make evidentiar showin# that
there is merit to the PIs CoA
c. Neither demand !or comp&aint nor a notice o! appearance is a
waiver o! jurisdictiona& o"jections
C. Amendments and p&eadin#s
$. A&&owed once as a matter o! ri#ht (w? ojudicia& permission). J-ree
amendmentJ can inc&ude anthin# that cou&d have "een in ori#ina&
p&eadin#. Can "e made durin# the !o&&owin# periods4
a. P can amend up to *E das a!ter 9 answers
". 9 can amend up to *E das a!ter 9 answers
*. 0hen I!ree amendmentI period has e,pired' or the part uses up' a mtn
!or &eave to amend in re.Id
a. Std (&i"era&) 1 in #enera&' the amendment wi&& "e a&&owed as &on# as
opponent wi&& su!!er no incura"&e prejudice (detrimenta& chan#e in
position) as a resu&t o! de&a 1 e.#. a witness died
HI. ;d Part practice' contri"ution' and indemni!ication
$*?*$
A.;d part practice (imp&eader)
$. A procedura& device used " 9 to join another part a&&e#ed to "e
&ia"&e in who&e or in part to 9 !or dama#es that 9 ma have to pa P
(the usua& c&aim in these circumstances is !or indemnit or
contri"ution)
a. 6ather than !orcin# 9 to pa jud#ment to P then sue' 9 just adds ;d
part 9 (@P9)
i. In re&ation to @P9' 9 technica&& is now ;d part P
". Procedure 1 9 ma imp&ead @P9 an time a!ter answer.
i. 9 must4
(A) -i&e summons and ;d part comp&aint
(<) Serve (within# $*E das o! !i&in#) a cop o! a"ove on P
and @P9 (must have "asis o! jurisdiction over @P9 and
proper& serve
ii. @P9 answer time same 1 *E or ;E das dependin# on where and
how @P9 was served w? process
iii. A!ter @P9 is joined' P ma amend comp&aint to assert c&aim
direct& a#ainst @P9' there" makin# @P9 additiona& 9 in PIs
action. P can make w? ojudicia& permission i! within# *E das
a!ter served w? @P9 answer. I! a!ter *E das 1 P needs ct
permission
(A) @ime& 1 the PIs amendment deemed time& (even i! So5
on action has run) as &on# as the @P9 was imp&eaded within#
So5 o! 9e!Is c&aim
*. >rounds !or imp&eadin#
a. Indemnit 1 a&&ows $ part to shi!t $EEU o! the responsi"i&it to
another entit
i. < 3 1 e,4 in construction 3' su"contractor ma a#ree to
indemni! contractor !or su"contractorIs work
ii. Imp&ied in&aw
(A) Products &ia"i&it 1 retai&er he&d &ia"&e !or se&&in# de!ective
product is entit&ed to indemnit !rom manu!acturer
(<) Hicarious &ia"i&it situations 1 in NY' the owner o! a car
vicarious& &ia"&e !or dama#e caused " ne#&i#ent driver usin#
w? permission. (wner who pas victim is entit&ed to indemnit
$;?*$
!rom driver.
". Contri"ution 1 invo&ves a sharin# o! &oss (apportionment) amon#
mu&tip&e tort!easors who are a&& actua& participants o! the tort
i. Purpose 1 miti#ate harshness o! joint and severa& &ia"i&it
ii. Mechanics o! jud#ment !or joint and severa& &ia"i&it %
(A) /ach tort!easor is &ia"&e to the P !or !u&& amount'
re#ard&ess o! U o! !au&t (jud#ment entered in !u&& !or each 9)
(<) P on& entit&ed to co&&ect on& the jud#ment amount' "ut
ma co&&ect !rom an one o! them
(C) @he pain# 9 ma then seek contri"ution !rom the other
9s
iii. Intentiona& tortious conduct
(A) Mu&tistate ru&e 1 contri"ution not avai&a"&e when nature o!
&ia"i&it invo&ves intentiona& wron#doin#
(<) NY 6u&e 1 contri"ution avai&a"&e in a&& tort cases
iv.0as to assert c&aims !or contri"ution
(A) I! P ori#ina&& joined tort!easors as Co%9s' the can assert
cross%c&aims !or contri"ution a#ainst each other
(<) I! P omits a tort!easor' a 9 can imp&ead the outsider as
@P9
v. A&&ocatin# contri"ution amount
(A) /.ua& shares !ormu&a (minorit view) 1 shares a&was
e.ua& in amount re#ard&ess o! 9Is respective U o! !au&t
(<) Comparative de#rees o! !au&t (mu&tistate and NY view) 1
the amount o! contri"ution to which a tort!easor is entit&ed is
the e,cess actua&& paid " him' over and a"ove his e.uita"&e
share o! the jud#ment
vi. Su"stantive &aw ru&e !or contri"ution 1 the #enera& ru&e is
that a ri#ht to contri"ution e,ists whenever @P9 "reached a dut
in tort which contri"uted to or a##ravated the dama#es !or which
9 ma "e he&d &ia"&e to P @hus' @P9 ma "e he&d &ia"&e !or
contri"ution even i! @P9 has no direct &ia"i&it to P
(A) /, 1 P owns "ui&din#' "us !ire a&arm !rom A' !orms 3 w?
< !or a&arm monitorin# w? c&ause &imited &ia"i&it to #ross
ne#&i#ence' !ire occurs' a&arm !ai&s' and < ne#&i#ent& reported
$A?*$
!ire too &ate. P sues A !or products &ia"i&it and A imp&eads <
!or contri"ution. A&&owed even thou#h < not &ia"&e to P
"ecause &imitin# c&ause.
(<) /,ception 1 workerIs comp
(I) MS ru&e 1 a @P9 (e.#. % manu!acturer o! product
emp&oee was usin# at work when injured) never has the
ri#ht o! contri"ution !rom PIs emp&oer.
(II) NY 6u&e 1 a @P9 on& has the ri#ht to contri"ution
!rom PIs emp&oer i! the P sustained a #rave injur
(a) >rave injur 1 death' &oss o! "od part (inde, !in#er
or D$ !in#er' D$ toe)' para%?.uadrip&e#ia' severe !acia&
dis!i#urement' tota& dea!ness or "&indness' or "rain
dama#e causin# tota& disa"i&it.
c. Sett&ements in cases invo&vin# mu&tip&e tort!easors
i. @he pretria& re&ease o! $ tort!easor in partia& satis!action o! a
c&aim does not dischar#e &ia"i&it o! other tort!easors
ii. 6eduction !ormu&a 1 an jud#ment a#ainst a non%sett&in#
tort!easor must "e reduced " either the amount o! the sett&ement
or the sett&in# tort!easorIs e.uita"&e share o! the !au&t (whichever
is &ar#er)
iii. /!!ect o! sett&ement in cases invo&vin# contri"ution c&aims 1
pretria& sett&ement e,tin#uishes contri"ution c&aims " and
a#ainst sett&in# part
iv./!!ect on indemnit c&aims 1 sett&ement does not e,tin#uish
c&aims !or indemnit " sett&in# part
d. CP56 Art $)
i. NY ru&e that modi!ies joint and severa& &ia"i&it in NY
(A) 6u&e 1 In P.I. c&aim' joint tort!easor whose !au&t is !ound
to "e BEU or &ess cannot "e re.Id to pa more than his
e.uita"&e share o! PIs non%economic dama#es
(I) (n& app&ies to P.I. c&aims (not c&aims !or wron#!u&
death)
(II) Non%economic dama#es 1 pain su!!erin#' menta&
an#uish' &oss o! consortium
(<) /,c&usions !rom Art. $) 1 !o&&owin# tort!easors su"ject to
$B?*$
!u&& joint and severa& &ia"i&it !or a&& dama#es
(I) Acted w?i ntent or reck&ess disre#ard !or sa!et o!
others
(II) 6e&eased ha:ardous su"stances into the environment
(III) 9rivers and owners o! motor vehic&es' not po&ice and
!ire vehic&es
HII. mtn procedure
A.mtns on notice
$. >ive adversar an opportunit to "e heard in opposition
*. Part must serve a notice o! mtn (advises opponent o! nature and time)
and supportin# a!!idavits (written statements under oath showin# wh
mtn shou&d "e #ranted)
;. Mtn is JmadeJ when mtn papers served on other part
a. I! served " mai&' mtn is made when papers dropped in mai&"o,
A. @he da upon which mtn papers are presented to the ct is ca&&ed the
return date aka the hearin# date
a. @he movin# par must serve the mtn papers on the opponent at &east
8 das "e!ore return date
". A&& mtn papers' those o! the movin# part as we&& as the opponent'
must "e !i&ed w? the ct no &ater than return date. (Ct "e#ins to
de&i"erate on the return date and then issues an order either #rantin#
or denin# the mtn)
B. (rder to show cause (a&ternative wa to make mtn on notice)
a. Pre&iminar order' si#ned " jud#e' #ivin# due date to show wh
mtn shou&d not "e #ranted
". ; possi"&e reasons !or movin# " order to show cause rather than
ordinar notice o! mtn4
i. Statute that #overns the particu&ar notice ma re.uire it
ii. It is a means o! acce&eratin# the return date where e,i#ent
circumstances make the usua& 8%da advance notice too &on# to
wait !or judicia& assistance. In si#nin# order to show cause' the
jud#e can speci! sooner return date
iii. Jud#e can #rant an immediate sta or @6(
c. Procedure
i. @he movin# part dra!ts order to show cause and su"mits is to a
$)?*$
jud#e a&on# w? supportin# a!!idavits !or under&in# mtn. @he
jud#e wi&& set the return date in order and wi&& speci! the method
o! service on the adversar (usua&& persona& de&iver)
(A) /.#. a proposed order to show cause is si#ned " jud#e on
Ma $' *EE; and it states J5et P show #ood cause on Ma B'
*EE; wh an order shou&d not "e #ranted re.uirin# him to
produce documents ,' ' and :.J A!ter si#ned' the order and
under&in# mtn papers are then served on the opponent. @he
opponent then ma su"mit opposition papers on return date.
<. @he decidin# order
$. A!ter the return date o! the mtn on notice' the ctIs decision must "e
em"odied in a written order si#ned " the ct
a. @he prevai&in# part (whether movant or opponent) serves a cop o!
the order on the &osin# part
". Service o! the order is necessar !or the order to take e!!ect
c. Appea&s
i. Service o! the order starts the runnin# o! a ;E%da time &imit !or
an appea& o! the order
(A) NY a&&ows an immediate appea& to Appe&&ate 9ivision as
o! ri#ht within# ;E das o! service o! an order that resu&ts
!rom a mtn on notice (unusua&' ca&&ed an inter&ocutor appea&).
Gowever' part can wait and appea& !ina& jud#ment
C. /, parte mtn
$. No advance notice is #iven to adversar (i.e. w? o #ivin# an
opportunit to "e heard in opposition). @he movin# part #oes strai#ht
to the ct w? the mtn and re.uest an order #rantin# re&ie! sou#ht.
*. (n& a&&owed when statute e,press& authori:es
;. Appea& o! #rant 1 opponent must !irst move ct to vacate and i! denied'
then appea&
HIII. Mtn !or summar jud#ment
A./na"&es 9 "e!ore tria& to show that even thou#h p&eadin# are prima !acie
su!!icient' that there is no #enuine issue o! materia& !act re.uirin# a tria&'
and jud#ment entit&ed as a matter o! &aw
$. /,am tip 1 discuss under&in# CoA
<. @imin# 1 a!ter 9 !i&es answer
$7?*$
$. /,ception 1 pre%tria& mtns !or SJ 1 * situations
a. 9Is pre%answer mtn to dismiss !or no CoA can "e converted to mtn
!or SJ i!4
i. 9 su"mitted !actua& a!!idavits w? mtn to dismiss
ii. 0hen ct #ives notice to P o! conversion and a&&ows P to su"mit
additiona& a!!idavits in support o! CoA
". Mtn !or SJ in &ieu o! comp&aint
i. In two tpes o! actions' P ma' i! he wishes' move !or SJ at the
same time as servin# summons ("oth invo&ve documents that
show prima !acie that P entit&ed to re&ie!)4
(A) An action on an instrument !or the pament o! 2 on&' e.#.
% a promissor note' not "reach o! 3 action
(<) An action on an out%o!%state jud#ment
ii. Procedure
(A) A!ter !i&in# process w? the ct' P must serve on 9 9
response date 1 same determination as answer
C. An part can move !or summar jud#ment w? respect to an c&aim or
de!ense asserted in the p&eadin#s
9.Support O a!!idavits
/. 9e!eatin# 1 i! non%movin# part shows tria"&e issue N denia&
$. or i! not et a"&e to make showin# throu#h no !au&t N Ct can #rant SJ
!or P on issue o! &ia"i&it and order immediate tria& on issue o!
dama#es
IT. Provisiona& remedies
A.(verview
$. 5awsuits can take time and PIs ri#hts ma "e jeopardi:ed whi&e matter
is pendin#' provide a measure o! securit to P !or u&timate
en!orcement o! potentia& jud#ment
*. B tpes
a. Attachment
". Pre&iminar injunction
c. @emporar receivership
d. (rder to sei:e chatte&
e. Notice o! pendenc
;. A&& o! the provisiona& remedies re.uire a ct order' e,cept notice o!
$8?*$
pendenc
<. Attachment 1 provides securit !or the en!orcement o! 2 jud#ment
$. P o"tains order and #ives to sheri!! who &evies upon prop. (puts &ien on
prop. pendin# outcome) o! 9 in NY' #ivin# P securit interestP
superior to an su"se.uent &ien ho&der.
*. prop. tpes
a. 6ea&
". Persona&
i. @an#i"&e 1 i.e. car
ii. Intan#i"&e 1 de"t owed to 9 (e.#. "ank account' etc)
(A) >arnishee 1 ;d person who owes de"t to 9 or who has
possession o! 9Is tan#i"&e persona& prop.
;. Gow sheri!!Is &ev made on prop. =
a. (n rea& prop 1 sheri!! !i&es order o! attachment w? count c&erk in
NY count where prop. is &ocated
". Persona& prop 1 sheri!! de&ivers the order o! attachment to person
ho&din# prop (9 or #arnishee)
i. Imposes &ien and is injunction a#ainst trans!er unti& disposition
A. @pes o! actions
a. P seeks 2 dama#es ((3 i! there are other c&aims joined seekin#
e.uita"&e re&ie!)P and
i. 9 is un&icensed !orei#n corp or non%domici&iar o! NYP or
ii. 9 is a"out to concea& or remove assets !rom the state w?i ntent to
de!raud creditors or !rustrate en!orcement o! a jud#ment
B. Procedure
a. P must make mtn
i. 6e.Is o! mtn
(A) A!!idavits in support o! mtn must show $ o! * #rounds !or
attachment
(<) A!!idavits must show pro"a"i&it o! success on the merits
o! PIs CoA
(C) P must post an undertakin# ("ond) to indemni! 9 !or an
dama#es or e,penses caused " attachment (9 wi&& #et i!4
attachment is wron#!u& or 9 wins on the merits)
". Mtn can "e made on notice or e, parte. 6e.Is !or e, parte4
$F?*$
i. A hearin# prompt& a!ter sei:ure o! 9Is prop. so he can contest
(A) A!ter sheri!! &evies on the prop. ' P must make mtn on
notice to con!irm the e, parte order o! attachment
(<) /, parte mtn "ecomes automatica&& void i! P !ai&s to
make mtn on notice w?i , das a!ter &ev
(I) , determined on these #rounds
(a) I! 9 is un&icensed !orei#n corp or NY non%
domici&iar 1 mtn to con!irm on 9 w?i $E das a!ter &ev
(") I! 9 a"out to concea&?remove assets etc. mtn to
con!irm served on 9 w?i B das
C. Pre&iminar injunctions 1 used to maintain status .uo whi&e action
pendin#
$. @pes o! actions
a. /.uit where P seeks either
i. Permanent injunction' or
ii. I! 9 threatens to harm PIs interest in su"ject matter
". Not actions just !or 2 dama#es
*. Procedure
a. Mtn on notice
". Mtn served w? or a!ter summons' antime "e!ore !ina& jud#ment
c. 6e.Is !or mtn
i. PIs a!!idavit shows #rounds !or e.uita"&e re&ie! inc&udin# threat o!
irrepara"&e injur
ii. Show pro"a"i&it o! success on merits o! under&in# CoA
iii. Must #ive an undertakin# ("ond) to indemni! 9 !or
dama#es i! pre&iminar injunction shou&d have "een #ranted
;. 6e&ation to @6(
a. w? a @6( 1 in a case invo&vin# threat o! immediate injur' P ma
re.uest a @6( e, parte
i. -unction 1 maintains the status .uo unti& mtn !or pre&iminar
injunction is decided
ii. Procedure 1 to make mtn on notice !or a pre&iminar injunction
" wa o! order to show cause served on 9' who is immediate&
restrained " @6( pendin# reso&ution o! mtn !or pre&iminar
injunction
*E?*$
9.@emporar receivership 1 a person is appoint " ct to mana#e prop. In 9
possession
$. @pe o! action 1 P must "e assertin# an e.uit c&aim in which speci!ic
prop. Is
*$?*$
Contracts
I. Vocabulary
A.K agreement plus
1. Express K find agreement from words of parties
2. Implied K parties act as toug tere is a K
!. "uasi#K an e$uitable remedy
1. %eed not apply K rules
2. Applies wen strict application of K seems un&ust
'. Elements
a. ( as conferred benefit on )* and
b. ( as reasonably expected to be paid+ and
c. ) reali,ed un&ust enricment if ( is not compensated
-. .easure of reco/ery
a. K price not measure
b. K price is ceiling if ) is in default or K reco/ery barred by 0o1s
C. !ilateral K results from an offer tat is is open as to te metod of
acceptance.
).2nilateral K results from an offer tat expressly re$uires
performance as te only possible metod of acceptance
1. A K is bilateral unless
a. A reward* pri,e* or contest* or
b. 3ffer expressly re$uires performance for acceptance
II. Applicable law
A.Common law applies to ser/ices* real estate* and oters not co/ered
by te 2CC
!. Articles 1 4 2 of te 2CC apply to Ks tat are primarily sales of
goods 5tangible personal property6
1. .ixed deal 200 applies to Ks tat include bot goods and
ser/ices if te goods are te more important part of te deal 5if
ser/ice is more important ten C7 applies6
a. Exception if K di/ides payment* ten 2CC applies to goods
part and C7 to ser/ices
III. 1ormation of Ks
A.3ffers
1. 8eneral test manifestation of an intention to K. 9e basic test is
weter a reasonable person in te position of te offeree would
1:'2
belie/e tat is or er assent creates a K.
2. Content;
a. 8eneral rule an offer does not a/e to contain all material items
i. .issing price term in sales K;
5A6 In sale of real estate 5C76 price and description
re$uired 5if missing* not offer6
5!6 0ale of goods 5Art. 26 no price re$uirement 5offer if
parties so intend6
ii. Vague or ambiguous material terms;
5A6 2nder C7 and 2CC an offer using /ague or
ambiguous material terms is not an offer 5e.g. # <I=ll sell you
my car for a fair price<6
iii. >e$uirements Ks:3utput Ks;
5A6 A K for te sale of goods can state te $uantity of goods
to be deli/ered under te K in terms of te !=s re$uirements
of te 0=s output or in terms of exclusi/ity.
516 Ex. # ! <offers< to buy all of is grits from 0 for ?
years 5tis is sufficiently specific to be an offer6
5a6 %o unreasonably disproportionate increases !
can increase re$uirements so long as te increase is in
line wit prior demands 5in te example abo/e* if !
buys 1*@@@ lbs of grits in eac of te 1st ' years of te
agreement* e cannot order A*@@@ lbs in te -t year
tis is too large and increase and will be reduced6
'. Communication :Context
a. 8eneral rules
i. (rice $uotation is not an offer
ii. An ad is not an offer
b. Exceptions
i. (rice $uotation can be an offer if it is in response to a specific
in$uiry
ii. An ad/ertisement can be an offer if it is in te nature of a
reward
iii. An ad can be an offer if it is specific as to $uantity and
wo can accept 5<1 widget a/ailable* 1st come* 1st ser/e<6
!. 9ermination of offers
1. An offer cannot be accepted if it a/e been terminated 5it is dead6
2:'2
2. .etods of termination
a. 7apse of time an offer tat as not been accepted witin te
time stated for acceptance or witin a reasonable time is
considered terminated
b. Bords or conduct of offeror an offer can be re/oCed by eiter;
i. An unambiguous statement by offeror to offeree of
unwillingness or inability to contract+ or
ii. 2nambiguous conduct be offeror indicating an
unwillingness:inability to K tat offeree is aware of
5A6 Ex. # ! D 0 offer to sell car* 0 sees C dri/ing car next
day
iii. >e/ocation of an offer;
5A6 0ent by mail* not effecti/e until recei/ed
5!6 An offer cannot be re/oCed after it as already been
accepted
5C6 3ffers tat cannot be re/oCed;
516 An offer cannot be re/oCed if te offeror as
promised to Ceep te offer open and tis promise is
supported by consideration 5<option K<6
526 1irm offer rule 52CC Art. 26 an offer cannot be
re/oCed for up to ' monts if;
5a6 3ffer to buy or sell goods+
5b6 0igned* written promise to Ceep offer open+ and
5c6 (arty is a mercant 5person in business6.
5i6If writing promises to Ceep offer open for longer tan
' monts* te mercant can still re/oCe after '
monts
5ii6 If writing does not state a time period* te
mercant can=t re/oCe for a reasonable time period
fixed by te court 5up to ' monts6
5'6 1irm offers in %E in Ks oter tan sale of goods
Ks* an offer tat states in writing tat it will be eld open
is irre/ocable for time states or a reasonable time
5a6 %o signature re$uirements
5b6 %o time limit
5c6 In general* %E gi/es greater significance to te
existence of writing.
':'2
5-6 An offer cannot be re/oCed if tere as been
detrimental reliable by te offeree tat is reasonably
foreseeable 5e.g. # subcontractor cannot re/oCe is bid
wen a general contractor wo is bidding on a K relies on
tat bid6.
5?6 9e start of performance pursuant to an offer to enter
into a unilateral K maCes tat offer irre/ocable for a
reasonable time to complete performance
5a6 >e$uires start of performance not &ust mere
preparation 5toug if mere preparation* offer could be
irre/ocable under detrimental reliable abo/e if
preparation was reasonably foreseeable6
c. Bords or conduct of te offeree >e&ection;
i. Counteroffer terminates te offer and becomes a new offer
5A6 <Bill you taCe F1@@G< does not constitute a
counteroffer
ii. Conditional acceptance operates te same way as a
counteroffer. 7ooC for prases suc as;
5A6 if
5!6 so long as
5C6 pro/ided
5)6 on condition tat
iii. Additional terms to a C7 K 5<mirror image rule<6 an
<acceptance< tat adds new terms is treated liCe a counteroffer
rater tan an acceptance.
5A6 )oes not apply to te sale of goods
i/.Additional terms under 2CC Article 2 a response to an offer
tat adds new terms 5but does not maCe te new terms a
condition of acceptance6 is generally treated as an acceptance
5A6 Is te additional term part of te KG
516 If bot parties are mercants te general rule is tat
te additional term is part of te K.
5a6 Exceptions te additional terms are not part of
te K if;
5i69ey materially cange te offer+ or
5ii6 9e original offeror ob&ects to te cange.
526 If one or bot parties is not a mercant te
-:'2
additional term is merely a proposal tat is to be
separately accepted or re&ected
d. )eat of party prior to acceptance
i. 8eneral rule deat or incapacity of eiter party terminates te
offer
5A6 Exceptions;
516 3ptions
526 (art performance of offer to enter into unilateral K
C. Acceptance of an offer
1. Bo can accept generally an offer can only be accepted by a
person wo Cnows about te offer wo is te person to wom it was
made 5offers cannot be assigned+ options can be assigned unless
option expressly pro/ides oterwise6
2. .etods of accepting an offer 5A fact patterns6;
a. If te offeree performs te only $uestion is weter notice of
performance is re$uired. 9is answer turns on weter offeree
as reason to belie/e tat offeror will not learn of te acceptance
and weter te offer dispenses wit notice.
b. If te offeree starts to perform start of performance is
acceptance of an offer to enter into a bilateral K but is not
acceptance of offer to enter into a unilateral K
i. 2nilateral K completion of performance is re$uired to
constitute acceptance.
c. If offeree promises to perform most offers can be accepted by a
promise to perform 5not offers tat expressly re$uire performance
for acceptance and reward offers6
d. If te offeror and te offeree are at different places and tere are
conflicting communications if an offeree is in/ited to accept by
mail* acceptance is effecti/e wen sent 5<.ailbox rule<6
i. 9us if C mails and acceptance letter and ten te offer is
re/oCed before te letter arri/es* te acceptance is /alid
5A6 >e&ection and acceptance exception if C mails a
re&ection letter but canges is mind and ten mails and
acceptance letter* wice/er arri/es first will be effecti/e.
e. If 0 sends te wrong goods general rule is tat te 0 accepted
te !=s offer but breaced te K
i. Accommodation exception in te sipment of nonconforming
?:'2
goods includes a note saying te sipment is offered merely as
an accommodation* it is /iewed as a counteroffer not breac 5!
can accept or re&ect sipment wit no oter remedy6
f. If te offeree is silent generally silence is not acceptance
i. Exception if offeree by words or conduct agrees tat silence
is acceptable* ten it is.
).1ormation 50econd /iew6;
1. 0ome agreements are not legally enforceable;. 7egal reasons for not
enforcing an agreement include;
a. 7acC of consideration or consideration substitute for te promise
at issue
b. 7acC of capacity of te person wo made tat promise
c. 0o1s
d. Existing laws tat proibit performance of te agreement
e. .isrepresentations
f. )uress
g. 2nconscionability
. Ambiguity in words of agreement
i. .istaCes at te time of te agreement as to te material facts
affecting te agreement
E. Consideration or consideration substitute
1. Consideration bargained for legal detriment to promisee
a. 1orms of consideration
i. (erformance 5doing someting not legally obligated to do6
ii. 1orbearance 5not doing someting legally entitled to do6
iii. (romise to perform
i/.(romise to forbear
b. <!argained for<
i. Versus conditional gift tere is no consideration wen you
say to a omeless man* <If you go to te cloting sop* you
may buy a coat on my credit.<
c. Illusory promises an illusory promise is one were te promisor
as not committed imself in any manner and is not
consideration.
i. Ex. 1 E agrees to sell is car to C unless C canges is mind.
E is not legally obligated to sell is car to C because no
consideration+ illusory promise.
A:'2
ii. Ex. 2 0ame facts but C promises to buy car by )ec. H or
notify E by )ec. A not to buy. E=s promise not to sell to
someone else in excange for assuming obligation to notify.
d. 9e ade$uacy of consideration is not rele/ant in K law.
e. (ast consideration
i. 8eneral rule not consideration 5e.g. A sa/es 7=s life. I is so
grateful tat e promises to pay A F'C. I canges is mind.
(romise not enforceable.6
5A6 Exception past consideration was expressly re$uested
and tere was an expectation of payment 5e.g. # I sees 7 is
in danger and asCs A to sa/e er* Cnowing tat A would
expect to be paid. After A sa/es 7* I promises to pay a F'K
legally enforceable6
f. (re#existing contractual or statutory duty rule
i. C7
5A6 8eneral rule doing wat you were already legally
obligated to do is not consideration for a promise to pay your
more to do merely tat 5you need new consideration for te
modification of an existing K6
516 Ex. # ! maCes K ten demands more money to
perform
5a6 Exceptions;
5i6Addition to or cange in performance any sligt
cange will do
5ii6 2nforeseen difficulty so se/ere as to excuse
performance
5iii6 'd party promise to pay no existing legal duty
to 'd party
ii. 2CC Article 2
5A6 %o pre#existing legal duty rule good fait is te test
for canges in existing sale of goods Ks
516 Ex. # 0 Ks to sell grits to ! for F1@@@. 0 subse$uently
tells ! tat it cannot deli/er grits for less tan F1*'@@. !y
promises to pay te additional F'@@. 0 deli/ers. ! is
obligated to pay te additional F'@@ as long as 0 was
acting in good fait.
g. (art payment as consideration for release 5promise to forgi/e
H:'2
balance of debt6;
i. If debt is due and undisputed part payment is not
consideration for release
ii. If debt is not yet due or is disputed part payment is
consideration for release.
. Consideration substitutes
i. A written promise to satisfy an obligation for wic tere is a
legal defense is enforceable witout consideration 5as a
consideration substitute6
5A6 Ex. # ) owes C F1C but C=s claim to collect te debt is
barred by te 037. ) writes C* <I Cnow tat I owe you
F1@@@. I will pay you FA@@.< C can collect on te FA@@
promise.
ii. 2nder 2CC* a written release of all or part of a claim for
breac of K for sale of goods is enforceable witout
consideration.
iii. (romissory estoppel most important consideration
substitute
5A6 Exam tip; on multiple coice* first looC for
consideration* and only if tere is not looC for promissory
estoppel
5!6 Elements;
516 (romise+
526 >eliance on te promise wic is reasonable*
detrimental* and foreseeable+ and
5'6 Enforcement is necessary to a/oid in&ustice.
1. )efendant:(romisor=s lacC of capacity
1. Bo lacCs capacity
a. An infant 5under 1J6
b. .ental incompetent 5lacC ability to understand agreement6
c. Intoxicated persons 5if oter party ad reason to Cnow6
2. Conse$uences of incapacity
a. 9e person witout capacity as a rigt to disaffirm K 5te party
cannot in/alidate* only incapacitated person can6
b. Implied affirmation te incapacitated person implicitly affirms
te K 5and tus cannot in/alidate it6 by retaining te benefits after
gaining capacity.
J:'2
c. 7iability for necessaries a person wo does not a/e capacity is
legally obligated to pay bacC for tings tat were necessary suc
as food* cloting* medical care* or selter
i. 9is liability is based on $uasi#K law not on K law 5tus oter
party can only reco/er benefit conferred* not K price6
8.0o1 defense
1. Ks witin 031;
a. A promise in consideration of marriage 5not promise to marry6
b. (romise by executor or administrator to pay obligation of estate
from is own funds 5not from estate funds6
c. (romise to answer for 5guarantee6 debts of anoter
i. %ot promise to pay* but promise to pay in someone else does
not
ii. .ain purpose exception if purpose of underlying obligation
was to benefit guarantor 5031 does not apply6
5A6 Ex. 0 sells to 3 paint on credit. 0 claims tat 3
promised to pay if ( didn=t. (=s purpose in buying te paint
was to paint 3=s ouse.
5!6 %E )istinction main purpose exception re$uires
independent duty of payment 5if guarantor would a/e been
legally obligated to pay anyways6
d. 0er/ice K not capable of being performed witin a year from te
time of K
i. Examples
5A6 Employment K for ' years 031
5!6 Employment K for ' years tat can be terminated on '@
day notice 031
5C6 Employment K for a year beginning next mont 031
5)6 Ks to perform tasCs %ot 031 because in teory wit
unlimited resources* any tasC could be completed witin te
year
516 )oesn=t matter if in reality te tasC was not
completed witin te year 5it was still capable of being
completed witing te year and tus not witin 0316
5E6 Ks for life not 031* regardless of ealt* etc
516 Ks for life in 031 in %E
e. 9ransfers of interest in real estate for a term more tan 1 year
K:'2
i. Includes sales* leases* easements* etc 5not building because not
transfer of interest6
f. 0ale of goods for F?@@ or more
g. %E Exam only
i. 7eases of goods wit payments totaling F1C or more
ii. K to assign insurance policy or name beneficiary
iii. K to pay finder=s fee or broCer=s fee to person oter tan a
licensed broCer or lawyer
2. 0atisfying 031
a. (erformance
i. 0er/ice Ks full performance by eiter party satisfies 031
5A6 (art performance does not satisfy 031 5tus no remedy
under K law* toug possible remedy as a $uasi#K6.
ii. 0ale of goods Ks
5A6 3rdinary goods part performance of a K for te sale
of goods satisfies te 031 but only to te extent of part
performance 5tus* 0 can sue for payment for goods
deli/ered but ! can=t sue compelling deli/ery of remaining
goods6L
5!6 0pecially manufactured goods 031 is satisfied as
soon as 0 maCes a substantial beginning of maCing or
obtaining te goods 5enoug worC to Cnow te goods were
specially manufactured6.
iii. >eal estate transfer K
5A6 1ull payment by te ! of real estate does not satisfy te
031L
5!6 (art performance by ! of real estate can satisfy 031 if
any of te following ' are satisfied; payment* possession*
and:or impro/ements
516 Ex. ! orally agrees to buy !lacCacre from 0 for
F1@*@@@. ! taCes possession of !lacCacre and pays F2*@@@
5031 satisfied because part payment and possession
b. Briting
i. C7 C31 all of te material terms 5te wat and ow muc6
of te K must be in writing5s6 and it must be signed by te )
ii. 2CC 031 same as abo/e but writing also must include
$uantity term
1@:'2
5A6 <Answer te damn letter< exception does away wit
signature re$uirement if bot parties are mercants and te
person wo recei/ed a signed writing wit a $uantity term
tat claims tere is a K fails to respond witin 1@ days of
receipt.
iii. 2CC 2A leases of personal property writing must
indicate tat it is a lease* describe wat is being leased* and
state te duration of te lease.
c. Mudicial admission of sale of goods agreement a statement in
pleadings* disco/ery* or testimony tat tere was an agreement
'. >elated issues
a. Autori,ation to enter into a K for someone else must be in
writing if te K to be signed in witin te 031 5e$ual dignity
rule6
b. K modifications
i. Ben law re$uires a writing to modify If te deal wit te
alleged cange would be witin te 031* ten te alleged
modification agreement must be in writing.
ii. Ben K re$uires writing to modify;
5A6 C7 K pro/isions re$uiring tat all modification be in
writing are ignored
5!6 2CC effecti/e unless wai/ed
I.Illegality* .isrepresentation* )uress
1. Illegal sub&ect matter:purpose
a. Illegal sub&ect matter a K to do someting illegal is /oid
b. Illegal purpose a K to do someting tat is legal but in
furterance of an illegal purpose is not /oid 5and is enforceable*
but only by te person wo did not Cnow of te illegal purpose6
2. .isrepresentation
a. A false assertion of fact or a concealment of facts
i. As to terms of te K 5e.g. tis ouse as no termites6 maCes
te agreement /oidable if te misrepresentation is fraudulent or
material 5K misrepresentation* unliCe tort does not re$uire
fraud6 and te misrepresentation induced te maCing of te K
5A6 A misrepresentation as to te nature of te K 5e.g.
tis is &ust a lease wen it is actually a purcase agreement6
is /oid 5it cannot be enforced6
11:'2
ii. >emedy recission
'. )uress
a. Elements
i. Improper treat
ii. %o reasonable alternati/e
I. 2nconscionability
1. Empowers a court to refuse to enforce all or part of an agreement if
tere was unfair surprise or oppressi/e terms as tested at te time of
te agreement was made
2. 2nder 2A* a court may grant relief from a consumer lease e/en
toug no pro/ision of te lease is unconscionable* if tere is
unconscionable conduct in inducing or enforcing te lease.
M. Ambiguity in words of agreement
1. 9ere will be no K if;
a. (arties use a material term tat is open to at least 2 reasonable
interpretations+ and
b. Eac party attaces a different meaning to te term+ and
c. %eiter party Cnows or as reason to Cnow te term is open to at
least 2 reasonable interpretations
i. If 1 party did Cnow tat te term was open to 2 reasonable
interpretations* te K will be enforced under terms as
understood by te oter party.
K..istaCe of fact
1. .utual mistaCe of material fact
a. 9ere will be no K if;
i. !ot parties were mistaCen as to
ii. A basic assumption of fact* wic
iii. .aterially affects te agreed excange
b. Key is weter te agreed upon sub&ect matter exists
i. .utual mistaCe as to wat someting is te agreement is not
legally enforceable
ii. .utual mistaCe as to wat someting is wort te agreement
is still legally enforceable
2. 2nilateral mistaCe of material fact;
a. 8eneral rule courts are reluctant to allow a party to a/oid a K
for mistaCe made by only one party
i. Exceptions
12:'2
5A6 <(alpable< mistaCes if te oter party to te K Cnows
or sould a/e Cnown of te mistaCe* courts may grant relief
to te mistaCen party.
5!6 .istaCes disco/ered before significant reliance by te
oter party
IV. 9erms of te K
A.(arties words and parol e/idence rule
1. Vocabulary
a. Integration written agreement tat court finds is te final
agreement 5triggers parol e/idence rule6
b. (artial integration written and final but not complete
c. Complete integration written* final* and complete
d. .erger clause K clause suc as <9is is te complete and final
agreement<
2. 9riggering facts
a. Britten K tat te court finds is te final agreement* and
b. 3ral statement made at te time te K was signed or earlier oral
or written statements by parties to te K.
'. (arol e/idence fact patterns 5-6;
a. Canging written deal regardless if te writing is complete or
partial integration* te parol e/idence rule pre/ents a court from
considering earlier agreements as a source of terms tat are
inconsistent wit te terms of te written K
i. 9e court may* owe/er* consider e/idence of suc terms for
te limited purpose of determining weter tere was a mistaCe
in integration 5a mistaCe in reducing te agreement to writing6
5A6 Ex. 1 0 Ks in writing to sell ! 1*@@@ cicCens per
mont for 12 monts. ! claims tat 0 told im &ust as tey
were signing te K tat e would deli/er as many cicCens
as ! needs during te 12 monts K term and offers e/idence
of telefaxes from 0 supporting tis claim
516 9e court cannot consider te e/idence in
determining wat te terms of te K are.
b. Establising a defense to te enforcement of a written deal
regardless of weter te writing is a complete or partial
integration* te parol e/idence rule does not pre/ent a court from
considering earlier words of te parties for te limited purpose of
1':'2
determining weter tere is a defense to te enforcement of te
agreement suc as misrepresentation* fraud* duress 5not asCing
te court to cange te deal* but to cancel it6
c. Explaining terms in a written deal earlier agreements can be
considered to resol/e ambiguities in written K
d. Adding to te written deal te parol e/idence rule pre/ents te
court from considering earlier agreements as a source of
consistent* additional terms unless te court finds te written
agreement was only a partial integration.
i. Ex. 0 Ks in writing to sell ! cicCens. 9e written K does not
specify ow te cicCens are to be pacCaged and wrapped. 9e
court can consider e/idence of earlier agreements between 0
and ! as to ow te cicCens are to be pacCaged and wrapped
if it determines te written agreement was only a partial
integration.
ii. <%aturally and normally< exception e/en if te writing is a
complete integration* a court can still consider e/idence of
earlier agreements for terms tat would naturally be in a
separate agreement.
!. Conduct* course of performance* and custom 4 usage
1. 9e words are parties are not te only source of K terms. Courts
looC first at te court of performance* ten course of dealing * ten
custom 4 usage to explain words in Ks or to fill in gaps in Ks;
consider again te example of a written K for te sale of <cicCens<
a. Iierarcy
i. Course of performance same people* same K
5A6 Ex. 0 Ks to sell 1*@@@ cicCens a mont to ! for 12
monts. 10t ' sipments are boiling ens and ! does not
complain
ii. Course of dealing same people* similar but different Ks
5A6 Ex. 0 Ks to sell 1*@@@ cicCens per mont to ! for 12
monts. 2nder prior cicCen Ks* 0 sent be boiling ens and
! complained
iii. Custom 4 usage different but similar people* different
but similar K
5A6 Ex. 0 Ks to sell 1*@@@ cicCens a mont to ! for 12
monts. It is customary in te cicCen industry to use te
1-:'2
word <cicCen< wen deal co/ers cicCens up to A lbs.
C. 2CC terms
1. )eli/ery obligations of 0 of goods;
a. %o place of deli/ery as been agreed upon absent agreement*
te place is te 0=s place of business unless bot parties Cnow tat
te goods are somewere else and ten tat place
b. (lace of deli/ery by common carrier as been agreed upon ten
tere is $uestion as to wat te 0 as to do to complete its
deli/ery obligation
i. If sipment K 0 completes deli/ery wen
5A6 It gets te goods to te common carrier*
5!6 .aCes reasonable arrangements for deli/ery* and
5C6 %otifies te !
ii. If destination K te 0 doesn=t complete its deli/ery obligation
until goods arri/ed were ! is.
iii. )etermining weter K is a sipment or a destination K
5A6 If K says <13! N0=s cityO< sipping K
5!6 If K says <13! N!=s cityO< destination K
2. >isC of loss
a. >isC of loss issues arise were 516 after te K as been formed
but before te ! recei/es te goods 526 te goods are damaged or
destroyed* and 5'6 neiter te ! nor te 0 is to blame.
i. If risC of loss is on te ! e as to pay te full K price for te
lost or damaged goods
ii. If te risC of loss is on te 0 no obligation on te !=s party
5and possible liability on te 0 for non#deli/ery6
b. 1our rules for risC of loss 5a ierarcy6;
i. Agreement of te parties controls
ii. If no agreement* looC for an unrelated breac 5breacing party
as te risC of loss6
5A6 Ex. 0 Ks wit ! for coffee. Coffee is destroyed by
rats 5no fault by eiter party6. 0 was already 2 weeCs late in
deli/ering te coffee before it was destroyed. 0 as te risC
of loss.
iii. )eli/ery by common carrier oter tan 0 risC of loss
sifts from 0 to ! at te time tat te 0 completes is deli/ery
obligations 5wat constitutes completion depends on weter it
1?:'2
is a sipment or a destination K6
i/.%o agreement* no breac* no deli/ery by a carrier;
5A6 9e determining factor is weter te 0 is a mercant
5weter te ! is a mercant is irrele/ant@
516 >isC of loss 5mercant 06 sifts from a mercant#0
to a ! on te !=s receipt of te goods 5taCing pysical
possession6
526 >isC of loss 5non#mercant 06 sifts from a non#
mercant#0 to a ! wen e tenders goods+ maCes goods
a/ailable
5a6 Ex. ! !* a used car dealer* buys a used /an from
is friend 0. 0 tells ! to picC up te /an at is
con/enience* tat te Ceys are beind te front bumper.
Vandals damage te /an before ! gets it. 0 is not liable
because e tendered te /an to !.
c. 2A lease of personal property generally* risC of loss is on te
lessor
i. Exception finance leases 5risC on lessee6
'. Barranties of $uality
a. Express warranty
i. Bords looC for words tat promise* describe* or state facts
5distinguis from sales talC6
5A6 Ex. 1 <All macine parts are steel.< P express
warranty
5!6 Ex. 2 <9is macine is well#made.< P no warranty
5C6 Exam tip looC for parol e/idence issues 50 made
statement about $uality but K does not include tese terms
ii. 2se of sample model creates an express warranty tat te
goods te ! recei/es will be liCe te sample model.
b. Implied warranty of mercantability
i. Ben any person buys any goods from any mercant* a term is
automatically added to te K by operation of law tat te
goods are fit for te ordinary purpose for wic suc goods are
used.
5A6 9riggering fact 0 is a mercant 5meaning e deals in
goods of tat Cind6
5!6 Barranty goods are fit for ordinary purposes
1A:'2
c. Implied warranty of fitness for a particular purpose
i. 9riggering facts ! as a particular purpose* ! is relying on 0
to select suitable goods* and 0 as reason to Cnow of te
purpose and reliance
d. 2A warranties on leases
i. 8eneral rule lessor of personal property maCes te same
warranties as 0; express* mercantability* fitness
ii. 1inance leases in a <finance lease< warranties made by
supplier to lessor are enforceable by lessee 5can only enforce
against 0* not against banC can=t stop maCing lease payments
to banC because of defect6
-. Contractual limitations on warranty liability
a. )isclaimer 5e.g. tere are no warranties6 eliminates implied
warranties
i. Express warranties 5words or sowing model:sample6 cannot
be disclaimed
ii. Implied warranties of mercantability and fitness can be
disclaimed 5wit words liCe;
5A6 as is
5!6 wit all faults
5C6 or conspicuous language of disclaimer mentioning
mercantability
b. 7imitation of remedies 5e.g. <warranty liability sould be
limited to replacement parts< does not eliminate warranty*
simply limits or sets reco/ery for any breac of warranty.
i. (ossible to limit remedies* e/en for express warranties
ii. 8eneral test is unconscionability
iii. (rima facie unconscionable if limitation of warranty on
consumer goods does not allow for reco/ery for personal in&ury
V. (erformance
A.0ale of goods performance concepts
1. 8oods
a. (erfect tender te general standard of Article 2. 0ub&ect to
limited exceptions* te 0 is obligated to deli/er perfect goods
b. Cure in some instances* a 0 wo fails to maCe a perfect tender
will be gi/en a <second cance*< an option of curing. %ote tat
e/ery 0 does not a/e te opportunity to <cure*< and tat te !
1H:'2
cannot compel te 0 to cure.
i. 9ime for performance not yet expired In /ery limited
situations* a 0 as te option of curing e/en after te K
deli/ery date
5A6 0tatutory test weter te 0 as reasonable grounds
for belie/ing tat te improper tender would be acceptable*
peraps wit a money allowance 5looC for information in te
$uestion about prior deals between te ! and 0 wit suc
allowance6
c. >e&ection of te goods
i. Effect if goods are non#conforming* !=s re&ection of goods
as effect of creating a breac of K by 0 so tere can be a
lawsuit
ii. Ben can te ! re&ect te goodsG
5A6 >e&ection of te goods must occur before acceptance of
te goods
516 If te goods are less tan perfect* te ! as te option
to re&ect unless it is an installment C
526 Installment sales Ks a K tat re$uires or autori,es
516 deli/ery in separate lots 526 to be accepted separately
5a6 ! as rigt to re&ect only were tere is a
substantial impairment in tat installment tat can=t be
cured.
5b6 E.g. 0 and ! enter into and installment sales K
for te deli/ery of 1@ Cegs of beer at Apm for eac nigt
of bar re/iew course. 3ne nigt 0 deli/ers K Cegs at
A;'@ pm 5! cannot re&ect installment because it is not a
substantial impairment e/en toug not perfect
tender6
d. Acceptance of goods
i. Ben is acceptanceG
5A6 Express
5!6 (ayment witout opportunity to inspect is not treated as
acceptance
516 (re#inspection payment pro/ision in K payment
still not treated as acceptance.
5C6 Implied acceptance retention after opportunity for
1J:'2
inspection witout ob&ection is acceptance 5bar exam rule of
tumb; if ! ad goods for more tan a mont witout
complaint acceptance6
ii. Effect of acceptance
5A6 If ! accepts* e cannot later re&ect
e. >e/ocation of acceptance of te goods
i. In limited circumstances* a ! can effect a cancellation of te K
by re/oCing is acceptance of te goods
ii. >e$uirements for re/ocation;
5A6 %on#conformity substantially impairs te /alue of te
goods+
5!6 Excusable ignorance of grounds for re/ocation or
reasonable reliance of 0=s assurance of satisfaction+ and
5C6 >e/ocation witin a reasonable time after disco/ery of
non#conformity.
2. (ayment
a. (ayment is in cas unless oterwise agreed upon.
b. !uy can pay by cecC
c. 0 does a/e to taCe te cecC but tat gi/es te ! an additional
reasonable time
!. Conditions of performance
1. Bat is an express performance conditionG
a. A condition is a mutually agreed upon promise modifier
i. 9rue condition an e/ent beyond te influence of eiter of te
parties to te K tat affects te duty to perform
ii. Co/enant 5duty:promise6 is not a condition
iii. Condition coupled wit co/enant an e/ent tat is to
someone extent witin te influence of one of te parties of te
K tat affects te duty to perform
i/.Condition coupled wit an implied co/enant were te
conditioned e/ent is sub&ect to te efforts of one of te parties
to te K* ten te law implies a promise to use reasonable
efforts 5if not* ten breac of K6
5A6 E.g. ! Ks to buy I=s ouse. 9e K pro/ides in part
<9is sale is conditioned on !=s obtaining an JQ mortgage
516 If ! maCes reasonable efforts to obtain te mortgage
by cannot no K
1K:'2
526 If ! does not maCe reasonable efforts to obtain
mortgage breac of K
2. Iow can an express condition be modified;
a. if
b. pro/ided tat
c. so long as
d. sub&ect to
e. in te e/ent tat
f. until on condition tat
'. Iow can express condition be satisfiedG
a. 8eneral rule strict compliance wit express conditions
i. E.g. condition to use >eading pipe in ouse* builder uses
comparable Coo no payment re$uired
5A6 Exception <payment upon appro/al*< if reasonable
person would appro/e* ten payment due* unless sub&ect art
or oter matters inerently discretionary
-. Iow can an express condition be excusedG
a. Estoppel
i. Identify te person wo benefits from or is protected by te
condition. 9en looC for a statement by tat person gi/ing up
te benefits and protection condition
ii. Estoppel is based on a statement by te person protects
!E13>E te conditioning e/ent was to occur and re$uires a
cange of position.
b. Bai/er
i. is based on a statement by te person protected by te
condition A19E> te conditioning e/ent was to occur and does
not re$uire a cange of position
?. Bat is a constructi/e condition and ow is it satisfiedG
a. Identification
i. Constructi/e conditions are less ob/ious* are Ceyed to order of
performance. 3n bar* te most common constructi/e condition
$uestion in/ol/es a fact patter in wic K is silent as to time of
payment. In real world* unless tere is an ad/ance agreement
for payment in ad/ance* you pay wen worC is done. 3n bar* in
suc a situation* doing worC is constructi/e condition
precedent to te payment performance
2@:'2
b. 0atisfaction
i. 0tandard substantial performance
5A6 Ex. 1 M Ks to build E=s ouse. K; <All pipe must be
>eading<
516 Express condition no 5not language6
526 Constructi/e condition Ees* worC before payment
5'6 Construction satisfied Ees* only need substantial
compliance
5!6 Ex. 2 ( Ks to paint 2@ apartments for 3 for F1@K. (
paints 1K of te apartments ten stops.
516 9e constructi/e condition precedent of (=s painting
2@ apartments as been satisfied so tat* under K law* 3
as to pay ( for te 1K apartments tat a/e been painted
5because 1K:2@ is substantial performance tere will be a
price ad&ustment or damages because of partial breac.
5C6 Ex. ' ( Ks to paint 2@ apartments for 3 for F1@C. (
paints - of te apartments and ten stops.
516 %ot substantial performance. ( could reco/er for -
apartments under $uasi#K teory of reco/ery.
ii. )i/isible K and te substantial performance rule;
5A6 )i/isible K liCe installment K 5but not dealing wit
te sale of goods6
516 If K itself di/ides te performance of eac party into
te same number of parts wit eac part performance by
one party ser/ing as consideration for te corresponding
part performance by te oter* ten te K is a di/isible K
and te substantial performance test is applied to eac
di/isible part of te K.
526 Ex. ( Ks to paint 2@ apartments for F?@@ and
apartment. ( paints - of te apartments and ten stops.
5a6 9e constructi/e condition precedent as been
satisfied so tat* under K law* 3 as to pay ( for te
apartments se painted.
VI. Excuse for non#performance
A.Excuse by reason of oter party=s breac
1. 0ale of goods perfect tender
a. >emember tat in a sale of goods K* te 0 generally is obligated
21:'2
to maCe a perfect tender. In te tender is less tan perfect* te !
can re&ect te goods and witold payment 5te ! is excused from
paying6. Excuse by reason of te oter party=s breac.
2. Common law Ks material breac
a. C7 generally re$uires only substantial performance. If one party
to a K substantially performs* te oter party is re$uired to
perform. A minor breac by one party to te K will not excuse
performance by te oter party.
b. At common law* only a <material breac< by one party excuses
te oter party=s performance <.aterial breac< is te con/erse of
<substantial performance< 5material breac results from a
performance tat is not substantial6. Beter a breac is material
is a $uestion of fact.
!. Excuse of performance by reason of oter party=s anticipatory
repudiation or inability to perform
1. Anticipatory repudiation
a. An unambiguous statement 516 tat te repudiating party will not
perform 526 made prior to te time performance is due.
i. Anticipatory repudiation by one party excuses te oter party=s
duty to perform.
ii. It also generally gi/es rises to an immediate claim for damages
unless te claimant as already finised is performance 5in
wic case must wait until K date6
b. Can be re/ersed or retracted so long as tere as not been a
material cange in position by te oter party. If te repudiation is
timely retracted* te duty to perform is reimposed but
performance can be delayed until ade$uate performance is
assured.
2. Inability to perform
a. 7iCely fact pattern doing worC for someone* not for money* but
for someting tat te worCer wants* and ten tat someting is
no longer a/ailable6
i. Ex. ( Ks to paint 3=s ouse in excange for 3=s !lacCacre.
!efore ( finises paying* 3 sells !lacCacre to R. ( is excuses
from continuing painting.6
C. Excuse by reason of later K
1. >ecission 5cancellation6
22:'2
a. A K can be rescinded 5bot parties agree to rescind6 if some
performance is still remaining from of of te K parties
2. Accord and satisfaction 5substituted performance6
a. Accord is an agreement by te parties to an already existing
obligation to accept different performance in satisfaction of te
existing obligation 5satisfaction is different from performance6
b. 9e accord suspends legal enforcement of te original obligation
to pro/ide time to perform te accord.
'. .odification 5substituted agreement6
a. .odification is an agreement by parties to an existing obligation
to accept a different agreement in satisfaction of te existing
obligation
b. Issues to remember
i. Consideration rules for modification 5C7* Art. 2* %E6
ii. 0o1s
-. %o/ation 5substituted person6
a. 0ame performance* different party
b. %o/ation excuses te contracted for performance of te party
wo is substituted or replaces
c. Iow delegation is different from no/ationS
i. %o/ation re$uires te agreement of !39I parties to te
original K and excuses te person replaced from any liability
for non#performance
ii. )elegation does not re$uire agreement of bot parties and does
not excuse te party to te original K wo sougt to delegate
).Excuse of performance by a later unforeseen e/ent;
1. (erformance of K duties 5oter tan a K duty to pay money6 can be
excused under impossibility* impracticability* or frustration of
purpose
a. 0ometing appens after K formation but before te completion
of K performance+
b. it was unforeseeable+ and
c. it maCes performance impossible* commercially impracticable* or
frustrates te purpose of performance.
2. ' basic facts patterns were issue is liCely to arise;
a. )amage or destruction of sub&ect matter of K
i. Ex. 1 ( Ks wit 3 to paint ouse. ( begins* ouse burns
2':'2
down* ( is excused.
ii. Ex. 2 ! Ks wit 3 to build ouse. ! begins* ouse burns
down* ! is not excused 5can still build ouse6
iii. Ex. ' 50=s risC of loss and damage:destruction6 E Ks
wit C to sell special car. After K but before risC to C* car
destroyed by flood* E=s non#performance excused
i/.Ex. - 5!=s risC of loss and damage:destruction6 assume in T'
abo/e tat flood occurs after risC sifts to C* C=s performance
not excused.
/. Ex. ? In T'* is sub&ect was 1@@ sacCs of grits* E=s
performance not excuses because fungible 5and replaceable6
b. )eat
i. (arty to K wo is special person
5A6 Ex. I delays in ousing ouse until e can get 1*
famous arcitect* to form K. 1 dies before designing. I ires
anoter arcitect* A to design ouse. 1=s non#performance is
excused because se is <special< person and party to K
ii. (erson not party to K
5A6 Ex. ! Ks to build ouse to 3 for F1@@C. !efore !
builds ouse* C* one of !=s carpenters dies. ! does not build
ouse. !=s non#performance is not excused.
iii. (arty to te K but not <special< person
5A6 Ex. I Ks wit ( to paint ouse because ( ad lowest
bid* F1@@@. ( dies* I ires anoter painter for F-*@@@. (=s
non#performance not excused. 5I can sue (=s estate from
F1*@@@6
c. 0ubse$uent law or regulation
i. 7ater law maCes performance of K illegal excuse by
impossibility
ii. 7ater law maCes mutually understood purpose of K illegal
excuse by frustration of purpose
VII. !reac remedies
A.(uniti/e damages not generally reco/erable for breac of K
!. 7i$uidated damages K can stipulate damages or metods of gi/ing
damages* but a K cannot pro/ide for a penalty
1. 2 general tests for determining weter a K pro/ision is a /alid
li$uidated damages clause or an in/alid penalty pro/ision
2-:'2
a. 9e amount of possible damages from any later breac of K is
difficult to determine+ and
b. 9e K pro/ision is a reasonable forecast of possible damages
2. Example of in/alid penalty pro/ision ! Ks wit 3 to build 0Ci
>ental place+ K includes F1@*@@@ late fee not /alid
'. Example of /alid penalty pro/ision 0ame as abo/e but F?@@ per
day late fee 5expected profit6
a. %E a 0 of a ouse may Ceep down payment as li$uidated
damages as long as it doesn=t exceed 1@Q of te K price.
C. )amages rules for ordinary Ks
1. 8eneral measure of damage in&ured party is entitled to reco/er
amount tat would a/e put im in as good a position as if te K
ad been performed
a. 9ese rules are based on protecting ( expectation interests by
trying to put te ( in same position as if te K ad been
performed 5put tis in a %E essay6.
b. Ex. 1# ( Ks wit 3 to paint ouse for F1C. ( breaces and 3 as
to pay F1*-@@ to anoter painted for te same worC. 3 can
reco/er F-@@ from (.
c. Ex. 2 0ame facts except tat 3 breaces sortly after ! begins*
after ( as incurred cost of F1@@. ( can reco/er costs actually
incurred plus lost profits.
2. Additional limitations
a. (lus incidental damages te in&ured party can also reco/er costs
se incurs in dealing wit te breac suc as costs of finding a
replacement
b. (lus foreseeable conse$uential damages te in&ured party can
also reco/er for conse$uential damages 5damages tat were
special to tat (6 tat were in reasonable contemplation of bot
parties at te time of te K.
c. .inus a/oidable damages 5mitigation6 no reco/ery for loss tat
could a/e been a/oided by appropriate steps. !urden of proof on
a/oidability is on te ) 5affirmati/e defense6
).)amage rules for sale of goods
1. (art H of Art. 2 reflects te general K damages policy of putting te
innocent party were it would a/e been ad te K been performed.
9ere are two rele/ant facts; wo breaced and wo as te goods.
2?:'2
9us tere are - basic Article 2 damages fact patterns and four sets
of rules.
a. 0 breaces* ! Ceeps te goods fair marCet /alue if perfect
minus fair marCet /alue as deli/ered
i. Ex. 0 sells ! anti$ue car for F'@C. 9e car is defecti/e. !
Ceeps te car and sues for breac of K. 9e &ury finds tat te
car as deli/ered was only wort F2@C and tat if te car ad
been deli/ered as K=ed* it would a/e been wort F'-C. ! can
reco/er F1-C.
ii. 0 breaces* ! as goods but does not accept
b. 0 breaces* 0 Ceeps goods were te 0 does not deli/er or te !
properly re&ects or re/oCes acceptance of tendered goods* te !=s
basic remedy is te different between te K price and eiter te
marCet price or te cost of buying replacement goods 5co/er6.
i. Bere ! as paid for goods wic are non#conforming* and
te 0 as refused te !=s offer to restore te goods and te !=s
demand for repayment* te ! may resell te goods and credit
te proceeds to te amount owed by te 0 5under te same
rules tat apply to a 0=s resale of wrongfully re&ected goods.6
9e ! may sell at eiter a public or pri/ate sale+ but if it is a
pri/ate sale* reasonable ad/ance notice must be gi/en to te 0.
c. ! breaces* ! as te goods K price
i. E.g. # ! Ks to buy carpeting from K. K price is FJ@@. !
recei/es te carpeting and does not pay for it. ! owes FJ@@
5always owes K price* regardless of marCet price.6
d. ! breaces* 0 as goods K price marCet price at reasonable
time and place of deli/ery 5or K price resale price6 and in some
situations* pro/able lost profits.
i. Ex. 1 E Ks to sell is 1KH' Cadillac to C for F1C. C breaces.
E ten sells to 0 for FJ@@. E can reco/er F2@@ from C.
ii. Ex. 2 5lost profits6 04. 7eater Ks to sell leater cloting to
C for F1C. 5Assume tat C is buying goods apart of 04.=s
regular in/entory. C breaces. 04. sells te /ery same items
to M for F1*@@@. 04. can reco/er damages from C 5GG6
5A6 Critical facts in lost profit ypos
516 >egular in/entory
526 9ere is a breac followed by resale at exactly te
2A:'2
same price
2. 0 breaces;
a.
E. "uasi#K
1. 2n&ust enricment
1. %on#.onetary remedies;
1. 0pecific performance:In&unction 5an e$uitable remedy wen remedy
at law is inade$uate6
a. Ks for sale of real estate
b. Ks for sale of uni$ue goods
i. 2ni$ue anti$ues* art* custom#made
c. Ks for ser/ices no specific performance but possible in&uncti/e
relief
i. Ex. If E Ks wit C to lecture for a Company* C cannot obtain
a court order re$uiring E to lecture but could possible bar E
from lecturing for a competing company 5negati/e specific
performance5
5A6 ' part test for /alidity
516 >easonable business need for te protection+
526 >easonable time limitation+ and
5'6 >easonable geograpic limitation
d. )efenses
i. 7aces a claim tat te plaintiff as delayed bringing te
action and tat te delay as pre&udiced te defendant+
ii. 2nclean ands a claim tat te party seeCing specific
performance is guilty of wrongdoing in te transaction being
sued upon+ and
iii. 0ale to a bona fide purcaser a claim tat te sub&ect
matter as been sold to a person wo purcased for /alue and
in good fait.
2. >eformation
a. An e$uitable remedy
b. Canges a written K
c. 1acts to watc for
i. .istaCe in writing te agreement clerical errors
ii. 1raudulent misrepresentation as te wat is in te writing due
to te oter party=s fraudulent misrepresentation
2H:'2
'. Ade$uate assurances of future performance
a. 7ooC for
i. 3ne party to K learning someting after te K tat gi/es im
reasonable grounds for insecurity about te oter party=s
performance+ and
ii. Britten demand for ade$uate assurance
b. Ex. ( Ks to paint 3=s ouse for F1C wit payment due '@ days
after completion of worC. After maCing K* ( learns of 3=s record
of not paying is bills. ( can maCe written demand for ade$uate
assurances.
-. >eclamation
a. >igt of an unpaid 0 to get is goods bacC.
b. Key facts are tat
i. 9e ! must a/e been insol/ent a te time tat is recei/ed te
goods+
ii. 9at 0 demand return goods witin 1@ days of receipt 5tis
<1@#day rule< becomes a <reasonable time rule< if before
deli/ery tere as been an express representation of sol/ency
by te !6+ and
iii. 9e ! still as te goods at time of demand.
c. Ex. 3n Man. 1?* 0 sells ! grits on credit. 9e grits are deli/ered
to ! and Man. 22. ! is insol/ent on Man 22. 0 learns of !=s
financial difficulties and demands return on Man. 2Ht. ! still as
grits on Man. 2Ht. 0 can reco/er te grits troug reclamation.
?. >igt of good fait purcaser in entrustment
a. If an owner lea/es is goods wit a person wo sells goods of
tat Cind and tat person wrongfully sells te goods to a 'd party*
ten suc a good fait purcaser cuts off te rigts of te original
owner:entruster
VIII. 'd party problems
A.'d party beneficiaries
1. Identifying 'd party beneficiary problems
a. 7acC for 2 parties K=ing wit te intent of benefiting a 'd party
i. Ex. 1 0 agrees to pay Mumbo !agels F1@@ and M! agrees to
deli/er 12 do,en bagels to E. If M! refused to deli/er* E can
sure on te K.
ii. Ex. 2 life insurance policies 5beneficiaries can sure insurance
2J:'2
company6
2. Vocabulary
a. 'd party beneficiary not a part to te K. Able to enforce Ks
oters made for is benefit.
b. (romisor a person wo is maCing te promise tat benefits te
'd party.
c. (romisee a person wo obtains te promise tat benefits te 'd
party
d. Creditor:donee 'd party beneficiary is usually a donee unless e
was already a creditor of te promisee
'. )ealing wit efforts to cancel or modify
a. 9est 'd party Cnows of or as relied on or assented as re$uested*
ten te rigts a/e /ested and te K cannot be cancelled or
modified witout consent unless te K pro/ides oterwise.
i. Ex. in bagel example* 0 and M! can cancel te K before E
learns about it but not after E learns about it and relies on it.
-. Bo can sue womG
a. !eneficiary can sue promisor+
b. (romisee can sue promisor+
c. )onee beneficiary cannot sue promisee* but creditor beneficiary
can sue on a pre#existing debt.
?. )efenses
a. If te 'd party sues te promisor* te promisor ) can assert any
defenses e would a/e ad if sued by te promisee.
!. Assignment of rigts
1. Bat is an assignmentG 9ransfer of rigts under a K in two separate
steps; 516 K between only two parties+ 526 one of te parties later
transfers rigts under tat K to a 'd party
a. Assignment /s. 'd party beneficiary;
i. Assignment 3n Man. 1?* !atman Ks wit 8otam to pro/ide
security ser/ices for a year+ te K pro/ides tat !atman is to be
paid F'@@C for te ser/ices. !atman later transfers is rigts
under te K to >obin.
ii. 'd party beneficiary !atman Ks wit 8otam to pro/ide
security ser/ices for a year+ te K pro/ides tat 8otam will
pay >obin F'@@C for !atman=s ser/ices
2. Vocabulary
2K:'2
a. Assignor party to te K wo later transfers is rigts under te
K to anoter
b. Assignee not a party to te K. Able to enforce te K because of
te te assignment
c. 3bligor oter party to te K.
'. 7imitations on assignments;
a. K pro/isions
i. (roibition language of proibition taCes away te rigt to
assign but not te power to assign wic means tat te
assignor is liable for breac of K but an assignee wo does not
Cnow of te proibition can still enforce te assignment.
ii. In/alidation language of in/alidation taCes away bot te
rigt to assign and te power to assign so tat tere is a breac
by te assignor and no rigts in te assignee
b. Common law
i. E/en if a K does not an any way limit te rigt to assign* C7
bars an assignment tat substantially canges te duties of te
obligor.
5A6 Assignment of rigt to payment tis does not
substantially cange te duty of te obligor
5!6 Assignment of oter performance rigts tis does
substantially cange te duty of te obligor 5e.g. 8otam
assigns its rigts to security ser/ices to .etropolis* i.e.
!atman is to defend .etropolis* not 8otam
-. >e$uirements for assignment
a. .ust a/e language of present assignment 5<I assign< not <I
promise to assign< or <I will assign<6+
b. Consideration is generally not re$uired
?. >igts of assignee;
a. Assignee can sue obligor
b. 3bligor as same defenses against assignee as it would a/e
against assignor
c. (ayment by obligor to assignor is effecti/e until obligor Cnows of
assignment
d. .odification agreements between obligor and assignor are
effecti/e if obligor did not Cnow of te assignment.
A. .ultiple assignments
'@:'2
a. 8ratuitous assignments;
i. 8eneral rule last assignee wins
5A6 It is possible to maCe a gratuitous assignment.
8enerally* owe/er* suc a gift assignment can be freely
re/oCed. >e/ocation can be accomplised directly or
indirectly by banCruptcy* deat* te assignor taCing
performance directly from te obligor* or te maCer of
anoter assignment. 0ince a later gift assignment re/oCes
and earlier gift assignment* te general rule for resol/ing
claims among assignees wo did not pro/ide consideration
is a last in time rule.
ii. Exception if te gift assignment is not re/ocable* ten it will
taCe priority o/er a later assignment
5A6 A gratuitous assignment is no re/ocable if;
516 It is te sub&ect matter of a writing deli/ered to te
assignee+
526 9e assignee as recei/ed some sort of indicia of
ownersip+ or
5'6 9e assignee as relied on te assignment in a way
tat is reasonable* foreseeable* and detrimental
iii. %E rule 8ratuitous assignment is not re/ocable if it is in
writing
b. Assignment for consideration
i. 8eneral rule first assignee for consideration wins
ii. 7imited exception a subse$uent assignee taCes priorityo/er
an earlier assignee for /alue only if e bot 516 does not Cnow
of te earlier assignment and 526 is te first to obtain payment*
a &udgment* a no/ation* or indicia of ownersip 5first to notify
is irrele/ant6
iii. .ultiple assignments for consideration as a breac of
warranty in an assignment for consideration* te assignor
maCes a warranty tat te rigts are assignable and
enforceable.
5A6 7osing assignee can sue assignor for breac of warranty
C. )elegation of duties
1. Bat is a delegationG party to K transferring worC under tat K to
'd party
'1:'2
2. >elationsip of assignment a delegation;
a. Assignment is te transfer by a party to a K of is rigts or
benefits under te K to a 'd party wo was not a party to te K
b. )elegation te transfer by a party to a K of duties or burdens
under te K to a 'd party wo was not party to te K.
c. 3ften a K=ing party maCes bot an assignment and a delegation of
is rigts and duties under te same K to a 'd party.
i. 3ften te multistate examiners use te term <assignment< in a
problem in/ol/ing an assignment and a delegation e/en in a
problem in/ol/ing only a delegation.
'. Bic duties are delegableG
a. 8eneral rule K duties are delegable
b. 7imitations 5/ery limited6 delegations are permitted unless
eiter;
i. K proibits delegations or proibits assignments+ or
ii. K calls for /ery special sCills+ or
iii. (erson to perform K as a /ery special reputation.
-. Conse$uences of delegation
a. )elegating party always remains liable
b. )elegatee is liable only if e recei/es consideration from
delegating party
i. Ex. 1 ( Ks wit 3 to paint ouse for F1*@@@. R ten agrees
wit ( tat R will do te painting for ( because ( is a good
friend. R does not do te worC.
5A6 3 can sue (.
5!6 ( cannot sue R 5because delegation was not for
consideration6
ii. Ex. 2 ( Ks wit 3 to paint ouse for F1*@@@. ( and R agree
tat R will do te worC and ( will pay R FK@@@. R does not do
te worC.
5A6 3 can sue (.
5!6 ( can sue R 5because delegation was for consideration6
5C6 3 can sue R 5delegation for consideration creates a 'd
party beneficiary obligation6
'2:'2
Corporations
I. Organization of NY Corps
A.Formation requirements (people, paper, acts):
1. Incorporators (people)
a. !at "oes an incorporator "o
i. #$ecutes t!e certificate an" "eli%ers it to t!e &ept. of 'tate
ii. (ol"s t!e organizational meeting
). Num)er of incorporators require" * 1 or more
c. !o can )e one+ (umans onl,, not entities
-. Certification of incorporation (paper):
a. .urpose:
i. / )et0een corp an" '(s
ii. / )et0een corp an" state
). Info on certificate
i. Names an" a""resses
(A) Corp name * must inclu"e one of t!e follo0ing 0or"s:
(1) Corporation
(-) Incorporate"
(1) 2imite"
(3) Count, in NY of t!e office of t!e corp
(C) &esignation of NY 'ec. Of 'tate as agent for ser%ice of
process (an" a""ress for for0ar"ing process)
(1) 4a, also name registere" agent for ser%ice of process
(&) Name an" a""ress of eac! incorporator
ii. 'tatement of "uration
(A) If none, presume perpetual e$istence
iii. Corp purpose (statement require"):
(A) 5eneral statement of purpose
(1) #g. 6 to 7engage in all la0ful acti%it, after first
o)taining necessar, state agenc, appro%al7
(3) 'pecific statement of purpose an" ultra %ires ules
(1) If ,ou gi%e a specific statement of purpose, acti%it, t!at
falls outsi"e of t!e scope of t!at is an ultra %ires act
(a) 8ltra %ires /s are %ali" (enforcea)le)
191-
()) '(s can see: in;unction to stop t!e ultra %ires act
(c) <! responsi)le officers an" "irectors are lia)le to t!e
corp for ultra %ires losses
i%.Capital structure
(A) &efinitions
(1) Aut!orize" stoc: * ma$imum num)er of s!ares t!at t!e
corp can sell
(-) Issue" stoc: = t!e num)er of s!ares t!e corp actuall,
sells
(1) Outstan"ing stoc: * s!ares t!at !a%e )een issue" an"
not re6acquire" ), t!e corp
(3) !at must )e inclu"e" in t!e certificate a)out stoc:
(1) Aut!orize" stoc:
(-) Num)er of s!ares per class
(1) Info on par %alue, rig!ts, preferences, an" limitations of
eac! class
(a) Note * at least on class of stoc: or )on"s must !a%e
unlimite" %oting rig!ts an" at least one class of stoc:
must !a%e unlimite" "i%i"en" rig!ts
(>) If preferre" s!ares are issue" in series (su)classes),
statement of %ariation in t!e series or of 3oar"?s po0er (if
an,) to esta)lis! series an" fi$ %ariations )et0een t!em, an"
limitations (if an,) on 3"?s aut!orit, to c!ange num)er of
s!ares in an, series of preferre" s!ares
1. Acts
a. #ac! incorporator signs certificate an" ac:no0le"ges it )efore a
notar, an" t!e, "eli%er it to t!e NY &ept. of 'tate
i. If it conforms 0it! t!e la0 an" filing fees pai", t!en t!e &ept.
files t!e certificate
(A) #ffect of filing * t!is is conclusi%e e%i"ence of a %ali"
formation (a "e ;ure corp)
ii. <!en, incorporators !ol" an organizational meeting (or t!e, can
"o it ), 0ritten consent) to a"opt an, ),la0s an" elect t!e initial
)oar" of "irectors
(A) 3" t!en ta:es o%er management
-91-
3. 2egal significance of formation of corp
1. Internal affairs of NY Corp (relations!ip among "irectors, officers,
'(s, etc) are go%erne" ), NY la0
-. A corp is a separate legal person. It !as )roa" po0ers ), statute,
inclu"ing po0er to enter /s, transfer propert,, )u, an" sell securities
(its o0n or ot!ers) an" to sue or )e sue". It can ma:e political
contri)utions regar"less of corp )enefit ()ut cannot contri)ute more
t!an @A: per ,ear to an, can"i"ate or organization Bc!ec: t!isC). It can
ma:e c!arita)le contri)utions 0it! no statutor, ceiling.
1. 3ecause t!e corp is a separate entit,, generall, t!e people 0!o run it
("irectors an" officers) are not lia)le for its o)ligations an" t!e o0ners
('(s) generall, en;o, 7limite" lia)ilit,7 0!ic! meanst !at a '( is
lia)le onl, for t!e price of !is s!ares.
C. &e facto corp "octrine9Corp ), estoppel
1. &octrines ), 0!ic! a )usiness failing to ac!ie%e "e ;ure corp status
nonet!eless is treate" as a corp ('(s 0ill not )e personall, lia)le for
)usiness "e)ts)
a. &e facto corp * 1) #$ists rele%ant incorporation statuteD -) parties
ma"e goo" fait!, colora)le attempt to compl, 0it! itD an" 1) some
e$ercise of corp pri%ileges
i. If applica)le * treate" as corp for all purposes e$cept in an action
), t!e state
ii. 'tatus in NY * )ecause t!e &ept. of 'tate certification is
conclusi%e proof of formation, t!e "octrine 0as t!oug!t to )e
a)olis!e". 38< case la0 suggests it ma, )e ali%e, at least in
limite" circumstances:
(A) Incorporators put toget!er proper certificate an" "eli%er it
to t!e &ept. of 'tate )ut t!e &ept. faile" to file it (0it!out
re;ecting it). Not "e ;ure, )ecause not file (can argue "e facto if
meet t!e test)D or
(3) .eople 0!o plan to incorporate commence )usiness after
signing certificate )ut )efore "eli%ering it for filing. &uring t!e
inter%al, argua)l, sufficient colora)le attempt to compl, to
result in "e facto corp.
). Corp ), estoppel * a)olis!e" in NY
191-
&.3,la0s
1. A"option of ),la0s is not a con"ition prece"ent to formation of a
corp. 3ut %irtuall, all corps !a%e t!em. <!e, set up internal
proce"ures, "efine responsi)ilities of "ifferent person (i.e. officers),
la, out !o0 notice of "irector meetings is gi%en, etc.
a. If t!e ),la0s conflict 0it! t!e certificate of incorporation * t!e
certificate controls )ecause ),la0s are internal (not file" 0it! state)
so outsi"ers are not )oun" ), t!em or c!arge" 0it! :no0le"ge of
t!em. 3,la0s are essentiall, a / among '(s
-. !o a"opts t!e initial ),la0s+ <!e incorporators (t!ese !a%e t!e
status of a '( ),la0)
1. !o can amen" or repeal t!e ),la0s or a"opt ne0 ones * t!e '(s
a. <!e 3" can "o so onl, if t!e certificate or '( ),la0s allo0s (an"
'(s can amen" or repeal an, 3"6a"opte" ),la0)
#. .re6incorporation /s
1. .romoter * a person acting on )e!alf of a corp not ,et forme"
-. 2ia)ilit, on pre6inc /s
a. Corporation * t!e corp is not lia)le on pre6inc /s until it a"opts t!e
/
i. #$press a"option * e.g. 3" resolution
ii. Implie" a"option * t!e corp?s :no0ing acceptance of t!e /
). .romoter * generall,, unless t! / clearl, in"icates t!at t!e parties
"o not inten" t!e promoter to )e lia)le, t!e promoter remains lia)le
on pre6inc /s until t!ere !as )een a no%ation (an agreement of t!e
promoter, t!e corp, an" t!e ot!er /?ing part, t!at t!e corp 0ill
replace t!e promoter un"er t!e /)
i. A"opting of / ), corp "oes not relie%e t!e promoter of lia)ilit,
(onl, no%ation)
F. 'ecret profit rule (0!en promoter "eals 0it! corp itself)
1. Eule * promoter cannot ma:e secret profit on !er "ealings 0it! t!e
corp
a. as t!ere a profit
i. 'ale to corp of propert, acquire" )efore )ecoming promoter
(A) .rofit * price pai" ), corp minus F4F
ii. 'ale to corp of propert, acquire" after )ecoming promoter
>91-
(A) .rofit * price pai" ), corp minus price pai" ), promoter
). If profit, t!e promoter is lia)le to t!e corp for t!at profit onl, if t!e
profit 0as secret (not lia)le if 3" consents to or ratifies t!e profit)
5.Foreign corps
1. Foreign corps "oing )usiness in NY must qualif,
a. Foreign corp is one inc an,0!ere )ut 3Y
). &oing )usiness means t!e regular course of intrastate, not interstate,
)usiness acti%it,. Not occasional or spora"ic )usiness (not ;ust
!a%ing meetings in NY, etc)
c. Foreign corp can qualif, ), appl,ing to &ept. of 'tate an"
"esignating 'ec. Of 'tate as agent for ser%ice of process
i. It applies ), gi%ing information from its certificate an" ),
pro%ing goo" stan"ing in !ome state
". Consequences of foreign corporations transacting )usiness 0it!out
qualif,ing:
i. .enalt, 0!en t!e corp finall, "oes qualif,, an"
ii. 8ntil it qualifies, t!e foreign corp cannot sue in NY ()ut it can )e
sue")
(A) <!ese are t!e onl, consequences (t!e )usiness transacte"
is %ali", etc)
II. Issuance of stoc:
A.!at is an issuance
1. !en a corp sells or tra"es its o0n stoc:
-. Issuance of stoc: is one 0a, a corp can raise capital
a. In%estors )u, stoc: an" t!ere), )ecome equit, !ol"ers * o0ners of
t!e corp. (t!eir equit, interest )rings 0it! it %arious rig!ts t!at 0ill
)e "iscusse")
). <!is is "istinguis!e" from issuance of )on"s
i. it! a )on", t!e in%estor ma:es a loa" to t!e corp to )e repai"
(usuall, 0it! interest) as agree" in t!e / (t!e !ol"er of a )on" is
a cre"itor (not a o0ner of t!e corp))
(A) A 7"e)enture7 is simpl, a loan t!at repa,ment of 0!ic! is
not secure" ), corp assets
3. 'u)scriptions (0ritten, signe" offers to )u, stoc: from corp):
1. Ee%ocation of pre6inc su)scriptions * a pre6inc su)scriptions is
A91-
irre%oca)le for 1 mont!s (unless it sa,s ot!er0ise an" all ot!er
su)scri)ers agree)
a. !,+ 6 so people forming t!e corp can rel, on t!e mone,?s )eing
t!ere (if t!ese 0ere re%oca)le, people coul" ple"ge to )u, stoc: an"
t!en pull t!e rug out rig!t )efore t!e corp 0as forme")
-. Ee%ocation of post6inc su)scriptions * re%oca)le until acceptance
1. !en "o t!e corporation an" su)scri)ers )ecome o)ligate" un"er a
su)scription+ 6 t!e t!e 3" accepts t!e offer (at t!at point, t!ere is an
agreement to sell to t!is su)scri)er. <!e call for pa,ment must )e
uniform 0it!in eac! class or series of stoc:)
>. 'u)scri)er "efault on pa,ment
a. If t!e su)scri)er !as pai" less t!an A=G of t!e purc!ase price * an"
fails to pa, t!e rest 0it!in 1= "a,s of 0ritten "eman", t!e corp can
:eep t!e mone, pai" an" cancel t!e s!ares (t!e s!ares )ecome
aut!orize" an" unissue")
). If t!e su)scri)er !as pai" A=G or more * an" fails to pa, t!e rest
0it!in 1= "a,s of 0ritten "eman", t!e corp must tr, to sell t!e stoc:
to someone else for cas! (or a )in"ing o)ligation to pa, cas!). If no
one 0ill pa, t!e remaining )alance, t!e "efaulting su)scri)er
forfeits 0!at !e !as pai" an" t!e s!ares are cancele". If someone
0ill pa, more t!an t!e remaining )alance "ue (plus t!e corp?s
e$penses in selling) t!e original su)scri)er reco%ers an, e$cess o%er
t!e total !e originall, agree" to pa,
A. &efenses to get out of / after corp accepts su)scription offer
a. 4aterial c!ange in purpose of corp
). Corp not full, su)scri)e"
i. .romoter sa,s 1=: s!ares )eing sol", )ut onl, gets A:
su)scriptions an" corp tries to open )usiness an,0a,s
ii. On e$am, num)er of s!ares ma, appear in su)scription
agreement
c. Not a "e ;ure corp
i. No su)stantial compliance
C. Consi"eration (0!at must t!e corp recei%e 0!en it issues stoc:)
1. Forms of consi"eration
a. .ermitte":
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i. 4one, (cas! or equi%alent, e.g. c!ec:)
ii. <angi)le or intangi)le propert,
iii. 2a)or or ser%ices alrea", performe" for t!e corp
i%.A )in"ing o)ligation to perform for t!e corp future ser%ices
!a%ing an agree" %alue
). .ro!i)ite" (results in 7unpai" stoc:,7 treate" as 0ater): an,t!ing
else
-. Amount of consi"eration
a. .ar %alue * means 7minimum issuance price7: must sell for at least
t!at amount
). No par stoc: * no minimum issue price (3" sets price unless
certificate reser%es t!e rig!t to set price to t!e '(s)
c. <reasur, stoc: * t!is is stoc: t!at 0as pre%iousl, issues an" t!en re6
acquire" ), corp
i. Corp ma, t!en sell t!e treasur, stoc: 0it! no minimum (treate"
as no par stoc:)
". Acquiring propert, 0it! par %alue stoc:
i. Form of consi"eration * propert, (tangi)le propert,)
ii. Amount of consi"eration * total %alue of t!e propert, must )e at
least t!e par %alue of t!e stoc: (par %alue9s!are $ num)er of
s!ares)
(A) 3" al0a,s %alues t!e consi"eration in a par issuance
(3) In no6par, 3" %alues consi"eration unless certificate
allo0s '(s to "o so
(C) 3"?s %aluation is conclusi%e if ma"e in a)sence of frau"
e. Consequences of issuing par stoc: for less t!an par (i.e., 0atere"
stoc:):
i. #.g. 6 C corp issues 1=,=== s!ares of @1 par to I for @--:. <!e
corp (or cre"itors is t!e corp is insol%ent) can sue for @J: of
70ater7
(A) &irectors lia)le+ 6 ,es if t!e, :no0ingl, aut!orize" t!e
issuance
(3) I lia)le+ Yes, c!arge" 0it! t!e :no0le"ge of par %alue
(1) !at if I transfers t!e stoc: to a 1" part,+ 6 t!e 1"
part, is not lia)le if !e acte" in goo" fait! ("i" not :no0
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a)out 0ater)
&..reempti%e rig!ts
1. !at is+
a. <!e rig!t of an e$isting '( to maintain !er percentage of o0ners!ip
), )u,ing stoc: 0!ene%er t!ere is a ne0 issuance of stoc: for
mone, (0!ic! inclu"es cas! or c!ec:s)
i. Ne0 issuance * unless t!e certificate sa,s ot!er0ise, 7ne0
issuance7 "oes not inclu"e:
(A) <!e sale of treasur, s!aresD or
(3) <!e sale of s!ares aut!orize" ), t!e original certificate
an" sol" 0it!in - ,ears of formation
ii. For mone, * no preempti%e rig!ts 0!en stoc: is issue" in
e$c!ange for propert,, etc.
-. If t!e certificate of incorporation is silent regar"ing preempti%e rig!ts,
"o t!e, e$ist+
a. For corps forme" on or )efore Fe) --, 1LLJ * ,es (for common
stoc:)
). For corps forme" ater Fe) --, 1LLJ * no (preempti%e rig!ts onl,
e$ist if t!e certificate sa,s so)
III. &irectors an" officers
A.&irectors * statutor, requirements
1. Num)er * one or more a"ult natural persons
a. <!e num)er can )e set in ),la0s or ), '( action or ), t!e 3" if a
'(6a"opte" ),la0 allo0s t!e 3" to "o it
). If no num)er of "irectors is set in an, suc! manner, t!en one
"irector
-. Incorporators elect initial "irectors, after t!at '(s elect "irectors at
annual meeting
a. Can elect 0!ole 3" or can classif, t!e 3" in t!e certificate or ),la0
a"opte" ), '(s. Can !a%e -, 1, or > classes of equal num)er (or as
close as possi)le). No class can !a%e fe0er t!an 1 mem)ers
1. &irectors can )e remo%e" for cause ), '(s if permitte" in certificate
or ),la0. &irectors can )e remo%e" 0it!out cause ), '(s, )ut onl, if
certificate or ),la0s allo0.
a. &irector cannot )e remo%e" if cumulati%e %oting in effect an" t!e
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num)er of %otes cast against remo%al 0oul" !a%e electe" !er
>. !o selects 0!o fills a %acanc, on t!e 3"+ 6 t!e remaining "irectors
%ote
a. 3ut if t!e %acanc, is cause" )ecause t!e "irector 0as remo%e" ),
'(s 0it!out cause, t!en (unless t!e certificate or '( ),la0
pro%i"es to t!e contrar,), t!e '(s select t!e replacement
A. 3" action
a. <!ere are - 0a,s t!e 3" can ta:e a %ali" act (if neit!er is met, t!e
7act7 is %oi" unless later ratifie" ), a %ali" corp act)
i. 8nanimous "irector consent in 0riting to act 0it!out meetingD or
ii. A meeting
(A) A conference call qualifies as a meeting
(3) 4eetings can )e !el" an,0!ere (nee" not )e in NY)
(C) Notice of meetings
(1) No notice require" for regular meetings
(-) Notice is require" for special meetings an" t!e met!o"
(mail, p!one, -6"a, notice, etc) can )e set in t!e ),la0s
(a) If require" notice not gi%en, action ta:en is %oi"
unless t!ose not gi%en notice 0ai%e t!e "efect in signe"
0riting an,time or ), atten"ing t!e meeting 0it!out
o);ection
(&) .ro$, * "irectors cannot gi%e pro$ies for "irector %oting
(#) Foting agreements * "irectors cannot enter into %oting
agreements
(F) Muorum for a meeting:
(1) <o "o )usiness, t!ere must )e a ma;orit, of t!e 7entire
3"7 ("ul, constitute" 3" N t!e num)er of positions if no
%acancies) present at meeting
(a) Certificate or ),la0 can "ecrease quorum to less t!an
ma;orit,, )ut ne%er to fe0er t!an 191 of t!e "irectors
()) Certificate (not ),la0) can increase quorum to super
ma;orit,)
(5) Foting requirement
(1) If quorum, t!en passing resolution requires ma;orit,
%ote of t!ose present
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(a) You can ne%er "ecrease t!e requirement of a ma;orit,
%ote of t!ose present
()) Certificate (not ),la0) can increase t!e %oting
requirement to greater t!an a ma;orit,
3. Eole of "irectors
1. 5enerall,, 3" manage )usiness of corp. It sets polic,, monitors an"
super%ises officers, "eclares "i%i"en"s an" ot!er "istri)utions,
recommen"s fun"amental corp c!anges, etc.
-. If t!e certificate or ),la0s allo0, a ma;orit, of t!e 7entire 3"7 can
"elegate all po0ers an" responsi)ilities to a committee
a. A committee cannot amen", repeal, or a"opt ),la0s, recommen"
action to '(s requiring '( appro%al, fill 3" %acanc, or set "irector
compensation ()ut committee can recommen" an, of t!ese for 3"
action)
C. &ut, of care
1. 't" * "irectors must "isc!arge !er "uties in goo" fait! an" 0it! t!at
"egree of "iligence, care, an" s:ill t!at an or"inaril, pru"ent person
0oul" e$ercise in un"er similar circumstances in li:e position
a. Nonfeasance ("irector "oes not!ing):
i. #g * a "irector of C Corp fails to atten" an, of t!e 3" meetings.
ill )e !el" lia)le for )reac! of "ut, of care
(A) (e %iolate" t!e st" of care )ut !e is onl, lia)le if !is
)reac! cause" a loss to t!e corp
). 4isfeasance ("irectors "o somet!ing t!at !urts t!e corp)
i. #g * 3a" )usiness "ecision
(A) Not lia)le if meets t!e )usiness ;u"gment rule
(1) 3OE * a court 0ill not -" guess a )usiness "ecision if it
0as ma"e in goo" fait! an" 0as reasona)l, informe" an"
!a" a rational )asis (pru"ent people "o t!eir !ome0or:,
anal,ze, "eli)erate, etc)
&.&ut, of lo,alt, ()ecause t!ese cases in%ol%e conflicts of interest, 3OE
"oesn?t appl,)
1. &ut, of lo,alt, st" * a "irector must act in goo" fait! an" 0it! t!e
conscientiousness, fairness, moralit,, an" !onest, t!at t!e la0 requires
of fi"uciaries
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a. Intereste" "irector transactions * an, "eal )et0een t!e corp an" one
of its "irectors (or a )usiness t!at t!e "irector is also a "irector or
officer or in 0!ic! !e !as su)stantial financial interest)
i. Intereste" "irector transactions 0ill )e set asi"e unless t!e
"irector s!o0s eit!er (1) t!e "eal 0as fair an" reasona)le to t!e
corp 0!en entere"D or (-) t!e material facts an" !er interest 0ere
"isclose" or :no0n an" t!e "eal 0as appro%e" ), an, of t!ese:
(A) '( %oteD or
(3) 3" appro%al ), sufficient %ote not counting t!e %otes of
intereste" "irectorsD or
(C) 8nanimous %ote of "isintereste" "irectors if intereste"
"irectors are nee"e" to ma:e a quorum
ii. 3" can fi$ compensation of "irectors in an, capacit,, unless
certificate or ),la0 sa,s t!e, can?t
(A) Compensation must )e reasona)le an" in goo" fait! (if
e$cessi%e, it is a 0aste of corp assets 0!ic! is a )reac! of "ut,
of lo,alt,)
iii. 'ometimes a corp ma, 0ant to gi%e a "irector or officer
stoc: options as an incenti%e to ser%ice
(A) <!is use of stoc: options must )e appro%e" ), a '( %ote
if t!e stoc: is not liste" on t!e stoc: e$c!ange
(3) If t!e stoc: is liste", t!is use of options must )e
aut!orize" un"er e$c!ange policies an" no s!are!ol"er %ote is
nee"e"
). Competing %entures
i. A "irector ma, ser%e on anot!er )" if t!at compan, "oes not
compete 0it! t!e corp of 0!ic! !e is alrea", a )" mem)er
ii. (o0e%er, a "irector ma, not ser%e on t!e )" of a competing
compan,
(A) If so, t!e corp gets constructi%e trust on t!at "irector?s
profits
c. Corporate opportunit,
i. A "irector cannot usurp a corporate opportunit, for !imself
(A) <!is means !e cannot ta:e it for !imself until !e:
(1) Informs t!e 3" of its e$istence an"
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(-) aits for t!e 3" to re;ect it
(3) !at is a corp opportunit,+ 6 somet!ing t!at t!e corp
nee"s, !as an interest or tangi)le e$pectanc, in, or is logicall,
relate" to its )usiness
(C) <!e corp?s financial ina)ilit, to pa, for t!e opportunit, is
pro)a)l, not a "efense (ma,)e a "efense t!at t!e corp coul"
not ta:e a"%antage of t!e opportunit,)
(&) Eeme", for usurpation * constructi%e trust
(#) #$am tip: loo: for 7classic com)o7 (usurpation 0it!
intereste" "irector transaction): & usurps opportunit, t!en
sell9leases to propert, to corp
#. Ot!er state la0 )ases of "irector lia)ilit,
1. 8ltra %ires act
-. atere" stoc:
1. Improper loans (eg * )" %otes to len" a "irector @1==: of corp fun"s)
a. For corps forms on or )efore Fe) --, 1LLJ, suc! loans must )e
appro%e" ), '( %ote (in 0!ic! quorum is ma;orit, of "isintereste"
s!ares), unless certificate allo0s 3" to "eci"e if t!e loan )enefits
t!e corp
). For corps forme" after Fe) --, 1LLJ * instea" of '( appro%al, can
O/ ), 3" conclusion t!at loan is in t!e corp?s interest 0!ic! means
it )enefits t!e corp
>. Improper "istri)utions
A. For t!ese or an, ot!er t!ing for 0!ic! a "irector can )e lia)le, 0!ic!
"irectors are lia)le+
a. 5eneral rule * a "irector is presume" to !a%e concurre" 0it! 3"
action unless !er "issent is note" in 0riting in Corp recor"s.
5enerall,, t!is means entering "issent:
i. in t!e minutes
ii. in 0riting to t!e corp secretar, at t!e meeting, or
iii. in registere" letter to t!e corp promptl, after a";ournment
(cannot "issent if %ote" for resolution at t!e meeting)
). #$ceptions
i. A)sent "irectors are not lia)le if t!e, register 0ritten "issent (),
"eli%er, or registere" mail to t!e corp secretar, or ensuring t!at
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t!e "issent is file" 0it! t!e minutes 0it!in reasona)le time after
learning of t!e action
ii. 5oo" fait! reliance on information, opinions, reports or statement
), (1) officers or emplo,ees of t!e corp 0!om t!e "irector
)elie%es competent an" relia)le, (-) la0,ers or pu)lic
accountants 0!om t!e "irector, or officer )elie%es are acting
0it!in t!eir competence, or (1) a committee of 0!ic! t!e person
rel,ing is not a mem)er, as to 0!ic! t!e person rel,ing is not a
mem)er, as to matters 0it!in its "esignate" aut!orit,
(A) <!is seems li:e a prett, )ig e$ception
F. Officers
1. O0e t!e same "ut, of lo,alt, as "o "irectors
-. 'tatus * officers are agents of t!e corp (0atc! for cross6o%er issues)
1. <!e 3" ma, select a presi"ent, one or more F.s, a secretar,, a
treasurer, an" an, ot!ers t!e 3" ma, "etermine or for 0!ic! t!e
),la0s pro%i"e
a. One person ma, !ol" multiple offices simultaneousl, (t!us 0!en all
stoc: is o0ne" ), one person, t!at person ma, !ol" all offices)
>. 'election an" remo%al of officers
a. Officers are selecte" ), an" remo%e" ), t!e "irectors, unless t!e
certificate allo0s '(s to elect t!em (if '(s elect, onl, t!e, can fire.
#%en t!en, for cause, "irectors can suspen" officer?s aut!orit, to act)
i. If fire, corp ma, )e lia)le for / "amages
ii. (ierarc!, * '(s !ire an" fire "irectors, "irectors !ire an" fire
officers
(A) 'o as a general rule, '(s "o not !ire an" fire officers
). Ou"icial actions * t!e NY A5 or !ol"ers of 1=G of all s!ares ma,
sue for a ;u"gment remo%ing an officer for cause. Court can )ar
reappointment of a person so remo%e" from office
5.In"emnification of &irectors an" officers
1. A person sue" in !is capacit, as "irector or officer incurs costs,
attorne,?s fees, ma,)e e%en fines, a ;u"gment or settlement, an" t!en
!e see:s reim)ursement from t!e corp.
a. In an action ), or on )e!alf of t!e corp t!ere are t!ree possi)ilities:
i. Eeim)ursement pro!i)ite" * if "irector9officer !el" lia)le to t!e
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corp
ii. Of rig!t * corp must in"emnif, if t!e "irector9officer 0as
successful in "efen"ing t!e actions, on merits or ot!er0ise (t!e
3" passes a resolution regar"ing in"emnification)
(A) 3ut t!e "irector or officer cannot reco%er litigation
e$penses an" att, fees incurre" n litigating to esta)lis! !is
rig!t to in"emnif,
iii. .ermissi%e * in situations not satisf,ing (i) or (ii), t!e corp
ma, in"emnif, t!e officer or "irector
(A) 't" * t!e officer or "irector must s!o0 t!at s!e acte" in
goo" fait! an" for a purpose reasona)l, )elie%e" to )e in t!e
corp?s )est interest. Eeim)ursement can inclu"e settlement
amount, e$penses, an" attorne,?s fees (not ;u"gment t!oug!)
(3) Note: reim)ursement not allo0e" if it 0oul" )e contrar,
to a pro%ision in t!e certificate or ),la0s or 3"9'( resolution
or agreement in effect at t!e time t!e cause of action accrue"
). In an action ), an" for someone ot!er t!at t!e corp, reim)ursement
is permitte" if t!e "irector9officer s!o0s s!e acte" in goo" fait! an"
for a purpose reasona)l, )elie%e" to )e in t!e )est interest of t!e
corp (in a criminal case, must also s!o0 s!e !a" no reason to
)elie%e !er con"uct 0as unla0ful)
i. Eeim)ursement can inclu"e ;u"gment, settlement, e$penses, an"
att,?s fees
c. !o "etermines eligi)ilit,+
i. <!e 3" (0it! quorum of "irectors )eing non6parties)D of it t!ere
is no suc! quorum
ii. '(s or a quorum of t!ose "irectors 0!o are "isintereste"D or
iii. <!e 3" pursuant to report from in"epen"ent legal counsel
-. Court 0!ere officer9"irector 0as sue" can or"er in"emnification if it
fin"s t!e officer9"irector is fairl, an" reasona)l, entitle" to it. An,
suc! or"er cannot inclu"e reim)ursement for a ;u"gment against t!e
"irector9officer t!oug!
1. Certificate or ),la0s can pro%i"e for in"emnification ), resolution of
3" of '(s or ), agreement, unless t!e officer9"irector acte" in )a"
fait!, 0as "eli)erate an" "is!onest in a 0a, material to t!e case or
1>91-
0rongfull, profite"
>. Corp can a"%ance litigation e$penses to t!e officer9"irector )ut t!e
e$penses must )e repai" if it turns out t!at t!e officer or "irector is not
entitle" to in"emnification
A. Corporation can )u, insurance to co%er "irector9officer lia)ilit,
IF. '(s
A.(ol"ing '(s lia)le for "e)ts of t!e corp:
1. 5enerall,, a '( is not lia)le for t!e "e)ts or acts of a corp. 3ut a ct
ma, pierce t!e corp %eil an" !ol" '(s personall, lia)le if t!e, !a%e
a)use" t!e pri%ilege of incorporating an" if fairness "eman"s t!at t!e,
"on?t en;o, limite" lia)ilit,
a. <!e .CF st" * NY cts ma, .CF to pre%ent frau" or to ac!ie%e
equit, (t!e cts 0ill pre%ent use of corp as cloa: for illegalit,)
i. Alter ego (I"entit, of interests, agenc,, e$cessi%e "omination)
(A) In NY a ct 0ill not .CF if corp !as an, min"6e$istence or
0ill of its o0n (%er, "ifficult in NY)
(1) 4ig!t .CF in follo0ing situations
(a) A "umm, corp, 0!ere '(s carr, on carr,ing on
)usiness in personal capacit, or for purel, personal, not
corp, en"s
()) A parent corp so controls t!e "ail, operations of a
su)si"iar, as to )e true prime mo%ers for t!e su)si"iar,?s
actions
(c) A group of separate corps are operate" as one, so
"ominate" ), one t!at t!e, !a%e no min", e$istence, or
0ill of t!eir o0n
(3) 8n"ercapitalization alone is apparentl, not enoug! to
.CF (nee" illegalit,, frau", or e$cessi%e "omination as 0ell)
(C) #$am tip * state t!e general rule an" .CF st" an" e$plain
.CF
-. ages * in a closel, !el" (or close) corp, t!e ten largest '(s are
personall, lia)le for 0ages an" )enefits to t!e corp?s emplo,ees
3. '( mgmt of corp
1. Eemem)er t!at generall, t!e "irectors (not '(s) manage t!e corp.
<!ere is a pu)lic polic, t!at t!e 3" must e$ercise t!e mgmt po0er,
1A91-
an" t!e '(s s!oul" not encroac! "irectl, on t!at po0er. <!is is a tren"
a0a, from t!at pu)lic polic, in some instances
-. 4em)ers of a license" profession, suc! as "octors an" la0,ers, cannot
practice t!e profession t!roug! a general )usiness corp. <!e, can
incorporate, !o0e%er, ), forming a professional ser%ice corp, often
a))re%iate" 7..C.7. '(s must )e license" in t!e profession )ut t!e ..C.
Can !ire non6professionals as emplo,ees
a. .rofessionals are personall, lia)le for negligence in ren"ering
professional ser%ices. <!e ..C., !o0e%er, is lia)le as an entit, for /s
an" for rents "ue on leases in t!e ..C.?s name.
i. In general, t!e ..C. is go%erne" ), rules of t!e )usiness corp.
Certificate of inc must meet general requirements e$cept for use
of 7..C.7 must in"icate t!e profession practice" an" inclu"e
names an" a""resses of original '(s, "irectors, an" officers. As
to eac!, t!e certificate must )e accompanie" ), certification t!at
eac! propose" '(, "irector, an" officer is license" to practice.
). <!e ..C. must purc!ase s!ares of a '( 0!o "ies or is "isqualifie"
from t!e practice
1. '(s can manage corp "irectl, if it is close. A close corp !as fe0 '(s
an" t!e s!ares are not pu)licl, tra"e"
a. A pro%ision in t!e certificate can restrict or transfer 3" po0er to
'(s or ot!ers. O/ if:
i. All incorporators or '(s (%oting an" non6%oting) appro%e itD
ii. All su)sequent '(s !a%e noticeD
iii. It is conspicuousl, note" on front an" )an: of all s!ares (t!is
is not tec!nicall, require" )ut is a 0a, to ma:e sure su)sequent
'(s !a%e :no0le"ge)D an"
i%.'!ares are not liste" or regularl, quote" o%er t!e counter
). !en '(s "o manage t!e corp, t!e managing '(s o0e t!e "uties of
care a lo,alt,
c. <!ere is a tren" to0ar" imposing fi"uciar, "uties on '(s in t!eir
"ealings 0it! eac! ot!er. Controlling '(s cannot use t!eir po0er
for personal gain at t!e e$pense of minorit, '(s or t!e corp or to
oppress minorit, '(s or t!e corp. <!e, o0e a "ut, of utmost fait!.
Cts are increasingl, 0illing to step in to !elp minorit, '(s in a
1H91-
close corp )ecause minorit, '(s !a%e no 0a, out of a close corp
(no mar:et to sell s!ares)
C. '!are!ol"er &eri%ati%e 'uits
1. In a "eri%ati%e suit, a '( is suing to enforce t!e corp?s claim. It?s a
case in 0!ic! t!e corp is not pursuing its o0n claim, so a '( steps in
to prosecute t!e claim (al0a,s as: ,ourself 0!et!er t!e corp coul"
!a%e )roug!t t!is suit * if so, li:el, "eri%ati%e)
a. #$ 1 * ', '( of C Corp, sues I for )reac!ing its / 0it! C Corp
). #$ - * ' sues t!e 3" of C Corp for usurping corp opportunities
i. <!is is for )reac! of "ut, of lo,alt, o0e" to t!e corp. 'ame 0it!
"ut, of care. 3ot! "uties are o0e" to t!e corp so )reac! !urts
corp itself.
c. #$ 1 * ' sues regar"ing 0aste of corp assets
-. !at are t!e consequences of a successful "eri%ati%e suit
a. 5enerall,, t!e reco%er, in an, successful "eri%ati%e suit goes to t!e
corp
i. '( gets costs an" att,?s fees, usuall, from t!e ;u"gment 0on for
t!e corp ()ecause s!e conferre" a )enefit upon t!e corp ),
0inning)
ii. ' can reco%er "amages "irectl, in a "eri%ati%e suit if t!e reco%er,
), t!e corp 0oul" simpl, return t!e mone, to t!e )a" gu,s
(A) #g * a close corp !as 1 '(, eac! of 0!om o0ns 191
s!ares an" participate in mgmt. One )reac!es "ut, of lo,alt,
), engaging in a competing %enture. In a "eri%ati%e suit, t!e
corp 0ins a ;u"gment to reco%er t!e )a" gu,?s profits. 3ut
gi%ing t!e reco%er, to t!e corp 0ill return 191 of it to t!e )a"
gu,. Court mig!t let t!e ot!er '(s reco%er "irectl,, alt!oug! it
is a "eri%ati%e suit
1. !at are t!e consequences of an unsuccessful '(s "eri%ati%e suit+
a. '( cannot reco%er costs an" e$penses
). '( is pro)a)l, lia)le for costs of opposing part, ()ecause 0inner
usuall, reco%ers costs from loser)
i. 4a,)e opposing part, can reco%er att,?s fees from '( if '( sue"
0it!out reasona)le cause
c. Ot!er '(s cannot later sue opposing part, on t!e same transactions
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>. !at are t!e requirements for )ringing a '( "eri%ati%e suit+
a. 'toc: o0ners!ip * t!e person )ringing t!e suit must !a%e o0ne"
stoc: (or !el" a %oting trust certificate) at t!e time t!e claim arose
or s!e must !a%e gotten it ), operation of la0 (e.g. in!eritance or
"i%orce "ecree) from someone 0!o o0ne" it 0!en t!e claim arose.
In a""ition, s!e must one t!e stoc: 0!en t!e action is )roug!t an"
t!roug! entr, of ;u"gment
). 4ust a"equatel, represent t!e interests of t!e corp an" '(s
c. 4ust also ma:e "eman" t!at "irector )ring suit unless it 0oul" )e
futile to "o so
i. !en futile
(A) If t!e ma;orit, of t!e 3" is intereste" or un"er control of
t!e intereste" "irectors
(3) If t!e 3" "i" not inform itself of t!e transaction to t!e
e$tent reasona)le un"er t!e circumstances, or
(C) <!e transaction is so egregious on its faces t!at it coul"
not )e t! result of soun" )usiness ;u"gment
ii. .l. must plea" 0it! particularit, 3"?s initiation of suit or 0!,
"eman" 0as e$cuse"
iii. If "eman" to sue is ma"e an" refuse", ' cannot sue unless
s!e can s!o0 a ma;orit, of t!e 3" is intereste" or its proce"ure
0as incomplete or ina"equate
". Corp ma, )e a)le to "eman" t!at t!e .l. '( post securit, for costs
unless s!e o0ns AG or more of an, class of stoc: or !er stoc: is
0ort! more t!an @A=,===
e. Corp can mo%e to "ismiss t!e "eri%ati%e suit )ase" upon t!e fin"ing
), in"epen"ent "irectors (or a committee of in"epen"ent "irectors
sometimes calle" a 7special litigation7 committee) t!at t!e suit is
not in t!e corp )est interests (eg lo0 c!ance of reco%er,, or cost of
litigation 0oul" e$cee" reco%er,)
i. <!e court 0ill scrutinize t!e in"epen"ence of t!ose "oing t!e
in%estigation an" t!e sufficienc, of t!e in%estigation
A. 2itigation
a. Eole of t!e corp
i. 4ust )e a part,
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ii. Nominal "efen"ant * name" as "efen"ant )ecause corp "i"n?t
)ring suit on its o0n+
). &efenses
i. &efen"ant can raise an, "efense t!at coul" !a%e )een )roug!t
against t!e corp if t!e corp !a" sue"
ii. &efen"ant can raise "efenses to "isqualif, '( from suing
c. No "ismissal or settlement of a "eri%ati%e suit 0it!out court
appro%al. Ct ma, or"er notice gi%en to ot!er '(s 0!ose interests
0ill )e su)stantiall, affecte" ), t!e "iscontinuation of t!e case.
&.Foting
1. !o %otes
a. 5eneral rule * t!e recor" o0ner as of recor" "ate !as t!e rig!t to
%ote
i. <!e recor" o0ner to t!e person s!o0n as t!e o0ner in corp
recor"s. <!e recor" "ate is a %oter eligi)ilit, cut6off, set no fe0er
t!an 1= an" no greater t!an H= "a,s )efore t!e meeting
(A) #g * C corp sets t!e annual meeting for K9K an" recor"
"ate of H9H. ' sells !er C corp stoc: on H9-A (' is entitle" to
%ote t!e s!ares )ecause o0ne" on H9H)
). #$ceptions to t!e general rule t!at recor" o0ner on recor" "ate
%otes
i. #%en if it is t!e recor" o0ner on t!e recor" "ate, corp "oes not
%ote treasur, stoc:
ii. &eat! of '( * if '( "ies, e$ecutor can %ote t!e s!ares e%en if '(
0as t!e o0ner on t!e recor" "ate
iii. .ro$ies
(A) A pro$, is a 1) 0riting, -) signe" ), recor" '( or
aut!orize" agent, 1) "irecte" to t!e '( or t!e corp, >)
aut!orizing anot!er to %ote t!e s!ares
(1) A pro$, can )e create" ), fa$ or email (,ou "on?t nee"
t!e '(?s signature if fa$ or electronic transmission or
telegram ma:es clear t!at it is aut!orize" ), '(
(-) .ro$ies are onl, for 11 mont!s (unless pro$, sa,s
ot!er0ise)
(1) A '( can re%o:e !is pro$, e%en if it sa,s irre%oca)le
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(a) #$ception * '( sells 3 !is s!ares after t!e recor"
"ate )ut )efore t!e annual meeting. ' gi%es 3 an
7irre%oca)le pro$,7 to %ote t!e s!ares at t!e annual
meeting. ' cannot re%o:e t!is pro$, )ecause 1) it sa,
irre%oca)le an" -) t!e pro$,6!ol"er !as some interest in
t!e s!ares ot!er t!an %oting. <!is is a pro$, couple" 0it!
an interest, o0ners!ip. Interest coul" also )e option,
ple"ge, etc.
c. Foting trusts an" %oting agreements
i. Foting trusts
(A) Eequirements
(1) A 0ritten trust agreement controlling !o0 t!e s!ares
0ill )e %ote"D
(-) Cop, to corpD
(1) <ransfer legal title of s!ares to %oting trusteeD an"
(>) Original '(s recei%e" %oting trust certificates an"
retain all '( rig!ts e$cept %oting
(3) <ime limit * 1= ,ears ma$ ()ut 0it!in H mont!s of
e$piration, ma, e$ten" for anot!er term of up to 1= ,ears)
ii. Foting agreement (or 7pooling agreement7)
(A) '(s can enter into %oting agreements (must )e signe" in
0riting)
(1) Apparentl, are not specificall, enforcea)le
(-) A pro$, gi%en su);ect to a %oting agreement is
irre%oca)le if it sa,s so
(1) 'cope of agreement * t0o '(s agree to %ote to elect
eac! ot!er as "irectors * O/ )ecause electing "irectors is
0!at '(s "o
(a) 3ut cannot agree furt!er a)out future actions
inten"e" to ta:e as "irectors (t!is %iolates t!e rule re: no
%oting agreements among "irectorsD pro)a)l, O/ if onl,
- '(sD it is O/ to agree to use 7)est efforts7 to act in a
particular 0a,)
-. !ere "o '(s %ote
a. <!ere are t0o 0a,s '(s can ta:e %ali" action
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i. 8nanimous 0ritten consent of all t!e !ol"ers of all %oting s!ares
to act 0it!out meetingD or
(A) If t!e certificate allo0s, can ta:e action 0it!out meeting if
t!ere is agreement in 0riting of t!e !ol"ers of enoug! s!ares to
pass a resolution if all %oting s!ares 0ere present an" %oting at
a meeting
ii. A meeting
(A) Annual meeting * can )e !el" an,0!ereD ct can or"er one
if not !el"
(1) <!is is 0!ere '( elect "irectors
(3) 'pecial meeting * can )e !el" an,0!ere
(1) !o can call+ 6 t!e 3& or an,one "esignate" ), t!e
certificate
(a) A special meeting to elect "irectors must )e calle" ),
t!e 3" is t!ere is a failure to elect enoug! "irectors to
con"uct t!e )usiness of a corp. If t!e 3" fails to call suc!
a meeting, t!e !ol"ers of 1=G of t!e %oting s!ares ma,
"eman" in 0riting t!at t!e corp !ol" t!e meeting. In t!is
case t!e corp secretar, must gi%e notice of t!e meeting. If
t!e secretar, fails to "o so, t!e '( ma, gi%e notice.
(C) Notice requirement * must gi%e 0ritten notice (t!at
inclu"es fa$ an" email) to e%er, '( entitle" to %ote, for e%er,
meeting (annual an" special) )et0een 1= an" H= "a,s )efore
t!e meeting
(1) Contents of notice * it must state 0!en an" 0!ere t!e
meeting 0ill )e !el"
(a) Also must inform if t!e propose" action 0oul"
entitle '(s to appraisal rig!ts an" tell 0!, (an" e%en
inclu"e t!e statute a)out appraisal rig!ts)
()) Notice of a special meeting must stat 0!o calle" it
an" t!e purpose (0!ic! limits t!e )usiness t!at can )e
"one at t!e meeting * must also )e for proper '( purpose
Bnot to remo%e an officer )ecause '(s "on?t remo%e
officersC)
(-) Consequences of failure to gi%e proper notice to all '(s
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* actions ta:en at t!e meeting are %oi" unless t!ose not
gi%en notice 0ai%e t!e notice "efect
(a) (o0 "oes 0ai%er occur
(i)#$press * in 0riting, signe", an,time, or
(ii) Implie" * if atten" meeting 0it!out o);ection
1. (o0 "o '(s %ote
a. Muorum requirement
i. <!ere must )e a quorum represente" at t!e meeting
(A) &etermination of a quorum focuses on t!e num)er of '(s.
5enerall,, a quorum requires a ma;orit, of outstan"ing s!ares
(1) <!e certificate can pro%i"e increase in t!e G of s!ares
require" for a quorum
(-) <!e certificate or ),la0s can re"uce quorum to less
t!an a ma;orit, )ut not less t!an 191
). Foting requirement
i. If a quorum is present, a ma;orit, ma, act to )in" t!e corp unless
t!e certificate requires a !ig!er %ote (can ne%er set it at lass t!an a
ma;orit,)
(A) 4a;orit, means ma;orit, of t!e s!ares actuall, %oting in
fa%or or against t!e proposal
(1) #$ * I corp !as 1-=,=== s!ares outstan"ing. H-/
s!ares at t!e meeting, A=: s!ares %ote on a particular
proposal, -A,==1 s!ares must %ote for t!e proposal for it to
)e accepte" ), t!e '(s
(-) An", unli:e "irector?s meeting, a quorum is NO< lost is
people lea%e t!e meeting
>. (o0 an" 0!en "o '(s use cumulati%e %oting
a. Onl, a%aila)le in %oting for "irectors (it is a "e%ice to !elp small
'(s get representation on t!e 3")
). Onl, e$ists if certificate allo0s (if silent * no cumulati%e %oting)
c. 4ultipl, num)er of s!ares ), num)er of "irectors to )e electe"
(,ou can put t!ose %otes on an, one "irector, or "i%i"e t!em up as
,ou 0is!)
i. #$ * ,ou o0n 1,=== s!ares in C Corp. C Corp !as L "irectors!ips
open for election. You 0ant &ere: Oeter to )e "irector so ,ou cast
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L: %otes for &ere:
". Formula
i. G of s!ares require" to elect one "irectors if cumulati%e %oting is
in place
(A) You nee" one more t!an t!is G: $ P 1 ($N Q of "irectors
)eing electe"
(3) #$ * if t!e '(s 0ere going to elect L "irectors, ,ou 0oul"
nee" 1 s!are more t!an 1=G to elect one "irector
#. 'ale of stoc: ), a '(
1. Amount of consi"eration
a. '( can sell stoc: for an, amount regar"less of par %alue (par is an
issuance rule, so is onl, rele%ant 0!en t!e corp is selling its o0n
s!ares)
-. <ransfer of stoc: restrictions
a. #$ample of restriction
i. Eig!t of first refusal * selling '( must first offer !is stoc: to t!e
corp
). Fiolation of stoc: transfer restriction
i. Action against selling '(
(A) 2oo: to t!e %ali"it, of t!e restriction: it 0ill )e up!el"
pro%i"e" t!at t!e, are reasona)le un"er t!e circumstances
(0!ic! means not an un"ue restraint on alienation)
(1) A rig!t of first refusal is accepta)le so long as t!e price
office is reasona)le
(-) A corp mig!t )e a)le to require corp appro%al for a '(
to sell !is stoc: if t!e appro%al requirement sa,s t!e
appro%al cannot )e 0it!!el" unreasona)l, (if it "oesn?t,
unli:el, a reasona)le restraint on alienation)
ii. Action against t!e transferee ()u,er) of t!e stoc:
(A) 2oo: for )u,er?s :no0le"ge or notice
(3) #%en if t!e restriction is reasona)le an" t!us %ali", it
cannot )e in%o:e" against t!e transferee unless eit!er
(1) It is conspicuousl, note" on t!e stoc: certificateD or
(-) <!e transferee !as actual :no0le"ge of t!e restriction
F. Eig!t of '( (in person or ), agent) to inspect (an" cop,) t!e )oo:s an"
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recor"s of t!e corp
1. 'tatute gi%es '( a rig!t o inspect an" cop, (1) minutes of '(
procee"ings an" (-) t!e recor" of t!e '(
a. An, '( can "eman" access on A "a,s 0ritten "eman"
-. 'tatute also gi%es a rig!t to inspect an" cop, t!e list of current officers
an" "irectors
a. An, '( can "eman" t!is on t0o "a,s 0ritten "eman"
1. <!e corp ma, "eman" t!at t!e '( gi%e an affi"a%it t!at !is purpose is
not ot!er t!an in t!e interest of t!e corp an" !e !as not 0it!in A ,ears
trie" to sell an, list of '(s (corp cannot require more "etail in an
affi"a%it)
>. A '( can ma:e 0ritten request for t!e corp?s latest annual )alance
s!eet, profit an" loss statement, an" latest interim statement
"istri)ute" to '(s or pu)lic
a. A corp must pro%i"e t!e "ocuments (can mail to '()
A. C2 rig!t to inspect * in a""ition to t!e foregoing, for all '(, t!ere is a
C2 rig!t to inspect corp recor"s at a reasona)le time an" proper place
for a proper purpose (relate" to !er role as a '()
5.&istri)utions
1. Forms of "istri)utions
a. &i%i"en"s
). .a,ments to repurc!ase s!ares
c. .a,ments to re"eem s!ares (re"emption is a force" sale to t!e corp
at a price set in t!e certificate)
-. &istri)utions of an, t,pe are to )e "eclare" at t!e 3"?s "iscretion.
<!us, t!er is o '( rig!t to a "istri)ution until it is "eclare".
a. Cts 0ill not interfere 0it! 3"?s "iscretion a)sent )a" fait! or
"is!onest purpose. 'o it is toug! for a .l. to 0in a case tr,ing to
compel t!e "eclaration of a "istri)ution.
). #$ample of strong argument to compel "i%i"en" * 0!ere t!e corp
ma:es consistent profit, )ut refuses to issue a "i%i"en" 0!ile pa,ing
t!emsel%es )onuses
1. Ee"emptions, as note", are set in t!e certificate. <!e, generall, must
)e ma"e proportionatel, 0it!in eac! class of stoc: t!at is su);ect to
re"emption.
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>. Eepurc!ases, on t!e ot!er !an", are in"i%i"uall, negotiate", an"
generall, t!e corp can "iscriminate * can )u, )ac: some people?s an"
not ot!er?s. (o0e%er, in close corp, t!is t,pe of "iscrimination ma,
constitute unfair oppression of t!ose minorit, '(s. 'o in te close corp
t!ere ma, )e a "ut, of 7equal opportunit,7 ), 0!ic! t!e corp must
purc!ase pro6rata from all 0!o 0ant to sell t!eir s!ares
A. !ic! '(s get "i%i"en"s
a. > !,pos: for eac! of t!ese !,pos t!e 3" "eclares a "i%i"en" of
@>==:. !o recei%es 0!at if t!e outstan"ing stoc: is
i. 1==: s!ares of common stoc:+ @>9s!are
ii. 1==: s!ares of common an" -=: of preferre" 0it! @- "i%i"en"
preference+
(A) .referre" means pa, first. 'o t!ose -=/ preferre" s!ares
must )e pai" t!eir @- preference first, )efore an,one else gets
an,t!ing. -=/ s!ares multiplie" ), @- N a total preference of
@>=:, lea%ing @1H= 0!ic! goes to t!e common s!ares
(1) .referre" stoc: 6 @-9s!are
(-) Common stoc: 6 @1.H=9s!are
iii. 1==: s!ares of common an" -=: s!ares of @- preferre" t!at
is participating
(A) .articipating means pa, again. 'o t!ese -=: s!ares get
pai" t0ice. 'ame as a)o%e, @>=: first to preferre" an" t!en
"i%i"e @1H=: ), 1-=: s!ares
(1) .referre" stoc: 6 @A9s!are
(-) Common stoc: 6 @19s!are
i%.1==: s!ares of common an" -=: s!ares of @- preferre" t!at is
cumulati%e (an" no "i%i"en"s 0ere pai" in 1 prior ,ears.
(A) .referre" stoc: 6 @J9s!are (- $ >)
(3) Common stoc: 6 @-.>=9s!are
H. !ic! fun"s must )e use" for an, "istri)ution+ ("i%i"en", repurc!ase,
re"emption)
a. 'urplus
i. Compute": assets minus lia)ilities minus state" capital (or net
assets minus state" capital)
ii. Onl, surplus can )e use" for "istri)utions
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). 'tate" capital
i. Cannot )e use" for "istri)utions
ii. &etermining state" capital
(A) For par stoc: * par %alue $ num)er of s!ares (remain"er
of equit, is surplus)
(3) For no par stoc: * 0it!in H= "a,s after issuance, t!e 3"
can allocate an, part )ut not all to surplus
(1) (Y+
K. Corp can ma:e "istri)utions e%en t!oug! it lost mone, last ,earD corp
cannot ma:e "istri)utions if it is insol%ent or if t!e "istri)ution 0oul"
ren"er it insol%ent. Insol%ent means una)le to pa, "e)ts as t!e, come
"ue in t!e or"inar, course of )usiness. An", of course, after a
"istri)ution, net assets must )e at least equal to state" capital.
J. &irectors are personall, lia)le for unla0ful "istri)utions as are '(s
0!o :no0 t!e "istri)ution 0as unla0ful 0!en t!e, recei%e" it.
Eemem)er, !o0e%er, "irector?s possi)le "efense of goo" fait! reliance.
F. Fun"amental corp c!anges
A.C!aracteristics of a fun"amental corp c!ange:
1. <!ese are so fun"amental t!at t!e, require )ot! 3" an" '( appro%al.
In a""ition, in most, t!e corp must notif, t!e &ept. of 'tate ),
"eli%ering a "ocument t!at t!e &ept. files
-. Appraisal rig!ts * "issenting '( rig!t of appraisal is t!e rig!t of a '(
to force t!e corp to )u, !er s!ares at a fair %alue
a. !at actions ), corps trigger '( rig!t of appraisal+
i. 'ome amen"ments to t!e certificates
ii. Consoli"ation
iii. 4erger
i%.<ransfer of su)stantiall, all assetsD or
%. '!ares acquire" in s!are e$c!ange
). 3ut, e%en if t!e corp is "oing one of t!ese t!ings, t!ere is no rig!t of
appraisal if t!e corp is liste" (t!e "isgruntle" '( can simpl, sell on
pu)lic mar:et)
c. !at actions are ta:en ), '( to perfect t!e rig!t (assuming t!e t!e
corp?s stoc: is not liste")
i. 3efore '(?s %ote, file 0ritten notice of o);ections an" intent to
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"eman" pa,ment
ii. A)stain or %ote against t!e propose" c!angeD an"
iii. After t!e %ote, ma:e 0ritten "eman" to )e )oug!t out
". If t!e '( an" t!e corp cannot agree on t!e fair %alue of t!e stoc:,
t!e corp sues an" t!e ct "etermines t!e %alue
i. In setting t!e %alue of t!e stoc:, t!e ct cannot "iscount t!e %alue
to reflect t!e fact t!at minorit, s!ares ma, )e 0ort! less t!an
controlling s!ares
1. Amen"ments to certificate
a. 4inor c!anges, suc! as t!ose relating to office location, registere"
agent, etc are ma"e ), t!e 3"
). Ot!er amen"ments, suc! as c!ange of name, purpose, or "uration,
increase or "ecrease of s!ares or par, creation of ne0 classes of
stoc:, "enial or grant or limitation of preempti%e rig!ts, must )e
appro%e" ), 3" action an" ), a ma;orit, of t!e s!ares entitle" to
%ote
i. Muorum rules, etc (a)o%e) "o not appl, !ere
(A) #$ * if t!ere are 1,=== outstan"ing s!ares entitle" to %ote,
1A=1 must appro%e t!e amen"ment for it to pass
(3) #$6 same as a)o%e, e$cept suppose onl, -,>== s!ares
atten" t!e meeting to %ote on t!e amen"ment an" onl, -===
s!ares actuall, %ote. 'till 1,A=1 must appro%e t!e amen"ment
for it to pass
c. !at a)out amen"ments to c!ange or stri:e superma;orit, quorum
or %oting requirements or to stri:e a pro%ision restricting 3&
aut!orit,+ <!e amen"ment 0ill require appro%al ), 3" action. !at
a)out '( appro%al+
i. If t!e amen"ment 0ill c!ange or stic: a superma;orit, quorum or
%oting requirements for Bd or 0ill stri:e a pro%ision restricting
3" aut!orit,, in a""ition to 3" appro%al, 0e nee":
(A) For a corp forme" on or )efore Fe) --, 1LLJ * must get
3" appro%al an" appro%al ), -91 of t!e s!ares entitle" to %ote
(3) For a corp forme" after Fe) --, 1LLJ * must get 3"
appro%al an" appro%al ), a ma;orit, of t!e s!ares entitle" to
%ote
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ii. 3ut if t!e amen"ment 0ill c!ange or stri:e a superma;orit,
quorum or %oting requirement for SH (not 3"), in a""ition to 3"
appro%al, t!e amen"ment must )e appro%e" ), -91 of t!e s!ares
entitle" to %ote, regar"less of 0!en t!e corp 0as forme"
". If an amen"ment is appro%e", "eli%er certificate of amen"ment to
&ept. of 'tate for its filing
e. Are t!ere "issenting '( rig!ts of appraisal+ Yes, if t!e amen"ment
alters or a)olis!es a preference, c!anges re"emption rig!ts, alters or
a)olis!es a preempti%e rig!t, or limits %oting rig!ts (assuming, of
course, t!at stoc: is not liste")
>. 4ergers (AP3 R A) or Consoli"ations (AP3 R C)
a. #ac! corps 3" a"opts a plan of merger (or consoli"ation) an" nee"
'( appro%al
i. (o0 man, s!ares must %ote for t!e propose" merger of AP3+
(A) For corps forme" on or )efore Fe) --, 1LLJ * -91 of t!e
s!ares entitle" to %ote
(3) For corps forme" after Fe) --, 1LLJ * a ma;orit, of t!e
s!ares entitle" to %ote
ii. No '( appro%al require" in 7s!ort6form7 merger, 0!ere a parent
corp o0ns L=G or more of eac! class of stoc: of a su)si"iar, t!at
is merge" into a parent corp
). &eli%er certificate of merger (or consoli"ation) to &ept of 'tate for
filing
c. Are t!ere "issenting '( rig!ts of appraisal+
i. In a merger * ,es for '(s of t!e acquire" compan, ()ecause it
"isappeare")
(A) Not for '(s of t!e sur%i%ing corp in a merger (e%en
t!oug! t!e, %ote" on t!e "eal)
ii. In a consoli"ation * ,es )ecause )ot! corps "isappear
". #ffect of merger or consoli"ation * t!e sur%i%ing corp succee"s to
all rig!ts an" lia)ilities of t!e constituent companies ()ecause
constituents "isappeare")
A. <ransfer (not ;ust mortgage) of all or su)stantiall, all of t!e assets not
in t!e or"inar, course of )usiness or s!are e$c!ange (one compan,
acquire" all t!e outstan"ing s!ares of one or more classes of anot!er
-J91-
corp)
a. <!ese are fun"amental corp c!anges for t!e selling corp onl,. Not
for t!e )u,ing corp (no '( %ote require" for t!e )u,ing corp)
). #ac! compan,?s 3" of "irectors must aut!orize t!e "eal an" nee"
appro%al ), selling corp?s '(s
i. Num)er of s!ares of ' corp t!at must appro%e t!e sale
(A) For corps forme" on or )efore Fe) --, 1LLJ * -91 of t!e
s!ares entitle" to %ote
(3) For corps forme" after Fe) --, 1LLJ * a ma;orit, of t!e
s!ares entitle" to %ote
c. Are t!ere "issenting '( rig!ts of appraisal+ Yes, for '(s of t!e
selling corp onl,
i. #$ception * no rig!t of appraisal e%en for '(s of selling corp is a
sale of assets is for cas! an" t!e compan, 0ill "issol%e an"
"istri)ute to '( 0it!in 1 ,ear
". In t!e s!are e$c!ange, "eli%er plan of e$c!ange to &ept. of 'tate for
filing. In t!e transfer of assets, no suc! filing is require".
e. 5eneral rule * t!e acquiring compan, 0ill not )e lia)le for t!e torts
of t!e acquire" compan, unless (1) t!e "eal pro%i"es ot!er0ise, or
(-) t!e purc!asing compan, is mere continuation of t!e seller
()u,er+), or (1) t!e "eal 0as entere" into frau"ulentl, to escape
suc! o)ligations
i. Eationale * compan, t!at sol" off its assets still e$ists (an" no0
!as cas!)
H. &issolution
a. Foluntar,
i. No 3" %ote necessar,
ii. '( %ote require"
(A) Corps on or )efore Fe) --, 1LLJ * -91 of '(s entitle" to
%ote
(3) Corps after Fe) --, 1LLJ * ma;orit, of all '(s entitle" to
%ote
iii. #it!er 0a,, certificate of "issolution "eli%ere" to &ept. of
'tate for filing
). In%oluntar, (;u"icial * someone is as:in for a ct or"er of
-L91-
"issolution)
i. 3, 3" resolution or resolution of ma;orit, of s!ares entitle" to
%ote, stating t!at (1) t!e corp !as insufficient assets to "isc!arge
lia)ilities or t!at (-) "issolution 0oul" )e )eneficial to '(s
ii. One6!alf or more of s!ares entitle" to %ote ma, petition if (1)
"irectors are too "i%i"e" to manage or (-) '(s are too "i%i"e" to
elect "irectors or (1) t!e magnitu"e of internal "issention ma:es
"issolution )eneficial to '(s
iii. An, '( entitle" to %ote ma, petition if '(s una)le to elect
"irectors for t0o annual meetings
i%.-=G or more of %oting s!ares in corp 0!ose s!ares are not tra"e"
on a securities mar:et ma, petition on eit!er of t!ese groun"s:
(A) 4anagement?s illegal, oppressi%e, or frau"ulent acts
to0ar" complaining '(s
(1) 4gmt * "irectors (or managing '(s in a close corp)
(3) 4gmt?s 0asting, "i%erting, or looting assets
(C) Ct ma, "en, "issolution if t!ere is some ot!er 0a, t!e
complaining '( can o)tain a fair return on !is in%estment (e$
* ), or"ering )u, out. Ct 0ill consi"er 0!et!er liqui"ation is
necessar, to protect t!e petitioners an" is t!e onl, 0a, for
t!em to get a fair return on t!eir in%estment)
(1) (o0 ma, t!e corp or non6complaining '(s tr, to a%oi"
"issolution !ere+
(a) it!in L= "a,s of t!e petition, )u, t!e petitioner?s
s!ares at fair %alue on terms appro%e" ), t!e ct
c. in"ing up: 1) gat!er all assets, -) con%ert to cas!, 1) pa, cre"itors,
an" >) "istri)ute remain"er to '(s, pro6rata an" ), s!are unless
t!ere?s a "issolution preference (meaning pa, first, li:e "i%i"en"
preference)
i. Certificate must specif, 0!ic! preferences ("i%i"en", "issolution,
etc)
FI. Controlling '( consi"erations
A.<ra"itional rule * outsi"e t!e close corp, '(s generall, "o not o0n
fi"uciar, "uties to eac! ot!er or t!e corp. <!e, can act in t!eir o0n self6
interest
1=91-
3. Controlling '(
1. O0es a "ut,. 3uta '( 0!o also occupies a control position (suc! as
"irector or managing '( in a close corp) or 0!ose o0ners!ip is suc!
t!at s!e !as 0or:ing control o%er t!e corp o0es a fi"uciar, "ut, to
minorit, '(s an" sometimes ot!ers (inclu"ing t!e corp(
a. Cannot use "ominant position for in"i%i"ual a"%antage at t!e
e$pense of minorit, '(s or t!e corp (usuall, a pro)lem in close
corps, )ut can !appen in an, corp)
). atc! especiall, for oppression of minorit, '( in a close corp
-. 'ale of controlling '( interest
a. 3ecause of !er control, t!e '( ma, )e a)le to sell !er s!ares at a
premium. <!at is, s!e can sell t!e stoc: for more t!an t!e s!ares
t!emsel%es 0oul" )e 0ort! )ecause s!e also !as control
i. If s!e "oes sell for a premium, can s!e :eep t!e mone,+
5enerall,, ,es * no case imposes lia)ilit, ;ust for t!isD t!e
minorit, 0oul" not s!are in t!e premium. 3ut cts ma, impose
lia)ilities if:
(A) <!e controlling '( sol" to looters 0it!out ma:ing
reasona)le in%estigation (0atc! for facts t!at 0oul" put a
person on notice of a pro)lem, eg agent for un"isclose"
principal offers to )u,)
(1) If controlling '( sells 0it!out reasona)le in%estigation
to someone 0!o t!en loots t!e corp, t!e selling '( is lia)le
for all "amages "one to t!at corp
(3) <!e controlling '( "e facto sells a corp asset. If s!e "oes,
all '(s s!oul" s!are t!e premium pai" ), t!e )u,er.
(C) <!e controlling '( sells a corp office, suc! as !er
position on t!e 3". Fi"uciaries cannot sell t!eir position. #g,
controlle" '( sells controlling interest an" agrees t!at s!e an"
7!er7 "irectors 0ill resign from t!e 3". It is one t!ing to !a%e
t!e ne0 controlling '( elect ne0 "irectors. 3ut it is anot!er to
sell seats on t!e 3"
1. Freeze6out mergers
a. All mergers must !a%e a legitimate corp purpose, e%en t!oug!
appro%e" ), t!e requisite num)er of s!ares. atc! for 7freeze6out7
1191-
merger aime" solel, at cas!ing out minorit, '(s unfairl,. 8suall,,
ma;orit, '(s cause t!eir corp to merge 0it! anot!er corp 0!ic!
t!e, o0n. <!e minorit, '(s s!ares are purc!ase" for cas! so t!e,
!a%e no interest in eit!er corp. Cts ma, )e increasingl, protecti%e of
minorit, an" 0ill loo: to transaction as a 0!ole to see (1) if it is
tainte" 0it! self6"ealing or frau", (-) 0!et!er t!e minorit, '(s are
"ealt 0it! fairl, an" (1) 0!et!er t!ere is a legitimate )usiness
reason for t!e merger
i. Cts 0ill loo: at t!e price an" course of "ealing 0it! t!e minorit,
'(s
>. 4ar:et tra"ing on insi"e information
a. 'uppose a "irector or office engages in mar:et tra"ing )ase" on
insi"e information from t!e corp. (e ma:es a profit ), so "oing. In
NY, t!e "irector9officer !as )reac!e" a "ut, to t!e corp ), "oing
t!is an" t!e corp can sue !im to reco%er t!e profit !e ma"e in t!e
mar:et tra"ing
A. Non6"isclosure of 7special facts7 (or 7special circumstances7)
a. <!is is C2 insi"er tra"ing
). All "irectors an" officers (an" pro)a)l, controlling '(s) o0e an
affirmati%e "ut, to "isclose special facts in a securities transaction
0it! a non6insi"er. 'o t!e, cannot tra"e on secretsD t!e, must
"isclose or a)stain from "ealing.
i. !at special facts+ <!ose a reasona)le in%estor 0oul" consi"er
important in ma:ing an in%estment "ecision (t!e, )ear on
potential %alue of t!e securities)
ii. !o can sue+ <!e '( "ealing 0it! an insi"er 0!o %iolates t!e
special facts "octrine
iii. 4easure of "amages * "ifference )et0een price pai" an"
%alue of stoc: a reasona)le time after pu)lic "isclosure
1-91-
I. Professional Reponsibility
II.
III. NY State Lawyer's Code of Professional Responsibility
A.Made up of Disciplinary Rules DRs! w"ic" lawyers #ust co#ply wit"
or t"ey will be sub$ect to discipline and %t"ical Considerations %Cs!
w"ic" lawyers s"ould co#ply wit"
I&. Misconduct
A.A lawyer or fir# s"all not'
(. &iolate a DR
). Circu#*ent a DR t"rou+" t"e actions of anot"er
,. %n+a+e in ille+al conduct t"at ad*ersely reflects on t"e t"e lawyer's
"onest- trustwort"iness- or fitness as a lawyer e.+. . assistin+ client
wit" per$ury/ an act- e*en if out of practice!
0. %n+a+e in conduct in*ol*in+ dis"onesty- fraud- deceit- or
#isrepresentation need not be ille+al!
1. %n+a+e in conduct t"at is pre$udicial to t"e ad#inistration of $ustice
*ery broad!
2. 3nlawful discri#ination in t"e practice of law in "irin+ or pro#otin+!
4. %n+a+e in any ot"er conduct t"at ad*ersely reflects on fitness as a
lawyer e.+. . possession of #ari$uana!
&. Reportin+ #isconduct
A.Duty to report 5 a lawyer #ust report anot"er lawyer's *iolation of DRs
t"at raise substantial 6uestion as to t"at lawyer's "onesty- trustwort"iness-
or fitness as a lawyer
7. %8ception 5 confidences and secrets 5 if a lawyer learns about a *iolation
in t"e conte8t of representation- t"ere is no duty to report
C. Duty of cooperation 5 if a lawyer is called in by +rie*ance co##ittee- "e
"as a duty to cooperate
D.A lawyer cannot be fire for reportin+ *iolations as re6uired under t"e
code
&I. Responsibility of super*isory and subordinate lawyers
A.Law fir# 5 s"all #a9e efforts to ensure t"at all lawyers co#ply wit" t"e
DRs
7. Super*isory lawyers 5 "a*e sa#e duty as abo*e to subordinate lawyer
C. Subordinate lawyers 5 #ust obey DRs e*en if actin+ at direction of
(:()
superior
&II. Disciplinary aut"ority and c"oice of law
A.Disciplinary aut"ority 5 a lawyer ad#itted in NY can be disciplined in
NY for any conduct no #atter w"ere is occurs
7. C"oice of law
(. Conduct in connection wit" proceedin+ 5 apply rules of state w"ere ct
proceedin+ conducted
). Any ot"er conduct
a. Lawyer only ad#itted in NY 5 NY Code applies
b. Lawyer ad#itted in NY and ot"er $urisdiction 5 apply rules of
$urisdiction w"ere lawyer principally practices unless conduct "as
predo#inant effect elsew"ere- t"en apply rules of t"at $urisdiction
&III. Preser*ation of confidences and secrets
A.Confidences 5 any info protected by A.C relations"ip
7. Secrets 5 any ot"er info +ained in t"e professional relations"ip t"at'
(. ;"e client "as re6uested to be 9ept confidential
). <ould be e#barrassin+ to C if re*ealed
,. <ould be detri#ental to C if re*ealed C does not wai*e secrets by
tellin+ ,d party!
C. =enerally- an L s"all not'
(. Re*eal of confidence or secret
). 3se one to disad*anta+e of C can't be wai*ed wit" C's consent!
,. 3se one to t"e ad*anta+e of lawyer or ,d person unless C consents
D.%8ceptions 5 a L #ay re*eal con:sec'
(. After infor#ed consent of C unless to disad*anta+e to C!
). <"en re6uired by law or court order
,. ;o re*eal intent of C to co##it cri#e and info necessary to pre*ent
cri#e
0. ;o collect fee and defend accusation of wron+ful conduct in ci*il
#alpractice action or disciplinary proceedin+
1. ;o t"e e8tent i#plicit in wit"drawin+ a written or oral opinion or
representation t"at lawyer now 9nows is false
a. Correctin+ a false state#ent
%. A lawyer "as a correspondin+ duty to ensure t"at "er e#ployees-
associates- and ot"ers w"ose ser*ices s"e uses- i.e. accountants and
):()
parale+als- do not re*eal confidences or secrets
I>. Ad*ertisin+
A.A lawyer s"all not use or disse#inate or participate in t"e preparation of
disse#ination of any publication or co##unication to a prospecti*e
client t"at is false- decepti*e- or #isleadin+.
7. %8a#ples of proper ad*ertisin+
(. %ducation- de+rees- and ot"er sc"olastic distinctions
). Dates of ad#ission to any bar
,. Areas of law in w"ic" lawyer or law fir# practices can't say
?speciali@e?!
0. Public offices and teac"in+ positions "eld
1. Me#bers"ips in bar associations or ot"er professional societies or
or+ani@ations
2. Aorei+n lan+ua+e fluency
4. Na#es of clients re+ularly represented pro*ided written consent!
B. 7an9 references
C. Credit arran+e#ents accepted
(D. Le+al fees for initial consultation
((. Contin+ent fee rates in ci*il #atters- w"en acco#panied by t"e
followin+'
a. <"et"er E co#puted before or after deduction of costs-
disburse#ents- and ot"er e8penses of liti+ation
b. A state#ent t"at- in t"e e*ent of no reco*ery- t"e C s"all re#ain
liable for t"e e8penses of liti+ation includin+ ct costs and
disburse#ents
(). Ran+e of fees for ser*ices- pro*ided t"at t"ere by a*ailable to t"e
public- free of c"ar+e- a written state#ent clearly describin+ t"e scope
of eac" ad*ertised ser*ice
(,. Fourly rates
(0. Ai8ed fees for specified le+al ser*ices
(1. Gt"ers 5 list not e8"austi*e
a. Cannot put in awards recei*ed in prior cases unless t"orou+"
disclai#er ?no +uarantee?!
C. Radio and ;* ads' per#itted in NY if .
(. prerecorded- taped- and appro*ed for broadcast by lawyer
,:()
). lawyer 9eeps copy of ad for ( yr followin+ last trans#ission
D.Direct #ail
(. Per#issible but lawyer #ust file copy of ad wit" appellate di*ision
). Lawyer cannot reference t"e filin+ in t"e direct #ail w"y notH!
,. Lawyer #ust 9eep #ailin+ list for ( year followin+ law #ailin+
%. C"an+es in rates 5 if lawyer ad*ertises fees- s"e can't c"an+e t"e rate
until after a reasonable period of ti#e #ust 9eep rate open for at least ,D
days!
A. Na#e- office address- and p"one nu#ber 5 eac" ad #ust include
>.Solicitation
A.A L s"all not solicit professional e#ploy#ent fro# a prospecti*e client
in person or by telep"one contact applies to written- recorded- or
personal co##unication!
(. %8ceptions
a. Close friends
b. Relati*es
c. Aor#er clients
d. Current clients
7. A L s"all not solicit professional e#ploy#ent by written or recorded
co##unications if'
(. ;"e co##unication is false- #isleadin+- or decepti*e can't pro#ise
results!
). ;"e recipient "as co##unicated a desire not to be solicited by t"e
lawyer
,. ;"e solicitation in*ol*es coercion- duress- or "arass#ent e.+.
co##unication directed at so#eone in "ospital!
0. ;"e a+e or t"e p"ysical- e#otional- or #ental state of recipient #a9e it
unli9ely t"at "e:s"e will be able to e8ecute reasonable $ud+#ent in
retainin+ an atty
1. t"e L e8pects but does not disclose t"at t"e le+al ser*ices necessary to
"andle t"e #atter co#petently will be pro*ided by a L not affiliated
wit" solicitin+ L as
a. Partner
b. Associate
c. Gf counsel
0:()
C. Referral fees 5 a lawyer cannot +i*e anyt"in+ of *alue to a person or
entity for reco##endin+ e#ploy#ent
D.Refusin+ e#ploy#ent 5 a L #ust refuse e#ploy#ent if person w"o
see9s to retain a L does so because of *iolation of t"ese rules
%. Internet ads
(. <eb pa+e 5 apply ad rules
). %#ails 5 apply rules for direct #ail
,. C"at roo# 5 apply solicitation rules
>I. Aees
A.No e8cessi*e fees 5 a L cannot enter into an a+ree#ent for- c"ar+e- or
collect e8cessi*e fees
7. Aactors
(. ;i#e and labor re6uired no double billin+!
). Li9eli"ood- if apparent or #ade 9nown t"e t"e client- t"at t"e
acceptance of t"e particular e#ploy#ent will preclude ot"er
e#ploy#ent by t"e L
,. Locality relati*e to ot"er L's fees in t"e area!
0. A#ount in*ol*ed and results obtained
1. ;i#e li#itations i#posed by client or circu#stances
2. Nature and len+t" of t"e professional relations"ip t"e lon+er- t"e
#ore #oney!
4. %8perience- reputation- and ability of lawyer
B. <"et"er fee is fi8ed or contin+ent latter can result in "i+"er "ourly
rate! H!
C. <ritten letter of en+a+e#ent
(. Doesn't need to be si+ned $ust #ust #e#oriali@e a+ree#ent!
). %ffecti*e date
,. Contents
a. %8planation of scope of sources to be pro*ided
b. %8planation of fees to be c"ar+ed- e8penses- and billin+ practices
c. Notice of client's ri+"t to arbitration of fee disputes
0. %8ceptions
a. If L uses si+ned retainer a+ree#ent t"at contains t"ree ite#s abo*e
b. <"ere fee is e8pected to be less t"an I,9
c. <"ere L's ser*ices are of sa#e +eneral 9ind as pre*iously renders
1:()
and paid for by t"e client
d. Do#estic relations #atter see below 5 need special letter!
e. <"ere lawyer "as no office in NY or no #aterial portion of ser*ices
rendered in NY
1. Insurers 5 if L is bein+ paid by insurer to represent insured- letter of
en+a+e#ent #ust be sent to bot" insurer and insured
D.Contin+ent fees
(. <ritin+ 5 #ust be in writin+ and filed wit" appellate di*ision
a. <ritin+ #ust include
i. Met"od by w"ic" fee is to be deter#ined- inc. E t"at s"all accrue
to lawyer in e*ent of settle#ent- trial- or appeal as specific E!
ii. Liti+ation and ot"er e8penses to be deducted fro# reco*ery
iii. <"et"er suc" e8penses are to b deducted before- or if not
pro"ibited by statute or ct rule- after t"e contin+ent fee is to be
calculated
). <ritten closin+ state#ent 5 after representation is o*er- L #ust
pro*ide client a state#ent co#putin+ t"e fee #ust be filed wit"
appellate di*ision!
,. Contin+ent fees are pro"ibited in
a. Cri#inal
b. Do#estic relation
%. Do# Rel #atters
(. Definition 5 w"en a L represented a C in any clai#- action- or
proceedin+ n any ct includin+ appellate cts for
a. di*orce
b. separation
c. annul#ent
d. custody
e. *isitation
f. #aintenance
+. c"ild support
". ali#ony
i. proceedin+s to enforce or #odify a $ud+#ent or order in connection
wit" any of t"e abo*e clai#s- actions- or proceedin+s
). No contin+ent fee in do# rel #atters e*en if to collect an unpaid
2:()
support $ud+#ent!
,. Aee a+ree#ent #ust be in writin+- as prescribed by ct rule. ;"e writin+
#ust be si+ned by L and C. ;"e L s"all pro*ide a prospecti*e client
wit" a state#ent of client's ri+"ts and responsibilities at t"e initial
conference and prior to t"e si+nin+ of a written retainer a+ree#ent.
0. Retainer fees'
a. No nonrefundable fees in do# rel #atters
b. A L #ust return any unused portion of retainer
1. In do# rel #atter- L #ust resol*e fee disputes by arbitration at t"e
election of t"e client
A. Di*ision of fees a#on+ Ls
(. A L s"all not di*ide a fee for le+al ser*ices wit" anot"er L w"o is not a
partner in or an associate of L's fir# unless'
a. C consents after full disclosure t"at a di*ision of fees will be #ade/
and di*ision is in proportion to ser*ices perfor#ed by eac" lawyer/
or
b. di*ision #ay be #ade in any #anner pro*ided eac" L assu#es $oint
responsibility for t"e representation in a writin+ +i*en to C and total
fees of all Ls do not e8ceed reasonable co#pensation in tote#
=.Aee dispute resolution pro+ra#
(. <"ere representation "as co##enced on or after Jan. (- )DD)- ci*il
#atter fee disputes between L and C are sub$ect to arbitration at C's
option.
a. %8ceptions
i. Aee disputes in cri#inal #atters
ii. <"ere a#ount in dispute is KI(9 or LI1D9
iii. Clai#s in*ol*in+ #alpractice
>II. <it"drawal
A.Per#ission of tribunal 5 if #atter is before tribunal- L #ust obtain ct's
per#ission before wit"drawin+ fro# e#ploy#ent
7. Deli*ery of property 5 L #ust return property of C includin+'
(. 3nused portion of retainer
). All docs in L's possession e*en drafts!
a. %8ception 5 can e8ercise retainin+ lien on file if client "asn't paid
bill can e*en wit""old property!
4:()
C. Mandatory wit"drawal 5 a L representin+ a C must #a9e a #otion to
wit"draw fro# representation w"en'
(. t"e lawyer 9nows or it is ob*ious t"at t"e C is assertin+ a position in
t"e liti+ation #erely for t"e purpose of "arassin+ any person e.+. .
fri*olous lawsuit!
). continued e#ploy#ent will result in *iolation of a 7R e.+. per$ury!
,. t"e lawyer's #ental or p"ysical condition #a9e it unreasonably
difficult to carry out t"e e#ploy#ent effecti*ely
0. t"e L is disc"ar+ed by t"e C
D.Per#issi*e wit"drawal
(. A L may wit"draw fro# representin+ a C- or #a9e #otion to do so- if'
a. <it"drawal can be acco#plis"ed wit"out #aterial ad*erse effects
on interest of t"e C
b. t"e C insists on presentin+ fri*olous clai# or defense lawsuit itself
is *alid but wants to a*oid fri*olous clai#!
c. if C persists in course of action in*ol*in+ t"e L's ser*ices t"at L
reasonably belie*es is cri#inal or fraudulent
d. t"e C insists on course ille+al or pro"ibited by DRs
e. by any ot"er conduct- t"e C renders it unreasonably difficult for t"e
L to carry out e#ploy#ent effecti*ely
f. t"e C insists- in a #atter not pendin+ before a tribunal- t"at t"e L
en+a+e in conduct contrary to $ud+#ent and ad*ice of L e*en
t"ou+" not pro"ibited by DRs
+. C deliberately disre+ards an a+ree#ent or obli+ation to L as to
e8penses or fees failure to pay bill- standin+ alone- not enou+"
unless deliberate refusal
". C "as used L's ser*ices to perpetuate cri#e or fraud
i. L's continued e#ploy#ent is li9ely to result in DR *iolation
$. L's inability to wor9 wit" co.counsel indicates best interests of C
would be wit"drawal
9. C 9nowin+ly and freely a+ree#ents to ter#ination of t"e
e#ploy#ent
l. t"e lawyer belie*es in +ood fait" in proceedin+ before tribunal t"at
tribunal will find t"ere e8ists ot"er +ood cause for wit"drawal
). L #ay not a+ree wit" client to alter t"ese rules to allow for wit"drawal
B:()
under any circu#stance
>III. Conflicts
A.) issues
(. Does t"ere e8ist a conflict
). Can client consent and allow representation
7. L's own personal interests 5 L s"all not accept or continue e#ploy#ent if
t"e e8ercise of professional $ud+#ent reasonably #ay be affected by t"e
lawyer's own financial- business- property- or personal interests
(. If disinterested L would belie*e t"at rep of C will not be ad*ersely
affected and C consents to rep after a full disclosure of i#plications of
L's interest
). <ills 5 a L s"ould not su++est t"at C +i*e a +ift or be6uest dict'
in"eritanceH! to t"e L
,. Mort+a+es 5 a L cannot ta9e one in a C's property to secure a fee
C. 7usiness transactions between L and C 5 a L s"all not enter into a
business transaction wit" a C if t"ey "a*e differin+ interests t"erein and
t"e C e8pects t"e L to protect C's interest in t"e transaction e.+.
representin+ C in a purc"ase of land and ta9in+ $oint owners"ip in land!
(. Consent- if'
a. ;ransaction is fair and reasonable to C w"en entered into and down
t"e road w"en 6uestioned about it!
b. ;ransaction is fully disclosed and trans#itted in writin+ to C in
ter#s t"at can be reasonably understood
c. lawyer ad*ises C to see9 ad*ice of independent counsel/ and
d. C consents in writin+
). %8 5 w"ere L recei*es stoc9 in e8c"an+e for incorporatin+ ser*ices
D.Si#ultaneous representation 5 a L s"all decline to rep a prospecti*e C if
independent $ud+#ent on be"alf of t"e prospecti*e party is li9ely to be
affected by L's rep of a current C e+ 5 rep'in+ co.defendants in a
cri#inal #atter *irtually ne*er proper- nor in rep'in+ passen+er and
dri*er in sa#e car in P.I. Action!
(. Consent 5 a L can rep #ultiple Cs w"ose interests #ay differ if a
disinterested L would belie*e t"at L can co#petently represent interest
of eac" and if eac" consents to t"e rep after full disclosure of t"e
i#plication if t"e si#ultaneous rep and ad*anta+es:ris9s in*ol*ed
C:()
%. Aor#er clients 5 a L w"o "as rep'd a for#er C in a #atter s"all not
t"ereafter rep anot"er person in t"e sa#e or substantially related #atter
in w"ic" t"e current client's interests are #aterially ad*erse to t"e
interests of t"e for#er C
(. Rationale 5 a L cannot re*eal or use con:sec of a for#er client in
rep'in+ a current C
). Proponent of Dis6ualification #otion based on a for#er C conflict
#ust establis" , t"in+s'
a. ;"ere e8isted an A.C relations"ip between #o*in+ party and
opposin+ L
b. Substantially related #aters
c. Materially ad*erse interests
,. Aor#er client conflict of departin+ L 5 if L lea*es fir#- s"e cannot
t"ereafter rep a C w"ose interests are #aterially ad*ers to a C of "er
for#er fir# if s"e ac6uired con:sec w"ile at t"e prior fir# t"at are
#aterial to t"e current #atter
0. Aor#er C conflict of fir# fro# w"ic" L "as departed 5 after a L
departs fro# a fir#- t"e fir# is pro"ibited fro# t"ereafter rep'in+ a
client wit" interests t"at are #aterially ad*erse to t"ose of a client
rep'd by t"e departin+ L and not currently rep'd by t"e fir# only if a L
re#ainin+ in t"e fir# "as info protected as a con:sec of t"e for#er C
t"at is #aterial to t"e current #atter
a. Consent. a L can rep a current C in a #atter t"at is substantially
related to prior rep of for#er C if for#er C pro*ides consent after
full disclosure
A. I#puted dis6ualification 5 w"ile Ls are associated in a law fir#- none of
t"e# can accept or continue e#ploy#ent if any one of t"e#- practicin+
alone- would be pro"ibited fro# doin+ so because of a conflict based on'
(. L's personal interests
). Si#ultaneous rep conflict
,. Aor#er client conflict
=.C"ec9in+ for conflicts 5 e*ery fir# #ust 9eep conflicts c"ec9in+ syste#
to allow L's to c"ec9
F.Gr+ani@ational Cs
(. <"en a L e#ployed or retained by an or+ is dealin+ wit" t"e or+'s
(D:()
directors- officers- e#ployees- #e#bers- SFs- or ot"er constituents-
and it appears t"at t"e or+'s interests #ay differ fro# t"ose of t"e
constituents- t"e L #ust state t"at s"e is L for t"e or+ not t"e
constituents and #ust ad*ise constituents if interests of corp are
different fro# t"eir interests
). If a L for a an or+ 9nows t"at a director- e#ployee- or ot"er person
associated wit" t"e or+ is en+a+ed in action- intends to act- or refuses
to act in a #anner related to t"e rep t"at is a *iolation of law t"at
reasonably #i+"t be i#puted to t"e or+ and is li9ely to result in
substantial in$ury to t"e or+ t"e L s"all proceed as is reasonably
necessary in t"e best interest of t"e or+ any #easures ta9en s"all be
desi+nated to #ini#i@e disruption of t"e or+ and t"e ris9 of re*ealin+
confidential info to persons outside t"e or+!
a. Suc" #easures #ay include- a#on+ ot"ers'
i. as9in+ a person to reconsider t"e proposed action
ii. as9 for a separate le+al opinion
iii. refer #atter to a "i+"er aut"ority
i*.wit"draw fro# rep of t"e corp
I. Rep'in+ t"e insured
(. L rep's insured not insurance co payin+ t"e bill
a. L cannot let insurer direct rep
b. Letter of en+a+e#ent +oes to bot" insured and insurance co
>I&. Co##unicatin+ wit" Rep'd and 3nrep'd parties
A.A rep'd party 5 durin+ course of rep of C- a L cannot co##unicate wit" a
party t"e L 9nows to be rep'd by a L in t"at #atter
(. %8ceptions
a. Consent fro# party's lawyer
b. Co##unication doesn't relate to representation
c. Co##unication is aut"ori@ed by law e.+ 5 deposition!
7. 3nrep'd party 5 a lawyer #ay not +i*e ad*ice to an ad*erse party w"o is
not rep'd e8cept to ad*ise t"e# to +et an L!
C. Causin+ a C to co##unicate wit" a rep'd person 5 only wit" ad*ance
notice to ot"er L
>&. ;"e client w"o co##its per$ury
A.Cri# def 5 "as a ri+"t to testify- not to per$ure "i#self
((:()
(. L #ust try to tal9 "i# out of it
). If C insists- L #ay wit"draw and clai# irreconcilable differences
,. If durin+ trial- L can re*eal to ct wit"out re*ealin+ con:sec
0. L can't 9nowin+ly use per$ury or refer to per$ured testi#ony later
7. Party is ci*il liti+ation 5 no constitutional ri+"t to testify
(. If L "as reasonable belief t"at client will testify falsely- L can pre*ent
C fro# ta9in+ t"e stand
). An L can wit"draw any written or oral opinion +i*en by L t"at L now
9nows to be false
():()
Real Property
I. The Present Estates:
A.Fee Simple Absolute:
1. What language will create:
a. To A! or To A an" his heirs!
#. $istinguishing characteristics:
a. This is absolute ownership o% potentially in%inite "uration.
b. It is %ree "e&isable' "escen"ible an" alienable.
(. Accompanying %uture interest:
a. )one
b. A li&ing person has no heirs' thus while A is ali&e' A has no heirs
*only prospecti&e heirs+.
,. Fee Tail:
1. What language will create:
a. To A an" the heirs o% his bo"y.!
#. $istinguishing characteristics:
a. -irtually abolishe" in the ..S. to"ay' inclu"ing )/.
b. 0istorically' the %ee tail woul" pass "irectly to grantees lineal bloo"
"escen"ents *no matter what+.
c. To"ay' the attempte" creation o% a %ee tail creates a %ee simple
absolute instea".
(. Accompanying %uture interest
a. 0istorically' i% in the grantor it was calle" a re&ersion. I% in a (r"
party it was calle" a remain"er.
1. $e%easible %ees:
1. Types:
a. Fee simple "eterminable *%ee on limitation+:
i. What language will create:
*A+ To A %or so long as...! To A "uring...! or To A until...!
*,+ 2rantor must use clear "urational language.
*1+ I% the state" con"ition is &iolate"' %or%eiture is automatic.
ii. $istinguishing characteristics:
*A+ This estate *li3e all "e%easible %ees+ is "e&isable'
"escen"ible an" alienable' but always sub4ect to a con"ition
1567
*can8t con&ey more than what you starte" with+.
iii. Accompanying %uture interest:
*A+ in the grantor 9 possibility o% re&erter.
b. Fee simple sub4ect to a con"ition subse:uent *%ee on con"ition+:
i. What language will create:
*A+ To A' but i% ; e&ent occurs' grantor reser&es the right to
reenter an" reta3e.!
*,+ 2rantor must use clear "urational language an" must
car&e out the right to reenter.
ii. $istinguishing characteristics:
*A+ This estate is not automatically terminate"' but it can be
cut short at the grantor8s option i% the state" con"ition occurs.
*,+ This estate *li3e all "e%easible %ees+ is "e&isable'
"escen"ible an" alienable' but always sub4ect to a con"ition
*can8t con&ey more than what you starte" with+.
iii. Accompanying %uture interest:
*A+ right o% entry *a.3.a. power o% termination+
*,+ )/ 9 calle" right o% reac:uisition.
c. Fee simple sub4ect to e<ecutory limitation:
i. What language will create:
*A+ To A' but i% ; e&ent occurs' then to ,.!
ii. $istinguishing characteristics:
*A+ This estate is 4ust li3e the %ee simple "eterminable' only
now' i% the con"ition is bro3en' the estate is automatically
%or%eite" in %a&or o% some other grantor.
*,+ This estate *li3e all "e%easible %ees+ is "e&isable'
"escen"ible an" alienable' but always sub4ect to a con"ition
*can8t con&ey more than what you starte" with+.
iii. Accompanying %uture interest:
*A+ shi%ting e<ecutory interest.
#. Rules o% construction *%or all "e%easible %ees+:
a. Wor"s o% mere "esire' hope' or intention are insu%%icient to create a
"e%easible %ee.
i. 1ourts "is%a&or restrictions on the %ree use o% lan".
ii. Thus' courts will not %in" a "e%easible %ee unless clear "urational
#567
language is use".
*A+ e<ample = in each o% these instances' A is &este" with a %ee
simple absolute' an" )>T a "e%easible %ee: ?To A %or the
purpose o% constructing a "ay care center?@ ?To A with the hope
that he becomes a lawyer?@ ?To A with the e<pectation that the
premises will be use" as a ,loc3buster &i"eo store.?
b. Absolute restraints on alienation are &oi".
i. An absolute restraint on alienation is an absolute ban on the
power to sell or trans%er that is not lin3e" to any reasonable' time
limite" purpose.
*A+ E<ample 1 9 > con&eys: ?To A so long as she ne&er
attempts to sell.? A has a %ee simple absolute *> has nothing+.
*,+ e<ample # 9 contrast with: > con&eys: ?To A so long as
she "oes not attempt to sell until the year #AA6' when clou"s
on the title will be resol&e".? A has a %ee simple "eterminable
an" > has a possibility o% re&erter *b5c the restraint is lin3e" to
a reasonable' time=limite" purpose+.
$.Bi%e estate:
1. What language will create:
a. To A %or li%e.!
b. This is an estate that must be measure" in e<plicit li%etime terms
an" ne&er terms o% years.
c. Bi%e estate pur autre &ie: *i+A li%e estate measure" by a li%e other
than the grantee8s.
i. e<ample 1 9 To A %or the li%e o% ,.!
ii. e<ample # 9 To A %or li%e'! but A sells the li%e estate interest to $
*$ has possession o% the lan" until A8s "eath+.
#. $istinguishing characteristics:
a. The li%e tenant is entitle" to all the or"inary uses an" pro%its %rom
the lan".
b. The li%e tenant must not commit waste *can8t "o anything to harm
%uture interest hol"ers+.
i. Three species o% waste:
*A+ &oluntary or a%%irmati&e waste 9 actual o&ert con"uct that
causes "ecrease in &alue.
(567
*1+ -oluntary waste an" natural resources = the general rule
is that the li%e tenant must not consume or e<ploit natural
resources on the property *such as timber' oil' or minerals+'
unless one o% %our e<ceptions applies' remembere" by
P.R2E.
*a+ Prior .se 9 prior to the grant' the lan" was use" %or
e<ploitation.
*i+>pen Cines $octrine 9 i% mining was "one on the lan"
be%ore the li%e estate began' the li%e tenant may
continue to mine' but is limite" to the mines that are
alrea"y open.
*b+ Reasonable repairs 9 the li%e tenant may consume
natural resources %or reasonable repairs an" maintenance
o% the premises.
*c+ 2rant 9 the li%e tenant may e<ploit i% e<pressly
grante" the right to "o so.
*"+ E<ploitation 9 the lan" is suitable only %or
e<ploitation *e.g. 9 a :uarry+.
*,+ permissi&e waste or neglect 9 this occurs when the lan" is
allowe" to %all into "isrepair or the li%e tenant %ails to
reasonably protect the lan".
*1+ Permissi&e waste an" the obligation to repair 9 the li%e
tenant must simply maintain the premises in reasonably
goo" repair.
*#+ Permissi&e waste an" the obligation to pay all or"inary
ta<es 9 the li%e tenant is obligate" to pay all or"inary ta<es
on the lan"' to the e<tent o% income or pro%its %rom the lan".
I% there is no income or pro%it' the li%e tenant is re:uire" to
pay all or"inary ta<es to the e<tent o% the premises %air
mar3et &alue.
*1+ ameliorati&e waste 9 the li%e tenant must not engage in
acts that will enhance the properties &alue unless all %uture
interest hol"ers are 3nown an" consent.
(. Accompanying %uture interest:
a. i% in the grantor 9 re&ersion.
6567
b. i% in a (r" party 9 remain"er.
II. Future interests:
A.Future interests capable o% creation in the grantor:
1. Possibility o% re&erter 9 it accompanies only the %ee simple
"eterminable.
#. Right o% entry *a.3.a. power o% termination+ 9 it accompanies only the
%ee simple sub4ect to a con"ition subse:uent.
(. Re&ersion 9 the %uture interest that arises in a grantor who trans%ers an
estate o% lesser :uantum then he starte" with' other than %ee simple
"eterminable or a %ee simple sub4ect to a con"ition subse:uent.
a. E<amples:
i. To A %or li%e.!
ii. To A %or 77 years.!
iii. To A %or li%e' then to , %or 77 years.!
,. Future interests in trans%erees:
1. Types:
a. -este" remain"er:
i. ( species:
*A+ in"e%easibly &este" remain"er@
*,+ &este" remain"er sub4ect to complete "e%easance *a.3.a.
&este" remain"er sub4ect to total "i&estment+@
*1+ &este" remain"er sub4ect to open.
b. 1ontingent remain"er:
c. E<ecutory interest:
i. # species:
*A+ shi%ting e<ecutory interest@
*,+ springing e<ecutory interest.
#. What is a remain"erD
a. A remain"er is a %uture interest create" in a grantee that is capable
o% becoming possessory upon the e<piration o% a prior possessory
estate create" in the same con&eyance in which the remain"er is
create".
i. It always accompanies a prece"ing estate o% a 3nown %i<e"
"uration *usually a li%e estate or term o% years+.
ii. A remain"er cannot cut short or "i&est a prior trans%eree *it will
E567
ne&er %ollow a "e%easible %ee+.
b. -este" remain"ers:
i. A remain"er is &este" i% it is both create" in an ascertaine" person
an" is not sub4ect to any con"ition prece"ent.
ii. ( 3in"s o% &este" remain"ers:
*A+ in"e%easibly &este" remain"er 9 the hol"er o% this
remain"er is certain to ac:uire an estate in the %uture with no
con"itions attache".
*1+ e<ample 9 To A %or li%e' remain"er to ,.! A is ali&e. ,
is ali&e.
*a+ I% , pre"eceases A' ,8s %uture interest passes by his
will or by intestacy to his heirs.
*,+ &este" remain"er sub4ect to complete "e%easance = right to
possession coul" be cut short by a con"ition subse:uent.
*1+ Also 3nown as the &este" remain"er sub4ect to total
"i&estment.
*#+ )/ = this remain"er is calle" a ?remain"er &este"
sub4ect to complete "e%easance.?
*(+ 0ere' note the "i%%erence between a con"ition
prece"ent' which creates a contingent remain"er' an" a
con"ition subse:uent' which creates a &este" remain"er
sub4ect to complete "e%easance. To tell the "i%%erence' apply
the ?1omma Rule?: When con"itional language in a trans%er
%ollows language that' ta3en alone an" set o%% by commas'
woul" create a &este" remain"er' the con"ition is a con"ition
subse:uent' an" you ha&e a &este" remain"er sub4ect to
complete "e%easance.
*6+ e<ample 9 > con&eys: ?To A %or li%e' remain"er to ,'
pro&i"e"' howe&er' that i% , "ies un"er the age o% #E' to 1.?
A is ali&e. , is #A years ol".
*a+ A 9 li%e estate
*b+ , 9 &este" remain"er sub4ect to complete "e%easance
*c+ 1 9 shi%ting e<ecutory interest
*"+ > 9 re&ersion *i% neither 1 nor 18s heirs e<ist i% the
con"ition is breache"+.
F567
*E+ ,y contrast' i% the con"itional language appears be%ore
the language creating the remain"er' the con"ition is a
con"ition prece"ent' an" you ha&e a contingent remain"er.
*a+ For e<ample: > con&eys ?To A %or li%e' an" i% , has
reache" the age o% #E' to ,.? *, has contingent remain"er'
> has re&ersion+.
*1+ &este" remain"er sub4ect to open 9 here a remain"er is
&este" in a group o% ta3ers at least one o% whom is :uali%ie" to
ta3e possession but each class member8s share is sub4ect to
partial "iminution b5c a""itional ta3ers not yet ascertaine" can
still :uali%y as class members.
*1+ e<ample = ?To A %or li%e' then to ,8s chil"ren.? A is
ali&e. , has two chil"ren' 1 an" $.
*#+ classes 9 a class is either open or close".
*a+ A class is open i% it is possible %or others to enter.
*b+ A class is close" when its ma<imum membership has
been set *so that persons born a%ter are shut out+.
*c+ common law rule o% con&enience = a class closes
when e&er any member can "eman" possession.
*i+In the abo&e e<ample' the class closes in ,8s "eath *b5c
, can8t ha&e any more chil"ren' an" on A8s "eath *b5c
un"er the rule o% con&enience' 1 an" $ can "eman"
possession+.
*ii+ >nce A "ies a chil" born to , or concei&e"
therea%ter will not share in the gi%t.
*iii+ E<ception: the womb rule 9 a chil" o% , in the
womb at A8s "eath will share with 1 an" $.
*i&+ What i% 1 or $ pre"eceases AD 9 at common law'
their share goes to there "e&isees or heirs.
c. 1ontingent remain"ers:
i. A remain"er is contingent i% it is create" in an unascertaine"
person or is sub4ect to a con"ition prece"ent' or both.
*A+ The remain"er that is contingent because it is create" in as
yet unborn or unascertaine" persons.
*1+ E<ample 1 = ?To A %or li%e' then to ,8s %irst chil".? A is
G567
ali&e. ,' as yet' has no chil"ren.
*#+ E<ample # = ?To A %or li%e' then to ,8s heirs.? A is ali&e.
, is ali&e. ,ecause a li&ing person has no heirs' while , is
ali&e his heirs are un3nown.
*(+ E<ample ( = ?To A %or li%e' then to those chil"ren o% ,
who sur&i&e A.? A is ali&e. We "on8t yet 3now which' i% any'
o% ,8s chil"ren will sur&i&e A.
*,+ The remain"er that is contingent because it is sub4ect to a
con"ition prece"ent.
*1+ A con"ition is a con"ition prece"ent when it appears
be%ore the language creating the remain"er or is wo&en into
the grant to remain"erman.
*a+ E<ample 1 = ?To A %or li%e' then' i% , gra"uates %rom
college' to ,.? A is ali&e. , is now in high school. ,e%ore
, can ta3e' he must gra"uate %rom college. 0e has not yet
satis%ie" this con"ition prece"ent. , has a contingent
remain"er. > has a re&ersion *i% , ne&er gra"uates' > or
>8s heirs ta3e+.
*i+I% , gra"uates %rom college "uring A8s li%etime' ,Hs
contingent remain"er is trans%orme" automatically into
an in"e%easibly &este" remain"er.
*b+ E<ample # = ?To A %or li%e' an"' i% , has reache" the
age o% #1' to ,.? A is ali&e. , is 17 years ol". Again' ,
must satis%y a con"ition prece"ent be%ore , can ta3e. ,
there%ore has a contingent remain"er. > has a re&ersion *i%
, ne&er reaches #1' the estate re&erts bac3 to > or >8s
heirs+.
*i+I% , obtains the age o% #1 "uring A8s li%etime' ,Hs
contingent remain"er is trans%orme" automatically into
an in"e%easibly &este" remain"er.
*1+ The rule o% "estructibility o% contingent remain"ers:
*1+ At common law 9 a contingent remain"er was
"estroye" i% it was still contingent at the time the prece"ing
estate en"e".
*a+ e.g. 9 To A %or li%e' an" i% , has reache" the age o%
I567
#1' to ,.! )ow' A has "ie"' lea&ing behin" ,' who is still
only 17 years ol". At common law' ,8s contingent
remain"er woul" be "estroye" an" > *or >8s heirs+ woul"
ta3e in %ee simple absolute+.
*b+ To"ay 9 the "estructibility rule has been abolishe".
*i+Thus i% , is still un"er #1 when A "ies' > *or >8s heirs+
hol" the estate sub4ect to ,8s springing e<ecutory
interest. >nce , reaches #1' , ta3es.
*ii+ The Rule o% $estructibility has been abolishe" in
)/.
*$+ The Rule in Shelly8s case:
*1+ Applies in one setting only 9 > con&eys to A %or li%e'
then on A8s "eath to A8s heirs.! A is ali&e.
*a+ 0istorically 9 the present an" %uture interest woul"
merge' gi&ing A a %ee simple absolute *this was a rule o%
law an" thus woul" apply in the %ace o% contrary grantor
intent+
*b+ To"ay 9 Rule in Shelly8s 1ase has been &irtually
abolishe". Thus' A woul" ha&e a li%e estate' A8s as yet
un3nown heirs ha&e a contingent remain"er' an" > has a
re&ersion *since A coul" "ie without heirs+.
*c+ )/ 9 the Rule in Shelly8s 1ase has been abolishe" in
)/.
*E+ The $octrine o% Worthier Title *a.3.a. rule against a
remain"er in 2rantor8s heirs+:
*1+ This "octrine is still &iable in most states to"ay. It
applies when >' who is ali&e' tries to create a %uture interest
in his heirs.
*a+ e.g. 9 >' who is ali&e' con&eys to A %or li%e' then to
>8s heirs.!
*#+ I% the $octrine o% Worthier Title "i" not apply:
*a+ A 9 li%e estate@
*b+ >8s heirs 9 contingent remain"er.
*(+ With the $octrine o% Worthier Title:
*a+ 1ontingent remain"er in >8s heirs is &oi" *promotes
7567
%ree trans%er o% lan"+.
*b+ A 9 li%e estate.
*c+ > 9 re&ersion.
*6+ The $octrine o% Worthier Title is a rule o% construction
not a rule o% law' thus grantor8s intent controls.
*a+ I% the grantor clearly inten"s to create a contingent
remain"er in his heirs' that intent is bin"ing.
*E+ )/ 9 The $octrine o% Worthier Title has been abolishe"
in )/ with respect to trans%ers ta3ing e%%ect a%ter September
1' 17FG.
(. $istinguishing remain"ers %rom e<ecutory interests:
a. What is an e<ecutory interestD = it is a %uture interest create" in a
trans%eree *a thir" party+' which is not a remain"er an" which ta3es
e%%ect by either cutting short some interest in another person
*?shi%ting?+ or in the grantor or his heirs *?springing?+.
i. Shi%ting e<ecutory interest 9 it always %ollows a "e%easible %ee
an" cuts short someone other than the grantor.
*A+ e<ample = ?To A an" her heirs' but i% , returns %rom
1ana"a sometime ne<t year' to , an" his heirs.?
*1+ A 9 %ee simple sub4ect to ,8s shi%ting e<ecutory interest.
*#+ , 9 shi%ting e<ecutory interest
*(+ , "oes not ha&e a remain"er b5c remain"ers ne&er
%ollow "e%easible %ees.
*6+ RAP problemD 9 this con&eyance "oes not &iolate the
RAP b5c o% the one=year limit on ,8s potential power.
ii. Springing e<ecutory interest 9 it always %ollows a "e%easible %ee
an" cuts short the grantor.
*A+ e<ample = : > con&eys: To A' i% an" when he marries.! A
is unmarrie".
*1+ > 9 %ee simple sub4ect to A8s springing e<ecutory
interest
*#+ A 9 springing e<ecutory interest
*(+ RAP problemD 9 no' b5c we will 3now by the en" o% A8s
li%e whether the con"ition is met or not.
iii. )/ = has abolishe" the "istinction between e<ecutory
1A567
interests an" contingent remain"ers. Instea"' contingent
remain"ers an" e<ecutory interests are calle" remain"ers sub4ect
to a con"ition prece"ent.
1. The Rule Against Perpetuities:
1. Rule = 1ertain 3in"s o% %uture interests are &oi" i% there is any
possibility' howe&er remote' that the gi&en interest may &est more than
#1 years a%ter the "eath o% a measuring li%e.
#. Four=Step Techni:ue %or Assessing Potential RAP Problems:
a. $etermine which %uture interests ha&e been create" by the
con&eyance. The RAP potentially applies only to contingent
remain"ers' e<ecutory interests' an" certain &este" remain"ers
sub4ect to open.
i. The RAP "oes )>T apply to any %uture interest create" in > *the
grantor+' or to in"e%easibly &este" remain"ers or &este"
remain"ers sub4ect to complete "e%easance.
ii. e<ample: ?To A %or li%e' then to A8s chil"ren.? A is ali&e. She has
no chil"ren.
*A+ A 9 li%e estate
*,+ as yet unborn chil"ren 9 contingent remain"er
b. I"enti%y the con"itions prece"ent to the &esting o% the suspect %uture
interest.
i. E.g. 9 in the abo&e e<ample' A must "ie lea&ing a chil".
c. Fin" a measuring li%e. Boo3 %or a person ali&e at the "ate o% the
con&eyance an" as3 whether that #7I personHs li%e or "eath is
rele&ant to the con"itionHs occurrence.
i. In the abo&e e<ample' A :uali%ies as a measuring li%e.
". As3: Will we 3now' with certainty' within #1 years o% the "eath o%
our measuring li%e' i% our %uture interest hol"er*s+ can or cannot
ta3eD
i. I% so' the con&eyance is goo". I% not *i% there is any possibility'
howe&er remote' that the con"ition prece"ent coul" or coul" not
occur more than #1 years a%ter the "eath o% a measuring li%e+' the
%uture interest is &oi".
ii. The abo&e con&eyance' there%ore' is goo" b5c we will 3now' at
the instant o% A8s "eath' i% A has le%t behin" a chil" or not.
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(. Applying the 6 steps:
a. e<ample = ?To A %or li%e' then to the %irst o% her chil"ren to reach the
age o% (A.? A is GA. 0er only chil"' ,' is #7 years ol".
i. Step 1: classi%y the %uture interest 9 contingent remain"er
ii. Step #: con"ition prece"ent 9 A must "ie' an" must ha&e a chil"
reach (A
iii. Step (: %in" a measuring li%e 9 A *not , b5c con&eyance to
A8s chil"ren is not , speci%ic+.
i&.Step 6: as3 rele&ant :uestion = Will we 3now' with certainty'
within #1 years o% the "eath o% our measuring li%e' i% a %uture
interest hol"er can ta3eD In other wor"s' is there any possibility'
howe&er remote' that A woul" not ha&e a chil" to reach (A until
more than #1 years a%ter A8s "eathD 9 /es *thus the contingent
remain"er &iolates RAP+.
*A+ The common law RAP is miserable. It presumes that
anything is possible *e.g. 9 ,' who is #7' coul" "ie tomorrow.
Therea%ter' A coul" ha&e another chil"' no matter that A is GA.
*This is calle" the Fertile >ctogenarian Rule: it presumes that a
person is still capable o% ha&ing chil"ren no matter what
his5her age+. A coul" "ie in labor' or' A coul" li&e. We 4ust
"on8t 3now %or sure' to"ay' whether the con"ition prece"ent to
any potential newborn8s ta3ingJthe chil"8s turning (AJwill
be satis%ie" within #1 years o% A8s "eath.
*,+ Thus' we are le%t with: a. A 9 li%e estate b. > = re&ersion
6. Two bright line Rules o% 1ommon Baw RAP:
a. A gi%t to an open class that is con"itione" on the members sur&i&ing
to an age beyon" #1 &iolates the common law RAP.
i. ?,a" as to one' ba" as to all.? = to be &ali"' it must be shown that
the con"ition prece"ent to e&ery class member8s ta3ing will occur
within the perpetuities perio". I% it is possible that a "isposition
might &est too remotely with respect to any member o% the class'
the entire gi%t is &oi".
*A+ For e<ample: ?To A %or li%e' then to such o% A8s chil"ren as
li&e to attain the age o% (A.? A has two chil"ren' , an" 1. , is
(E an" 1 is 6A. A is ali&e.
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*1+ , an" 18s &este" remain"ers sub4ect to open are &oi"e"
by the 1B RAP an" its ba" as to one' ba" as to all!
principle.
*#+ Thus' un"er the common law RAP' we are le%t with:
*a+ A 9 li%e estate ii. > 9 re&ersion
b. Cany shi%ting e<ecutory interests &iolate the RAP. An e<ecutory
interest with no limit on the time within which it must &est &iolates
the RAP.
i. e<ample 1 = ?To A an" his heirs so long as the lan" is use" %or
%arm purposes' an" i% the lan" ceases to be so use"' to , an" his
heirs.?
*A+ Step 1: classi%y the %uture interest 9 shi%ting e<ecutory
interest
*,+ Step #: con"ition prece"ent 9 lan" must cease to be use"
%or %arming purposes.
*1+ Step (: %in" a measuring li%e 9 A
*$+ Step 6: as3 rele&ant :uestion 9 Will we 3now within #1
years o% A8s "eath i% the , can ta3eD )>
*1+ Thus we are le%t with:
*a+ A 9 %ee simple "eterminable
*b+ > 9 re&ersion RAP problemD 9 )o' b5c RAP "oesn8t
apply to %uture interest in >
ii. e<ample # = ?To A an" his heirs' but i% the lan" ceases to be use"
%or %arm purposes' to , an" his heirs.?
*A+ Same result as abo&e' e<cept that now' once the o%%ensi&e
%uture interest is stric3en' the con&eyance no longer is
grammatically soun". Thus the entire con"itional clause is
stric3en.
*1+ A 9 %ee simple absolute
*#+ > 9 nothing
iii. 1harity=to=charity e<ception 9 A gi%t %rom one charity to
another "oes not &iolate RAP.
*A+ e.g. = ?To the American Re" 1ross' so long as the
premises are use" %or Re" 1ross purposes' an" i% they cease to
be so use"' then to the /C1A.?
1(567
*1+ >r"inarily the /C1A woul" ha&e a &oi" shi%ting
e<ecutory interest.
*#+ 0owe&er' b5c o% the charity=to=charity e<ception to
RAP' the gi%t is goo".
*(+ Thus the Re" 1ross has a %ee simple sub4ect to the
/C1A8s shi%ting e<ecutory interest.
E. Re%orm o% the RAP:
a. the ?wait an" see? or ?secon" loo3? "octrine = un"er this ma4ority
re%orm e%%ort' the &ali"ity o% any suspect %uture interest is
"etermine" on the basis o% the %acts as they now e<ist at the
conclusion o% the measuring li%e. (A#
b. .ni%orm Statutory Rule Against Perpetuities *.SRAP+ = co"i%ies the
common law RAP an"' in a""ition' pro&i"es %or an alternati&e 7A
year &esting perio".
c. ,oth the ?wait an" see? an" .SRAP re%orms embrace:
i. The cy pres "octrine *as near as possible!+ = i% a gi&en
"isposition &iolates the rule' a court may re%orm it in a way that
most closely matches the grantor8s intent while still complying
with RAP. *
ii. The re"uction o% any o%%ensi&e age contingency to #1 years.
". The )ew /or3 Perpetuities Re%orm Statute:
i. )ew /or3 applies the common law rule against perpetuities' an"
has re4ecte" wait an" see an" cy pres' e<cept %or charitable trusts
an" powers o% appointment' to be ta3en up in Trusts.
ii. Three points o% note:
*A+ .n"er the )ew /or3 perpetuities re%orm statute' where an
interest woul" be in&ali" because it is ma"e to "epen" on any
person8s ha&ing to attain an age in e<cess o% #1 years' the age
contingency is re"uce" to #1 years.
*,+ The common law %ertile octogenarian principle is
mo"i%ie" by the )ew /or3 perpetuities re%orm statute. The
)ew /or3 statute presumes that a woman o&er the age o% EE
cannot ha&e a chil".
*1+ The possibility that the person may ha&e a chil" by
a"option is "isregar"e".
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*1+ The )ew /or3 ?suspension? rule *teste" with Trusts an"
Wills+:
*1+ The rule against suspension o% the absolute power o%
alienation applies the common law RAP to restrictions on
the power to sell or trans%er.
*#+ Thus' an interest is &oi" i% it suspen"s the power to sell
or trans%er %or a perio" longer than the li&es in being plus #1
years.
*a+ In other wor"s' %or a con&eyance to be &ali" un"er
the suspension rule' there must be persons in being who
coul" 4oin together in a con&eyance o% the %ull %ee simple
title within li&es in being plus #1 years.
III. 1oncurrent Estates:
A.Types:
1. Koint tenancy = two or more own a share with the right o% sur&i&orship
an" the right to use an" en4oy the whole.
a. $istinguishing characteristics:
i. The right o% sur&i&orship 9 when one 4oint tenant "ies' his share
passes automatically to the sur&i&ing 4oint tenants.
ii. Koint tenant8s interest is alienable' it is not' howe&er' "e&isable or
"escen"ible.
b. 1reation:
i. 6 unities *T=TIP!+ 9 4oint tenants must ta3e their interests:
*A+ Time 9 at the same time@
*,+ Title 9 by the same title *in the same instrument+@
*1+ Interests 9 with i"entical *e:ual+ interests@
*$+ Possession 9 with i"entical rights to possess the whole. *
ii. 2rantor must clearly e<press the right o% sur&i&orship.
iii. .se o% a straw:
*A+ 1. I% one in"i&i"ual is the sole owner o% ,A an" he wants
to hol" it as a 4oint tenant with 1 or more in"i&i"uals' un"er the
common law he must use a straw in or"er to satis%y the 6
unities.
*1+ Step 1 9 original owner con&eys ,A to a strawman.
*#+ Step # 9 straw con&eys bac3 to original owner an"
1E567
prospecti&e 4oint tenants with the right o% sur&i&orship *now
all 6 unities are present inclu"ing time an" title+.
*,+ In )/ 9 by statute' )/ has "ispense" with the nee" %or a
straw. In )/ it is permissible %or original owner to con&ey'
using only 1 piece o% paper to himsel% an" prospecti&e 4oint
tenants.
c. Se&erance o% a 4oint tenancy *SPAC!+ 9 Sale' Partition An"
Cortgage.
i. Se&erance an" Sale:
*A+ A 4oint tenant can sell or trans%er his interest "uring his
li%etime. a. 0e can e&en "o so secretly without the consent o%
%ellow 4oint tenants.
*,+ >ne 4oint tenant8s sale se&ers the 4oint tenancy as to the
seller8s interest b5c it "isrupts the 6 unities.
*1+ ,uyer becomes a tenant in common.
*#+ To the e<tent that we starte" with more than # 4oint
tenants in the %irst place' the 4oint tenancy remains in tact as
between the other' non=trans%erring 4oint tenants.
*(+ e.g. 9 > con&eys ,A To P' R an" C as 4oint tenants
with the right o% sur&i&orship.! P' R' an" C now each own a
presumpti&e 15( share in ,A an" a right to use an" en4oy the
whole. I% P then sells her interest to 1' this se&ers the 4oint
tenancy as to P8s interest. 1 owns 15( as tenant in common
with R an" C' R an" C still hol" #5( as 4oint tenants.
*1+ At e:uity' a 4oint tenant8s mere act o% entering into a
contract %or the sale o% her share will se&er the 4oint tenants as
to that contracting party8s interest un"er the $octrine o%
E:uitable 1on&ersion *e:uity regar"s as "one' that which
ought to be "one!+.
ii. Se&erance an" Partition:
*A+ Three &ariations:
*1+ by &oluntary agreement 9 an allowable peace%ul way to
en" the relationship.
*#+ partition in 3in" 9 a 4u"icial action %or physical "i&ision
o% the property i% it is in the best interest o% all parties
1F567
*"i&i"e the property itsel%+.
*(+ %orce" sale 9 4u"icial action' i% in the best interests o% all
in&ol&e"' where the lan" is sol" an" sale procee"s are
"i&i"e" up proportionately *wor3s best when ,A is a
buil"ing+.
iii. Se&erance an" Cortgage:
*A+ Title theory o% mortgages *minority+9 one 4oint tenant8s
e<ecution o% a mortgage or a lien on his or her share will se&er
the 4oint tenancy as to that now encumbere" share.
*,+ Bien theory o% mortgages *ma4ority an" )/+ 9 a 4oint
tenant8s e<ecution o% a mortgage on his or her interest will not
se&er the 4oint tenancy.
#. Tenancy by the entirety *recogniLe" in #1 states+ = a protecte" marital
interest between husban" an" wi%e with the right o% sur&i&orship.
a. $istinguishing characteristics:
i. This is a &ery protecte" %orC o% co=ownership:
*A+ 1re"itors o% only one spouse cannot touch the tenancy.
*1+ In )/ 9 one spouse may mortgage his interest an" his
cre"itors may en%orce against that interest' but only as to
"ebtor spouse8s share. Further' the non="ebtor spouse8s
rights' inclu"ing the right o% sur&i&orship' must not be
compromise".
*,+ )either tenant' acting alone' can "e%eat the right o%
sur&i&orship by a unilateral con&eyance to a (r" party.
b. 1reation:
i. It can only be create" in husban" an" wi%e as %ictitious one
person with the right o% sur&i&orship.
ii. In those states that recogniLe the tenancy by the entirety' it arises
presumpti&ely in any con&eyance to husban" an" wi%e' unless
clearly state" otherwise.
(. Tenancy in 1ommon = two or more own with no right o% sur&i&orship.
a. Three %eatures:
i. Each co=tenant owns an in"i&i"ual part an" each has a right to
possess the whole.
ii. Each interest is "escen"ible' "e&isable an" alienable *there are no
1G567
sur&i&orship rights between tenants in common+.
iii. The presumption %a&ors tenants in common.
,. Rights an" $uties o% 1o=Tenants *%or all three abo&e+:
1. Possession 9 each co=tenant is entitle" to possess an" en4oy the whole.
a. I% one co=tenant wrong%ully e<clu"es another tenant %rom
possession o% the whole or any part' he has committe" wrong%ul
ouster.
#. Rent %rom co=tenant in e<clusi&e possession 9 absent ouster' a co=
tenant in e<clusi&e possession is not liable to other co=tenants %or rent.
(. Rent %rom (r" parties 9 a co=tenant who leases all or part o% the
premises to a (r" party must account to his co=tenants' pro&i"ing them
their %air share o% the rental income.
6. A"&erse possession 9 unless he has ouste" the other co=tenants' one
co=tenant in e<clusi&e possession %or the statutory a"&erse possession
perio" cannot ac:uire title to the e<clusion o% others.
a. WhyD 9 the hostility element o% a"&erse possession is absent. There
is no hostility b5c there was ne&er any ouster.
b. In )/ 9 a co=tenant may ac:uire %ull title by a"&erse possession i%
he is in e<clusi&e possession %or #A continuous years un"er a theory
o% implie" ouster.
E. 1arrying costs 9 each co=tenant is responsible %or his %air share o%
carrying costs *such as ta<es an" mortgage interest payments+' base"
upon the in"i&i"ual share that he hol"s.
F. Repairs 9 the repairing co=tenant en4oys a right to contribution %or
necessary repairs pro&i"e" that she has noti%ie" the others o% the nee"
%or repairs *base" on percentage o% ownership+.
G. Impro&ements 9 "uring the li%e o% the co=tenancy' there is no right to
contribution %or so calle" impro&ements! *b5c one co=tenant8s
impro&ements coul" be another8s nightmare+.
a. 0owe&er' at partition' the impro&ing co=tenant is entitle" to a cre"it
e:ual to any increase in &alue cause" by her e%%orts.
b. In a""ition' at partition' the impro&er! bears %ull liability %or any
"ecrease in &alue cause" by her e%%orts.
I. Waste 9 a co=tenant must not commit waste *&oluntary' permissi&e or
ameliorati&e+
1I567
a. A co=tenant can bring an action %or waste "uring the li%e o% the co=
tenancy.
7. Partition 9 a 4oint tenant or tenant in common has a right to bring an
action %or partition *see abo&e+.
I-. Ban"lor"5Tenant Baw:
A.The %our leasehol" or non=%reehol" estates:
1. The Tenancy %or /ears *a.3.a. the Estate %or /ears or the Term o%
/ears+:
a. This is a lease %or a %i<e" "etermine" perio" o% time *coul" be 1 "ay'
# months' E years' etc+.
b. Triggering %act = when you 3now the termination "ate %rom the start.
c. ,ecause a term o% years states %rom the outset when it will
terminate' no notice is necessary %or termination.
". A term o% years greater than 1 year must be in writing to be
en%orceable b5c o% the S>F.
#. The Perio"ic Tenancy:
a. This is a lease that continues %or successi&e inter&als until lan"lor"
or tenant gi&es proper notice o% termination.
b. The perio"ic tenancy can be create" e<pressly *e.g. 9 B con&eys To
T %rom month to month!+ or implie"ly in one o% ( ways:
i. Ban" is lease" with no mention o% "uration' but pro&ision is ma"e
%or the payment o% rent at set inter&als.
ii. An oral term o% years in &iolation o% the S>F creates an implie"
perio"ic tenancy measure" by the way rent is ten"ere".
iii. In a resi"ential lease' i% the lan"lor" elects to hol"o&er a
tenant who has wrong%ully staye" past the conclusion o% the
original lease' an implie" perio"ic tenancy arises measure" by the
way rent is now ten"ere".
*A+ In )/ 9 a lan"lor" who elects to hol"o&er a tenant creates
an implie" month=to=month perio"ic tenancy' unless otherwise
agree".
c. Termination:
i. )otice' usually written' must be gi&en.
ii. At common law' time %or notice must at least be e:ual to the
length o% the perio" itsel% unless otherwise agree".
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*A+ e<ception 9 i% the tenancy is %rom year=to=year or greater'
F months notice is re:uire".
iii. ,y pri&ate agreement' the parties may lengthen or shorten
these common=law prescribe" notice pro&isions *%ree"om o%
contract+.
i&.The perio"ic tenancy must en" at the conclusion o% a natural lease
perio".
(. Tenancy at Will:
a. This is a tenancy %or no %i<e" perio" o% "uration *e.g. 9 To T %or so
long as B or T "esires!+.
b. .nless the parties e<pressly agree to a tenancy at will' the payment
o% regular rent will cause a court to treat the tenancy as an implie"
perio"ic tenancy.
c. The tenancy at will may be terminate" by either party at any time.
0owe&er' a reasonable "eman" to :uit the premises is typically
re:uire".
". In )/ 9 the lan"lor" terminating a tenancy at will must gi&e a
minimum o% (A "ays written notice o% termination.
6. The Tenancy at Su%%erance:
a. It is create" when T has wrong%ully hel"=o&er past the e<piration
"ate o% the lease. This wrong"oer is gi&en a leasehol" estate *the
tenancy at su%%erance+ to permit the lan"lor" to reco&er rent.
b. The tenancy at su%%erance lasts only until the lan"lor" either e&icts
the tenant or elects to hol" the tenant to a new term.
c. In )/ 9 lan"lor"8s acceptance o% rent subse:uent to the e<piration
o% the term will create an implie" month=to=month perio"ic tenancy'
unless otherwise agree".
,. Tenants $uties:
1. Biability to (r" parties:
a. T is responsible %or 3eeping the premises in reasonably goo" repair.
b. T is liable %or in4uries sustaine" by (r" parties he in&ite"' e&en
where the lan"lor" has e<pressly promise" to ma3e all repairs.
#. T8s "uty to repair:
a. When the lease is silent:
i. stan"ar" 9 T is re:uire" only to 3eep the premises in reasonably
#A567
goo" repair.
ii. T must not commit waste:
*A+ &oluntary waste 9 o&ert harm%ul acts.
*,+ permissi&e waste 9 neglect.
*1+ ameliorati&e waste 9 alteration that increase the premises8
&alue.
iii. The law o% %i<tures:
*A+ T must not remo&e a %i<ture' no matter that he installe" it
*%i<tures pass with ownership o% the lan"+.
*,+ When a tenant remo&es a %i<ture' he commits &oluntary
waste.
*1+ %i<ture 9 a once mo&eable chattel that' by &irtue o% its
anne<ation to realty ob4ecti&ely shows the intention to
permanently impro&e the realty.
*a+ Fi<tures pass with ownership o% the lan".
*b+ e.g. 9 heating systems' customiLe" storm win"ows' a
%urnace' certain lighting installation' etc..
*#+ 0ow to tell when a tenant installation :uali%ies as a
%i<ture:
*a+ E<press agreement controls 9 the agreement between
lan"lor" an" tenant is bin"ing.
*b+ In the absence o% an agreement 9 the tenant may
remo&e a chattel that she has installe" so long as remo&al
"oes not cause substantial harm to the premises.
*c+ I% remo&al will cause substantial harm 9 in ob4ecti&e
4u"gment' tenant has shown the intention to install a
%i<ture *the %i<ture must stay put+.
b. When tenant has e<pressly co&enante" in the lease to maintain the
property in goo" con"ition %or the "uration o% the lease:
i. At common law 9 historically' a tenant was responsible %or any
loss to the property inclu"ing loss attributable to %orce o% nature
*e.g. 9 earth:ua3es' lightning' etc.+.
ii. To"ay *ma4ority &iew+ 9 a tenant may terminate the lease i% the
premises are "estroye" without the tenant8s %ault.
iii. )/ 9 absent tenant8s e<press un"erta3ing to restore the
#1567
premises in the e&ent o% their "estruction' i% the premises are
"estroye" through no %ault o% the tenant' tenant may :uit the
premises an" surren"er possession without any %urther "uty to
pay rent.
(. Tenant8s "uty to pay rent:
a. Tenant breaches the "uty an" is in possession o% the premises:
i. The lan"lor"8s only options are to e&ict the tenant through the
courts or continue the relationship an" sue %or rent "ue.
*A+ I% the lan"lor" mo&es to e&ict' he is nonetheless entitle" to
rent %rom the tenant until the tenant' who is now a tenant at
su%%erance' &acates.
ii. Ban"lor" must not engage in sel%=help' such as changing the
loc3s' %orcible remo&ing the tenant' >r remo&ing any o% the
tenant8s possessions.
*A+ Sel%=help is %latly outlawe" an" is punishable ci&illy an"
criminally.
*,+ In )/ 9 sel%=help is %latly prohibite" an" entitle" tenant to
treble "amages.
b. Tenant breaches the "uty but is out o% possession *e.g. 9 wrong%ully
&acates the time le%t on a term o% years lease+:
i. Remember SIR:
*A+ Surren"er 9 lan"lor" can choose to treat tenant8s
aban"onment as an implicit o%%er o% surren"er' which the
lan"lor" accepts.
*1+ Surren"er occurs when a tenant "emonstrates by wor"s
or actions that she wishes to gi&e up the leasehol"
*#+ I% the une<pire" term is greater than 1 year' surren"er
must be in writing to satis%y the statute o% %rau"s.
*,+ Ignore 9 lan"lor" can ignore the aban"onment an" hol"
the tenant responsible %or the unpai" rent' 4ust as i% tenant were
still there.
*1+ >nly a&ailable in a minority o% states.
*1+ Re=let = lan"lor" can re=let the premises on the wrong"oer
tenant8s behal%' an" hol" him liable %or any "e%iciency.
*1+ Ca4ority rule 9 lan"lor" must at least try to re=let
##567
*mitigation principle+.
*#+ )/ 9 generally' )/ "oes not re:uire a lan"lor" to
mitigate "amages when a tenant aban"ons the premises.
1. Ban"lor"8s $uties:
1. $uty to "eli&er possession 9 the ma4ority rule re:uires that B put T in
actual physical possession o% the premises. Thus i% at the start o% T8s
lease a prior hol"o&er is still in possession' B is in breach an" the new
T is entitles to "amages.
#. Implie" co&enant o% :uiet en4oyment 9 applies to both resi"ential an"
commercial leases. T has a right to :uiet use an" en4oyment without
inter%erence %rom B.
a. ,reach by actual wrong%ul e&iction 9 this occurs when B wrong%ully
e&icts T or e<clu"es T %rom the premises.
b. ,reach by constructi&e e&iction 9 %or e<ample' e&ery time it rains'
$8s apartment %loo"s *$ has a claim %or constructi&e e&iction i% the
three elements below are met+.
i. ( elements %or constructi&e e&iction *SI)2+:
*A+ substantial inter%erence 9 a chronic problem attributable to
B8s actions or %ailure to act.
*,+ notice 9 T must gi&e B notice o% the problem an" B must
%ail to respon" meaning%ully.
*1+ goo"bye 9 T must &acate the premises within a reasonable
time a%ter B %ails to correct the problem. *
ii. Is the lan"lor" liable %or acts o% other tenantsD
*A+ general rule 9 no
*1+ two e<ceptions: a. B ha" a "uty not to permit a nuisance
on the premises.
*#+ B must control common areas.
(. Implie" warranty o% habitability 9 applies only to resi"ential leases. It
is non=wai&able.
a. stan"ar" 9 the premises must be %it %or basic human habitation *bear
li&ing re:uirements must be met+.
i. The appropriate stan"ar" may be supplie" by local housing co"e
or 4u"icial conclusion.
ii. E<ample o% problems that trigger breach o% the warranty:
#(567
*A+ %ailure to pro&i"e heat in winter@
*,+ lac3 o% plumbing@ (. lac3 o% running water.
b. T8s entitlements when the implie" warranty o% habitability is
breache" *CR(+:
i. Co&e *an" terminate lease+@
ii. Repair an" "e"uct *allowable by statute is a growing number o%
4uris"ictions+.
iii. Re"uce rent *or withhol" all rent until the court "etermines
%air rental &alue@ typically T must place withhel" rent in escrow
to show her goo" %aith+.
i&.Remain in possession *pay rent an" a%%irmati&ely see3 money
"amages+.
6. Retaliatory e&iction 9 i% T law%ully reports B %or housing co"e
&iolations' B is barre" %rom penaliLing T by raising rent' en"ing lease'
harassing T' etc.
$.Assignment &ersus the sublease:
1. In the absence o% some prohibition in the lease' T may %reely trans%er
his interest in whole *an assignment+ or in part *a sublease+.
a. In the lease' B can prohibit T %rom assigning or subletting without
B8s prior written appro&al. *i+>nce B consents to one trans%er by T' B
wai&es the right to ob4ect to %uture trans%ers by T unless B e<pressly
reser&es the right.
b. )/ 9 unless the lease pro&i"es otherwise' a resi"ential T may not
assign without B8s written consent. B can unreasonably withhol"
consent to assign' an" T8s sole reme"y is to see3 release %rom the
lease.
i. ,y contrast' in )/' a T in a resi"ential buil"ing ha&ing %our or
more units has the right to sublease sub4ect to B8s written consent.
1onsent to sublease cannot be unreasonably withhel"
*unreasonably withhel" consent is "eeme" consent+.
#. The assignment:
a. E<ample 1 9 T1 has ten months remaining on a two=year term o%
years. T1 trans%ers all 1A months to T# *this is an assignment+.
i. As a result' B an" T# are in pri&ity o% estate *this means that B
an" T# are liable to each other %or all o% the co&enants in the
#6567
original lease that run with the lan": promise to pay rent' "uty to
repair' etc.+.
ii. B an" T# are not in pri&ity o% contract unless T# e<pressly
assume" the per%ormance o% all promises o% the original lease.
iii. B an" T1 are no longer in pri&ity o% estate' but remain in
pri&ity o% contract. 1. This B an" T1 remain secon"arily liable to
each other.
b. E<ample # 9 B leases ,A to T1. T1 assigns to T#. T# assigns to T(.
T( then engages in %lagrant abuse o% the premises.
i. B can procee" against T( *b5c in pri&ity o% estate+.
ii. T1 is secon"arily liable to B *b5c in pri&ity o% contract+.
iii. B cannot procee" against T# *no pri&ity o% estate or
contract+.
(. The sublease:
a. B an" the sublessee are in neither pri&ity o% estate or pri&ity o%
contract.
i. T# can procee" against T1 an" &ice &ersa.
E. Ban"lor"8s Tort Biability:
1. general 1B rule *ca&eat lessee+ 9 in tort' B is un"er no "uty to ma3e
the premises sa%e.
#. Fi&e E<ceptions *1BAPS+:
a. 1ommon areas 9 B must maintain all common areas such as
hallways an" stairwells.
b. Batent "e%ects rule 9 B must warn T o% hi""en "e%ects o% which B
has 3nowle"ge or reason to 3now o% *B is un"er no "uty to repair+.
c. Assumption o% repairs 9 while un"er no "uty to ma3e repairs' once
un"erta3en' B must complete them with reasonable care.
". Public use rule 9 B who leases public space *such as con&ention
hall' museum+ an" who shoul" 3now' b5c o% the nature o% the "e%ect
an" the length o% the lease' that T will not repair' is liable %or any
"e%ects on the premises.
e. Short=term lease o% a %urnishe" "welling 9 B is responsible %or any
"e%ecti&e con"ition that pro<imately in4ures T.
-. Ser&itu"es:
A.Easements:
#E567
1. easement 9 the grant o% a nonpossessory property interest that entitles
its hol"er to to some %orm o% use or en4oyment o% another8s lan" *the
ser&ient tenement+.
#. Easements can be a%%irmati&e or negati&e.
a. a%%irmati&e easement 9 most easements are a%%irmati&e *the right to
go onto an" "o something on ser&ient lan"+.
b. negati&e easement 9 entitles its hol"er to pre&ent the ser&ient
lan"owner %rom "oing something that woul" otherwise be
permissible.
i. )egati&e easements are generally recogniLe" in only %our
categories *BASS+:
*A+ light@
*,+ air@
*1+ support@
*$+ streamwater %rom an arti%icial %low. *
ii. )egati&e easements can only be create" e<pressly' by writing
signe" by the grantor. There is no natural or automatic right to a
negati&e easement.
(. An easement is either appurtenant to lan" or it is hel" in gross.
a. Easement appurtenant 9 an easement is appurtenant when it bene%its
its hol"er in his physical use or en4oyment o% the property. Two
parcels o% lan" must be in&ol&e":
i. the "ominant tenement *which "eri&es the bene%it+@ an"
ii. the ser&ient tenement *which bears the bur"en+.
b. Easement in gross 9 an easement is in gross i% it con%ers upon its
hol"er only some personal or pecuniary a"&antage that is not relate"
to his use or en4oyment o% his lan". 0ere the ser&ient lan" is
bur"ene"' but there is no bene%ite" or "ominant tenement.
i. E<amples:
*A+ right to place a billboar" on another8s lot@
*,+ right to swim in another8s pon"@
*1+ utility8s right to lay power lines on another8s lan".
6. Trans%erability:
a. Easement appurtenant 9 passes automatically with the "ominant
tenement' regar"less o% whether it is e&en mentione" in the
#F567
con&eyance.
i. )ote that the bur"en o% the easement appurtenant also passes
automatically with the ser&ient estate' unless the new owner is a
bona %i"e purchaser w5o notice o% the easement.
b. Easement in gross 9 is not trans%erable unless it is %or commercial
purposes.
E. 1reation o% an a%%irmati&e easement:
a. Four ways:
i. ,y grant 9 an easement to en"ure %or more than one year must be
in a writing that complies with the %ormal elements o% a "ee" *b5c
o% S>F concerns = calle" a "ee" o% easement+. *
ii. ,y implication 9 also 3nown as an easement implie" %rom
e<isting use
*A+ e<ample 9 A owns two lots. Bot 1 is hoo3e" up to a sewer
"rain locate" on lot #. A sells lot 1 to ,' with no mention o% ,8s
right to continue to use the "rain on A8s lot #. A court may
nonetheless imply an easement on ,8s behal% i%:
*1+ the pre&ious use ha" been apparent@ an"
*#+ the parties e<pecte" that the use woul" sur&i&e "i&ision
b5c it is reasonably necessary to the "ominant lan"8s use an"
en4oyment.
iii. ,y necessity 9 the lan"loc3e" setting@ an easement o% right
o% way will be implie" by necessity i% grantor con&eys a portion
o% his lan" with no way out e<cept o&er one part o% grantor8s
remaining lan".
i&.,y prescription 9 an easement may be ac:uire" by satis%ying the
elements o% a"&erse possession.
*A+ elements o% a"&erse possession *1>A0+:
*1+ continuous use %or gi&en statutory perio"@
*a+ )/ = the statutory perio" is 1A years
*#+ open an" notorious use@
*(+ actual use@
*6+ hostile use *w5o ser&ient owner8s position+
F. The scope o% an easement:
a. The scope o% an easement is set by the terms o% the grant or
#G567
con"itions that create" it.
i. .nilateral e<pansion is not allowe".
G. Termination o% an easement *E)$ 1RACP!+:
a. Estoppel 9 ser&ient owner materially changes his or her position in
reasonable reliance on the easement hol"er8s assurances that the
easement will no longer be en%orce".
b. )ecessity 9 Easements create" by necessity e<pire as soon as the
necessity en"s. 0owe&er' i% the easement' attributable to necessity'
was nonetheless create" by e<press grant it "oes not en"
automatically once the necessity en"s.
c. $estruction 9 o% the ser&ient lan"' other than through the will%ul
con"uct o% the ser&ient owner.
". 1on"emnation 9 o% the ser&ient estate' by go&ernmental eminent
"omain power.
e. Release 9 a written release' gi&en by the easement hol"er to the
ser&ient lan"owner.
%. Aban"onment 9 the easement hol"er must "emonstrate by physical
action the intention to ne&er ma3e use o% the easement again.
i. Aban"onment re:uires physical action by the easement hol"er
*mere nonuse or mere wor"s are insu%%icient to terminate by
aban"onment+.
*A+ e.g. 9 A has a right o% way across ,8s parcel. A erects a
structure on A8s parcel that preclu"es him %rom e&er again
reaching ,8s parcel. That action signi%ies aban"onment.
g. Cerger 9 also 3nown as unity o% ownership
i. The easement is e<tinguishe" when the easement an" title to the
ser&ient lan" become &este" in the same person.
ii. I% complete unity o% title is achie&e"' the easement is
e<tinguishe". I% there is later separation o% title the easement is
not automatically re&i&e" *easement woul" ha&e to be create"
%rom scratch+.
h. Prescription 9 the ser&ient owner may e<tinguish the easement by
inter%ering with it in accor"ance with the elements o% a"&erse
possession.
i. Re:uirements %or a"&erse possession:
#I567
*A+ continuous inter%erence that is
*,+ open an" notorious@ an"
*1+ actual@ an"
*$+ hostile to the easement hol"er.
ii. E.g. 9 A has an easement o% a right o% way across ,8s parcel. ,
erects a chain lin3 %ence on ,8s parcel' thereby preclu"ing A %rom
reaching it. >&er time' , may succee" in e<tinguishing the
easement through prescription.
,. The Bicense:
1. $e%inition 9 a mere pri&ilege to enter another8s lan" %or some
"elineate" purpose.
#. $oes not nee" to be in writing *not sub4ect to the S>F+.
(. Bicenses are %reely re&ocable' at the will o% the licensor' unless
estoppel applies to bar re&ocation.
6. Typical cases:
a. Tic3et cases 9 tic3ets create %reely re&ocable licenses.
b. )eighbors tal3ing by the %ence 9 attempts to create oral easements
*unen%orceable b5c o% S>F+ instea" result in a %reely re&ocable
license *nothing goo" comes when neighbors tal3 by the %ence+.
i. e.g. 9 )eighbor A' tal3ing by the %ence with neighbor ,' says' ,'
you can ha&e that right o% way across my lan".! This oral
easement is unen%orceable "ue to S>F' instea" a %reely re&ocable
license is create".
c. Estoppel 9 will apply to bar re&ocation only when the licensee has
in&este" substantial money' labor or both in reasonable reliance on
the license8s continuation.
1. The Pro%it:
1. The pro%it entitles its hol"er to enter the ser&ient lan" an" ta3e %rom it
the soil or some substance %rom the soil such as minerals' timber or
oil.
#. All the rules o% easements apply to pro%its.
$.The co&enant:
1. The co&enant is a promise to "o or not "o something relate" to lan". It
is unli3e the easement b5c it is not the grant o% a property interest' but
rather a contractual limitation or promise regar"ing lan" *one tract is
#7567
bur"ene" by the promise an" another is bene%ite"+.
a. )egati&e *restricti&e+ co&enants 9 a promise to re%rain %rom "oing
something relate" to lan" *e.g. 9 I promise not to buil" %or
commercial purposes on my lan"+.
b. A%%irmati&e co&enants 9 a promise to "o something relate" to lan"
*e.g. 9 I promise to maintain our common %ence+.
#. 1o&enant &s. E:uitable Ser&itu"e:
a. $i%%erence lies in the reme"y sought.
i. I% Pl. see3s money "amages 9 co&enant.
ii. I% Pl. see3s an in4unction 9 e:uitable ser&itu"e.
(. When will a co&enant run with the lan"D 9 when it is capable o%
bin"ing successors *both bene%it an" bur"en must run+:
a. elements necessary %or the bur"en to run *WIT0)!+
i. Writing 9 original promise must ha&e been in writing.
ii. Intent 9 original parties must ha&e inten"e" that the co&enant
woul" run.
iii. Touch an" concern the lan" 9 the promise must a%%ect the
parties8 legal relations as lan"owners' an" not simply as members
o% the community at large.
*A+ 1o&enants to pay money to be use" in connection with the
lan" *e.g. 9 homeowners association %ees+ an" co&enants not to
compete "o not touch an" concern the lan".
i&.0oriLontal an" &ertical pri&ity 9 both re:uire" %or the bur"en to
run.
*A+ 0oriLontal pri&ity re%ers to the ne<us between the
originally promising parties.
*1+ It re:uires that they be in succession o% estate' meaning
that they were in a grantor5grantee' lan"lor"5tenant or
mortgagor5mortgageee relationship.
*,+ -ertical pri&ity re%ers to the ne<us between original owner
an" their successor to title in the parcel.
*1+ It re:uires some non=hostile ne<us such as though
contract' "e&ise or "escent *the only time when &ertical
pri&ity will be absent is when successor obtains lan" through
a"&erse possession+.
(A567
&. )otice 9 successor must ha&e ha" some notice o% the promise
when he too3.
b. Elements necessary %or the bene%it to run *WIT-!+:
i. Writing 9 original promise was in writing.
ii. Intent 9 original parties inten"e" that bene%it woul" run.
iii. Touch an" concern 9 promise a%%ects the parties as
lan"owners.
i&.-ertical pri&ity 9 same non=hostile ne<us between original hol"er
o% the bene%ite" parcel an" his successor in title.
*A+ horiLontal pri&ity is not re:uire".
E. E:uitable ser&itu"es:
1. The e:uitable ser&itu"e is a promise that e:uity will en%orce against
successors.
#. It is accompanie" by in4uncti&e relie%.
(. To create an e:uitable ser&itu"e that will bin" successors you nee":
a. Writing 9 generally' although not always' the original promise is in
writing.
b. Intent 9 the original parties must inten" that the promise woul" be
en%orceable by an" against assignees.
c. Touch an" 1oncern 9 the promise must e%%ect the parties as
lan"owners.
". )otice 9 the assignees o% bur"ene" lan" must ha&e notice o% the
promise.
e. Pri&ity is not re:uire" to bin" successors.
6. The implie" e:uitable ser&itu"e:
a. .n"er the general or common scheme "octrine' a court will imply a
reciprocal negati&e ser&itu"e to hol" an unrestricte" lot=hol"er to a
restricti&e co&enant.
i. Re:uirements = when the sales began' the sub"i&i"er:
*A+ ha" a general scheme o% resi"ential "e&elopment which
inclu"e" Pl.8s lot now in :uestion@ an"
*,+ the Pl. lot=hol"er ha" notice o% the promise containe" in
the prior "ee"s.
*1+ There are ( types o% notice potentially impute" to Pl.
*AIR!+:
(1567
*a+ Actual notice 9 Pl. ha" literal 3nowle"ge o% promises
containe" in those prior "ee"s@
*b+ In:uiry notice 9 neighborhoo" seems to con%orm to
common restrictions@
*c+ Recor" notice 9 the %orm o% notice sometimes
impute" to buyers on the basis o% publicly recor"e"
"ocuments.
*i+courts are split: some ta3e the &iew that a subse:uent
buyer is on recor" notice o% the contents o% prior "ee"s
trans%erre" to other by a common grantor. The better
&iew' ta3en by other courts an" )/' is that the
subse:uent buyer "oes not ha&e recor" notice o% the
contents o% those prior "ee"s trans%erre" to others by
the common grantor+.
E. E:uitable "e%enses to en%orcement o% an e:uitable ser&itu"e:
a. 1hange" con"itions 9 the change" circumstances allege" by the
party see3ing release %rom the terms o% an e:uitable ser&itu"e must
be so per&asi&e that the entire area or a sub"i&ision has change"
*piecemeal change is ne&er goo" enough+.
F. A"&erse possession:
1. ,asic concept 9 possession' %or a statutorily prescribe" perio" o% time
can' i% certain elements are met ripen into title.
#. Elements %or possession to ripen into title *1>A0+:
a. 1ontinuous 9 uninterrupte" %or gi&en statutory perio" *1A years in
)/+@
b. >pen an" )otorious 9 the sort o% possession that usual owner woul"
ma3e un"er the circumstances@
c. Actual 9 entry can8t be hypothetical or %ictitious *no symbolic
entry+@
". 0ostile 9 the possessor "oes not ha&e true owner8s permission to be
there.
e. Possessor8s sub4ecti&e state o% min" is irrele&ant.
(. Tac3ing:
a. >ne a"&erse possessor may tac3 on to his time with the lan" his
pre"ecessor8s time' so long as there is pri&ity which is satis%ie" by
(#567
any non=hostile ne<us *e.g. 9 bloo"' contract' "ee" or will+.
b. Tac3ing is not allowe" when there has been an ouster.
6. $isabilities:
a. The statute o% limitations will not run against a true owner who is
a%%licte" by a "isability at the inception o% the a"&erse possession.
i. 1ommon "isabilities inclu"e insanity' in%ancy an" imprisonment.
-I. Ban" 1on&eyances = the Purchase an" Sale o% Real Estate:
A.E&ery con&eyance o% real estate consists o% a two= step process.
1. Ban" contract 9 which en"ures until step II
#. 1losing 9 where the "ee" becomes the operati&e "ocument
,. The lan" contract:
1. The lan" contract an" the Statute o% Frau"s:
a. stan"ar" 9 the lan" contract must be in writing' signe" by the party
against whom en%orcement is sought *it must "escribe the lan" an"
state some consi"eration+.
b. When the amount o% lan" recite" in the lan" contract is more than
the actual siLe o% the parcel: the buyer is entitles to speci%ic
per%ormance with a pro rata re"uction in the purchase price.
c. E<ception to the S>F:
i. $octrine o% part per%ormance 9 i% you ha&e two o% the %ollowing
three' the "octrine is satis%ie" an" e:uity will "ecree speci%ic
per%ormance o% an oral contract %or the sale o% lan":
*A+ , ta3es physical possession o% the lan"@
*,+ , pays all or part o% the purchase price@
*1+ , ma3es substantial impro&ement to the lan".
#. The problem o% ris3 o% loss:
a. Apply the "octrine o% e:uitable con&ersion: e:uity regar"s as "one
that which ought to be "one.
i. Thus' in e:uity' once the contract is signe"' , is the owner o% the
lan"' sub4ect o% course to the con"ition that he pays the purchase
price.
ii. >ne important result %lows %rom this: $estruction.
*A+ I%' in the interim' between contract an" closing' ,A is
"estroye" through no %ault o% either party' , bears the ris3 o%
loss *unless the contract says otherwise+.
((567
b. )/ 9 so long as the buyer is without %ault' the ris3 o% loss remains
with seller until buyer has title or ta3es possession
(. Two implie" promises in e&ery lan" contract:
a. Seller promises to pro&i"e mar3etable title 9 title %ree %rom
reasonable "oubt' %ree %rom lawsuits an" the threat o% litigation.
i. Three circumstances will ren"er title unmar3etable:
*A+ a"&erse possession 9 i% e&en a portion o% the title rests on
a"&erse possession' it is unmar3etable *seller must be able to
pro&i"e goo" recor" title+.
*,+ encumbrances 9 mar3etable title means an unencumbere"
%ee simple. Thus ser&itu"es an" mortgages ren"er title
unmar3etable unless the buyer has wai&e" them.
*1+ Seller has the right to satis%y an outstan"ing mortgage
or lien at the closing' with the procee"s %rom the sale. Thus'
buyer cannot claim that title is unmar3etable b5c it is sub4ect
to a mortgage prior to closing' so long as the parties
un"erstan" that the closing will result in the mortgage being
satis%ie" or "ischarge".
*1+ Loning &iolations 9 title is unmar3etable i% the property
&iolates a Loning or"inance.
b. Seller promises not to ma3e any %alse statements o% material %act 9
the ma4ority o% states now also hol" sellers liable %or %ailing to
"isclose latent material "e%ects *thus seller is responsible %or his
material lies an" material omissions.
i. I% the contract contains a general "isclaimer o% liability *e.g. 9
property sol" as is! or with all %aults!+' it will not e<cuse seller
%rom liability %or %rau" or %ailure to "isclose.
ii. )/ 9 in Carch #AA#' )/ passe" the Property 1on"ition
$isclosure Act' which re:uires sellers o% 1=6 %amily resi"ential
"wellings to pro&i"e the prospecti&e buyer with a complete"
statutory "isclosure %orm *con"ition o% the premises+ be%ore the
contract is %inal.
*A+ $oes not apply to coops' con"os' or new construction.
6. The lan" contract contains no implie" warranties o% %itness or
habitability *the 1B norm is ca&eat emptor+.
(6567
a. E<ception 9 the implie" warranty o% %itness an" wor3manli3e
construction applies to the sale o% a new home by a buil"er=&en"or.
1. The 1losing:
1. controlling "ocument 9 the "ee"
#. .nless otherwise speci%ie"' acceptance o% the "ee" "ischarges all o%
the seller8s contractual obligations' an" lea&es buyer only with
reme"ies on any co&enants containe" in the "ee".
a. e<am tip 9 once closing has occurre"' "on8t select any answer
choices pertaining to the lan" contract.
(. 0ow "oes the "ee" pass legal title %rom seller to buyer *BEA$+:
a. Baw%ul E<ecution o% the "ee":
i. stan"ar" 9 must be in writing' signe" by the grantor
*A+ The "ee" nee" not recite consi"eration' nor must
consi"eration pass to ma3e a "ee" &ali". *
ii. "escription o% the lan" 9 "oes not ha&e to be per%ect' only an
unambiguous "escription or a goo" lea" *e.g. 9 all o% my lan"!+.
b. $eli&ery Re:uirement:
i. The "eli&ery re:uirement coul" be satis%ie" when grantor
physically or manually trans%ers the "ee" to the grantee *it is
permissible to use the mail' an agent' or a messenger+.
ii. 0owe&er' "eli&ery "oes not necessarily re:uire actual trans%er o%
the instrument itsel%.
iii. The stan"ar" %or "eli&ery is a legal stan"ar"' an" is a test
solely o% present intent.
*A+ As3: "i" the grantor ha&e the present intent to be
imme"iately boun" irrespecti&e o% whether or not the "ee"
itsel% has been literally han"e" o&er.
i&.Recipient8s e<press re4ection o% the "ee" "e%eats "eli&ery.
&. I% a "ee"' absolute on its %ace' is trans%erre" to the grantee with an
oral con"ition' the oral con"ition "rops out *not pro&able 9 thus
"eli&ery is "eeme" accomplishe"+.
&i. $eli&ery by escrow is permissible.
*A+ 2rantor may "eli&er an e<ecute" "ee" to a thir"=party'
3nown as an escrow agent' with instructions that the "ee" be
"eli&ere" to grantee once certain con"ition are met. >nce the
(E567
con"itions are met' title automatically passes to the grantee.
6. 1o&enants %or title an" the three types o% "ee"s:
a. :uitclaim "ee" 9 contains :uitclaim@ grantor isn8t e&en promising
that he has title to con&ey
b. general warranty "ee" 9 it warrants against all "e%ects in title'
inclu"ing those attributable to grantor8s pre"ecessors.
i. The general warranty "ee" typically contains all si< o% the
%ollowing co&enants:
*A+ Present co&enants *breache" at the time the "ee" is
"eli&ere" 9 S>B runs %rom then+:
*1+ co&enant o% seisin 9 grantor warrants that he owns the
estate he now claims to con&ey.
*#+ co&enant o% right to con&ey 9 grantor promises that he
has the power to ma3e this con&eyance *no temporary
restraints on grantor8s power to sell+.
*(+ co&enant against encumbrances 9 grantor promises that
there are no sertitu"es or mortgages on the lan".
*,+ Future co&enants *breache" when grantor is "isturbe" o%
poss.= S>B runs %rom then+:
*1+ co&enant %or :uiet en4oyment 9 grantor promises that
grantee will not be "isturbe" in possession by a thir"=party8
law%ul claim o% title.
*#+ co&enant o% warranty 9 grantor promises to "e%en" the
grantee shoul" there be any law%ul claims o% title asserte" by
others.
*(+ co&enant %or %urther assurances = grantor promises to
per%orm whate&er %uture acts are reasonably necessary to
per%ect grantee8s title i% it later turns out to be imper%ect.
c. statutory special warranty "ee" 9 pro&i"e" %or by statute in many
states' this "ee" contains two promises *note: grantor ma3es no
representations on behal% o% his pre"ecessors in interest+:
i. The grantor promises that he has not con&eye" this estate to
anyone other than the grantee.
ii. The grantor promises that the estate is %ree %rom encumbrances
ma"e by the grantor.
(F567
iii. )/ 9 this "ee" is calle" a bargain an" sale "ee".
-II. The Recor"ing System:
A.Co"el scenario 9 > con&eys ,A to A. Bater' > con&eys ,A *the same
parcel+ to ,. >' our "ouble="ealer' has s3ippe" town. In the battle
between A an" ,' who winsD
,. Two brightline rules:
1. )otice 4uris"iction 9 i% , is a bona %i"e purchaser' , wins regar"less o%
whether or not she recor"s be%ore A "oes.
#. Race=notice 4uris"iction 9 in , is a bona %i"e purchaser' , wins i% she
recor"s properly be%ore A "oes.
1. Recor"ing Acts e<ist only to protect bona %i"e purchasers an"
mortgagees.
$.A bona %i"e purchaser is one who:
1. purchases ,A %or &alue@ an"
a. bargain sales = are consi"ere" %or &alue *, must remit substantial
pecuniary consi"eration+.
b. Cust be a purchaser 9 , always loses i% , is >8s heir' "e&isee' or
"onee.
#. w5o notice that someone else got there %irst.
a. Three %orms o% notice *AIR+:
i. actual 9 prior to ,8s closing' , gets literal 3nowle"ge o% A8s
e<istence
ii. in:uiry 9 , is on in:uiry notice o% whate&er e<amination o% the
lan" woul" re&eal' whether , actually loo3s or not *a %orm o%
constructi&e notice+.
*A+ I% a recor"e" instrument ma3es re%erence to an unrecor"e"
transaction' the grantee is on in:uiry notice o% whate&er a
reasonable %ollow= up woul" ha&e re&eale".
iii. recor" 9 , is on recor" notice o% A8s "ee" i% at the time ,
ta3es' A8s "ee" was properly recor"e" within the chain o% title *a
%orm o% constructi&e notice+.
*A+ To gi&e recor" notice to subse:uent ta3ers' the "ee" must
be recor"e" properly within the chain o% title' which re%ers to
that se:uence o% recor"ing "ocuments capable o% gi&ing recor"
notice to subse:uent ta3ers. In most states' chain o% title is
(G567
establishe" through a title search o% the grantor5grantee in"e<.
*,+ Two "iscrete chain o% title problems:
*1+ The problem o% the wil" "ee" 9 > sells ,A to A' who
"oes not recor". A then sells to ,. A recor"s the A M ,
"ee".
*a+ The A M , "ee"' although recor"e" is )>T
connecte" to the chain o% title b5c it contains a missing
grantor *the > M A lin3 is missing %rom the public
recor"+.
*b+ Rule o% the wil" "ee" 9 i% a "ee"' entere" on the
recor" *A M , abo&e+ has a grantor unconnecte" to the
chain o% title *> M A abo&e+' the "ee" is a wil" "ee" an"
incapable o% gi&ing recor" notice o% its e<istence.
*c+ Thus in our problem abo&e' it > then sells ,A to 1'
1 is a bona %i"e purchaser *assuming he "i"n8t ha&e actual
or in:uiry notice+' an" wins in both a notice state *by
being A ,FP+' an" in a race=notice state *by being %irst to
recor" b5c ,8s recor"ing is a nullity+.
*#+ Estoppel by "ee":
*a+ In 17EA' > owns ,A. 0e is thin3ing about selling it
to ;' but %or now "eci"es against it. In 17EA' ; who "oes
not own ,A' sells it anyway to A. A recor"s.
*b+ In 17FA' > %inally sells ,A to ;. ; recor"s in 17FA.
*c+ In 17GA ;' a "ouble "ealer' sells ,A to ,. , recor"s.
*"+ As between ; an" A' who owne" the property %rom
17FA=F7D
*i+A = b5c o% the rule o% estoppel by "ee" *one who
con&eys realty that in which he has no interest is
estoppe" %rom "enying the &ali"ity o% the con&eyance i%
he subse:uently ac:uires the interest that he pre&iously
trans%erre".
*e+ Who owns ,A in 17GAD
*i+, 9 as long as , is a ,FP *, wins in a notice system
b5c he is a ,FP@ , wins in a race=notice system b5c he
is a ,FP who won the race to recor"+.
(I567
*ii+ 0ow "i" , win the race to recor"D 9 A8s 17EA
recor"ing is a nullity b5c A recor"e" too early. ,8s title
searcher woul" not %in" A8s "ee" b5c one is entitle" to
assume that no one sells lan" until they %irst own it.
Thus ,8s title searcher woul" not "isco&er ;8s 17EA
pre=ownership trans%er to A.
-III. Cortgages:
A.A mortgage is the con&eyance o% a security interest in lan"' inten"e" by
the parties to be collateral %or the repayment o% a monetary obligation.
,. It is the union o% # elements:
1. a "ebt@ an"
#. a &oluntary trans%er o% a security interest in "ebtors lan" to secure the
"ebt.
a. $ebtor 9 the mortgagor.
b. 1re"itor 9 the mortgagee.
1. Begal mortgage = typically must be in writing to satis%y the S>F
1. a.3.a. = mortgage "ee"' note' security interest in lan"' "ee" o% trust' or
a sale leasebac3.
$.E:uitable mortgage 9 parties un"erstan" that lan" is collateral %or the
"ebt' but instea" o% e<ecuting a note or mortgage "ee"' the "ebtor han"s
the cre"itor a "ee" to the lan" that is absolute on its %ace.
1. Parole e&i"ence is %reely a"missible to show the parties8 true intent.
#. I% cre"itor procee"s to sell the lan" to a bona %i"e purchaser' the bona
%i"e purchaser owns the lan". The original owner8s only recourse is to
procee" against the cre"itor %or %rau" an" reco&er the procee"s o% the
sale.
E. >nce a mortgage has been create"' what are the parties rightsD
1. .nless an" until %oreclosure' "ebtor=mortgagor has title an" the right
to possession.
a. 1re"itor mortgagee has a lien *the right to loo3 to the lan" i% there is
"e%ault+.
#. All parties to a mortgage can trans%er their interests.
a. The mortgage automatically %ollows a properly trans%erre" note.
b. 1re"itor=mortgagee can trans%er his interest:
i. Ways to trans%er:
(7567
*A+ en"orsing the note an" "eli&ering it to the trans%eree@ or
*,+ by e<ecuting a separate "ocument o% assignment.
ii. I% the note is en"orse" an" "eli&ere"' the trans%eree is eligible to
become a hol"er in "ue course. This means that he ta3es the note
%ree o% any personal "e%enses that coul" ha&e been raise" against
the original mortgagee.
*A+ personal "e%enses! inclu"e lac3 o% consi"eration' %rau" in
the in"ucement' unconscionability' wai&er an" estoppel.
*,+ Thus the hol"er in "ue course may %oreclose the mortgage
"espite the presence o% any such personal "e%ense.
*1+ ,y contrast' the hol"er in "ue course is still sub4ect to
real! "e%enses that the ma3er might raise *CA$ FIFI6!+.
*1+ Caterial Alteration@
*#+ $uress@
*(+ Frau" In the Factum *a misrepresentation about the
instrument+@
*6+ Incapacity@
*E+ Illegality@
*F+ In%ancy@
*G+ Insol&ency.
*$+ To be a hol"er in "ue course o% the note' the %ollowing
criteria must be met:
*1+ the note must be negotiable' ma"e payable to the name"
mortgagee@
*#+ the original note must be in"orse"' signe" by the name"
mortgagee@
*(+ the original note must be "eli&ere" to the trans%eree *a
photocopy is unacceptable+@
*6+ the trans%eree must ta3e the note in goo" %aith without
notice o% any illegality@
*E+ the trans%eree must pay &alue %or the note' meaning
some amount that is more than nominal.
c. I% "ebtor=mortgagor sells mortgage" property:
i. The lien remains on the lan" so long as the mortgage interest has
been properly recor"e" *recor"ing statutes protect mortgages+.
6A567
*A+ It "oesn8t matter which recor"ing state the 4uris"iction has
enacte".
*1+ )otice state 9 buyer ta3es sub4ect to the lien b5c he is
on recor" noteice o% the lien at the time he ta3es.
*#+ Race=notice state 9 buyer ta3es sub4ect to the lien b5c
he is on recor" notice an" the %irst cre"itor=mortgagee won
the race to recor".
*,+ I% the original mortgage was not recor"e" when the lan"
was sol" but is recor"e" be%ore buyer recor"s the "ee"'
whether the buyer hol"s the lan" sub4ect to the mortgage
"epen"s on which recor"ing statute has been enacte".
*1+ )otice state 9 buyer ta3es the lan" %ree o% the mortgage
so long as he was a bona %i"e purchaser when he too3.
*#+ Race=notice state 9 buyer ta3es sub4ect to the mortgage
b5c he lost the race to recor".
ii. Who is personally liable on the "ebt i% "ebtor mortgagor sells the
mortgage" propertyD
*A+ I% the buyer has assume" the mortgage 9 than both the
original owner an" the buyer are personally liable *buyer is
primarily liable an" original owner is secon"arily liable+.
*,+ I% the buyer ta3es sub4ect to the mortgage 9 the buyer
assumes no personal liability on the "ebt *only the original
owner is personally liable+.
*1+ 0owe&er' i% recor"e"' the mortgage remains on the lan"
an" i% the original owner "oes not pay' the mortgage may be
%oreclose".
F. Foreclosure:
1. The mortgagee must %oreclose by proper 4u"icial procee"ing. At
%oreclosure' the lan" is sol". The sale procee"s go to satis%ying the
"ebt *with attorney8s %ees' e<penses o% %oreclosure an" any interest
accrue" on the mortgage ta3en o%% the top+.
a. I% the procee"s %rom the sale are less than the amount owe" 9 the
mortgagee can bring a personal action against the "ebtor %or a
"e%iciency 4u"gment.
b. I% there is a surplus %rom the sale 9 4unior liens are pai" o%% in or"er
61567
o% their priority *each claimant is entitle" to satis%action in %ull
be%ore a subor"inate" lienhol"er may ta3e+. Any remaining surplus
goes to the "ebtor.
#. E%%ect o% %oreclosure on &arious interests:
a. Foreclosure will terminate interests 4unior to the mortgage being
%oreclose" but will not a%%ect senior interests.
i. Kunior lienhol"er will be pai" in "escen"ing or"er with the
procee"s %rom the sale' assuming %un"s are le%to&er a%ter %ull
satis%action o% superior claims.
ii. Kunior lienhol"ers shoul" be able to procee" %or a "e%iciency
4u"gment' but once %oreclosure o% a superior claim has occurre"'
with the procee"s "istribute" appropriately' 4unior lienhol"ers can
no longer loo3 to the property %or satis%action.
iii. Those with interests subor"inate to those o% the %oreclosing
party are necessary parties to the %oreclosure action.
*A+ The "ebtor mortgagor is also consi"ere" a necessary
party an" must be 4oine"' particularly i% cre"itor wishes to
procee" against "ebtor %or a personal "e%iciency 4u"gment.
*,+ Failure to inclu"e a necessary party results in the
preser&ation o% that party8s claim "espite the %oreclosure an"
sale. Thus i% a necessary party is not 4oine"' his mortgage will
remain on the lan".
b. Foreclosure "oes not a%%ect any interest senior to the mortgage
being %oreclose". The buyer at the sale ta3es sub4ect to such interest.
This means that the buyer is not personally liable on the senior "ebt'
but' as a practical matter' i% the senior mortgage is not pai" sooner
or later' the senior cre"itor will %oreclose against the lan".
i. There%ore the %oreclosure sale buyer has a strong incenti&e to pay
o%% any senior mortgages still attache" to the lan" in or"er to
a&oi" a later %oreclosure action that coul" be brought by that
mortgagee.
*A+ Thus' bi""er shoul" o%%er %or the purchase price the FC-
o% the property minus the amount he will ha&e to pay to
"ischarge any mortgages the lan" is still sub4ect to.
(. Priorities:
6#567
a. As to cre"itor' you must recor" *until you properly recor" your
mortgage you ha&e no priority+.
b. >nce recor"e"' priority is "etermine" by the norm o% %irst in time'
%irst in right.
c. Purchase money mortgage 9 a mortgage gi&en to secure a loan that
enables a "ebtor to ac:uire the encumbere" lan".
i. The purchase money mortgagee is %irst priority as to the parcel he
%inance".
ii. E.g. 9 11 len"s N#AA'AAA to >' ta3ing a security in all o% >8s real
estate hol"ings' whether now owne" or herea%ter ac:uire".! *this
is a permissible a%ter=ac:uire" collateral clause+ 11 recor"s the
mortgage note. Si< months later 1# len"s > NEA'AAA to enable >
to ac:uire a parcel 3nown as ,A' ta3ing bac3 a security interest
in ,A an" recor"ing that interest. Subse:uently' > "e%aults on all
outstan"ing obligations. All that he has le%t is ,A. 1#' the
purchase money mortgagee' has %irst priority in ,A because he
%inance" that parcel.
". Subor"ination agreements 9 by pri&ate agreement' a senior
cre"itormay agree to subor"inate its priority to a 4unior cre"itor.
6. Re"emption in e:uity:
a. At any time prior to the %oreclosure sale' the "ebtor has the right to
re"eem the lan" an" %ree it %rom the mortgage.
i. E:uitable re"emption is uni&ersally recogniLe" up to the "ate o%
sale.
ii. >nce a &ali" %oreclosure has ta3en place' the right to e:uitable
re"emption is cut o%%.
b. The right is e<ercise" by paying o%% the amount "ue plus interests
an" costs.
i. I% the mortgage or note containe" an acceleration clause' the
mortgagee is permitte" to "eclare the %ull balance "ue in the e&ent
o% "e%ault' there%ore the %ull balance plus accrue" interest plus
costs must be pai" to re"eem.
ii. The "ebtor5mortgagor may not wai&e the right to re"eem in the
mortgage itsel% *this is 3nown as clogging the e:uity o%
re"emption an" is prohibite"+.
6(567
c. Statutory re"emption 9 recogniLe" in 15# the states' it gi&es the
"ebtor5mortgagor a statutory right to re"eem %or some %i<e" perio"
a%ter the %oreclosure sale has occurre" *typically F months to 1
year+.
i. Where recogniLe"' statutory re"emption applies only a%ter
%oreclosure has occurre". The amount to be pai" is usually the
%oreclosure sale price rather than the amount o% the original "ebt.
ii. In most states recogniLing statutory re"emption' the mortgagor
will ha&e the right to possession o% ,A "uring the statutory
perio".
iii. When the mortgagor re"eems' the e%%ect is to nulli%y the
%oreclosure sale an" the re"eeming owner is restore" to title.
i&.In )/ 9 "oes not e<ist.
I;. Bateral Support:
A.I% lan" is impro&e" by buil"ings an" an a"4acent lan"owner8s e<ca&ation
causes that impro&e" lan" to ca&e in' the e<ca&ator will be liable only i%
he acte" negligently.
,. Strict liability "oes not attach to the e<ca&ator8s actions unless Pl. shows
that b5c o% $e%.8s actions' $e%.8s impro&e" lan" woul" ha&e collapse"
e&en i% in its natural state *be%ore impro&ements+.
;.Water rights:
A.There are # ma4or systems %or "etermining allocation o% water in
watercourses such as streams' ri&ers an" la3es.
1. The Riparian $octrine 9 the water belongs to those who own the lan"
bor"ering the water course.
a. These people are 3nown as Riparians' who share the right o%
reasonable use o% the water.
i. >ne Riparian will be liable i% his or her use unreasonably
inter%eres with others8 use.
#. The prior appropriation "octrine 9 the water belongs initially to the
state' but the right to "i&ert it an" use it can be ac:uire" by an
in"i&i"ual' regar"less o% whether or not he happens to be a Riparian
owner.
a. Rights are "etermine" by priority o% bene%icial use. The norm %or
allocation is %irst in time' %irst in right' Thus' a person can ac:uire
66567
the right to "i&ert an" use water %rom a watercourse merely by
beings the %irst to "o so. Any pro"ucti&e or bene%icial use o% the
water' inclu"ing use %or agriculture' is su%%icient to create the
appropriate right.
,. 2roun"water *a.3.a. percolating water+ 9 water beneath the sur%ace o% the
earth that is not con%ine" to a 3nown channel.
1. The sur%ace owner is entitle" to ma3e reasonable use o% groun"water.
0owe&er' the use must not be waste%ul.
1. Sur%ace Waters 9 those which come %rom rain' springs or melting 3now
an" which ha&e not yet reache" a natural watercourse or basin.
1. 1ommon enemy rule 9 sur%ace water is consi"ere" a common enemy
an" a lan"owner may change "rainage or ma3e any other
changes5impro&ements on his lan" to combat the %low o% sur%ace water
*%ollowe" in 15# the states+.
a. Cany courts ha&e mo"i%ie" the common enemy rule to prohibit
unnecessary harm to others8 lan".
;I. Possessor8s rights:
A.The possessor o% lan" has the right to be %ree %rom trespass an" nuisance.
1. Trespass 9 in&asion o% lan" by tangible' physical ob4ect.
a. To remo&e a trespasser' lan"owner brings an action %or e4ectment.
#. Pri&ate nuisance 9 the substantial' intentional an" unreasonable
inter%erence with another8s use an" en4oyment o% lan".
a. .nli3e trespass' nuisance "oes not re:uire tangible physical
in&asion. Thus' o"ors an" noise coul" gi&e rise to a nuisance but not
a trespass.
b. )uisance an" the hypersensiti&e = there is no nuisance i% the
problem is the result o% Pl.8s super sensiti&ity or specialiLe" use.
;II. Eminent "omain 9 go&ernments Eth amen"ment power to ta3e pri&ate
property %or public use in e<change %or 4ust compensation.
A. E<plicit ta3ings 9 acts o% go&ernmental con"emnation *e.g. 9 go&8t
con"emns your lan" to ma3e way %or a public highway' go&8t must pay
4ust compensation+.
,. Implicit or regulatory ta3ings 9 a go&ernmental regulation that' although
not inten"e" to be a ta3ing' has the same e%%ect.
1. e.g. 9 you buy lan" in )1 %or "e&elopment. ( months later the go&8t
6E567
imposes a ban on all "e&elopment. /ou ha&e not been the target o% an
o&ert con"emnation. Still' you argue that the regulation is an implicit
ta3ing b5c it has wor3e" an economic wipeout o% your in&estment.
#. Reme"y %or a regulatory ta3ing 9 the go&ernment must either:
a. 1ompensate the owner %or the ta3ing@ or
b. Terminate the regulation an" compensate owner %or "amages that
occurre" while regulation was in e%%ect.
;III. Ooning 9 pursuant to police power' go&8t may enact statutes to
reasonably control lan" use.
A.-ariance 9 permission to "epart %rom re:uirements o% a Loning or"inance
*principal means to achie&e %le<ibility in Loning+.
1. Proponent must show:
a. un"ue har"ship@ an"
b. &ariance won8t wor3 "etriment to surroun"ing property &alues.
#. -ariance is grante" or "enie" by a"ministrati&e action *typically a
Loning boar"+.
,. )on=con%orming use 9 a once law%ul' e<isting use now "eeme"
noncon%orming by a new Loning or"inance.
1. It cannot be eliminate" all at once unless 4ust compensation is pai".
>therwise' it coul" be "eeme" an unconstitutional ta3ing.
1. .nconstitutional e<actions 9 those amenities that the go&8t see3s in
e<change %or granting permission to buil".
1. They must be reasonably relate" in both nature an" scope to the
impact o% the propose" "e&elopment *i% not they are unconstitutional
e<actions+.
a. E.g. 9 you are a "e&eloper see3ing permission to buil" a #AA=unit
resi"ential "e&elopment in the town o% .topia. The town tells you
that it will grant you the re:uisite permit i% you agree to pro&i"e
se&eral new streetlights' a small par3' an" wi"er roa"s.
6F567
Personal Property
I. Fin"ers o% property
A.Aban"one" &s. lost property:
1. Aban"one" property 9 when owner gi&es up possession with intent to
relin:uish title an" control.
a. The %in"er o% aban"one" property becomes the owner by ta3ing
possession an" ha&ing the intent to become owner.
#. Bost property 9 when owner parts with possession w5o the intent to
relin:uish title an" control.
a. >bligations on a thir" party %in"er:
i. I% &alue o% property P N#A 9 %in"er must ma3e a reasonable e%%ort
to locate the owner.
*A+ I% a%ter one year' the %in"er has not locate" the owner' he
can 3eep the property.
ii. I% &alue o% property N#A or more 9 %in"er must turn the property
o&er to the police' who must hol" it %or a statutory perio" *base"
in the &alue o% the property+.
*A+ I% no one claims a%ter the statutory perio"' %in"er can go to
the police station an" ta3e possession o% the property.
II. 2i%ts:
A.Two 3in"s o% gi%ts:
1. Inter &i&os gi%ts:
a. $onor must ha&e "onati&e intent *"esire to trans%er title+.
b. Cust be acceptance by the "onee.
i. Silence constitutes acceptance' thus acceptance is only an issue i%
there is outright re4ection.
c. -ali" "eli&ery 9 a turning o&er o% the actual chattel or something
representati&e o% the chattel.
i. Four problems concerning "eli&ery:
*A+ %irst party chec3s 9 gi%t not "eli&ere" until chec3 is cashe"
*"onor can stop payment+.
*,+ thir" party chec3s 9 consi"ere" "eli&ere" when turne"
o&er *cashier8s chec3' can8t stop payment+
*1+ stoc3 certi%icates 9 "eli&ery consummate" when
6G567
certi%icate turne" o&er *regar"less o% whether the new owner
registers with the corporation+.
*$+ agents 9 turning o&er to own agent *with instruction to
"eli&er+ is not consi"ere" "eli&ery@ turning o&er to agent o%
recipient consi"ere" "eli&ery.
#. 2i%ts 1ausa Cortis:
a. 2i%ts ma"e un"er circumstances that suggest "onor was in imminent
ris3 o% "eath li3ely to occur.
i. )ot &ali" i% "onor sur&i&es.
ii. )ot &ali" i% "onee "ies %irst *goes into "onor8s estate+.
III. Biens:
A.2i&es a person who has impro&e" or enhance" the &alue o% a chattel the
right to continue" possession until pai" %or wor3 *e.g. 9 ta3e car to get
painte"@ painter has a lien until pai"+.
1. Three elements:
a. An outstan"ing "ebt %or ser&ices per%orme"@ =
b. $ebtor retains title to the property *not a gi%t or aban"onment+@
c. 1re"itor has possession.
i. I% cre"itor returns the property' that eliminates the lien *no claim
to that item' but still "ebtor still owes "ebt to cre"itor+.
*A+ e<ception 9 general liens *arise when someone is
responsible %or a whole bunch o% property 9 returning one "oes
not release the lien on the rest+.
I-. ,ailment:
A.Someone ta3es custo"y o% a chattel with the notion that they will care %or
it %or a limite" perio" o% time *can be %or the bene%it o% the owner or the
custo"ian 9 coat chec3@ len"ing your car to a %rien"+.
,. The custo"ian has the responsibility to care %or the property.
1. What bailment encompassesD
a. Thing within a thing:
i. Sa%e "eposit bo<es 9 ban3 is custo"ian %or anything in the bo<
regar"less whether ban3 is aware o% its contents.
ii. Par3ing lot *where lea&e 3eys+ 9 not custo"ian %or e&erything in
the trun3 *maybe spare tire+.
iii. Par3ing lot *where ta3e 3eys+ 9 not a bailment
6I567
i&.1oat chec3:
*A+ i% "i"n8t pay 9 may reco&er up to N#AA
*,+ i% pai" 9 may reco&er up to N(AA' but not more than actual
&alue
*1+ This assumes no negligence.
*#+ I% negligent' can get the &alue o% the coat.
&. E<culpatory clause:
*A+ general rule 9 a bailee may not completely e<onerate
himsel% *but can limit reco&ery+.
*,+ >nly &ali" against or"inary negligence.
67567
Wills
I. Execution of wills
A.Requirements for validly executed will:
1. Capacity person is reater t!an 1" years old
#. $ part test
a. %ined &y testator
i. If sined &y proxy
'A( )roxy must also sin*
'+( )roxy is not one of t!e # required witnesses* and
'C( %!all 'not must( affix !is address 'failure does not ma,e
will invalid(
&. %ined at t!e end of t!e document
i. Words after sinature inored
'A( -nless material t!en t!e will is invalid
ii. %inature an mar, intended to &e ./s
iii. Witness may uide ./s !and0 so lon as still a volitional act
c. # witnesses to sinin
d. )u&lication . must tell witnesses t!e document is a will
e. Witnesses
i. 1on/t need to sin in eac! ot!er/s or ./s presence
ii. 2ust sin wit!in 34 days of eac! ot!er
iii. 5rder of sinin 'Ws and .( irrelevant as lon as
contemporaneous transaction
f. Execution ceremony wit!in 34 days
i. 34 days %tarts w!en 1st witness sins
3. A codicil 'an amendment of supplement to will( requires t!e same
formalities
+. )roof of wills in pro&ate
1. %urroates ct proceedin n w!ic!
a. Ct determines w!et!er t!ere exists a validly executed will
i. If not0 t!en intestate distri&utees determined
&. )ersonal representative identified
i. If t!ere is a will0 t!en t!e person is called an 6executor6
ii. If intestate0 t!en 6administrator6 appointed &y court
1734
#. +urden of proof if one is a proponent t!at a will exists0 t!en !e !as
t!e &urden of proof.
a. If will is 6self8proved6 t!en &ot! W/s must attest
&. If 1 W is dead0 a&sent from 9:0 incompetent0 or not a&le to &e
found wit! due dilience0 t!en t!e ot!er W/s attestation is sufficient
c. If no Ws availa&le0 t!en sinature of . and 1 W sufficient ';(
3. Attestation clause it is &elow ./s sinature and a&ove W/s sinatures
and recites elements of due execution
a. )rima facie evidence of facts recited t!erein
&. -seful
i. W wit! &ad memory
ii. <ostile witness
=. %elf8provin affidavit made after attestation &y Ws* su&stitute for
live testimony0 depositions0 and interroatories
C. Interested W %tatute
1. A &eneficiary as a witness does not cause t!e will to &e invalid
#. +ut t!e &equest to t!at W is void unless:
a. %upernumerary rule 3 Ws and # disinterested
&. If . !ad died wit!out a will and W would !ave &een distri&utee
'intestate !eir(0 t!en W8&eneficiary ta,es eit!er will s!are or
intestate s!are 'w!ic!ever less(
3. 5nly &eneficial ifts trier t!e statute. If W executor0 t!en t!is is
earned compensation0 not a ift
1.>orein wills act
1. A will is admissi&le to 9: pro&ate if executed under:
a. 9: law
&. law of state t!at is ./s domicile and t!at is not ./s domicile at
execution
c. law of state t!at is ./s domicile and place of execution or place of
deat!
#. Essentially0 a will is not admissi&le in 9: pro&ate if it was executed in
a state t!at was not: your domicile at time of deat!0 your domicile at
time of execution0 or your place of deat!.
3. 5nly question is admissi&ility. 5nce admitted0 9: law applies to
construction and application of provisions
#734
E. <olorap!ic wills
1. <andwritten0 sined0 not witnessed
#. 9ot valid unless
a. Armed forces durin declared or undeclared war 'expires 1 yr after
disc!are(
&. 2ariners at sea
3. <owever0 under >orein Wills Act0 !olorap!ic will made in state
w!ere valid is valid in 9:
>. Attorney nelience
1. Could8!ave8&een &eneficiaries w!o don/t ta,e &ecause will invalid due
to atty nelience cannot sue atty &ecause t!ere is no privity of ?
a. Atty/s duty to C w!o ?/d for services and C is dead
II. Revocation of wills
A.Is t!ere a valid revocation;
1. # ways
a. %u&sequent testamentary instrument 'executed wit! necessary
formalities(* or
&. )!ysical act &urnin0 cuttin0 tearin0 o&literation0 mutilatin
i. 2ust touc! words of will
+. Revocation &y implication
1. Ex 1@@= 6my last will6* 1@@" 6my last will6 and no lanuae of
revocation of 1@@= will. 1@@" will is a codicil to 1@@= if consistent*
inconsistent terms revo,ed0 and if all terms inconsistent0 t!en 1@@=
will revo,ed as an implied revocation
C. Revocation &y p!ysical act of anot!er
1. Requirements
a. Act at request of .
&. In ./s presence
c. Wit! # Ws to t!e act '= people in total in t!e room(
1.Re&utta&le presumptions reardin revocation of wills
1. If will last seen in ./s possession0 t!en not found at time of pro&ate0
t!en presumption t!at . revo,ed & p!ysical act
#. If will last in ./s possession or control and mutilated0 t!en same
presumption
3. 9eit!er presumption if will last seen in possession of someone
3734
adversely affected &y it
=. Evidence admissi&le to re&ut presumption
E. C!anes on face of will after execution
1. Added words disrearded
#. )artial revocation &y p!ysical act not reconiAed in 9: and t!us
read as written
3. .o ma,e c!ane in 9:0 must write new will or codicil and satisfy $
part test
=. C!anes &efore . sins are valid
>. 9o revival of revo,ed will: 1ependent Relative Revocation '1RR(
1. 9o will revo,in prior wills is a proper revocation
#. A revo,ed will cannot & revived unless:
a. Re8executed sined aain &y . and # Ws
&. 1octrine of repu&lication &y codicil . validly executes codicil to
1st will t!at ma,es various c!anes
3. 1RR CB doctrine: permits a revocation to &e disrearded w!en
dependent 'premised( upon mista,e of law as to validity of anot!er
disposition 'i.e. mista,en &elief t!at revo,in prior will would revive
earlier will(. 1octrine applied &y 1 Appellate 1ivision case &y never
CoA. If iven 1RR arue &ot! ways.
a. 1RR a,a #d &est solution doctrine
&. Also0 lost will doctrine
=. In 9:0 no revival rule also applies to codicils
III. 1eat! of &eneficiary durin ./s lifetime
A.9: Anti8lapse statute
1. If &eneficiary dies &efore .0 t!en ift lapses unless saved &y anti8lapse
statute
#. W!ic! is applied w!en + is ./s
a. Issue0 &rot!er0 or sister* and
&. + leaves issue
3. 1oesn/t matter to deceased + left property to
=. %tatute doesn/t apply to ifts conditioned on &eneficiary survivin .
'.o +0 if !e survives me(
+. Bapse in residuary ift: 6%urvivin residuary &eneficiaries6 rule:
1. +y statute in 9:0 if ./s residuary estate is devised to two or more
=734
persons0 and t!e ift to one lapses0 t!e ot!er residuary devisee's(
ta,e's( t!e entire estate0 in proportion to t!eir interests in t!e residue
'a&sent contrary will provision(
#. Anti8lapse trumps t!is rule
a. .!us is ./s 3 &rot!ers were to s!are in ./s residuary estate &ut one
of t!em predeceases .0 t!at &rot!er/s issue would et !is s!are
C. %imultaneous deat!s
1. -nder -niform %imultaneous 1eat! Act '-%1A(0 if two persons die
under circumstances suc! t!at t!ere is no sufficient evidence t!at t!ey
!ave died ot!erwise t!an simultaneously0 t!en t!e property of eac! is
distri&uted as t!ou! !e survived
a. Ex 2 'widow( is insured under a C144, life insurance policy t!at
names as &eneficiary 6my son % if !e survives me* ot!erwise to
dau!ter 16. 2 and % are &ot! ,illed instantly in a plane cras!. 2 is
survived &y 1 and a randson % Dr.
i. W!o ta,es residuary estate; % Dr. 'under anti8lapse( and 1* &ot!
et !alf
ii. W!o ta,es life insurance 1 'as t!ou! 2 survived %(
#. Cases of intestacy
a. .reated as t!ou! property owner survives !eir
3. If Eoint tenants 'or .+.E( die simultaneously0 one8!alf passes t!rou!
eac! will or intestacy. In essence0 converted to .IC
=. If t!ere is sufficient evidence of survival 'even 14 minutes(0 t!e -%1A
does not apply
1.Class ifts
1. Rule 'of construction &ased on presumed intent( If a will ma,es a
ift to a roup of persons enerically descri&ed as a class '6c!ildren06
6&rot!ers and sisters06 etc( and some class mem&ers predecease t!e .0
only t!e class mem&ers w!o survive . ta,e 'a&sent contrary provision(
a. Rationale . was 6roup8minded6 in ma,in t!e ift and wanted
t!is class of persons and no one else to s!are owners!ip of t!e
property. Anot!er explanation: In determinin t!e ta,ers of a class
ift0 you read t!e will as of ./s deat!.(
&. Contrast result w!en &eneficiaries named individually and not as a
class. If one devisee dies0 s!are oes to residuary estate.
F734
c. %u&Eect to possi&le application of t!e anti8lapse statute
d. Rule of convenience rule of construction used to determine ta,ers
of a class ift. .!e class is closed 'and later &orn mem&ers
excluded( at t!e time distri&ution to t!e class must &e made. We
close t!e class in order to determine minimum s!are of eac! class
mem&er so a distri&ution can &e made wit!out necessity of as,in
for a re&ate or refund later on.
i. %u&Eect to estation principle
IG. Intestate succession
A..!e statutes of descent and distri&ution apply w!en:
1. 1ecedent left no will 'or left a will t!at was not properly executed(
#. Will does not ma,e complete disposition of t!e estate 'partial
intestacy(0 or
3. An !eir '6distri&utee6( successfully contests t!e will and it is denied
pro&ate
+. 9: 9ote t!e 9: E).B used term issue t!rou!out and it means
descendants 'c!ildren0 ranc!ildren0 etc* not son87dau!ter8in8law(
C. Intestate decedent survived &y spouse
1. If spouse and 1 or more c!ildren or t!eir issue0 w!et!er of t!is
marriae or prior0 t!e survivin spouse ta,es CF4, plus !alf of t!e
&alance
#. If t!e intestate decedent is survived &y !er spouse &ut not &y any issue0
t!e survivin spouse ta,es t!e entire estate.
1.%!ares of issue
1. )er capita at eac! eneration
a. %tep 1 ma,e initial division of s!ares 'wit 1 s!are for eac! line of
issue0 w!et!er alive or dead(0 at t!e 1st enerational level at w!ic!
t!ere are ta,ers
&. %tep # all livin persons at t!e 1st enerational level ta,e a s!are
c. %tep 3 t!e s!ares of deceased person at t!at level are com&ined
and t!en divided equally amon t!e ta,ers at t!e next enerational
level in t!e same way 'if someone in your line of issue already too,
in t!e previous level0 t!eir issue et not!in(
d. 6Equally near0 equally dear6
e. 9ote in most ot!er states0 distri&ution is /per stirpes6. -nder t!is0
$734
t!e issue of a deceased c!ild ta,e &y representation t!e s!are t!eir
parents would !ave in!erited if livin 'divided equally(
#. +efore t!e decedent actually dies0 !is issue !ave no interest to
&equeat! only an expectancy. .!us0 +0 w!o predeceases !is mot!er0
cannot in !is will &equeat! 6all my property0 includin any interest I
!ave in my mot!er/s estate to C6
3. >or wills and trusts executed on or after %ept. 10 1@@#0 a ift to
someone/s /descendants/ or /issue/ is also distri&uted per capita at eac!
eneration.
E. Intestate decedent not survived &y spouse or issue
1. All to parents or survivin parent
#. If t!ere are no parents0 to issue of parents '&rot!ers0 sisters0 issue of
deceased &rot!ers and sisters( w!o ta,e per capita at eac! eneration
3. If no parents or issue of parents0 H to maternal and H to paternal
randparent or if neit!er livin to t!eir c!ildren and randc!ildren
w!o ta,e per capita. If no maternal or paternal0 t!en all to t!e ot!er.
=. If none of t!e a&ove0 issue of reat8randparents '1st cousins once
removed(0 H in equal s!ares to t!ose on maternal7paternal side
F. 9o in!eritance &eyond t!is estate t!en esc!eats to t!e state of 9:
'anti8lau!in !eirs statute(
>. In!eritance ri!ts of adopted c!ildren
1. %ame as &io c!ildren and if die0 same as a&ove
#. 9o ri!ts from &io parents or ,in
a. Exception w!ere c!ild adopted &y spouse of a natural parent
3. If c!ild adopted &y a relative if c!ild related to decedent &y &ot!
natural relations!ip and adoption0 c!ild in!erits under t!e natural
relations!ip and adoptoin0 c!ild in!erits under t!e natural relations!ip0
unless t!e decedent was t!e adoptin parent0 t!en c!ild in!erits under
adoptive relations!ip
a. Ex 2 'widow( dies leavin c!ild A. 2/s sister % adopts A. .!en0 %
dies and Irandma dies0 intestate. A in!erits from I under t!e
natural relations!ip and % under adoptive relations!ip
=. Construction of class ifts 6adopted out6 c!ild:
a. If c!ild is adopted &y new family0 t!e adopted c!ild does not ta,e as
a &eneficiary of a class ift made in t!e will of a mem&er of t!e
J734
c!ild/s natural family.
i. Rationale
'A( It is aainst 9: policy t!at adoption records are sealed
'+( Adopted c!ild s!ould not et # &ites of t!e apple 'new
family s!ould ta,e care of !im(
ii. Exception adoption &y family mem&er 'not sealed records0
in!erit from natural relations!ip(
I.In!eritance ri!t of non8marital c!ildren
1. C!ild &orn out of wedloc, !as full in!eritance ri!ts from t!e mot!er
'and mot!er/s ,in( and vica versa
#. C!ild in!erits from natural fat!er only if:
a. Beitimated &y marriae 'fat!er marries mot!er after &irt!(*
&. 5rder of filiation in paternity suit0 entered durin fat!er/s lifetime0
adEudicatin t!e man to &e t!e c!ild/s fat!er*
c. >at!er files a witness0 aut!oriAed &efore a notary0 affidavit of
paternity wit! t!e )utative >at!er Reistry*
d. )aternity esta&lis!ed in a pro&ate proceedin &y clear and
convincin evidence and man openly ac,nowleded as !is own* or
e. 19A plus ot!er evidence provin paternity &y clear and convincin
evidence
<.Bifetime ifts to intestate distri&utee Advancements:
1. At CB a lifetime ift to a c!ild was presumptively an advancement
of !is intestate s!are and to &e ta,en out of s!are of estate. +ased on
presumption t!at parent wants to treat c!ildren equally.
#. 9: reEect advancement presumption &y statute
a. 9o advancement unless proven &y a contemporaneous writin
sined &y a donor or donee
3. Computation
a. Advancement added to total estate
&. .!en amount reduced in specific s!are. If larer t!an s!are0 !e
doesn/t !ave to return excess
I. Bifetime ift &y testator to &eneficiary %atisfaction of leacies:
1. CB a lifetime ift to a &eneficiary is named in a donor/s will
'executed &efore ift was made( was presumptively in partial 'or total(
satisfaction of t!e leacy0 to &e applied aainst amount entitled to in
"734
will
#. 9: !as reEected presumption &y statute
a. %uc! a ift is not treated as a satisfaction of a leacy unless proven
&y contemporaneous writin sined &y donor or donee
D. 1isclaimer '6Renunciation6( &y intestate distri&utee or &eneficiary:
1. 9o on can &e compelled to &e a &eneficiary or !eir aainst !er will. A
will &eneficiary or intestate !eir can disclaim or renounce 'in w!ole or
in part( !er interest
#. .o &e a valid disclaimer
a. It must in in writin0 sined0 and ac,nowleded '&efore a notary(
&. It must &e accompanied &y a separate sworn affidavit t!at s!e
received no consideration for ma,in t!e disclaimer 'unless t!e ct
aut!oriAes suc!(
c. It must &e irrevoca&le and filed wit! t!e %urroate wit!in @ mont!s
after decedent/s deat! 'after disclaimer filed0 you can/t c!ane your
mind(
3. If disclaimed0 t!e s!are is distri&uted as t!ou! disclaimant
predeceased testator 'anti8lapse statute will apply(
=. .!ese parties can also disclaim: &eneficiaries of life insurance0
employee &enefit plans0 trusts0 ot!er non8testamentary transfers0
survivin Eoint tenant or tenant &y t!e entirety 'to t!e extent t!at
decedent furnis!ed consideration for tenancy/s acquisition(
a. Wit! ct approval0 disclaimer can &e made on a person/s &e!alf &y a
uardian0 !older of a dura&le power of attorney0 or decedent/s
personal representative
F. W!y disclaim; Avoid ift taxes and avoid creditor/s claims 'except
federal tax liens(
$. An !eir or &eneficiary cannot disclaim in order to remain elii&le for
2edicaid
G. C!anes in ./s family after will is sined
A.. marries after will is sined
1. 9o effect on will &ecause of election s!are statute
+. . divorced 'or annulment( after execution of will
1. All ifts and appointments in favor of former spouse are automatically
revo,ed &y operation of law
@734
a. Will read as t!ou! former spouse predeceased . 'a &equest to son
or dau!ter of former spouse is not revo,ed &y divorce(
i. 9ote t!at anti8lapse statute does not apply &ecause we are dealin
wit! &equests to spouse 'outside scope of anti8lapse statute(
&. 2ust &e formal decree of divorce or annulment for rule to apply
c. Rule only applies to wills
d. Exceptions:
i. Appointment of former spouse as uardian of couple/s c!ildren is
not affected
ii. If couple reconcile and remarry0 all provisions in favor of t!e
former spouse are restored 'statute applies only if t!ey are
divorced or annulled as of testator/s deat!(
C. )retermitted c!ild '&orn or adopted after will is executed(
1. .!e pretermitted c!ild statute ives no protection to c!ildren alive
w!en t!e will was executed. .!e statute only applies to after&orn and
after8adopted c!ildren.
#. Kualification for pretermitted c!ild status
a. c!ild is &orn or adopted after will is executed*
&. c!ild is unprovided for &y any settlement*
c. c!ild is not provided for or mentioned in t!e will
3. .estator !ad ot!er c!ildren w!en t!e will was executed pretermitted
c!ild ta,es t!e same s!are as t!e si&lins
a. %!are comes out of ifts to ot!er c!ildren 'no one else/s is cut
down(
i. If c!ildren are iven different amounts0 an equal percentae is
pro&a&ly ta,en from eac! ift
ii. If will ma,es no provision for ot!er c!ildren0 pretermitted c!ild
ets not!in
iii. If will ma,es limited provision for testator/s existin
c!ildren 'e I ive CF to my c!ildren A and +6( after&orn c!ild
ta,es amount equal to intestate s!are
=. If testator !as no ot!er c!ildren w!en will was executed after&orn or
after8adopted c!ild ta,es intestate s!are
GI. Reference to acts and events outside t!e will
A.Incorporation &y reference extrinsic document:
14734
1. At CB and in nearly every state0 t!e terms of an extrinsic document0
not present at t!e time t!e will is sined 'and t!us not part of t!e will
itself( can &e incorporated &y reference0 if:
a. .!e document was in existence w!en t!e will was sined*
&. .!e will s!ows an intent to incorporate t!e documentLs terms* and
c. .!e extrinsic document is clearly identified &y lanuae in t!e will.
#. 9: does not reconiAe t!e incorporation &y reference doctrine. All
instruments must &e sined and witnessed &y # witnesses 'except for
armed forced and marines at sea(.
a. Exception pour8over ifts &y will to an inter vivos trust 'see
&elow: trusts(.
+. Acts of independent sinificance 'M9on8 testamentary ActsN(:
1. Bifetime acts wit! lifetime motive or purpose0 even t!ou! affectin
will0 is iven full sinificance.
a. Example 1 . executes a will t!at &equeat!s Mt!e automo&ile t!at I
own at my deat!N to 90 and Mt!e furniture and furnis!ins in my
livin roomN to %. .!ereafter . trades !is 1@"@ C!evy in for a new
2ercedes. %!ortly &efore !is deat! . removes a )icasso 'wort!
C"40444( from !is den and mounts it on !is livin room wall. 9 will
ta,e t!e 2ercedes0 % will ta,e t!e )icasso.
&. Example # .Ls will leaves Mall t!e contents of my sea c!est to A.N
All tani&le property and cas! can pass under suc! a ift.
i. .itle documents suc! as deeds0 stoc, certificates and &an,
pass&oo,s cannot pass under suc! a ift.
C. 9on8pro&ate assets:
1. 9on8pro&ate assets interests in property t!at are not su&Eect to
disposition &y will or in!eritance0 and are not part of t!e pro&ate estate
for purposes of administration.
a. 2aEor types:
i. property passin &y ri!t of survivors!ip 'Eoint &ac, account0
etc.(*
ii. property passin &y contract 'life insurance0 employee deat!
&enefits paid to &eneficiary ot!er t!an insuredLs executor or
estate(*
iii. property !eld in trust 'includin revoca&le trusts trust
11734
terms overn distri&ution of assets(*
iv.property over w!ic! t!e decedent !eld power of appointment.
GII. )ro&lems associated wit! testamentary ifts:
A.Classification of ifts t!at can &e made &y a will:
1. %pecific ift MI devise +A to my son A.N
#. 1emonstrative leacy a eneral amount from a specific source 'e..
MI &equeat! CF0444 to &e paid from t!e proceeds of sale of my I+2
stoc,0 to +N(.
3. Ieneral leacy MI ive t!e some of CF0444 to C.N
=. Residuary disposition MI ive all t!e rest0 residue and remainder of
my estate to my &rot!er 1.N
F. Intestate property if a partial intestacy &7c will0 poorly drafter0 !as no
residuary clause.
+. A&atement of leacies to satisfy creditorsL claims:
1. A&sent provision in t!e will t!e order of a&atement of testatorLs
property to pay de&ts and claims starts from t!e &ottom of t!e a&ove
list and wor,s up 'no distinction is made wit!in eac! class of ifts
&etween real and personal property(.
a. Intestate property*
&. Residuary estate*
c. Ieneral leacies*
d. 1emonstrative and specific ift*
e. 1ispositions t!at qualify for t!e estate marital deduction 'property
passin into spouseLs outri!t owners!ip(.
C. )ro Rata apportionment rule overns estate tax:
1. A&sent contrary provision0 deat! taxes are apportioned pro rata amon
all persons interested in t!e estate '&eneficiaries of &ot! pro&ate and
non8 pro&ate transfers(.
a. Exception interests t!at qualify for c!arita&le or marriae
deduction et &enefit of t!at deduction 'do not !ave to contri&ute
pro rata(.
i. Apportionment ratio value of eac! testamentary O
nontestamentary ift .otal value of taxa&le estate
1.%pecific ift of encum&ered property no exoneration of liens:
1. Common law if testator made a specific &equest of property t!at was
1#734
su&Eect to a mortae or ot!er lien on w!ic! t!e testator was
personally lia&le0 t!e &eneficiary was entitled to !ave t!e lien
exonerated 'paid from t!e residuary estate(
#. 9: liens on specifically devised property are not exonerated unless
t!e will directs exoneration.
a. A eneral provision in t!e will for payment of de&ts is not suc! an
indication t!at liens are to &e exonerated.
E. Ademption if a will ma,es a specific ift of property and t!e property
is not owned &y t!e testator at deat!0 t!e ift fails under t!e doctrine of
ademption.
1. Example 8 . executes a will t!at provides: MI devise +lac,acre to my
son A0 and my residuary estate to my dau!ter +. .wo years later0 .
sells +lac,acre for C140444 cas! and a C@40444 note t!at is secured &y
a mortae on +lac,acre. . dies six mont!s later0 survived &y A and
+. Ademption applies so A ta,es not!in0 and t!e C140444 cas! and
C@40444 note falls into residuary estate.
#. .!ree statutory exceptions to t!e ademption doctrine:
a. Casualty insurance proceeds for lost0 damaed or destroyed
property &eneficiary ta,es insurance proceeds to t!e extent paid
after deat!.
&. Executory contract &eneficiary ets sale proceeds paid after deat!.
i. e.. 8 . executes a will t!at provides: 6I devise +lac,acre to my
&rot!er A.6 . enters into a contract for t!e sale of +lac,acre to +*
t!e contract is still executory at .ed /s deat!. + ta,es contract
payments remainin after .Ls deat! 'same rule applies to
installment sales(.
c. %ale &y uardian or conservator of specifically &equeat!ed property
&eneficiary ets sale proceeds to t!e extent not expended and can
&e traced &ac, to sale.
3. )roperty ta,en &y eminent domain:
a. Common law rule under t!e identity t!eory t!e property is not
owned &y testator at deat! t!erefore ademption applies 't!e reason
w!y t!e asset is not in t!e estate is irrelevant(.
&. 9: no statutory exception so ademption applies.
=. +equests of s!ares of stoc, and ot!er securities:
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a. MI ive CF04440 to &e paid from t!e proceeds of sale of my Acme
stoc, to I.N
i. result demonstrative leacy 'ademption does not apply &7c only
applies to specific ifts(.
'A( .!us on .Ls deat!0 I ets CF0444. a. If .Ls owns t!e stoc,
at deat! &ut it sells for less t!an CF04440 ot!er assets must &e
sold in order to raise t!e total CF0444. &. If . does not own t!e
stoc, at deat!0 ot!er assets must &e sold in order to raise t!e
total CF0444.
&. Iifts of stoc, in a pu&licly8traded company:
i. MI ive my 144 s!ares of I+2 stoc, to I.N
'A( result specific ift 'ademption applies if sold &efore .Ls
deat!(.
'+( MI ive 144 s!ares of ?oda, stoc, to 2.N
'1( %ince t!e !ypo doesnLt include t!e possessive pronoun
MmyN0 it is treated as a eneral leacy and ademption does
not apply '2 ets t!e date of deat! value of 144 s!ares of
?oda, stoc,(.
c. Iifts of stoc, in a closely8!eld company:
i. MI ive 144 s!ares of >amilyCo. 'a closely8!eld corporation(
stoc, to 2.N
'A( result w!et!er or not t!ere is a possessive pronoun0 t!e
ift is treated as a specific ift ' and ademption applies(.
d. %toc, splits:
i. .!e &equest of stoc, is treated as a specific &equest w!et!er or
not a possessive pronoun MmyN was used0 and w!et!er not
pu&licly traded or closely !eld stoc, is involved.
'A( example MI ive 144 s!ares of ?oda, stoc, to +6.
?oda, splits two8for8one. + ta,es t!e additional s!ares
produced &y t!e stoc, split even t!ou! t!is would !ave &een
classified as a eneral leacy for ademption purposes.
'+( A specific &equest of stoc, includes stoc, splits &ut not
stoc, dividends declared after t!e will is executed.
e. C!anes in form not su&stance ademption does not apply if t!e
new stoc, is directly tracea&le to t!e stoc, &equeat!ed in will and
1=734
t!e ta,eover.
i. example . ma,es a will t!at &equeat!s 6my 10444 s!ares of
Apple stoc, to my dau!ter 1.6 .wo years later0 Apple is
acquired &y I+2 in a friendly ta,eover in w!ic! Apple
s!are!olders et one s!are of I+2 stoc, for every two s!ares of
Apple. . dies ownin F44 s!ares of I+2 &ut no Apple stoc,. 1
ta,es t!e F44 s!ares of I+2 stoc,.
>. 2ista,e0 Am&iuity:
1. )lain meanin rule 8 a&sent suspicious circumstances0 it is
conclusively presumed t!at t!e . read will and intended its contents.
Extrinsic evidence is not admissi&le to s!ow t!at a provision was
mista,enly omitted from a will0 or t!at a provision contained in t!e
will is not w!at t!e testator intended.
#. If will is unam&iuous evidence is not admissi&le to s!ow t!e
testator made a mista,e in descri&in a &eneficiary or t!e property.
3. Batent am&iuity MI ive C140444 to my nep!ew Do!n )aul Dones.N .
!as a nep!ew named Dames )eter Dones0 and a nep!ew named <arold
)aul Dones0 &ut no nep!ew named Do!n )aul Dones.
a. If a misdescription results in a latent am&iuity 'am&iuity only
discovered w!en applyin will to t!e facts( extrinsic evidence is
admissi&le to try to find t!e meanin of t!e words used 'if evidence
fails to clear up am&iuity0 ift fails(.
i. Admissi&le evidence includes:
'A( >acts and circumstances 'evidence a&out t!e testator0 !is
family0 claims and under t!e will and t!eir relations!ip to t!e
testator0 testatorLs !a&its0 t!ou!ts0 etc.(*
'+( .estatorLs declaration of intent* statements made to 3rd
parties
'C( .estatorLs statements to attorney w!o prepared t!e will
=. )atent am&iuity MI ive t!e sum of .wenty8 five dollars 'C#F0444(
to &y &rot!er +N
a. If t!ere is an am&iuity t!at appears on t!e face of t!e will extrinsic
evidence is admissi&le to clear up t!e am&iuity.
i. Admissi&le evidence does not include testatorLs declarations of
intent to a 3rd party 'concerned a&out perEury(. +ut statement to
1F734
attorney 5?.
I.Conditional Wills:
1. A conditional will provides t!at it is operative only if a condition
specified in t!e will is satisfied 'e.. MIf I s!ould not survive t!is
trip...N(
a. If a will is conditional0 pro&ate will &e denied if t!e condition did
not occur.
&. <owever0 if lanuae in a will merely reflects motive or inducement
for ma,in a will it will o to pro&ate.
c. Exam tip if . executes a will sayin MIf anyt!in s!ould !appen to
me on t!is trip my estate s!ould &e distri&uted as follows...N &ut
t!en oes on t!e trip0 returns safely and dies many years later
wit!out revo,in t!e will0 arue &ot! ways 'courts !ave one &ot!
ways(0 t!e conclusion you reac! is not important.
i. %ome courts !ave pointed out t!at not c!anin a will for 3 years
and puttin it in safe ,eepin s!ows t!at . t!ou!t t!e will was
still valid.
<.Contracts relatin to wills:
1. +y statute0 a contract to ma,e a will or not to revo,e a will0 can &e
esta&lis!ed only &y an express statement in t!e will t!at its provisions
are intended to constitute a contract &etween t!e parties.
#. Doint wills 'will of two persons on one piece of paper(0
a. .!is statute !as eliminated litiation of Eoint wills as to w!et!er t!e
will was executed pursuant to a contract t!at t!e survivor would not
revo,e it 't!e old 9ew :or, cases sometimes found a contract
merely from t!e execution of a Eoint will usin plural possessive
pronouns 'we0 us0 our( t!at made a disposition of t!e com&ined
estates(.
3. If a will is contractual and survivor &reac!es t!e contract &y writin a
will wit! inconsistent provisions:
a. %tep 1 pro&ate t!e new will0 even t!ou! it was written in &reac!
of contract. 'Wills law controls to t!is extent.(
&. %tep # impose a constructive trust in favor of intended
&eneficiaries of contract.
=. <owever0 a contractual will can &e revo,ed &y areement of t!e
1$734
parties.
I. 9ew :or,Ls M9eative +equestN Rule:
1. At common law and in most states w!en a will does not ma,e a
complete disposition of t!e estate 'resultin in a partial intestacy(0
words of disin!eritance in t!e will are ineffective.
a. rationale 8 property passin &y intestacy is overned &y t!e
intestacy statutes0 not &y t!e decedent/s will.
#. 9ew :or, 6neative &equest6 statute words of disin!eritance in a
will are iven full effect 'will can provide !ow property not &e
disposed of(.
a. <ow is property distri&uted as t!ou! disin!erited !eir
predeceased . 'anti8lapse statute applies &ecause only t!at !eir was
disin!erited(.
GIII. Elective %!are %tatute:
A.)urpose 8 to protect survivin spouse aainst disin!eritance0 &y ivin
spouse entitlement to minimum s!are of decedent/s estate.
+. Amount of elective s!are reater of CF40444 or 173 of net estate0 plus
interest at $P &einnin J mont!s after issuance of Betters .estamentary
to t!e executor 'or Betters of Administration to t!e administrator
appointed &y t!e court(.
1. Elective s!are applies to net estate after payment of de&ts0 &ut &efore
payment of estate taxes.
#. Exempt personal property set8aside 8 t!ese items come 6off t!e top6
over and a&ove property passin to t!e spouse &y will0 intestate s!are0
or elective s!are 'total can &e as !i! as CF$0444(.
a. Car 'up to C1F0444 in value(*
&. >urniture0 appliances0 computers etc. 'up to C140444 in value(
c. C1F0444 cas! allowance*
i. Cas! allowance is not su&Eect to creditors/ claims except funeral
expenses.
d. Animals0 farm mac!inery0 tractor0 lawn tractor 'up to C1F0444(*
e. +oo,s0 pictures0 videotapes0 software0 etc. 'up to C10444(.
f. Exam tip mention t!is at t!e end of t!e essay. 1onLt fiure it in
w!en computin elective s!are or survivin spouseLs intestate s!are
&ecause it will mess up t!e num&ers.
1J734
C. Contrast survivin spouse/s intestate s!are:
1. %urvived &y spouse and issue: CF40444 plus 17# of &alance of estate
#. %urvived &y spouse and no issue: entire estate
3. .!erefore0 if t!e decedent died wit!out a will0 t!e survivin spouse/s
intestate s!are is always oin to &e larer t!an !is or !er elective
s!are unless testamentary su&stitutes are involved.
1.2ultistate pro&lems:
1. Elective s!are statute applies only to estate of 9: domiciliaries
reardless of w!et!er a non8 domiciliary owns property located in 9:
'elective s!are cannot &e invo,ed(.
a. Exception if . expressly states in !is will t!at t!e disposition of
!is real property in 9: is to &e overned &y 9: law 'e.. . retires
to >B &ut still owns real property in 9: and still !as 9: attorney
write !is will(.
#. If 9: domiciliary !as real property located outside of 9:0 t!e value of
t!at property can &e included w!en calculated elective s!are0 &ut t!e
property itself cannot &e part of adEudication in 9:.
E. .estamentary su&stitutes:
1. .!e elective s!are applies to property owned at deat! and certain
testamentary su&stitutes '&7c t!e pro&ate estate is aumented &y t!ese
testamentary su&stitutes0 cases !ave referred to t!e amount su&Eect to
t!e elective s!are as t!e aumented estate(.
a. rationale if t!e elective s!are applied only to t!e pro&ate estate0 a
person intent on disin!eritin !is or !er spouse could ma,e
nonpro&ate transfers 'revoca&le trusts0 Eoint &an, accounts0 etc.( in
favor of ot!ers0 and t!ere&y defeat t!e policy and protection of t!e
elective s!are statute.
&. A disposition 'ot!er t!an an irrevoca&le disposition( is a
testamentary su&stitute w!et!er created &efore or after marriae.
#. -nder current law0 almost all nonpro&ate transfers 'except life
insurance0 irrevoca&le dispositions made &efore marriae0 and
irrevoca&le dispositions made more t!an one year &efore deat!( are
testamentary su&stitutes.
a. .o remem&er t!e list of .estamentary %u&stitutes we need a BEI
-).
1"734
i. .otten .rust 8 '6A0 .rustee for +6( &an, accounts*
ii. %urvivors!ip estates Eoint tenancies0 tenancies &y t!e entirety0
Eoint and survivor &an, accounts.
iii. Bifetime transfers wit! strins attac!ed transfers wit! a
retained power to revo,e0 invade0 consume or dispose of
principal or name new &eneficiaries* and irrevoca&le transfers
wit! retained life estate made on or after %ept. 10 1@@#. '.!e most
sinificant consequence of t!is rule: Revoca&le trusts are
testamentary su&stitutes(.
iv.Employee pension0 profit8s!arin0 deferred compensation plans
if employee desinated t!e &eneficiary on or after %ept. 10 1@@#.
1. 5nly 1# of a qualified plan 'qualified for Q favora&le income
tax treatment(0 is a testamentary su&stitute.
v. Iifts 'in excess of C110444 ift tax annual exclusions( made
wit!in one year of deat!.
'A( ifts causa mortis even wit!in t!e C110444 exclusion are
testamentary su&stitutes.
'1( Iifts causa mortis 8 ifts iven in fear of impendin
deat! 'automatically revo,ed if donor survives appre!ended
peril(.
'a( +ut ift to a friend is not causa mortis if < died
6suddenly6 four wee,s after ift.
vi. -nited %tates overnment &onds and ot!er ).5.1. '6pay on
deat!6( arranements.
vii. )owers of appointment property over w!ic! decedent !eld
a presently exercisa&le eneral power of appointment '&ut not
property over w!ic! !e !eld a eneral testamentary power(.
&. .!e followin are 95. testamentary su&stitutes0 and do not affect
t!e elective s!are: RB5I)I.S:
i. Bife insurance w!et!er paya&le to survivin spouse or t!ird
party.
ii. 5t!er one8!alf of qualified pension and0 profit8 s!arin &enefits
'in any case0 &enefits in qualified pension plans are not
testamentary su&stitutes if t!e employee named a &eneficiary
&efore %eptem&er 10 1@@#0 and did not c!ane t!e &eneficiary
1@734
desination t!ereafter(
iii. Iifts wit!in C110444 ift tax annual exclusions0 even made
wit!in one year of deat!.
iv.)re8marriae irrevoca&le transfers.
v. Irrevoca&le transfers made more t!an one year &efore deat!
'transfers in w!ic! rantor did not retain power to revo,e0 invade0
consume or dispose of principal(.
vi. .ransfers wit! retained life estate made +E>5RE %ept. 10
1@@#.
c. W!at amount of any survivors!ip estate is a testamentary
su&stitute;
i. %urvivors!ip estates wit! deceased spouse and t!ird party 'Eoint
tenancy0 Eoint and survivor &an, account( 8 Mconsideration
furnis!edN test applies. .!e survivin spouse !as &urden of proof
as to amount of decedent/s contri&utions to property/s acquisition
'or amount of decedent/s deposits in Eoint &an, account(
'A( Rationale: survivin spouse is entitled to an elective s!are
of decedent spouseLs property0 not property t!at &elons to
someone else.
ii. %urvivors!ip estates wit! survivin spouse 'Eoint tenancy0
tenancy &y entirety0 Eoint &an, account( 8 t!e Mconsideration
furnis!edN test does not apply. 5ne8!alf is a testamentary
su&stitute reardless of w!ic! spouse furnis!ed t!e consideration
for t!e propertyLs acquisition.
iii. %urvivors!ip estates wit! deceased spouse and t!ird party
created &efore marriae consideration furnis!ed test applies0 &ut
it is complicated &y t!e fact t!at irrevoca&le dispositions &efore
marriae are not testamentary su&stitutes.
'A( example If W purc!ases a piece of land wit! % as Eoint
tenants &efore marriae0 upon WLs deat! < can prove t!at W
furnis!ed t!e entire consideration for t!e property/s acquisition.
5nly one8!alf of t!e property/s value0 or CJF04440 is a
testamentary su&stitute
'1( rationale 8 w!en W acquired t!e property in 1@@= and
too, title in t!is form0 s!e made an irrevoca&le ift of a one8
#4734
!alf interest to %. As t!is was an irrevoca&le disposition
&efore marriae0 t!is one8!alf is not a testamentary
su&stitute.
>. Computin elective s!are:
1. Example 1 W married < in1@@F. In 1@@"0 W and !er sister %
acquired real estate ta,in title as Eoint tenants wit! ri!t of
survivors!ip. In 1@@@0 W and < opened a Eoint &ac, account under
w!ic! t!e amount on deposit passes to t!e survivor. W died in #4410
leavin a net pro&ate estate of C3440444. WLs will devised +A
'CJF0444( to <0 and !er remainin estate 'C##F0444( to %. Assume t!at
t!ere is C$40444 on deposit in t!e < and W Eoint &an, account0 and
t!at t!e W8% Eoint tenancy property is wort! C1F40444 at W/s deat!. If
< is a&le to prove t!at all of t!e funds used to &uy t!e Eoint tenancy
property was contri&uted &y W 'and not!in was contri&uted &y W/s
sister(: C3440444 net pro&ate estate T 340444 W8< &an, account '17# is
testamentary su&stitute( T C1F40444 W8% Eoint tenancy 'testamentary
su&stitute C="40444 aumented estate C1$40444 elective s!are amount
'one8t!ird of aumented estate( 8 CJF0444 amount passin to < under
will 8 C340444 amount passin to < as testamentary su&stitute '1# Eoint
&an, account( Q CFF0444 net elective s!are to w!ic! < is entitled
I.%atisfyin t!e elective s!are
1. in ma,in up t!e elective s!are0 all ot!er &eneficiaries contri&ute pro
rata '&eneficiaries under t!e will0 &eneficiaries of testamentary
su&stitutes0 and intestate distri&utees(
a. Ratio U amount of elective s!are7remainin assets. G
<.)rocedural rules overnin election:
1. 2ust &e filed wit!in $ mont!s after Betters 'Betters .estamentary or
Betters of Administration( are issued &y %urroate at start of pro&ate
proceedins0 &ut even if t!ere is no estate administration in no event
more t!an # years after decedent/s deat!.
#. Ri!t of election is personal to t!e survivin spouse0 executor or
administrator of deceased spouse cannot elect 'purpose of elective
s!are is to protect t!e spouse0 not !er !eirs(. <owever0 t!e uardian or
committee of an incapacitated spouse may elect wit! court approval.
3. Can &e waived wit! or wit!out consideration* &efore or after marriae*
#1734
as to a particular will or testamentary su&stitute* or as to all wills and
testamentary su&stitutes enerally. Waiver must &e in writin0 sined0
and ac,nowleded &efore a notary pu&lic.
a. Ieneral waiver 'in premarital areement for example( of all ri!ts
in spouse/s estate waives ri!t to elective s!are or intestate s!are0
&ut does not waive ri!t to ifts made &y t!e spouse/s will* t!ere
must &e an explicit waiver of suc! &equests. ix( W!en spouse
disqualified from ta,in elective s!are:
i. %ame circumstances disqualify spouse from ta,in as !eir in an
intestate distri&ution0 wronful deat! action recovery0 and exempt
personal property set8aside '1I%2AB(:
'A( 1ivorce final decree of divorce or annulment valid
under 9ew :or, law*
'+( Invalid divorce 8 srvivin spouse procured0 outside of
9ew :or,0 divorce or annulment not reconiAed as valid under
9ew :or, law 't!is is a one8way street rule 8 doesn/t &ar
survivin spouse if deceased spouse procured invalid divorce
or annulment(*
'C( %eparation decree 8 final decree of separation rendered
aainst survivin spouse 'doesn/t &ar spouse if t!e final decree
of separation was rendered aainst deceased spouse(. If < and
W enter into a separation areement and live apart from eac!
ot!er0 &ut t!ere is no decree of separation0 t!e survivin spouse
is not disqualified from filin for an elective s!are*
'1( 2arriae void marriae void as incestuous or &iamous*
'E( A&andonment0 Bac, of support survivin spouse
a&andoned or refused to support deceased spouse.
ii. Compare effect of divorce followin execution of will:
'A( Iifts and fiduciary appointments in favor of former
spouse are revo,ed only if final decree of divorce or
annulment. .!us a decree of separation disqualifies t!e
survivin spouse from filin for an elective s!are0 &ut does not
disqualify t!e spouse from ta,in under t!e decedent/s will.
IV. Will Contests:
A..estamentary capacity:
##734
1. .estator must !ave sufficient capacity to:
a. understand t!e nature of t!e act !e was doin 'writin a will(*
&. ,now t!e nature and t!e approximate value of !is property*
c. ,now t!e natural o&Eects of !is &ounty*
d. understand t!e disposition !e was ma,in.
#. AdEudication of incapacity 'appointin uardian( is not sufficient to
esta&lis! t!at t!e person lac,ed capacity to ma,e a will.
a. It involves a different leal test 'capacity to contract0 to manae
oneLs affairs( t!an capacity to ma,e a will.
&. Dury could find t!at t!e testator sined t!e will durin a lucid
interval 'fleetin moment w!ere !e met =8point test(.
+. -ndue Influence existence of a testamentary capacity su&Eected to and
controlled &y a dominant influence or power.
1. +urden of proof on contestant to prove:
a. existence and exertion of an influence*
&. effect of suc! influence was to overpower t!e mind and will of t!e
testator*
c. product is will 'or a ift in t!e will( t!at would not !ave &een
executed &ut for suc! influence.
d. 6Influence is not undue unless t!e free aency of t!e testator was
destroyed and a will is produced t!at expresses t!e will0 not of t!e
testator0 &ut of t!e one exertin t!e influence.6 '2ental duress.(
#. W!ile evidence of undue influence usually circumstantial0 t!ese alone
are not enou!:
a. 5pportunity to exert influence. >act t!at one c!ild 'w!o received
maEor s!are of estate( lived wit! mot!er0 wrote c!ec,s for !er0
!elped on income tax0 !eld a power of attorney . . . is not evidence
t!at t!e opportunity was ta,en advantae of.
&. %uscepti&ility to influence due to illness0 ae. >act t!at 2ot!er was
very old0 !ad &ro,en !er !ip0 !ad memory lapses0 too, Galium . . .
t!is is not evidence of undue influence.
c. -nnatural disposition88i.e.0 t!at some c!ildren ta,e less t!an ot!ers
or are excluded entirely.
d. %urmise0 suspicion and conEecture are not evidence0 t!ere must &e
some indication t!at influence was exerted.
#3734
3. W!ere a will ma,es a ift to one in a confidential relations!ip 'e..0
attorney8client0 financial adviser0 c!ild w!o !eld power of attorney(
and t!at person was active in procurin t!e will0 t!ere is an inference
of undue influence.
a. If an inference is raised0 t!is doesn/t affect t!e &urden of proof
'contestant still !as &urden of proof(0 &ut will proponent !as t!e
&urden of oin forward wit! evidence t!at no undue influence was
exerted. If t!e will proponent does not produce sufficient re&uttal
evidence0 t!e inference satisfies t!e contestant/s &urden of proof on
t!e issue of undue influence.
=. If will ma,es a &equest to t!e draftin attorney0 t!e %urroate must
ma,e a )utnam %crutiny even if no o&Eection is filed 'i.e.0 an
automatic inquiry( to determine w!et!er t!e ift was voluntarily made.
F. If will names draftin attorney as executor0 !e must ive written
disclosure to t!e client.
a. 1isclosure musts state t!at:
i. any person0 not Eust attorneys0 can &e named executor*
ii. executors receive statutory commissions*
iii. attorney will also &e entitled to leal fees for representin
t!e estate.
&. Client must sin t!e ac,nowledment wit! two witnesses.
c. >ailure to comply wit! t!e statute results in executorLs commission
&ein reduced &y F4P.
C. 9o8contest 'Min torroremN( clauses:
1. 2aEority rule no8contest clauses are iven effect unless court finds
t!at contest was &rou!t in ood fait! and wit! pro&a&le cause 'it
wasn/t a stri,e suit desined to extract a settlement(.
#. In 9ew :or, no8contest clauses are fully enforcea&le reardless of
w!et!er t!e contest was filed wit! pro&a&le cause.
a. Rationale a testator s!ould &e permitted to protect !is
testamentary plan0 and !is reputation0 aainst post8deat! attac,.
&. Exceptions:
i. round of contest is forery or t!at will was revo,ed &y a later
will 'if t!e %urroate finds t!at t!ere was pro&a&le cause for t!e
contest(.
#=734
ii. contest is filed on &e!alf of an infant or incompetent 'action
ta,en &y a t!ird party 'uardian( s!ould not wor, a forfeiture(.
iii. construction suit to construe t!e willLs terms 'not
c!allenin t!e will0 Eust want to ,now w!at interests are created
&y it(.
iv.o&Eection to Eurisdiction of court 'e.. t!at testator was
domiciled in 9D not 9:0 not c!allenin0 Eust sayin it s!ould &e
pro&ated in .renton(.
V.)owers of Appointment:
A.A power of appointment is t!e aut!ority created in a person 'donee( to
desinate0 wit!in t!e limits prescri&ed &y t!e creator of t!e power
'donor(0 t!e persons w!o will ta,e t!e property and t!e manner in w!ic!
t!ey will ta,e it. 'ta,ers in default of appointment are t!e persons
desinated to ta,e t!e property if t!e donee fails to effectively exercise
!is power(.
1. )urpose permits t!e income &eneficiary to desinate t!e
remaindermen.
#. Ieneral power of appointment donee is not limited in t!e class of
&eneficiaries to w!om s!e can appoint 'can appoint t!e trust property
to !erself0 5R !er estate0 5R !er creditors(.
3. %pecific power of appointment donee is limited in t!e class to w!om
s!e can appoint
=. )resently exercisa&le power exercisa&le &y t!e donee durin !er
lifetime 'or &y will unless expressly pro!i&ited(
F. .estamentary power exercisa&le only &y doneeLs will.
+. In 9ew :or,0 a will exercises all powers of appointment !eld &y t!e
testator '&ot! special powers and eneral powers( unless t!e instrument
creatin t!e power called for its exercise &y a specific reference to t!e
power.
1. If ./s will ave t!e remainder 6to suc! of !er descendants as 1
appoints &y a will t!at specifically refers to t!is power6 and 1/s will
devises 6all t!e rest and residue of my estate0 includin any property
over w!ic! I may !ave a power of appointment0 to my son A06 1 !as
not exercised !er power of appointment &7c t!ere was no specific
reference to particular power as required in .Ls will 'instrument
#F734
creatin t!e power(.
C. )owers of appointment as testamentary su&stitute su&Eect to elective
s!are:
1. Ieneral presently exercisa&le power of appointment su&Eect to
elective s!are.
#. Ieneral testamentary power of appointment not su&Eect to elective
s!are.
3. %pecial power of appointment not su&Eect to elective s!are.
1.)owers of appointment and creditorsL claims:
1. Ieneral powers of appointment:
a. )resently exercisa&le doneeLs creditors can reac! property su&Eect
to a presently exercisa&le eneral power of appointment.
&. .estamentary doneeLs creditors cannot reac! property unless t!e
donee is also t!e donor.
#. %pecial powers of appointment:
a. 1oneeLs creditors cannot reac! property su&Eect to a special power0
even if t!e donee is also t!e donor0 unless t!e transfer was in fraud
of t!e donor8 doneeLs creditors.
VI. >ederal Estate .ax:
A..!e federal estate tax rants a C104440444 exemption for estates of
decedents dyin in #443 'C1.F million in #44= and #44F(. >or an estate
under t!at siAe0 no estate tax is due and no estate tax return !as to &e
filed.
+. W!at interests are includa&le in t!e Mross estate6;
1. revoca&le trust*
#. totten trust &an, account*
3. qualified pension plan &enefits*
=. life insurance proceeds 'loo, for incidents of owners!ip suc! as t!e
power to name0 and c!ane0 t!e &eneficiary(*
a. if decedent assined t!e policy to someone else wit!in 3 years of
deat! it is still includa&le in t!e ross estate at its date of deat!
value 'concern ot!erwise clients in poor !ealt! would try to ive
way t!e life insurance proceeds durin lifetime(.
F. 17# of Eoint tenancy &etween !us&and and wife Q 'wit!out reard to
w!ic! spouse furnis!ed consideration(*
#$734
$. Eoint tenancy &etween decedent and 3rd party 'consideration furnis!ed
test applies(*
J. irrevoca&le trust wit! retained life estate.
C. +ypass trust a &eneficiary can &e iven a life income interest and
limited powers over trust principal0 all wit!out causin t!e property to &e
taxed in t!e &eneficiary/s estate on !er deat!. '.!e trust 6&ypasses6 t!e
&eneficiary/s estate for estate tax purposes.( .!e trust will not &e taxed in
t!e &eneficiaryLs estate as lon as s!e is not iven a eneral power of
appointment.
1. 9o eneral power of appointment so lon as t!e &eneficiaryLs power
to invade t!e trust and appoint principal to !erself is limited to
purposes of !er !ealt!0 education0 maintenance or support.
a. Words t!at may create a eneral power of appointment comfort
'comforta&le maintenance is o, 8 adEective(0 &enefit0 welfare0 well8
&ein.
&. If trustee !olds power to invade trust for &eneficiaryLs comfort0
&enefit0 welfare0 well8&ein0 etc. it does not result in inclusion of
trust in &eneficiaryLs ross estate.
i. If &eneficiary is also trustee0 disa&lin statute prevents
&eneficiary w!o is trustee from distri&utin principal to self 'only
court can ma,e distri&ution(.
ii. If &eneficiary is a co8trustee0 only anot!er trustee can deliver
principal to &eneficiary.
1.Estate tax c!arita&le deduction:
1. >or a remainder interest passin to c!arity0 t!ere is no c!arita&le
deduction under t!e income tax0 ift tax0 or estate tax0 unless t!e ift
ta,es t!e form of:
a. Annuity .rust under w!ic! a stated dollar amount0 w!ic! can &e
no less t!an FP of t!e initial trust corpus0 is paya&le to t!e
individual &eneficiary for life. 'E..0 if a C#440444 trust0 t!e stated
annuity must &e at least C140444 per year.(
&. -nitrust under w!ic! a stated percentae 'w!ic! can &e no less
t!an FP( of t!e trust corpus0 valued annually0 is paya&le to t!e
individual &eneficiary for life.
E. .!e marital deduction:
#J734
1. .!e federal estate tax rants an unlimited marital deduction under &ot!
t!e ift tax and t!e estate tax for qualifyin ifts to a spouse. .!is
ena&les a !us&and or wife to ma,e provision for !is or !er spouse0
wit!out any diminution &y estate taxes. <owever0 to qualify for t!e
marital deduction0 t!e property must &e left in a form t!at will cause it
to &e taxed in t!e survivin spouseLs estate at !is or !er deat!. .!us0
t!e marital deduction doesnLt necessarily save taxes* it defers t!e
estate tax until t!e survivin spouseLs deat!.
#. W!at forms of transfer qualify for t!e unlimited marital deduction
under t!e estate tax;
a. Ieneral test must &e an interest t!at will &e includi&le in t!e
survivin spouse/s ross estate on !er su&sequent deat!0 to t!e
extent not iven away0 consumed or disposed of durin t!e
survivin spouse/s lifetime.
i. 5utri!t dispositions0 &y will0 intestacy0 elective s!are0 life
insurance in lump sum0 etc.
ii. K.I) .rusts and t!e K.I) 'Kualified .ermina&le Interest
)roperty( election:
'A( Conress !as permitted t!e use of trusts wit! certain
specific provisions to qualify for t!e marital deduction0 t!e
most important 'and t!e one t!ey test on( &ein t!e K.I) trust.
'+( .o &e elii&le for a K.I) election as a qualified
termina&le interest trust:
'1( Income must &e paya&le to spouse annually for life. If
t!e income interest terminates on t!e spouseLs remarriae0
t!e trust is not K.I)a&le 'i.e.0 not elii&le for K.I)
treatment(*
'#( 1urin t!e spouse/s lifetime0 no ot!er person can &e a
permissi&le &eneficiary of t!e trust. '9eit!er spouse nor
trustee can !ave power to distri&ute trust property to anyone
ot!er t!an t!e spouse.(* and
'3( Executor must ma,e K.I) election on estate tax return.
'C( Example 8 .0 w!o is married to B and !as c!ildren &y !is
first marriae0 dies leavin a will t!at &equeat!s property
wort! CF440444 in trust: 6.!e trustee s!all pay all trust income
#"734
to my wife B at least annually for life. 5n B/s deat!0 t!e trustee
s!all distri&ute t!e principal to my descendants.6 .!e will
names ./s &rot!er + as executor. If . died &efore 1@"# '&efore
t!e 6unlimited marital deduction6 was enacted and t!e K.I)
election rules were introduced(0 t!is disposition would not
qualify for t!e marital deduction &7c it is a termina&le interest
'terminates at BLs deat! so it would not &e included in !er
estate(. After #4410 it could qualify for a marital deduction if
executor ma,es a K8tip election.
'1( Estate tax results of K.I) election t!e amount qualifies
for a marital deduction and t!e value of t!e property is
includa&le in t!e recipientLs ross estate 'even t!ou! it is only
a life estate(.
'E( Estate tax results of failure to elect trust does not qualify
for marital deduction and it is not includa&le in &eneficiaryLs
ross estate.
'>( &enefits of electin &eneficiary !as income from all trust
assets and testator can direct w!o t!e trust is to &enefit after
spouseLs lifetime.
3. C110444 annual exclusion under t!e ift tax:
a. .!ere is a C1104448per8donee annual exclusion under t!e ift tax.
.!e exclusion is availa&le for ifts of present interests0 &ut not for
ifts of future interests.
i. Example if Doe ives C110444 eac! to !is t!ree c!ildren0 t!eir
spouses0 and !is six randc!ildren 'a total of 1# donees(0 Doe can
deplete !is estate &y C13#0444 wit!out !avin to file a ift tax
return0 and wit!out !avin made a taxa&le ift t!at uses up any of
DoeLs C104440444 Mcredit s!elter.N 'a ift tax return !as to &e filed
only if taxa&le ifts 'over annual exclusions( are made durin t!e
calendar year(.
&. .!ere is also an unlimited exclusion for tuition and medical
payments if '&ut only if( t!e payment is made directly to t!e
service8provider.
i. Example 1 if Doe pays for !is randson IaryLs C#=0444 tuition
at 1u,e -niversity &y writin t!e c!ec, directly to 1u,e0 t!e
#@734
payment qualifies for t!is exclusionWand Doe can ive Iary an
additional C110444 t!at will &e covered &y t!e annual exclusion.
ii. Example # payin off Doe/s I%B loan does not qualify under
t!is provision.
c. A ift is MincompleteN for ift tax purposes if t!e transferor retains
eit!er t!e power to revo,e t!e transfer or t!e power to c!ane t!e
&eneficiaries.
>. 9ew &asis at deat! rule:
1. for lifetime ifts for purposes of computin ain0 donee ta,es
donorLs &asis.
#. for testamentary ifts all assets owned &y decedent at deat! et new
&asis equal to t!eir date on deat! value.
34734
Trusts
I. A trust is an arrangement for making gifts of property and for the
management of assets, under which trustee holds legal title for the benefit
of beneficiaries
A.Trustee has burdens of ownership (duty to manage, safeguard, invest,
etc);
. eneficiaries have e!uitable title and all of the benefits of ownership
II. "e!uirements for a valid trust#
A.$o consideration is re!uired for the creation of trust (you can have
consideration but not re!uired).
. A trust can be created during the creator%s lifetime (&lifetime trust') or by
will (&testamentary trust').
(. All lifetime trusts must be evidenced by a writing that is signed by the
settler and trustee and either acknowledged before a notary public or
witnessed by two witnesses.
).(reator (settler) must deliver legal title as to the res (trust property) to a
trustee for the benefit of beneficiaries with intent to create a trust for a
lawful purpose.
*. (reator + must be over age *, with capacity to enter into contracts and
transfer title.
-. )elivery of legal title + the mere intent to create a trust, or a gratuitous
written promise to create a trust, is not enough.
a. In creating a lifetime trust#
i. titled assets + for assets whose title is evidenced by a document,
(e.g. + real estate, stocks and bonds, etc.), legal title must be
formally transferred to the trustee (whether the trustee is a third
party or the settlor himself).
ii. other assets + transfer must be by a written assignment to the
trustee.
b. Testamentary trusts + &delivery' re!uirement does not apply to
testamentary trusts, wills law controls.
.. "es (a.k.a. corpus. principal, sub/ect matter of trust) + to have a trust,
legal title to specific property must be formally transferred to the
trustee.
*0-1
a. The sub/ect matter of the trust must be certain and identifiable.
b. If there is no trust property, there is no trust.
i. 23pectancy interest in another%s will is not property.
ii. (annot create trust with &whatever money or property that I can
contribute over the ne3t *4 years' (this is promise to create a trust
in the future, not supported by consideration).
(A) but if written promise to create trust of property (to be
received in future) is supported by consideration, under
contract principals, trust automatically arises upon receipt of
the property.
5. Trustee#
a. Testamentary trust + by statute, a testamentary trustee may not be an
infant, incompetent, convicted felon, person incapable because of
546 drunkenness, dishonesty, want of understanding, improvidence.
i. $onresident alien can serve as fiduciary (testamentary trustee, or
e3ecutor or administrator of a decedent7s estate) if#
(A) related to decedent (decedent7s spouse; grandparent or
descendant of grandparent of decedent or decedent7s spouse; or
spouse of any of the above persons); and
() $8 resident must serve as co9fiduciary.
b. :ifetime trusts + these rules do not apply to lifetime trusts b0c
lifetime trusts are non9court trusts (no court is involved in the trusts%
creation, strictly between settler and trustee).
c. $o trust ever fails for lack of a trustee. If the intent to create a trust
is clearly manifested but no trustee is named (or the named trustee
dies or resigns with no provision for a successor), the court will
appoint a suitable trustee to carry out the trust purposes.
;. eneficiaries 9 <or a private (non9charitable) trust, beneficiaries must
be definite and ascertainable, and their interests must vest, if at all,
within lives in being plus -* years.
a. The rules for charitable trusts are e3actly opposite# charitable trusts
i. cannot benefit identifiable individuals, and
ii. are not sub/ect to "ule Against =erpetuities (see below).
b. 23trinsic evidence is not admissible to identify beneficiaries (trust
instrument must identify in clear terms).
-0-1
c. 23ample * 9 T%s will be!ueaths >*44,444 &to my good friend ? as
trustee, to pay the income therefrom to my best friends. I be!ueath
my residuary estate to my brother, @.A There is no valid trust b0c
there is no ascertainable beneficiary (&best friends' is too vague).
"esult is that ? holds property as &resulting trust' for @, the
residuary beneficiary.
i. A resulting trust is not a trust, it is the term courts employ when a
trust fails for some reason. The court will order that the >*44,444
be distributed to @am @lade.
d. 23ample - + &trustee is to pay income &to my family (or my wife%s
ne3t of kin) for then ne3t -4 years.' Balid trust. It is a class gift to
indicated group. Though it is broader than usual class gift, court will
give meaning to it, determining member of the class by looking by
analogy to intestacy statutes.
e. 23ample . + &trustee to use income to train spiritualistic meanings.'
If this is determined to be a charitable purpose (religion) it is a valid
gift. If not, gift fails b0c there is no ascertainable beneficiaries (on
e3am, argue both ways).
i. (haritable purpose was found when T%s will left >-54,444 estate
&for research or some scientific proof of a soul of the human
body which leaves at death. I think in time there can be a
photograph...'
1. Intention to create a trust + is the language precatory (a non9binding
suggestion), or did the settlor intend to impose an enforceable
obligationC (a) e3ample of precatory language + &it is my wish and
desire that @ue use a portion of the income to pay the educational
e3penses of my favorite nephew, $osh $okes.A (i)other precatory
words + &re!uest,' &hope,' &would like.' (important to look at
conte3t).
6. Trust must be for a lawful purpose + trust that calls for commission of
a crime or destruction of property is void as against public policy.
a. Also, conditions that are against public policy are unenforceable (-
types)#
i. 2ncouraging divorce; (
ii. Total restraint on marriage.
.0-1
(A) partial restraints on marriage are ok (e.g. + &to my son $
provided he marries a Dewish woman within 6 years after my
death. If he does not do so to the @tate of Israel.
() testamentary trusts conditioned on beneficiary not
remarrying are valid where motive is to provide support during
widowhood (e.g. + &Income to my wife for life or until she
remarries. Epon my wife%s death or remarriage to my son.').
III. "evocable trusts and other arrangements#
A. &=our9over' gift by will to lifetime trust#
*. e.g. + on Fctober **, *GG;, H transfers securities worth >;44,444 to
Acme ank as trustee of a revocable lifetime trust that provides#
AIncome to H for life, and on H7s death in further trust for her
children.A The trust instrument is signed by H and a bank trust officer
and is acknowledged before a notary public. The same day, H e3ecutes
a will that, after making various cash legacies, be!ueaths her residuary
estate Ato Acme ank, as trustee, to be added to and administered
under the terms of the trust that I e3ecuted on Fctober **, *GG;.A
a. This is a valid revocable trust, and is a useful arrangement to
provide for management in event of settlor7s future incapacity,
avoiding e3penses and restrictions of a guardianship administration.
As long as there is at least one beneficiary besides the settlor, trust
is not void as an attempted testamentary disposition (doesn7t have to
be e3ecuted with formalities of a will) even though settlor retains
any one or more of the following rights and powers#
i. income for life;
ii. power to revoke, alter or amend the trust;
iii. power to control trustee in the administration of the trust;
iv.power to cause life insurance proceeds or employee benefits to be
paid to the trust;
v. settlor can name herself as trustee, to serve as long as she has
capacity to do so.
b. The testamentary gift to the trust is called a ApouroverA gift by will
to a lifetime trust.
i. A statutory e3ception to the &no incorporation by reference' rule
of Iills law, the statute provides a mechanism for adding
50-1
testamentary assets to a trust the testator created during lifetime,
or to a trust created by another person.
ii. y statute, such a ApouroverA gift is valid even if the trust is
sub/ect to revocation and amendment and is later amended.
iii. ut, if the receptacle trust were created by another person,
amendments made after testator%s death are disregarded.
iv.To be a valid receptacle for such a pourover gift, the lifetime trust
must be in e3istence before or e3ecuted concurrently with the
will.
. Trust settlement of life insurance proceeds#
*. @ettlor can create an unfunded revocable insurance trust, and name the
trustee of the trust as policy beneficiary. Enfunded insurance trusts are
validated by statute (and can be the recipient of a ApouroverA gift),
even though there is no res until after the insured settlor dies and the
insurance proceeds are paid to the trustee (this would result in
additional legal fees for preparation of a trust).
-. @ettlor can also create in his will a testamentary trust. ?e can then
name Athe trustee named in my willA as beneficiary of the life
insurance policy. @uch a life insurance beneficiary designation is
validated by statute.
a. @ame procedures are available for payment of savings and thrift
accounts, and death benefits under employee retirement plans.
(. ank account arrangements#
*. Totten trust bank account + A deposits money in bank account;
signature card provides &A, trustee for .' A can then make deposits
and withdrawals throughout her life, on he death, the balance in the
account goes to .
a. depositor continues to have all rights over the account, but the trust
is partially revoked when depositor makes withdrawals ( beneficiary
succeeds only to amount on deposit at death).
b. "evocation#
i. depositor can change the named beneficiary, but only by a
written, signed and acknowledged (before notary) instrument that
names the bank and current beneficiary as well as the new
beneficiary, and is delivered to the bank.
;0-1
ii. Totten trust can be revoked by will, and the funds on deposit can
be be!ueathed to another person but the will must make e3press
reference to account in the named institution and the named
beneficiary of the account.
iii. if beneficiary predeceases depositor, trust is automatically
revoked (does not pass through deceased beneficiary%s estate).
<unds belong to depositor free and clear.
c. If beneficiary survives, amount on deposit belongs to him (sub/ect
to claims of depositor7s creditors, and sub/ect to surviving spouse7s
elective share as a testamentary substitute).
d. )elivery of passbook is not a gift of a totten trust account.
-. /oint and survivor bank account +
a. /oint and survivor bank account allows intended beneficiary to
access account during life and depositor is deemed to have made a
gift of J
i. 23ample * 9 ? deposits >;4,444 in a savings account at )ime
@avings ank that names ? and KsonL @ as owners, Apayable to
either or to the survivor of them.A @ome years later, ? dies
leaving a will that provides# AI have a savings account at )ime
@avings ank that names my son @ as /oint owner. I be!ueath all
funds on deposit in that account to my daughter ).A There is
>14,444 on deposit in the account at ?7s death. @ takes by right of
survivorship (? cannot revoke that right by will)
ii. 23ample - + same facts e3cept that, shortly before ?7s death (? is
very ill) @, who is concerned that ? may take all of the money
out of the account, withdraws the entire >14,444 in the account.
? dies five days later. The e3ecutor under ?7s will brings an
action against @ seeking to recover the entire >14,444. ? can only
recover >.4,444 (the other >.4,444 is deemed gift).
.. (onvenience account + if there are - names on the account, person can
challenge the validity of a right to survivorship by offering evidence to
prove that no right of survivorship was intended, that the name was
put on the account solely for convenience (e.g. @ to take care of ? if ?
got sick).
).Eniform transfers to minors act KETMAL + provides a convenient means
10-1
of making gifts to minors that avoid a guardianship (or the need for
creating a trust), and that !ualify for the >**,444 per9donee annual
e3clusion under the federal (and $ew 8ork) gift ta3.
*. 23ample 9 In *GG, D buys securities and has them registered in the
name of AD, custodian for @, under the $ew 8ork Eniform Transfers to
Minors Act.A (@ is his *49year9old son.) D dies in -44.; the securities
are worth >.;,444.
a. The >.;,444 gift is not includible in donor%s Agross estateA under the
$ew 8ork and <ederal estate ta3es, where the donor named himself
as ETMA custodian (Int. "ev. (ode N-4.,, captioned A"evocable
Transfers,A applies where decedent made a lifetime transfer in
which he retained a power to revoke, alter, amend or terminate). CCC
My outline says otherwise.
i. Ihile ETMA custodial gifts are irrevocable, the ETMA
authoriOes custodian to pay to or on behalf of the donee so much
or all of the property as is deemed advisable for donee7s benefit.
This discretionary power is considered a power to alter or amend;
and also a power to terminate (because custodianship would
terminate if donor distributed all the property to minor).
ii. If H bought the securities and registered them in the name of D as
custodian for @, value of custodial property is not includible in D%s
estate b0c there was not a retained power.
-. A ETMA custodianship terminates when donee attains age -* unless
the gift is made in the form, AA, custodian for until age *,.A
a. If a beneficiary of an estate or trust is a minor, the statute authoriOes
distribution by the e3ecutor or trustee to a ETMA custodianship on
the minor7s behalf.
i. =urpose + eliminates the need to appoint a guardian to receive
the distribution.
ii. If the will or trust e3pressly authoriOes such distributions,
custodianships established by a fiduciary terminate at age -*, and
there is no dollar limit on amount that can be distributed.
iii. If no such authoriOation, custodianships established by a
fiduciary terminate at age *,, and court approval is re!uired for
distributions over >;4,444.
60-1
IB. (haritable trusts, honorary trusts#
A.(haritable trusts are not sub/ect to "ule against =erpetuities, they may be
perpetual. (&The trustee shall pay all trust income to the American "ed
(ross forever.A is valid)
. To !ualify as a charitable trust, must be for a charitable purpose (health,
education, religion, etc.).
(. A charitable trust must be in favor of a reasonable large class of
unidentifiable members of the public at large, and cannot benefit
identifiable individuals. A trust Ato pay the income to my poor relativesA
is not a valid charitable trust.
*. Ender the Tilden Act, a valid trust can be created even though no
specific charitable beneficiary is named, if the trust is for a charitable
purpose (e.g. + &trustee shall distribute all trust income to
organiOations, as selected by trustee, actively engaged in research on
the prevention of polio').
a. Trust is enforced by the attorney general (an indispensable party in
any action concerning a charitable trust).
).(haritable trusts are sub/ect to the e!uitable doctrine of cy pres (Aas near
as possibleA)
*. If stated charitable purpose can no longer be accomplished, trust can
be reformed in /udicial proceedings, and the funds diverted to a related
charitable purpose as near as possible to the stated purpose.
a. To apply cy pres, there must be#
i. Peneral charitable intent that can still be accomplished (e.g. 9 to
devote her estate for medical research for the prevention and
cure of disease).
ii. @pecific direction that no longer can be accomplished.
(A) There is no reason to frustrate general intent so will is
reformed to carry out specific intent as near as possible while
giving effect to general charitable intent.
() cy pres applies to outright gifts to charities as well as
charitable trusts.
B. ?onorary trusts#
A. The trustee is on her honor in deciding whether to perform the trust (no
enforceable duties owed to anyone).
,0-1
*. 2.g. + T%s will be!ueaths >-;,444 to his brother as trustee to use
income for a polish and wa3 /ob to his beloved porsche which is
parked as a headstone over his grave.'
a. ?ere there is no enforceable duties owed to anyone so it is not a
trust.
. In several states, the honorary trusts are valid in the sense that trustee
will be allowed to perform if he chooses to do so.
(. In $ew 8ork, honorary trusts are unenforceable b0c so called trustee
owes no fiduciary duties to anybody (falls into residuary estate).
).Trusts for the perpetual care and maintenance of cemeteries and burial
plots + in $8, such trusts are classified as charitable trusts and thus are
valid notwithstanding indefiniteness of beneficiaries, and are e3empt
from the "ule Against =erpetuities.
2. Trusts to pets + in $8, trusts to pets are valid for -* years (settlor can
designate someone to enforce trust in will, or someone will be appointed
by the court).
BI. (onstructive trusts, resulting trusts#
A.(onstructive trust + not a trust. A(onstructive trustA is the name given a
fle3ible e!uitable remedy designed to disgorge un/ust enrichment that
results from wrongful conduct. ATrustee7sA only duty is to convey the
property to the person who, in e!uity, should have the property.
*. 23ample * 9 T has a will that devises all her property to A and . $ow
in her last illness, T asks a friend to have lawyer prepare a new will
that revokes T7s present will and devises her estate to ). The friend
and lawyer return several days later, and the lawyer begins to e3plain
the will7s provisions to T. A and are present; as soon as they learn
what is happening, they create a disturbance and physically prevent T
from e3ecuting the new will. ?ighly agitated, T lapses into a coma;
she dies three days later. T is survived by A, , and ). Applying the
law (step *), the new will cannot be probated b0c it was not signed and
witnessed and thus the old will was not validly revoked. Therefore the
estate would go to A and . Applying e!uity (step -) there is wrongful
conduct plus un/ust enrichment therefore a constructive trust should be
imposed for )%s benefit.
-. 23ample - 9 T has two children (@ and )) and @ has two children.
G0-1
After a heated family argument, @ bludgeons T to death with an a3e. T
left no will. )onna takes *0-, of course. As to other *-, Q applying the
law, @ inherits *- of T%s estate under $8%s Q intestacy statute. Applying
e!uity, a constructive trust should be imposed against @%s share in
favor of @%s children (treat as if wrongdoer predeceased T).
.. 23ample . 9 , named as beneficiary on a life insurance policy, was
tried and ac!uitted on charges of murdering the insured. 8et in a civil
action brought to impress a constructive trust, trial court found as fact
that had murdered the insured. )ecision should be affirmed on
appeal b0c ac!uittal is irrelevant (different evidentiary standard).
5. 23ample 5 9 @ promised his sister M that he would provide a home for
her and her daughter A, if M would move in and take care of him. In
the presence of witnesses, @ handed his brother a deed naming as
grantee (with no mention of a trust) saying# A?old this property in trust
until M7s death, then convey to A. This is in consideration of services
rendered by M as agreed.A @ died; denies the e3istence of a trust.
a. There is no valid e3press trust because there is no writing to
evidence the trust.
b. Peneral rule + if a deed is absolute on its face and an oral agreement
to hold land in trust is alleged, the general rule is that no
constructive trust will be imposed.
i. 23ception 9 a constructive trust may be imposed if one of the
following can be proven by clear and convincing evidence#
(A) <raud in the inducement ( orally promised to serve as
trustee but had no intention to do so); or
() Prantee9trustee served in a confidential relationship to
grantor9settlor (business associates; father9child; etc.)
c. If M can%t meet burden for establishing a constructive trust, M
might have an action in !uantum meruit for the reasonable value of
services rendered if performed with reasonable e3pectation of
payment.
. "esulting trust 9 a resulting trust is not a trust. It is the label courts
employ when a trust fails for some reason (e.g. + trust to pay the income
to Amy best friendsA).
*. 2.g. 9 A pays the purchase price for land, but has title taken in 7s
*40-1
name. A and are not related. A later brings lawsuit seeking to
impress a resulting trust in his favor, contending that he did not intend
to make a gift to but had some other reason for taking title in this
manner.
a. Ma/ority rule + holds on a purchase money resulting trust
K=M"TL for A, meaning that A can compel a reconveyance at any
time.
b. $ew 8ork + by statute, purchase money resulting trusts are not
recogniOed b0c parol evidence rule bars testimony contradicting
deed (but of there is clear and convincing evidence that e3pressly
or impliedly promised to reconvey the land to A, impose a
constructive trust to prevent un/ust enrichment).
BII. (reditor%s claims and spendthrift trusts#
A.$ew 8ork%s statutory spendthrift rule#
*. A spendthrift provision protects a trust beneficiary7s interest from
creditors by prohibiting voluntary or involuntary transfer of the
beneficiary7s interest.
a. 23ample 9 A$o beneficiary shall have the power to assign, transfer
or encumber his or her interest in the trust, nor shall such interest be
reachable by the beneficiary7s creditors by garnishment, attachment,
e3ecution, or other legal process.A
-. In $ew 8ork, all income interests in trusts are given spendthrift
protection by statute even if the trust instrument does not contain a
spendthrift clause.
a. 23ceptions (these e3ceptions also apply if trust has an e3press
spendthrift clause)#
i. (reditor who furnishes necessaries (medicine, food, rent);
ii. (hild support, alimony;
iii. <ederal ta3 liens;
iv.23cess income beyond that needed for support and education
(A) based on beneficiary7s station in life, income from other
sources.
() is a Alast resortA remedy (creditor must show he has
e3hausted all other remedies).
v. *4R levy under (=:" ;-4;(e)
**0-1
(A) Available to /udgment creditors in all cases (no need to
show that all other remedies have been e3hausted).
() It%s not *4R per creditor; all /udgment creditors share that
*4R.
b. There is no spendthrift protection as to any interest retained by the
settlor (even if the trust contains an e3press spendthrift clause).
i. (annot reach anything @ has irrevocably given away (trust
principal)
(A) e3ception + fraudulent conveyance (transfer with intent to
defeat, defraud or delay creditors).
() 23ample * 9 @ creates a valid lifetime trust# AThe trustee
shall pay the income to @ (the settlor) during his lifetime; and
on @%s death, the trustee shall distribute the trust principal to
@%s daughter ).A Two years later (reditor obtains a /udgment
against @ for >-;,444. (reditor can reach @%s retained income
interest b0c there is no spendthrift protection. (reditor cannot
reach the trust principal b0c @ did not own it anymore.
(() 23ample - 9 if the trust were a revocable trust, under
which @ retained the power to revoke the trust, @%s creditors
can reach entire trust property not /ust income interest b0c there
is nothing standing between @ and outright ownership e3cept
his e3ercising his power to revoke.
BIII. Dudicial modification and Termination of trusts#
A. Dudicial modification + changed circumstances#
*. "ule + a court will permit deviation from trust terms if, due to
circumstances not known to or anticipated by the settlor, compliance
with the trust will impair or frustrate the purpose of the trust
(reasoning similar to cy pres analysis).
a. (ases usually involve restriction on the sale of trust assets by the
trustee.
i. 23ample * (Matter of =ulitOer) 9 Doseph =ulitOer7s will created a
trust for the benefit of his family; included a provision that
=ulitOer7s stock in the $ew 8ork Iorld newspaper was not to be
sold as long as the trust was in e3istence. $ewspaper suffered
heavy losses, and income from other assets was needed to cover
*-0-1
the losses. Trustee petitioned for permission to sell the newspaper
stock. The @urrogate authoriOed the sale b0c primary purpose of
trust was to provide for =ulitOer7s family. Ihile he gave specific
direction that stock should never be sold, to continue to adhere to
specific direction would frustrate the primary purpose of the trust.
ii. (ii) 23ample - 9 T died in *G,;, leaving a will that created a trust#
&Income to his wife I for life, remainder to his son . I, ,4
years old and 5-5 suffering from various maladies of old age,
wants to move into a retirement home that will cost >.,444
month. The trust (with a corpus of >.44,444) is producing only
>*;,444 of income per year; and that, together with her @ocial
@ecurity, won7t be enough to pay the rest home. I petitions the
@urrogate7s (ourt to make annual distributions of principal to
supplement the income. ob/ects, pointing out that the trust did
not give the trustee any power to distribute principal; and that any
such distribution would be taking away AhisA money. y statute
surrogate has authority to authoriOe invasions of principal on
Mary7s behalf if it can be shown it will carry out T%s trust purpose
(if court doesn%t give power, /udicial approval is re!uired).
. Termination of trust by settlor 9 All $ew 8ork trusts are irrevocable and
unamendable unless the power to revoke and amend is e3pressly
reserved in the trust instrument. ?owever, the settlor can terminate an
irrevocable trust if A:: beneficiaries in being consent.
*. committee or guardian of an incompetent or minor person cannot give
consent. Thus if any trust beneficiary (even with only a contingent
interest) is a minor or incompetent, trust cannot be terminated.
a. Apersons beneficially interested in the trustA means only persons in
being and for purposes of the &trust termination' statute a child in
gestation Ais 5-; not regarded as a person until it sees the light of
day.A
-. *G;* Atrust terminationA statute + for purposes of rule authoriOing
settlor to terminate a trust with the consent of all beneficiaries, a
disposition in favor of heirs, ne3t of kin, etc. of the settlor does not
create a beneficial interest in the trust.
.. 23ample 9 In *GG;, @ created a valid irrevocable trust# AThe trustee
*.0-1
shall pay the income to me for life, then to my daughter ) for life; and
on )%s death the trustee shall distribute the trust principal to my heirs
at law.A @ now wants to terminate the trust; .49year9 old ) has
consented to the termination. @ can terminate the trust b0c under the
trust termination statute the heirs have no interest.
(. A"emainder to the grantor%s heirsA
*. multistate#
a. (ommon9law )octrine of Iorthier Title (Athe rule against
remainders in the grantor7s heirs') + in an inter vivos conveyance, a
grantor cannot create a remainder in his own heirs (instead, the
grantor takes a reversion).
i. 23ample + in *164 in 2ngland, F conveys land Ato A for life, and
on A7s death to my heirs at law.A
(A) if common law conveyance, or if !uestion stem states that
Athe following events take place in a /urisdiction that applies
the common law property law rules and has not enacted a
statute affecting the !uestionA A has a life estate; F%s 5-1 heirs
have nothing; F has a reversion in fee simple.
-. $ew 8ork#
a. 2=T: (*G16) )octrine of Iorthier Title abolished 9 where a
remainder is limited to the heirs or distributees of the creator of an
estate, such heirs or distributees take the remainder interest.
i. 23ample + in *GG;, @ created a valid irrevocable trust# AThe
trustee shall pay the income to me for life, then to my daughter )
for life; and on )%s death the trustee shall distribute the trust
principal to my heirs at law.A ) dies; then @ dies leaving a will
that gives all his property to his sister H. @, a widower, was
survived by A and (two adult sons) as well as H as his nearest
kin. The trust principal goes to A and (per their remainder as
@%s heirs).
b. ottom line + if on a $8 bar e3am !uestion a lifetime trust purports
to create a remainder in the settlor7s heirs
i. if the !uestion is whether the settlor can terminate the trust with
the consent of all persons beneficially interested in the trust 9 for
this purpose, settlor7s heirs do $FT have a beneficial interest, and
*50-1
settlor can terminate the trust (if all other adult beneficiaries in
being consent to the termination).
ii. if the !uestion concerns who takes on the settlor7s death 9 settlor7s
heirs (determined as of settlor7s death) take by remainder because
the )octrine of Iorthier Title has been abolished in $ew 8ork.
IH. Administration of trusts#
A.Trustee%s powers given by $8 <iduciary =owers Act (&<=A') can be
e3ercised by a trustee (and by an e3ecutor or administrator of a
decedent7s estate) without court order, and without e3press authoriOation
in trust or will. (The <=Aautomatically applies to all trusts and estates
e3cept as enlarged or limited by the trust or will).
. :ist of Acan doA powers too long to summariOe (or worry about). Seep in
mind, though, that <=A gives very broad powers.
*. "ule of thumb# If the !uestion is Acan he do itCA the answer is 82@#
Ae3pressly authoriOed by the $ew 8ork <iduciary =owers ActA 99
unless it involves#
a. @elf9dealing; or
b. Its on cannot do list
-. Ma/or &can do' powers + under the <=A, a trustee, e3ecutor or
administrator has the power (without court order) to#
a. @ell real or personal property at public sale KauctionL or private sale
(unless the property was specifically devised by the will);
b. Mortgage property;
c. :ease# by trustee, for up to *4 years; by e3ecutor, administrator, up
to . years;
d. Make ordinary repairs;
e. (ontest, compromise, settle claims;
f. Ihere up to >*4,444 is distributable to minor, can distribute to
parent or adult who has custody;
g. Make distributions on behalf of minor beneficiary to custodian for
minor under the $ew 8ork Eniform Transfers to Minors Act.
.. Ma/or &(an%t do' powers 9 unless will or trust authoriOes, or court
approves, a trustee, e3ecutor or administrator (A$$FT#
a. orrow money;
b. (ontinue a business;
*;0-1
c. Make e3traordinary repairs or improvements;
d. Abandon, demolish real property;
e. 2mploy agents, delegate authority;
f. Seep funds uninvested;
g. =ay debts barred by statute of limitations or discharged in
bankruptcy;
h. :end personal funds to estate, or advance funds to a beneficiary.
(. If named trustee has no powers or active duties to perform no trust arises;
trust re!uires fiduciary duties owed to someone ("emember if there is no
valid trust then a spendthrift clause has no effect).
).23culpatory clause 9 AThe Trustee shall not be liable for any acts or
omissions of itself or its agents e3cept for gross negligence, bad faith, or
fraud.A
*. Testamentary trusts + by statute, e3culpatory clauses in testamentary
trusts are invalid.
-. :ifetime trust + e3culpatory (or accounting) clauses are valid but they
can only e3culpate trustee for ordinary negligence (not gross
negligence, bad faith or fraud).
2. @elf9dealing + wearing - hats in same transaction.
*. Trustee cannot buy or sell trust assets to himself.
-. Trustee cannot borrow trust funds.
a. indirect self9dealing + rules of self9dealing also apply to loans or
sales to a relative, or to a business entity of which the trustee is an
officer, employee, partner, or principal shareholder.
b. @elf9dealing rules can be waived by the settlor 99 but this rule is
rarely tested.
.. Trustee cannot loan funds to the trust 9 any interest earned on such a
loan must be returned to the trust. Also, any security interest received
in connection with such a loan is invalid.
5. Trustee cannot profit from serving as trustee 9 as by taking advantage
of confidential information received in his capacity as trustee (but can
be compensated).
;. (orporate trustee cannot buy its own stock as a trust investment + but
it can retain its stock if a part of the estate received by it as trustee
(provided it is a permissible investment 9 must meet the Aprudent
*10-1
personA investment standard).
1. )uty to segregate trust assets from personal assets; and duty to
earmark trust assets by titling them in the trustee%s name + trustee
cannot commingle trust funds with her own.
a. If commingled funds are used to buy an asset and the asset goes
down in value, conclusive presumption that (to the e3tent available)
personal funds were used.
b. If asset goes up in value, conclusive presumption that (to the e3tent
available) trusts funds were used.
<. If trustee breaches A$8 fiduciary duty (Abreach of trustA) 99 self9dealing,
speculative investment, or e3ercises a power not given to the trustee, in
addition to bringing action to remove the trustee, beneficiary has option#
*. ?e can ratify the transaction and waive the breach of trust (e.g. + if
trustee invests in treasure9 hunting stock but the stock goes up in
value, AThanks for doing such a good /ob of investing.A).
-. ?e can sue for the resulting loss (name of the action is surcharge).
Moreover, if the case involves self9dealing, under the &no further
in!uiry' rule, breach of a fiduciary duty is an automatic wrong (good
faith, reasonableness is no defense).
a. Fnly issue in a self9dealing case + measure of damages.
.. If a trustee borrows trust funds and invests the proceeds, if value of
purchased property goes up, beneficiary can AtraceA and claim the
property for the trust. If trustee purchases an asset and the asset goes
up in value, beneficiary can demand that the asset be restored to the
trust.
P.@tatute of limitations does not begin to run on any action against a
fiduciary unless#
*. he repudiates the trust (buOO words used by the courts) by denying
e3istence of trust as to the particular assets in issue;
-. he dies or resigns; or
.. he gives accounting that shows facts on which action would be based
(if accounting merely said &loan# >*44,444,' statute would not begin
to run; but if accounting said &I borrowed >*44,444,' then statute
would begin to run).
?.@ale of trust assets to <= cuts off e!uitable title and beneficiaries only
*60-1
have an action against the trustee.
*. $o protection as <= if .rd party purchaser knew or should have
know trustee was engaged in self9 dealing.
I. Trustee is personally liable on contracts entered into on behalf of the
trust, unless a provision in the contract relieves him of personal liability.
*. 23ample * + T signs contract# &T, trustee of the "alph $orton Trust.A
(T is personally liable, this merely shows T%s representative capacity.
-. 23ample - + T signs contract# &T, as trustee and not individuallyA (no
liability, shows that creditor must look to trust for payment).
.. 23ample . + T signs contract# A"alph $orton Trust, by T, TrusteeA (no
liability, this shows that contract is with the trust, not T). 2ven if
personally liable on the contracts, trustee is reimbursed from the trust
if contract was within his powers and he was acting in course of
proper administration of the trust.
D. Trustee is personally liable on all torts of itself and its employees. (That%s
why a prudent trustee should immediately obtain liability insurance,
charging cost to the trust.)
*. The trustee can be reimbursed from trust estate if
a. trustee was acting within his powers when the tort was committed,
and
b. trustee was not personally at fault.
S.Trustee%s investment power + =rudent investor "ule (&"=M')#
*. Trustee may make investments Aas would be ac!uired by prudent men
of discretion and intelligence ... seeking reasonable income and
preservation of their capital.A
a. Applies to all fiduciaries, including e3ecutor, administrator,
committee, guardian.
b. ut trustee with Aspecial skillsA (bank) is held to higher standard of
prudence.
-. 23ample 9 Trust (current value >,44,444) provides for income to ) for
life, remainder to P. The trust does not authoriOe distribution of
principal to ). (urrent investments include 1R corporate bonds
(>-44,444) yielding >*-,444 in annual income, and common stocks
listed on $ew 8ork @tock 23change (>144,444) producing cash
dividends of -R (>*-,444 5.. per year). Trustee sells some common
*,0-1
stock and invests the >-44,444 sale proceeds to buy stock in an I=F
(Ainitial public offeringA) for odacious Inc., a three9year9old Internet
start9up company that has lost money every year, has never paid
dividends, and is not likely to do so for at least five years. A year later,
odacious has declined in value to >,4,444. @hould the trustee be held
liable for the >*-4,444 lossC
a. Many states 9 probably 82@.
i. investing in a company with no investment history or track record
too speculative.
ii. investing -;R of trust in an asset that produces no income
violated duty of fairness trustee owed to income beneficiary vis a
vis remaindmen.
b. (urrent $8 law 9 under the Eniform =rudent Investor Act (AE=IA,A
enacted in *GG;), which is based on the modern portfolio theory of
investing, the trustee is probably not liable b0c prudence is
measured by conduct when investment decision was made (not on
hindsight).
i. Trustee must have established a custom9tailored investment
strategy for the trust, taking into account such factors as#
(A) general economic conditions,
() -. the possible effect of inflation or deflation,
(() the e3pected ta3 conse!uences of investment decisions or
strategies,
()) the role that each investment plays within the overall trust
portfolio,
(2) the e3pected total return from income and capital gain,
(<) needs for li!uidity,
(P) an asset7s special relationship or value to the purposes of
the trust or a beneficiary, and
(?) any differing interests of the income beneficiaries and the
remaindermen.
ii. ut what of the fact that the trustee knew that the I=F stock was
unlikely to pay dividends; and that for a >,44,444 (oopsT now
>1,4,444) trust portfolio, the ordinary income (bond interest and
cash dividends) to be distributed to )onna will only be about
*G0-1
>-4,444C
(A) Ender E=IA, investment returns are measured by total
returns, including growth and capital gain as well as dividend
and interest income.
() Ender the Eniform =rincipal U Income Act, trustee can
e3ercise ad/ustment power and allocate capital to gain income.
(*) @tarting point# Trustee distributes AincomeA items
(interest income, rental income, dividends on common
stocks, etc.) to the income beneficiary; and adds capital
gains (part of proceeds of sale of a principal asset) to the
corpus of the trust. ?owever, capital gain can be allocated to
income where appropriate.
(-) <actors to be considered in e3ercising ad/ustment
power (i.e., power to ad/ust total return between income and
principal, and allocate capital gain to principal)#
(a) purpose and e3pected duration of the trust,
(b) intent of the settlor as to respective interests of the
beneficiaries,
(c) the net amount of ordinary income and capital gain
available for allocation,
(d) circumstances of the beneficiaries,
(e) the need for li!uidity, regularity of income, and
preservation and appreciation of capital,
(f) any increase or decrease in value of the trust assets,
(g) whether the trust gives the trustee a power to
distribute principal, viii. effect of economic conditions
and effects of inflation and deflation, and
(h) anticipated ta3 conse!uences of an ad/ustment.
iii. "ecap# Ender Eniform =rudent Investor Act, invest for total
return. =rudence is measured by conduct in making investment
decision at time investment is made, not by hindsight based on
outcome or performance. Ender Eniform =rincipal and Income
Act, trustee can e3ercise ad/ustment power in favor of income
beneficiary where appropriate, and can allocate capital gains to
income. T?I@ I@ A:: 8FE $22) TF S$FI
-40-1
:. The @uspension rule#
*. Ihenever the suspension rule is tested, it is always part of a "ule
Against =erpetuities !uestion.
-. "ule Against =erpetuities 9 $o estate in property shall be valid unless
it must vest, if at all, not later than twenty9one years after one or more
lives in being at the creation of the estate and any period of gestation
involved.A K:ives in being plus -* yearsL
.. The $ew 8ork @uspension "ule (&"ule Against @uspension of the
Absolute =ower of Alienation') 9 every present or future interest shall
be void in its creation if it suspends the absolute power of alienation
for a longer period thanA lives in being plus -* years. AThe absolute
power of alienation is suspended when there are no persons in being
by whom an absolute fee or estate in possession can be conveyed or
transferred.A
a. All the AsuspensionA rule re!uires is persons in being who could
/oin in conveying a fee simple within lives in being plus -* years.
i. 8ou have to be able to account for Aall the piecesA of the fee
simple title in ascertainable persons within :I V -* years (it7s
not that they would /oin in a conveyance, but that they are all
ascertainable and they could do so).
5. 23ample * + F conveys land Ato A and his heirs for so long as no
li!uor is sold or consumed on the premises; and if li!uor is ever sold
or consumed on the premises, title shall pass to and his heirs.A
a. @tep * 9 classify the interests as though there were no "ule Against
=erpetuities
i. A# <ee simple determinable ($8 calls it a Afee on limitationA).
ii. # 23ecutory interest (if there were no perpetuities problem).
iii. F# $o retained estate (if there were no perpetuities problem).
b. @tep - + Is 7s interest valid under the suspension ruleC + 82@ b0c A
and account for all the pieces of the full fee simple title. They
could /oin in conveying the fee simple title tomorrow.
c. @tep .# Is 7s interest valid under the "ule against =erpetuitiesC 9
$F (%s interest will not vest or fail within :I V -* years).
d. 2nd result after applying "ule against =erpetuities#
i. A# <ee simple determinable
-*0-1
ii. # Interest is void
iii. F# =ossibility of reverter (not sub/ect to "ule Against
=erpetuities).
;. 23ample - + T%s will devises land Ato the Albany Methodist (hurch;
but if the premises shall ever cease to be used for church purposes,
then and in that event title shall pass to my then living descendants.A
a. This disposition violates the "ule against =erpetuities, because the
vesting period is Aever.A The future interest in Tom7s Athen living
descendantsA will vest when the (hurch ceases to use the premises
for church purposes, which may be centuries from now.
b. This disposition also violates the suspension rule, for the persons
who could /oin the (hurch in conveying a fee simple estate (Tom7s
Athen living descendantsA) might not be determined within lives in
being plus -* years.
1. Age (ontingency beyond -* years in an open class 9 the most
fre!uently tested perpetuities !uestion on the $ew 8ork ar 23am
a. T dies leaving a will that devises his residuary estate Ato my son @
for life, then to such of @7s children as live to attain the age of .4.A
At T7s death, @ has three children# A (age *-), (age ,) and ( (age
;)
i. @tep * 9 what interests createdC
(A) @# life estate -. @ children as live to attain age .4#
contingent remainder .. T%s estate# reversion
b. @tep - 9 apply "ule against =erpetuities.
i. The remainder in @%s children is void (it may vest too remotely)
(A) what might happenC
(*) After Teddy7s death, @ could have a child W (not a life
in being);
(-) efore W reaches age G, everyone else dies;
(.) More than -* years later W turns .4 and remainder
vests.
c. @tep . 9 apply the suspension rule.
i. The remainder is valid under the suspension rule. All you need is
to account for all the pieces of the fee simple title within lives in
being V -* years. This rule has nothing to do with Avesting.A
--0-1
?ere, all of @7s children will be born (or in gestation) in @7s
lifetime (a Alife in beingA), and they could /oin in the hypothetical
conveyance of the entire fee simple no later than @7s death.
d. @tep 5 +apply $ew 8ork =erpetuities "eform @tatute.
i. "educe age contingency to -* years, where necessary to save the
disposition (b0c all @s kids will reach -* by @%s death).
6. @uspension rule is also violated whenever there is a life estate in trust
in an unborn person (or in an open class that may possibly include
unborn persons).
a. If the facts of a Trusts !uestion are along these lines# &Income to
"obert for life, then to "obert%s children for their lives . . . .'
b. 8FE ?AB2 A @E@=2$@IF$ ="F:2MT The remainder income
interest in "obert%s children violates the suspension ruleT
c. "ationale + by definition, an unborn person (e.g., "obert could have
another child in the future) can7t be counted as a Alife in being.A The
person, later born, might outlive everyone now on the scene by
more than -* years; and in the --nd year would have a trust income
interest that could not be transferred because of $ew 8ork7s
statutory spendthrift rule that prohibits voluntary or involuntary
transfer of a trust income interest. Thus we might not be able to
account for all of the pieces of the fee simple title within :I V -*
years.
d. 23ample 9 T%s will creates a trust# AIncome to my daughter A for
life, and on A7s death to pay the income to A7s children for their
respective lives.A At T7s death, A, who is .4 years old, has one child#
(.
i. The remainder life income interest in A7s children is valid under
the "ule against =erpetuities. True, the income gift to A7s children
is to an Aopen class,A because after T7s death A could have a child#
W, not a life in being. ?owever, there is no problem under the
"ule against =erpetuities, because life estate in A%s children (she
has to produce them, after all) will vest, if at all, on A7s death. (
ii. The income interest in A7s children is void under the suspension
rule. Ie have a trust income interest in an open class. After T7s
death, A could have a child# W. eing born after the testator7s
-.0-1
death, W was not a Alife in being.A Then A and ( die; W lives on,
and is entitled to the income for the rest of his life. ET in this
disposition, A and ( are the only relevant Ameasuring lives.A If W
outlives A and ( by more than -* years, in the --nd year 99 more
than -* years after lives in being 99W would have an income
interest in the trust sub/ect to the $ew 8ork statutory spendthrift
rule. W could not transfer his interest; thus there may not be
(within :I V -*) persons in being who can /oin in the
conveyance of a fee simple. @ince this might happen, and since
we can7t account for all the pieces of the fee simple title within
:I V-*, the remainder income interest in A7s children is void.
iii. Model Answer + the trust income interest in A7s children is
void under the @uspension "ule Kthe "ule Against @uspension of
the absolute power of alienationL, because of the statutory
spendthrift rule applicable to $ew 8ork trusts. A could have a
child in the future, and that child might outlive all lives in being
by more than -* years. ecause the statutory spendthrift rule
prevents a trust beneficiary from assigning her income interest,
the child might not be able to /oin in the conveyance of a fee
simple within lives in being plus -* years. ut the $ew 8ork
=erpetuities "eform @tatute MA8 save the gift, depending on A%s
age and medical condition. The statute raises various
presumptions as to child9 bearing capacity, and that a male under
age *5 cannot sire a child; that a female under age *- or over age
;; cannot have a child (the possibility of adopting children is
disregarded). Moreover, medical testimony as to child9bearing
capacity is 55- admissible. If at testator%s death Alice were over
age ;;, or if Alice (in her 54s) had had a hysterectomy, under the
statutory presumption, the class of &A%s children' would be
closed. There couldn%t be that afterborn W to foul things up.
M. "ule against perpetuities and powers of appointment#
*. <irst !uestion + is the power itself validC
a. To be valid, a general testamentary power or a special power of
appointment (whether inter vivos or testamentary) must be certain
to be e3ercised, if it is e3ercised, within lives in being plus -* years.
-50-1
If such a power of appointment is given to someone who is a life in
being at the time the power is created, no problem. ?owever, a
general testamentary power or a special power given to an
E$F"$ 2$2<I(IA"8 is void because the power could be
e3ercised beyond :I V -*.
i. 23ample + T7s will creates trusts for each of her children# to pay
the income to the child for life, and on the child7s death to such of
the child7s issue as he or she appoints by will; with a gift in
default of appointment to the child7s descendants. The special
testamentary powers of appointment are valid. This is a will, and
all of T7s children will be alive (or in gestation) at the time T dies
and the interests are created. Thus the powers will be e3ercised, if
they are e3ercised, within lives in being.
-. @econd !uestion + are interests created by the e3ercise of the power
validC
a. Peneral testamentary powers and all special powers of appointment
9 the validity of interests created by the e3ercise of the power is
measured from the date of the instrument creating the power of
appointment, and $FT from the date of the power7s e3ercise. $ew
8ork follows the common law rule; it is treated as though the donee
(the holder of the power) is the donor7s agent, and he is merely
Afilling in the blanksA in the donor7s will or trust
b. 23ample 9 T died in *GG4, leaving a will that created a trust#
Aincome to my daughter ) for life, and on )%s death to distribute the
property outright or in further trust to such of )7s descendants as she
appoints by will; in default of appointment to )7s children.A )7s
power of appointment is itself valid since ) was living at T7s death,
and thus the power will be e3ercised, if it is e3ercised, within a life
in being. ) died in -44-, leaving a will that appointed the property
Ato such of my children as live to attain age .4.A The perpetuities
period began to run when T died in *GG4. A<illing in the blanks,A we
read T7s will as though it read# ATo ) for life, then to such of )7s
children as live to attain age .4.A At this point, things look bad.
.. @tep .# Apply the @econd :ook )octrine 9 in cases involving powers
of appointment we are further aided by the second look doctrine. In
-;0-1
the ordinary perpetuities case, we don7t Await and seeA what happens;
validity is determined at the time the interests are created, without
regard to what actually happens. ut when interests are created by the
e3ercise of a general testamentary power or a special power, although
the perpetuities period starts to run from the date the power was
created, the courts recogniOed early on that it would be foolish not to
take into account facts e3isting when the donee Afilled in the blanksA
by e3ercising the power.
a. If at )7s death all of her children are aged G or over, the remainder
appointed to D7s children is valid b0c they will all make it to .4 or
not within -* years.
b. If, however, ) has a child under age G at her death, the remainder in
)%s children is void b0c child was not in being when T died and if
everybody dies, child will reach .4 in more than -* years, in which
case the age contingency will be reduced to -* under the $8
perpetuities reform statute.
-10-1
Constitutional Law
I. Federal judicial power
A. The requirement for cases and controversies (four justiciability
requirements
!. "tandin# $ the question of whether the %l. is the proper party to
brin# a matter to the court for adjudication
a.Injury & %l. must alle#e and prove that he has been injured or
imminently will be injured
i. Types of injuries & many different 'inds are sufficient for
standin# (torts( brea' of )( violations of constitutional ri#hts(
violations of statutory ri#hts( and any other harm that is
sufficiently important
ii. %l. only may assert injuries that she has personally suffered
iii. %l. see'in# injunctive or declarative relief must show a
li'elihood of future harm
b. Causation and redressability & the %l. must alle#e and prove
that the *ef. caused the injury so that a favorable court decision is
li'ely to redress the injury (co court won+t be issuin# an advisory
opinion
c.,o -d party standin# & a %l. cannot assert claims of others( -d
parties( who are not before the court.
i. ./ception ! & close relationship between %l. and -d party (e.#.
dr.0patient & drs brin# suits a#ainst laws prohibitin# abortion on
behalf of their patients1 bartender2customer
ii. ./ception 3 & injured party is unli'ely to be able to assert his
own ri#hts (e.#. criminal *ef. have -d party standin# for jurors
for discrimination
iii. ./ception - & an or#ani4ation may sue for its members if5
(A The members would have standin# to sue1
(6 interests #ermane to the or#ani4ation+s purpose1
(C ,either the claim nor relief requires participation of the
individual members
d. ,o #enerali4ed #rievances & the %l. must not be suin# solely as
a citi4en or as a ta/payer interested in havin# the #overnment follow
!23$
the law
i. ./ception & e/penditures violatin# the .stablishment clause (no
standin# to challen#e fed. 7vt+s #rants of property to reli#ious
or#ani4ations
3. 8ipeness & the question of whether a federal court may #rant pre0
enforcement review of a statute or re#ulation (e/am tip & when *ef.
as's for declaratory jud#ement( thin' ripeness
a.3 criteria for pre0enforcement jud#ment5
i. The hardship that will be suffered without
ii. The fitness of the issues and the record for judicial review
-. 9ootness & if events after the filin# of a lawsuit end the %l.+s
injury( the case must be dismissd as moot.
a../ception ! & wron# capable of repetition but evadin# review (./ &
8oe v. :ade & no lon#er pre#nant when case decided
b. ./ception 3 & voluntary cessation (if *ef. voluntarily halts the
offendin# practice but is free to resume it at any time
c../ception - & class action suits (even if named *ef.+s claim
becomes moot( as lon# as one member has on#oin# injury
;. The political question doctrine & refers to alle#ations of
constitutional violations that the federal courts will not adjudicate
a.Cases that are non0justiciable under this doctrine5
i. <8epublican form of #overnment< clause
ii. Challen#es to president+s conduct of forei#n policy
iii. Challen#es to impeachment and removal process
iv.Challen#es to partisan #errymanderin#
6. "C=T>" review5
!. ?irtually all cases come to "C=T>" by writ of certiorari
(discretionary review & ; justices must vote to hear the case
a.All cases from state courts come to "C=T>" by writ of cert
b. All cases from >.". Courts of Appeals come to "C=T>" by
writ of cert
c.Appeals e/ist for decisions of -0jud#e federal district courts (#o
strai#ht to "C=T>" & obli#ated to ta'e case
d. "C=T>" has ori#inal and e/clusive jurisdiction over suits
between state #overnments
323$
3. Final jud#ment rule & 7enerally( "C=T>" may hear cases only
after there has been a final jud#ment of the hi#hest state court( >.".
CoA( or a -0jud#e federal district court1 no interlocutory appeals
-. Adequate and independent state #rounds & for "C=T>" to
review a state court decision( there must not be an independent and
adequate state #round of decision. If a stat court decision rests on state
law and federal law( then if "C=T>" reversal of the federal law
#round will not chan#e the result( then "C=T>" cannot hear it.
C. Lower federal court review
!. Federal courts (or state #overnments may not hear suits a#ainst
state #overnments
a.The principle of soverei#n immunity
i. The !!th A bars suits a#ainst states in federal courts
ii. "overei#n immunity bars suits a#ainst states in state courts or
federal a#encies
b. ./ceptions & states may be sued under the followin#
circumstances
i. :aiver by state & must e/plicit
ii. "tates may be sued pursuant to federal laws adopted under s @ of
the !;th A. Con#ress cannot authori4e suits a#ainst states under
other constitutional provisions
iii. The federal #overnment may sue state #overnments
c."uits a#ainst state officers are allowed
i. "tate officers may be sued for injunctive relief
ii. They may be sued for money dama#es to be paid out of their own
poc'ets
iii. They may not be sued if state treasury will be payin#
retroactive dama#es
3. Abstention (federal court has jurisdiction but must abstain &
Federal courts may not enjoin pendin# state court proceedin#s
II. Federal Le#islative power
A. Con#ress+ authority to act5
!. There must be e/press or implied Con#ressional power
a.,o #eneral police power
b. The only cases where it is proper to say that Con#ress is
-23$
operatin# under police power is when it is le#islatin# for the
military( Indian reservation( lands or new territories( or *.C.
(9IL*
3. ,ecessary and proper clause
a.Con#ress can enact all laws necessary and proper to carry out its
authority (may choose any means not prohibited by the Constitution
to carry out its authority
-. Ta/in#2spendin# power and commerce power
a.Con#ress may spend for the #eneral welfare
b. The Commerce power5
i. Con#ress may re#ulate the channels of interstate commerce
(places where commerce occurs5 hi#hways( waterways( the
Internet
ii. Con#ress may re#ulate activities that have a substantial effect on
interstate activity
(A In the area of non0economic activity( a substantial effect
cannot be based on cumulative impact
;. !$th A as a limit on Con#ressional powers & all powers not
#ranted to the >" nor prohibited to the states are reserved to the states
or the people
a.Con#ress cannot compel state re#ulatory or le#islative actions
b. Con#ress may prohibit harmful commercial activity by state
#overnments (e.#. state *9?s cannot publish lists of names and
addresses of re#istrants
@. Con#ress power under s @( !;th A & Con#ress may not create new
ri#hts or e/pand scope of ri#hts under this section. Con#ress may act
only to prevent or remedy violations of ri#hts reco#ni4ed by the courts
and such laws must be <proportionate< and <con#ruent< to the
remedyin# constitutional violations
6. *ele#ation of powers
!. ,o limit e/ists on Con#ress+ ability to dele#ate le#islative power
to e/ecutive a#encies or even to the judiciaries
a.,o dele#ation has ever been declared unconstitutional
3. Le#islative vetoes and line0item vetoes are unconstitutional
a.For Con#ress to act there always must be bicameralism (passa#e by
;23$
both Aouse and "enate and presentment (#ivin# bill to %resident to
si#n or veto. %resident must si#n or veto bill in its entirety
i. Le#islative veto & Con#ress tries to veto an e/ecutive action
(unconstitutional without bicameralism and presentment
-. Con#ress may not dele#ate e/ecutive power to itself or its
officers
III. Federal e/ecutive power
A. Forei#n policy
!. Treaties & a#reements between the >.". And a forei#n country
that are ne#otiated by the %resident and are effective when ratified by
the "enate
a.Treaties prevail over conflictin# state laws
b. If treaty conflicts with federal statute( then last in time
c.If conflict with >" Constitution then invalid
3. ./ecutive a#reements & between >" and forei#n country(
effective when si#ned by %resident and other head
a.Can be used for any purpose (anythin# a treaty could do
b. %revail over conflictin# state laws but never over federal laws
or Constitution
c.%resident has broad powers as Commander0in0chief to use >"
troops aboard (so broad( such action has never been declared
unconstitutional
6. *omestic affairs
!. The appointment and removal power
a.The appointment power
i. The president appoints ambassadors( federal jud#es( and officers
of the >"
ii. Con#ress may vest appointment of inferior officers in th
%resident( the heads of departments( or the lower federal courts
(A Inferior officers includes independent counsel (because
may be fired by A7
iii. Con#ress may not #ive itself or its officers appointment
power
b. 8emoval power
i. >nless the removal is limited by statute( the %resident may fire
@23$
any e/ecutive branch official
ii. For Con#ress to limit removal
(A It must be an office where independence from the
%resident is desirable (e.#. 0 independent counsel( not
%residential cabinet
(6 Con#ress cannot prohibit removal1 it can limit removal to
where there is #ood cause
3. Impeachment and removal & the %resident( ?%( federal jud#es(
and officers of the >" can be impeached and removed from the office
for treason or other hi#h crimes and misdemeanors
a.Impeachment does not remove a person from office (conviction in
the "enate results in removal
b. Impeachment by Aouse of 8eps requires a majority vote1
conviction in the "enate requires a 32- vote
-. The %resident has absolute immunity to civil suits for money
dama#es for any actions while in office
a.Aowever( not for actions prior
;. The %resident has e/ecutive privile#e for presidential papers and
conversations but such privile#e must yield to other important
#overnment interests (overridin# needs for the information
@. The %resident has the power to pardon those accused or convicted
of federal crimes (only for criminal liability
a../ception & when a %resident is impeached by the Aouse( he cannot
be pardoned for incidents leadin# to impeachment
I?. Federalism (limits on state and local #overnment power5
A. %reemption & The "upremacy Clause of Article ?I provides that the
Constitution and laws and treaties made pursuant to it are the supreme
law of the land
!. ./press preemption & if a federal law e/plicitly says that Federal
law is e/clusive in the field( then state or local law preempted.
3. Implied preemption & even if a federal statute is silent abut
preemption( it can arise in the followin# ways5
a.If federal and state laws are mutually e/clusive & state law wins
b. If state law impedes achievement of a federal objective( federal
law preempts
B23$
c.If Con#ress evidences a clear intent to preempt state law (even
thou#h statute is silent & e.#. history( etc.
-. "tates may not ta/ or re#ulate federal #overnment activity (it is
unconstitutional to pay a state ta/ out of the federal treasury
a.,o re#ulations that put si#nificant burden on federal activity (e.#.
stricter state environmental laws
6. *ormant Commerce Clause and the %rivile#es C Immunities Clause
of Article I?
!. *efinitions
a.*CC & the principle that state and local laws are unconstitutional if
they place an undue burden on interstate commerce
i. Also referred to as the <ne#ative implications of the commerce
clause<
b. The %CI clause of Article I? & provides that no state may
deny citi4ens of other states the privile#es and immunities it affords
its own citi4ens (limits ability of state to discriminate a#ainst out0of
staters
c.%CI clause of !;th A & always wron# answer unless involves ri#ht
to travel
3. Formulas for answerin# questions involvin# above5
a.*oes the state law discriminate a#ainst out0of0statersD
b. Analysis if the law does not discriminate
i. %CI clause of Art. I? does not apply
ii. If the law burdens interstate commerce( it violates the *CC if its
burdens e/ceed its benefits
(A ..#. 0 Illinois law requirin# curved mud flaps on all truc's
c.If law discriminates a#ainst out0of0staters
i. If law burdens interstate commerce( then it violates the *CC
unless necessary to achieve an important #overnment purpose
(only purpose ever upheld & preservin# natural resources
(A ./ception !5 Con#ressional approval
(6 ./ception 35 The mar'et participant e/ception & a state or
local #overnment may prefer its own citi4ens in receivin#
benefits from #overnmental pro#rams or in dealin# with
#overnment0owned business (e.#. 0 hi#her tuition for out0of0
E23$
state students in state schools
ii. If law discriminates a#ainst out0of0staters with re#ard to their
ability to earn their livelihood( it violates the %CI clause of Art.
I? unless it is necessary to achieve an important #overnmental
purpose.
(A The law must discriminate a#ainst out0of0staters
(6 The discrimination must be with re#ard to civil liberties or
important economic activities
(C Corporations and aliens cannot use %CI clause
(* *iscrimination must be necessary to achieve an important
#overnment purpose
C. "tate ta/ation of interstate commerce
!. "tates may not use their ta/ systems to help in0state business
3. A state may only ta/ activities if there is a substantial ne/us to the
state
-. "tate ta/ation of interstate business must be fairly apportioned
*. Full Faith and Credit
!. Courts in one state must #ive full faith and credit to jud#ments of
courts in another state so lon# as5
a.The court renderin# jud#ment has subject matter and personal
jurisdiction
b. The jud#ment was on its merits
c.The jud#ment was final
?. The structure of the Constitution+s protection of individual liberties5
A. Is there #overnment actionD
!. The Constitution applies only to #overnment action. %rivate
conduct need not comply with the constitution.
3. Con#ress( by statute( may apply Constitutional norms to private
conduct5
a.The !-th A protects race discrimination
i. *iscrimination never violates the !-th A itself but can violate
federal statutes created under the !-th A (which Art 3 of the
amendment allows Con#ress to do
b. The commerce power can be used to apply Constitutional
norms to private behavior
F23$
-. ./ceptions (when private conduct must comply with the
Constitution5
a.%ublic function & if a private entity is performin# a tas' traditionally
done e/clusively by the #overnment (.#. 0 company0run town tries
to prohibit free speech1 T/ lets political parties run their own
primaries and those parties won+t let blac's vote
i. ,arrow e/ception & not runnin# a utility
b. .ntan#lement & if the #overnment affirmatively authori4es(
encoura#es( or facilitates unconstitutional activity
i. Courts cannot enforce racially restrictive covenants on land
because courts would be authori4in# behavior
ii. There is state action when the #overnment leases space to a
restaurant that racially discriminates
iii. "tate action5 free boo's to discriminatory schools
iv.There is not state action when private school fires teacher
because of free speech (#overnment subsidy is insufficient to
findin# of state action
v. ,ot state action0 ,CAA orders suspension of coach at state
university
vi. "tate action & private entity re#ulates interscholastic sports
in one state
vii. ,ot state action & private club with liquor license racially
discriminates
6. Application of the 6ill of 8i#hts
!. =nly applies to the federal #overnment
3. Applied to the state and local throu#h incorporation of the *ue
%rocess clause of the !;th A. ./cept5
a.The 3d A ri#ht to bear arms (thus states could adopt any #un control
laws they wanted
b. The -d A ri#ht not to have soldiers quartered in one+s home
c.The @th A ri#ht to #rand jury indictment in criminal cases
d. The Eth A ri#ht to jury trial in civil cases
e.The Fth A ri#ht a#ainst e/cessive fines
C. Levels of scrutiny
!. 8ational basis test & a law is upheld if it is rationally related to a
G23$
le#itimate #overnment purpose
a.,eed not be least restrictive means
b. 6urden of proof on challen#er
3. Intermediate scrutiny & a law is upheld if its substantially related
to an important #overnment purpose (any le#itimate( conceivable
purpose
a.,eed not be least restrictive means
b. 6urden of proof on #overnment
-. "trict scrutiny & a law is upheld if it is necessary to achieve a
compellin# #overnment purpose (court will only loo' at #overnment+s
actual purpose
a.9ust be least restrictive means
b. 6urden of proof on #overnment
?I. *ue %rocess
A. %rocedural due process
!. Aas there been a deprivation of life( liberty( or propertyD
a.*efinitions
i. *eprivation occurs if there is the loss of a si#nificant freedom
provided by the Constitution or a statute
(A ./cept in emer#encies( before an adult can be
institutionali4ed( there must be a notice and a hearin#
(6 :hen a parent institutionali4es a child( there must be a
screenin# by a neutral fact finder
(C Aarm to reputation by itself is not a loss of liberty (there
must be a tan#ible loss
(* %risoners rarely have a loss of liberty
ii. *eprivation of property occurs if there is an entitlement and that
entitlement is not fulfilled
(A An entitlement e/ists if there is a reasonable e/pectation
to the continued receipt of a benefit
(! ./ ! & person is told he will have a job for a year( then
ta'en away mid0year
(3 ./ 3 & teacher has a ) that mi#ht be renewed & no
e/pectation
b. 7overnment ne#li#ence is not sufficient for a deprivation of
!$23$
due process. 7enerally( there must be an intentional #overnment
action or at least rec'less action for liability to e/ist.
i. Aowever( in emer#ency situations( the #overnment is liable under
due process only if its conduct <shoc's the conscience< (e.#. 'id
'illed durin# police chase & not li'ely
c.7enerally( the #overnment+s failure to protect people from privately
inflicted harms does not deny due process (only if #overnment does
the actual harmin#
3. :hat procedures are required
a.The test & balance the followin#
i. The importance of the interest to the individual(
ii. The ability of additional procedures to increase the accuracy of
the fact0findin#( and
iii. The #overnment interest in administrative efficiency (cost of
additional procedures to the #overnment
b. ./amples
i. 6efore welfare benefits can be terminated( there must be notice
and a hearin#
ii. :hen "" disability benefits are terminated( there need only be a
post0termination hearin#
iii. :hen student is disciplined in public school. There must be
a notice of the char#es and a chance to e/plain
iv.6efore a parent+s ri#ht to custody of a child can be permanently
terminated( there must be notice and a hearin#
v. %unitive dama#es awards require instruction to the juryand
judicial review to assure reasonableness (#rossly e/cessive
violate due process
vi. ./cept in e/i#ent circumstances( pre0jud#ment attachment
and #overnment sei4ure of assets must be preceded by a notice
and hearin#
(A *ue process does not require an innocent owner defense
to #overnment sei4ure
6. "ubstantive due process
!. As' wheter the #overnment has adequate reason for ta'in# away
a persons life( liberty( or property
!!23$
3. The Constitution provides only minimal protection for economic
liberties
a.=nly rational basis test for laws affectin# economic ri#hts
b. The ta'in#s clause & the #overnment may ta'e private property
for public use if it provides just compensation
i. Is there a ta'in#
(A %ossessory ta'in# & #overnment confiscation or physical
occupation of property is a ta'in#
(6 8e#ulatory ta'in# & when #overnment leaves a property
no reasonable economically viable use
(! 8eduction in property value & not a ta'in#
(3 7overnment conditions on development of property
must be justified by benefit that is rou#hly proportionate to
the burden imposed (otherwise it is a ta'in#
(- A property0owner may brin# a ta'in#s challen#e to
re#ulations that e/isted at the time property was acquired
(; Temporarily denyin# an owner use of property is not a
ta'in# as lon# as the #overnment+s action was reasonable
ii. Is it for public useD
(A If not( #overnment must #ive property bac'
(6 For public use as lon# as #overnment acts out of a
reasonable belief that ta'in# will benefit the public #ood (very
broad
iii. Is just compensation paidD
(A 9easures in terms of loss to owner of reasonable mar'et
value (value to ta'er is irrelevant
c.The contracts clause & no state shall impair the obli#ations of )s
i. Applies only to state or local interference with e/istin# )s
(doesn+t apply to federal #overnment
ii. "uch interference must meet standard li'e intermediate scrutiny
(A *oes le#islation substantially impair a party+s ri#ht under
and e/istin# )D
(! If so( is the law reasonably and narrowly tailored to
promote an important and le#itimate public interest
iii. "tate or local interference with #overnment )s must meet
!323$
strict scrutiny
iv.The e/ post factor clause (which invalidates laws that criminally
punish conduct that was lawful when committed or increases the
punishment for that conduct does not apply in civil cases
(A 8etroactive civil liability only need meet a rational basis
test. (A bill of attainder is a law that directs the punishment of
a specific person without a trial
-. %rivacy is a fundamental ri#ht protected under due process and
laws restrictin# requirin# strict scrutiny1 ri#hts5
a.To marry
b. To procreate
c.To custody of children
i. Aowever( state may create an irrebuttable presumption that
husband is father of child
d. To 'eep family to#ether
i. 9ust be related to each other
e.To control upbrin#in# of children
i. %arents have the ri#ht to choose to send their 'ids to parochial
schools
ii. *ue process violation & to order #randparent+s visitation ri#hts
over the objection of parents
f. To purchase and use contraceptives
#. To abortion & "" not used
i. Current law
(A %rior to viability( state may not prohibit abortions but may
re#ulate so far that they do not create an undue burden on the
ability to obtain
(! 3;0hour waitin# period requirement & not undue burden
(3 =nly licensed physicians requirement & not undue
burden
(- %rohibition on <partial birth abortions< & impermissible
undue burden
(6 After viability( state may prohibit abortions unless
necessary to protect a woman+s life or health
(C The #overnment has no duty to subsidi4e abortions or
!-23$
provide them in public hospitals
(* "pousal consent laws are unconstitutional
(. %arental notice and consent for unmarried minors & as
lon# as alternative procedure wherein minor can #o before a
jud#e who can decide abortion is in her best interest or that she
is mature enou#h to decide for herself.
h. The ri#ht to refuse medical treatment & no level of scrutiny
attached
i. Competent adults have the ri#ht to refuse medical treatment( even
if it is life0savin#
ii. A state may require clear and convincin# evidence that a person
wanted treatment terminated before it is ended
iii. A state may prevent family members from terminatin#
treatment for another
i. There is no ri#ht to physician assisted suicide & thus rational basis
test
j. The ri#ht to privacy does not protect private( consensual
homose/ual activity (thus rational basis review
?II. .qual protection
A. An approach
!. :hat is the classificationD
3. :hat level of scrutiny should be appliedD
-. *oes the law meet this level of scrutinyD
6. Constitution provisions concernin# equal protection
!. .qual protection clause of the !;th A applies only to state and
local #overnments
3. .% is applied to federal #overnment throu#h due process clause
of the @th A
C. Classifications based on race and national ori#in
!. "trict scrutiny
3. Aow is e/istence of race classification provenD
a.The classification e/ists on the face of the law
b. If the law is facially neutral( provin# racial classification
requires demonstrative both discriminatory impact and
discriminatory intent
!;23$
i. ./ & discriminatory peremptory challen#es
-. Aow should racial classifications benefitin# minorities be
treatedD
a."trict scrutiny applied
b. ,umerical set0asides require clear proof of past discrimination
c..ducational institutions may use race as one factor in admissions
decisions to help minorities (Hchec' currentness
d. "eniority systems may not be disrupted for affirmative action
;. 7ender classifications
a.Intermediate scrutiny (maybe more5 e/ceedin#ly persuasive
justification
b. Aow is e/istence of #ender classification provenD
i. ./ists on the face of the law
ii. If law is facially neutral( provin# #ender classification requires
discriminatory impact and intent
(A ./ & discriminatory peremptory challen#es
c.Aow should affirmative action be treated
i. 7ender classifications benefitin# women that are based on role
stereotypes will not be permitted
ii. Those desi#nated to remedy past discrimination & o'
@. Aliena#e classification
a.7eneral strict scrutiny used
b. =nly rational basis test for aliena#e re#ulations that concern
self0#overnment or the democratic process
i. ?otin#( servin# on a jury( bein# a police officer( teacher( or
probation officer
c.=nly rational basis for Con#ressional discrimination a#ainst aliens
i. Con#ress has plenary power to re#ulate alients
d. Intermediate scrutiny a#ainst undocumented children
B. *iscrimination a#ainst non0marital children
a.Intermediate scrutiny used
b. Laws that deny benefit specifically to non0marital children are
unconstitutional
E. 8ational basis review for all other types of discrimination
a.A#e
!@23$
b. *isability
c.:ealth
d. .conomic re#ulations
e."e/ual orientation
F. Fundamental ri#hts protected under equal protection
a.The ri#ht to travel
i. Laws that prevent people from movin# into a state must beet
strict scrutiny
ii. *urational residency requirements must meet strict scrutiny
(A For votin#( @$ days ma/
iii. 8estrictions on forei#n travel & only rational basis
b. The ri#ht to vote
i. Laws that deny some citi4ens the ri#ht to vote must meet strict
scrutiny
(A %oll ta/es are unconstitutional
(6 %roperty ownership requirements are almost never
allowed (only once in water district election
ii. =ne person( one vote & for all state and local elections
iii. At0lar#e elections are constitutional unless proof of
discriminatory purpose
iv.The use of race in drawin# election district lines & strict scrutiny
v. Countin# uncounted votes without standards in presidential
election violates equal protection
c.There is no fundamental ri#ht to education
?III. The !st A
A. Free speech methodolo#y
!. Content0based vs. content0neutral restrictions
a.Content0based & strict scrutiny( #enerally( two types5
i. subject0matter
ii. viewpoint
b. Content0neutral laws & intermediate scrutiny( #enerally
3. %rior restraint & a judicial or administrative order that stops
speech before it be#ins
a.7a# orders on the press to prevent prejudicial pre0trial publications
are not allowed
!B23$
b. Court orders suppressin# speech must meet strict scrutiny.
%rocedurally proper C.=.+s must be complied with until they are
vacated and overturned
i. If violate C.=.( then barred from challen#in# constitutionality
c.The #overnment can require a license for speech only if important
reason and clear criteria leavin# almost no discretion to licensin#
authority
i. %rocedural safe#uards & prompt determinations and judicial
review
-. ?a#ueness and overbreadth
a.?a#ueness & a reasonable person cannot tell what speech is
prohibited and what is allowed
b. =verbreadth & if re#ulates substantially more speech than
constitutionally allowed
c.Fi#htin# words laws & va#ue and overbroad (even thou#h fi#htin#
words not protected by !st A
;. "ymbolic speech & the #overnment can re#ulate conduct that
communicates if is has an important interest unrelated to suppression
of the messa#e and if the impact on communications is no #reater than
necessary to achieve the #overnment+s purpose
a.Fla# burnin# is Constitutionally protected speech
b. *raft card burnin# is not
c.,ude dances & non1 cross0burnin# and swasti'a paintin# is
d. Cross0burnin#2swasti'a paintin#
i. 7overnment may punish destruction of other+s property
ii. or when cross0burnin# used as a threat
e.%unishment enhancements for hate motivated crimes are
constitutional
f. Contribution limits in election campai#ns are constitutional1
e/penditure limits are not (Hchec' currentness
@. Anonymous speech is protected
a.*on+t have to disclose identity to be ablet o spea'
6. :hat speech is unprotected or less protected by the !st AD
!. Incitement of ille#al activity & if substantial li'elihood of
imminent ille#ality and if speech is so directed
!E23$
3. =bscenity and se/ually0oriented speech
a.The test
i. 9aterial must appeal to prurient interest (shameful or morbid
interest in se/ & local or communicate standard
ii. %atently offensive
iii. Lac'in# serious redeemin# artistic( literary( political( or
scientific value (on a national scale
b. The #overnment may use 4onin# ordinances to re#ulate the
location of adult boo'stores and movie theaters
c.Child porno#raphy & can be completely banned even if not obscene
i. 9ust be actual children (not virtual or adult loo'0ali'es
d. The #overnment may not punish private possession of obscene
materials (e/cept child porno#raphy
e.The #overnment may sei4e the assets of businesses convicted of
violatin# obscenity laws
f. %rofane and indecent speech #enerally protected by !st A
i. ./ception & broadcast media
(A It is uniquely intrusive in the home
(6 Applies to public broadcast( but not cable which people
voluntarily brin# into their homes
(! ./ception & in schools
-. Commercial speech
a.False and deceptive ads not protected by !st A
b. True commercial speech that inherently ris's deception can be
prohibited
i. The #overnment may prevent professional from practicin# or
advertisin# under a trade name (i.e. bad doctors who chan#e their
name
ii. 7overnment may prohibit attorney in0person solicitation of
clients for profit
(A ,ot free representation
(6 Letter is o'
iii. 7overnment may not prohibit accountants from doin# the
same
c.=ther commercial speech can be re#ulated if intermediate scrutiny
!F23$
is met
d. ,arrowly tailored but not least restrictive
;. *efamation
a.If %l. is public official runnin# for office or a public fi#ure( %l. can
recover for defamation by provin# falsity of the statement and
actual malice (*ef. 'new false or acted with rec'less disre#ard
i. %ublic fi#ures are those who thrust themselves into the limeli#ht
b. If %l. is a <private fi#ure< and the matter is of <public concern(<
that state may allow the %l. to recover compensatory dama#es for
defamation by provin# falsity and ne#li#ence by *ef.
i. Aowever( the %l. may recover presumed (automatic dama#es &
preset by law or punitive dama#es only by showin# actual
malice
c.If %l. is <private fi#ure< and <private concern< then presumed or
punitive dama#es without showin# actual malice
@. %rivacy
a.The #overnment may not create liability for truthful reportin# of
information that was lawfully obtained from the #overnment
i. ..#. 0 can+t punish reporter for publishin# name of rape victim
obtained throu#h public court records
b. Liability is not allow if media broadcasts a tape of an ille#ally
intercepted call if media didn+t participate in ille#ality and it
involves matter of public importance
c.7overnment may limit its dissemination of information to protect
privacy
i. ,othin# requires that the #overnment turn info over the the press
(what about FIAD (%ublic and press only have ri#ht to attend
criminal trials
B. =ther #overnment restrictions based on content of speech must
meet strict scrutiny
C. :hat places are available for speech
!. %ublic forums & #overnment properties that #overnment is
required to ma'e available for speech (sidewal's( par's( etc
a.8e#ulations must be subject matter and viewpoint neutral
(otherwise strict scrutiny
!G23$
b. 8e#ulations must be a time( place( or manner re#ulation that
serve an important #overnment purpose and leaves open alternative
places for communication
c.7overnment re#ulation of public forums need no use least
restrictive alternative
d. City officials cannot have discretion to permit fees for public
demonstrations
3. Limited (desi#nated public forums & #overnment properties that
the #overnment could close to speech
a../ & school (#enerally( non0public that opens doors to community
in the evenin#
b. 8ules are the same as for public forum
-. ,on0public forums & #overnment properties that #overnment
constitutionally can and do close to speech
a.7overnment may re#ulate speech in non0public forum so lon# as
the re#ulation is reasonable (meets rational basis test and viewpoint
neutral (need not be subject0matter neutral
i. ./
(A 9ilitary bases (even parts usually open to the public(
(6 Areas outside prisons or jails
(C Advertisin# space on city buses
(* "idewal's on post office property
(. Airports
(! 7overnment may prohibit solicitation of money but not
distribution of literature (fails 86 test
(F Candidate debates sponsored by #overnment0owned
stations
;. There is no !st A ri#ht of access to private property for speech
purposes
a.%rivately0owned shoppin# centers( etc
*. Freedom of association
!. Laws that prohibit or punish #roup membership must meet "". To
punish someone it must be proven that
3$23$
Torts:
I. Intentional Torts:
A.Two overview observations:
1. The hypersensitivity of the Pl. does not count in determining if Pl. has
a claim.
a. Always analyze as if dealing with a person of average sensitivity.
2. There are no incapacity defenses for intentional torts even a child can
commit a tort!.
". Intent:
1. An element of all of the intentional torts.
2. #ef. must have acted deliberately or on purpose with the desire to
produce the forbidden result.
$. %even intentional torts:
1. "attery:
a. &lements:
i. 'armful or offensive contact(
A! offensive ) in analysis* can substitute the word
+unpermitted*, bearing in mind we are spea-ing of a
reasonably sensitive person e.g. ) tapping on shoulder would
not be offensive( stro-ing someone.s hair would be!.
ii. with the Pl..s person.
A! /ot limited to s-in and flesh( includes anything connected
to the Pl. purse* suitcase* dog on lease!.
2. Assault:
a. &lements:
i. #ef. places Pl. in apprehension(
A! +apprehension, ) means -nowledge or awareness not
fear!
"! Always analyze from the point of view of the Pl. thus
even if gun is unloaded* still an assault!.
ii. of an immediate battery.
A! 0ords alone lac- the necessary immediacy thus mere
words not an assault!.
"! /eed threatening physical conduct
1122
1! &.g. 3 #ef. displays a firearm* waives fist* etc
$! &ven where there is threatening conduct* accompanying
words may neutralize the immediacy.
1! conditional words ) negate threatening conduct e.g. )
+I.ve you weren.t my best friend....4while waiving a baseball
bat5.,
2! 0ords in the future tense* not an assault.
6. 7alse Imprisonment:
a. &lements:
i. Act of restraint(
A! Threats can be an act of restraint.
"! An omission can be an act of restraint if had a Pl.
previous obligation to assist Pl..s movement.
1! &.g. ) criminal sentence for 68 days* on day 61* sheriff
won.t let the criminal out( flight crew purposefully leaves a
wheelchair person on plane.
$! 9nly counts if Pl. -nows about it or is harmed by it.
ii. $onfinement in a bounded area.
A! :eeping someone out of a place is not confinement in a
bounded area.
"! An area is not bounded if there is a reasonable means of
escape that Pl. could reasonably discover.
;. Intentional Infliction of &motional #istress:
a. Intent ) can be satisfied by rec-less behavior as well as deliberate.
b. &lements:
i. 9utrageous behavior(
A! <ere insults w1o any plus factors! are never outrageous.
"! 7our hallmar-s of outrageousness plus factors!:
1! 0hen conduct is in public rather than private.
2! 0hen conduct is continuous or repetitive.
6! 0hen #ef. is a common carrier or inn-eeper.
;! 0hen Pl. is a member of a fragile class of persons:
a! 7ragile classes: children( elderly( pregnant women
$! It is outrageous to target someone.s psychological
Achilles heel.
2122
1! Thus an act that normally would not be considered
outrageous may be considered outrageous if #ef. -new
about Pl.s phobia in advance.
ii. %evere emotional distress.
A! /ot mildly annoyed.
c. /= ) in /= there is a separate cause of action for intentional
mishandling of a corpse.
>. Trespass to ?and:
a. intent ) only need intent to get to challenged location on purpose
b. &lements:
i. Act of physical invasion(
A! Two methods:
1! can enter the property on foot* vehicle* etc.!.
2! Propelling physical ob@ects onto the land.
"! A non3physical invasion shining light on neighbor.s
property( playing loud music! is not a trespass.
ii. ?and.
A! Pl.As interest in tort is not limited to surface of Pl.As
property* it includes the air above and soil below out to a
reasonable distance!.
1! Thus throwing a ball over a neighbor.s property would
be trespass* while a plane flying high overhead would not
be.
2. Trespass to $hattels and $onversion:
a. "oth remedy interference with chattels everything you own eBcept
land and buildings!.
i. 0ays to interfere:
A! damage to chattels vandalism!.
1! e.g. ) slashing tires
"! depriving you of possession of chattels theft!
b. These two torts are private remedies for theft and vandalism.
i. Trespass to chattels ) if amount of interference with chattel is
relatively slight.
ii. $onversion 3 if amount of interference with chattel is eBtensive.
A! $onversion gets special remedy of full mar-et value of
6122
the chattel.
"! A mista-e to ownership of the property is not an eBcuse to
conversion.
#.Affirmative #efenses to Intentional Torts:
1. $onsent ) a defense to all intentional torts
a. 9nly a person with capacity can give a valid consent.
i. &.g. ) a drun- can.t say +go ahead and hit me.,
b. Types of consent:
i. &Bpress consent ) literally +words, allowing #ef. to behave in
the challenged fashion.
A! eBception ) not valid if given under circumstances of
fraud or duress.
1! fraud eBample ) one night stand( give someone an
%T#( consent to have seB is not the reCuisite consent to
acCuire an %T#.
ii. implied consent:
A! $an come into play through custom and usage.
1! If Pl. goes into a place or is engaging in an activity
where certain invasions are customary playing sports(
subway at rush hour!* implied consent.
"! There can also be an implied consent based on #ef..s
reasonable interpretation of Pl..s observable conduct e.g. ) Pl.
circumstances ma-e it appear that it was o- to try to -iss her!.
1! Pl..s sub@ective mental though processes are irrelevant.
c. $onsent always has a scope* and #ef. is liable if he eBceeds that
scope.
2. The Protective Privileges:
a. Includes three defenses:
i. %elf3defense(
ii. #efense of other persons(
iii. #efense of property.
b. To invo-e a protective privilege* Pl. must prove two things:
i. Proper timing(
A! A demonstration that the threat to which you are
responding is in progress or imminent.
;122
ii. A reasonable belief that the threat is genuine.
A! /eed not be accurate* @ust reasonable.
c. $an only use the force necessary under the circumstances.
i. &Bcessive force will sub@ect #ef. to tort liability.
ii. 0hat.s eBcessiveD ) a rule of symmetry
iii. #eadly force ) allowable to preserve human life
A! /= distinction ) duty to retreat before using deadly force.
1! &Bception:
a! /o duty to retreat in your own home.
b! Police officers do not have a duty to retreat.
d. /o deadly force is allowed spring traps* etc.! to protect personal
property only.
6. /ecessity ) only a defense to the property torts trespass to land*
trespass to chattels( conversion!.
a. Public necessity ) eBists when #ef. invades Pl..s property land*
building or chattels! in an emergency to protect the community as a
whole or a significant group of people.
i. #ef. has absolute defense ) no liability.
b. Private necessity ) arises when #ef. interferes with Pl..s property in
an emergency to protect an interest of his own.
i. A limited defense: 6 conseCuences
A! Private necessity #ef. has to pay for actual damage
caused.
1! e.g. 3 # has to ma-e emergency landing( lands in P.s
corn field( destroys corn( #ef. must pay for corn.
2! #ef. never pays nominal or punitive damages.
a! e.g. 3 # goes hi-ing( chased by bear on P.s property(
# hides in shed( P sues for trespass no actual damages( P
won.t get nominal or punitive damages!.
6! %o long as emergency continues* P property owner may
not throw #ef. off his land during emergency #ef. has a of
sanctuary!.
a! e.g. ) same as above eBcept bear waits outside shed
for #( if P forces # to leave and # is in@ured by bear* P
must pay damages to #.
>122
II. Tort of #efamation:
A.Three elements traditional common law definition!:
1. #ef. made a defamatory statement specifically identifying the Pl.
a. $an be written or oral( formal or informal.
b. #efamatory ) if adversely effects the Pl.s reputation causes others
to thin- less highly of Pl. re: good traits!.
i. A mere name calling declaration is generally not defamation.
ii. /eed an alleged statement of fact e.g. ) E embezzled F!.
iii. 9pinions can be defamatory depends on the conteBt* tone
and purpose!.
c. $an only defame a living person.
2. Publication:
a. GeCuires that statement be made to one person other than Pl. can.t
hurt reputation by saying only to Pl.!
6. #amages maybe!:
a. ?ibel damages are presumed! ) any situation where defamation is
permanent.
b. %lander per se damages are presumed! ) a spo-en statement that
falls into one of four itemized categories
i. A statement concerning Pl..s business or profession.
ii. A statement accusing the Pl. of a serious crime.
iii. A statement imputing unchastity to a woman.
iv.A statement by the #ef. that the Pl. suffers from a loathsome
disease.
A! Two loathsome diseases:
1! ?eprosy(
2! Henereal #isease H#!(
v. imputation of homoseBuality is also slander per se.
;. Any party suing for slander not per se* is the only defamation that Pl.
must show damages.
a. <ental distress or social in@ury is not enough to get to the @ury.
b. /= ) Gules for #amage
i. ?oo- at damages rule in outline.
". Affirmative #efenses:
1. $onsent(
2122
2. Truth ) by demonstrating that the words spo-en or written are
factually accurate.
6. Privileges:
a. Absolute privileges 2!:
i. &Bists for communications between married persons ) there is an
absolute privilege for spouses to communicate thus can never
commit slander by saying something about a third3 party to your
spouse!(
ii. Iiven to officers of all 6 branched of gov.t engaged in their
official duty ) with regard to the @udiciary* includes lawyers(
things said in court cannot be the basis of a defamation claim.
b. Jualified privilege:
i. Arises when we have a socially valuable occasion for speech
letter of recommendation* credit report is issued( other occasions
where we want to encourage candor!.
ii. $an.t be liable for defamation:
A! if limit yourself to relevant material* and
"! you spea- in good faith.
III. 7irst Amendment #efamation a separate tort!:
A.Two word test ) public concern
1. If the sub@ect matter at issue deals with something of public concern*
the only available cause of action is first amendment defamation.
". &lements:
1. Three above K two eBtra elements:
a. Pl. must prove falsity(
b. Pl. must prove fault relates to awareness ormental state concerning
the falsity!.
i. If Pl. is a public figure 3 must demonstrate that #ef. -new or
was rec-less with regard to the truth
ii. if Pl. is a private figure 3 sufficient to show that #ef. was
negligent.
A! $an be a private figure re: a matter of public concern.
IH. Privacy Torts:
A.Appropriation ) the use of Pl..s name or picture for commercial purposes
1. &.g. ) put Tiger 0oods picture on cereal boB w1o his permission T0
L122
can get in@unction and damages!.
2. /ewsworthy eBception ) %ports Illustrated* etc. can put T0 on cover
with T0.s permission
6. /= ) this is the only privacy tort that eBists in /=.
". Intrusion 3 the invasion of the Pl..s seclusion by means ob@ectionable to
an average person.
1. &.g. ) wiretapping* secret video surveillance* eavesdropping* peeping
2. will only prevail if Pl. in a secluded place.
6. $an commit intrusion w1o trespassing e.g. 3 peering through a
telescope!.
$. 7alse light ) consists of the widespread dissemination of a ma@or
misrepresentation about the Pl. that would be ob@ectionable to the
average person.
1. 0idespread dissemination reCuirement distinguishing this from the
publication reCuirement of defamation.
2. The representation can be defamatory or non3 defamatory.
a. &Bample of defamatory ) +P is embezzling money.,
b. &Bample of non3defamatory ) +P is a devout $atholic*, when in
reality P is a practicing Mew.
i. %ame for mischaracterization of political beliefs.
6. An honest mista-e is no defense.
#.#isclosure ) the widespread dissemination of confidential information
about the Pl. that would be ob@ectionable to the average person..
1. Nnli-e defamation and false light* this information is truthful.
2. &.g. ) someone discloses your academic record* accounting records*
medical information.
6. /ewsworthy eBception ) applies here as well e.g. ) o- to publish
#ic- $haney.s medical records!
;. #ual life fact pattern )when Pl. operates in two spheres* both public*
but tries to -eep them separate( no liability for spreading information
from one sphere to the other.
a. &.g. ) P is gay* he is out to his friends and in gay community* but
not out at wor-( co3wor-er discovers that P is gay* tells everyone at
wor-.
>. Affirmative defenses:
O122
a. $onsent(
i. #efense to all four privacy torts.
b. Privileges see above!.
i. #efenses to false light and disclosure.
H. &conomic Torts:
A.7raud:
1. 7ive elements:
a. #ef. ma-es an affirmative misstatement in connection with a
commercial transaction silence can.t be fraud!.
b. scienter intent! ) #ef. must -now that statement is false(
c. #ef. must intend to induce reliance statement must be important to
the transaction!.
d. @ustifiable reliance ) Pl. must use the information as a component in
the decision3ma-ing process.
i. It is @ustifiable to rely on the #ef..s opinion if #ef. has superior
info or -nowledge re: the sub@ect matter of the statement.
e. #amages.
". Intentional Infliction of Pecuniary 'arm prima facie tort!:
1. #eliberately economically harming someone in a way that doesn.t fall
into any other tort category.
2. &lements:
a. Intent to do economic harm(
b. Gesulting harm.
6. &.g. ) deliberately selling products below cost to put a commercial
rival out of business.
$. Inducing a breach of contract:
1. #ef. interferes with contract between two other people.
2. 7our elements:
a. There must be a valid contract not terminable at will.
b. #ef. must have -nowledge of the contract.
c. #ef. must then persuade a party to abandon the contract.
d. A subseCuent breach.
6. #efense:
a. privilege 3 if you stand in some -ind of advisory relationship with
the breaching party.
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i. Includes parents* lawyers* accountants* spiritual advisors.
#.Theft of a trade secret:
1. Two elements:
a. There must be a valid trade secret.
i. Three attributes of a valid trade secret:
A! Pl. has some information that provides it with a business
advantage.
"! Information is not generally -nown.
$! 9wner of information must ta-e reasonable measures to
-eep it a secret.
b. #ef. must ta-e the secret by improper means:
i. two alternative scenarios that constitute improper means:
A! the traitorous insider ) #ef. initially learned of the secret
appropriately and with the consent of owner* but uses the
information for his advantage.
"! the industrial spy ) the unethical outsider who learns the
secret inappropriately.
2. Gemedy ) in@unction
HI. /egligence:
A.7our elements:
1. #uty(
2. "reach(
6. $ausation(
;. #amages(
". #uty:
1. To whom do you owe a duty an obligation to ta-e precautions!D
a. =ou owe a duty to foreseeable victims.
i. unforeseeable victims always lose negligence claims those
outside the zone of danger!
A! Two eBceptions:
1! Gescuers ) rescuers are always owed a duty
2! 7etuses:
a! 0hen #ef. causes an impact on the body of the
mother* the fetus will have a cause of action if born with
in@uries if dies in utero ) no cause of action!.
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b! <edical malpractice ) doctor misreads tests results
and says child will be fine* but child is born with birth
defects can recover costs of caring for child* but nothing
for mental anguish!.
c! If doctor botches sterilization procedure* no recovery
against doctor if have child.
2. 'ow much of a duty do you oweD
a. Ieneral duty in negligence cases
i. =ou must be as careful as a hypothetical reasonably prudent
person acting under similar circumstances an ob@ective
standard!.
A! &ven a person with a mental defect must meet the
reasonably prudent person standard even if that level may be
unobtainable for that person!.
"! &Bceptions:
1! If #ef. has superior -nowledge* the standard becomes
+a reasonable prudent person with the that superior
-nowledge.,
a! &ven a stupid person can have superior -nowledge
e.g. ) # -nows that stop light is bro-en!.
2! 0e will incorporate physical characteristics of the #ef.
if they are relevant.
a! &.g. ) if #ef. is blind* and the blindness is relevant*
we will as- how a reasonably prudent blind person would
have acted under the circumstances.
b. 9ther standards:
i. 7or children:
A! $hildren under four are incapable of negligence.
"! $hildren four and over are held to the care of a
hypothetical child of similar age* eBperience and intelligence
very sub@ective ) thus difficult to hold children liable for
negligence!.
1! &Bception ) when a child engages in an adult activity
operates something with a motor!* held to a reasonable
person standard.
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ii. 7or professionals:
A! Professionals provide services to the public and have
special s-ills and training often licensed!.
1! &.g. ) accountants* architects* lawyers* doctors
"! standard ) professionals owe the standard of care that is
given by average members of that profession practicing in
similar communities an empirical standard ) a test of
conformity( custom is the standard of care!.
1! similar communities ) big city doctors /=* $hicago*
etc.! owe a similar duty of care( rural doctors owe a similar
duty of care.
2! Pl.As in malpractice cases generally need an eBpert to
establish what the standard of care is.
$! #octors:
1! In addition to above duty* a doctor has a duty to eBplain
the ris-s of a medical procedure to a patient informed
consent!.
a! 7our eBceptions:
i!If the ris- is commonly -nown infection!.
ii! If patient declines the information.
iii! If patient is incompetent.
iv! If disclosure would be harmful to the patient.
iii. #uty owed by occupants of land to entrants:
A! 9ccupant may be but is not always the owner.
"! To determine duty* must answer two CuestionsD
1! 0hat is the cause of the in@uryD
a! %ome entrants will get hurt by activities carried out
on the land.
i!e.g. ) entrant in@ured by harvesting eCuipment on farm.
I
b! 9ther entrants will get hurt b1c of dangerous
conditions on the land.
i!e.g. ) shelf at supermar-et collapses* cans fall* you are
in@ured.
2! 0hat is Pl..s legal status on the landD
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a! undiscovered trespasser ) no permission to come on
land and occupier doesn.t -now that they are there.
i!standard for activities ) no duty owed
ii! standard for dangerous condition ) no duty owed
iii! Nndiscovered trespassers always lose.
b! discovered trespasser ) includes not only trespassers
that the occupant -nows about* but anticipated trespassers
as well.
i!Trespassers can change their status from undiscovered
to discovered in the middle of a fact pattern.
ii! standard for activities 3 reasonable prudence under
similar circumstances regular negligence standard!.
iii! standard for dangerous conditions ) four part test
9nly a duty if the conditional is artificial in nature
construed by humans!(
$ondition must be highly3dangerous can cause
severe in@ury or death!(
$ondition must be concealed from the Pl.3entrant(
and
The occupier -new about the condition in advance of
the in@ury.
in sum ) occupier must protect discovered trespasser
from -nown man3made deathtraps on the land.
c! ?icensee ) social guests
i!standard for activities 3 reasonable prudence under
similar circumstances regular negligence standard!.
ii! standard for dangerous conditions 3 must protect
from any condition:
that is hidden from the licensee( and
the condition is one that the occupier -new about in
advance
in sum ) occupier must protect the licensee from all
-nown traps on the land.
d! Public Invitees ) people who enter land that in
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generally open to the public.
i!People that visit supermar-ets* etc. includes going to
office building where need to show credentials!.
ii! standard for activities 3reasonable prudence under
similar circumstances regular negligence standard!.
iii! standard for dangerous conditions ) must protect
from those conditions:
that are concealed( and
occupier -new about the condition in advance or
should have discovered through a reasonable
inspection.
in sum ) occupier must protect invitee from all
reasonably -nowable traps on the land.
e! 7ootnotes:
i!7irefighters and Police officers ) can never recover for
an in@ury that is an inherent ris- of their @ob.
ii! $hild trespassers ) a child trespasser in@ured by an
artificial condition is owed a higher duty of care
regular negligence standard!.
0ould a reasonably prudent person eBpect that child
would enter the landD
If so* must ta-e reasonable steps to protect the
children that which a reasonable person in similar
circumstances would ta-e!.
iii! If an occupier owes entrant a duty of care
concerning a dangerous condition* there are two ways
to satisfy that duty:
7iB the problem(
Iive a warning e.g. ) warning sign: +wet floor,!.
iv.7or Automobile #river.s in /=:
A! /o37ault Insurance:
1! In some accident cases* we are going to ignore ordinary
negligent rules and tell people simply to loo- to their own
insurance companies.
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a! 7or people free from fault* this eliminates the need to
meet the burden of proof but limits recovery!.
b! People who in@ure themselves and are at fault still
can recover under no3fault.
2! /= ma-es automobile insurance mandatory liability
insurance and no3fault coverage!.
6! The no3fault scheme in /= only applies to personal
in@uries.
;! 0ho has claim to the no3fault insurance after an
accidentD
a! the owner of an insured vehicle(
b! any authorized driver of an insured vehicle(
c! any authorized passenger of an insured vehicle(
d! any pedestrian hit by the insured vehicle.
>! 0ho can.t claim under no3faultD
a! drug drivers(
b! car thieves(
c! drag racers(
d! fleeing felons.
2! 0hen can you get out of the no3fault framewor-D
a! If you suffer more than basic economic loss or
serious in@ury then can litigate!.
i!basic economic loss 3 F>8*888 over the course of a year*
in summing:
medical eBpenses(
O8Q of earning 4up to F28881month5(
F2>1day miscellaneous eBpenses.
ii! serious in@ury ) death( disfigurement(
dismemberment( serious fracture( or permanent or total
loss of a bodily organ or function.
b! /o3fault insurance recovery never includes pain or
suffering this is why people want to get out from under
no fault!.
L! /o3fault insurance travels with you.
v. %tatutory %tandard of $are:
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A! borrows a statutory reCuirement to provide the Pl.
reCuisite standard of care.
1! To do so:
a! Pl. must establish that he falls within the class of
persons that the statute see-s to protect( and
b! Pl. must establish that the accident is in the class of
harm that the statute see-s to prevent.
2! &Bample ) Pl. falls down elevator shaft( Pl. finds
statute that says that anyone repairing an elevator must put
yellow tape on the elevator door or is sub@ect to a F>88 fine.
a! %ince this meets the two3part test* the statute can be
borrowed. Thus when the Pl. sues the elevator repair
company* the #ef. is negligent per se thus #ef. can.t
argue that he was reasonable under the circumstances!.
6! Two cases when can.t you don.t borrow statute even if
two3 part test is met!:
a! 0here compliance is more dangerous than the
violation.
i!&.g. ) driver.s swerves to avoid child* crosses yellow
line* hits other car( statute says must stay on own side
of road don.t borrow statute 3 analyze under
reasonable person standard!.
b! 0here compliance is impossible.
i!&.g. ) # rolled through stop sign( statute says must stop
at stop sign( # rolled through stop sign b1c he had heart
attac- don.t borrow statute ) analyze under reasonable
person standard: did he ta-e has warning signs* etc.!.
6. Affirmative #uties to Act ) there are none
a. &.g. 3 when drive* must drive as a reasonably prudent person* but
you don.t have to drive.
b. Thus you have no duty to rescue.
i. &Bceptions:
A! If put the Pl. in the peril in the first place* there is a duty
to rescue.
"! If there is a pre3eBisting relationship between the parties.
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1! 0hat type of relationship not eBclusive list!D
a! 7amily member not limited to blood relatives!(
b! $ommon carrier1inn-eeper and customer(
c! ?and occupier and invitees
ii. 9nce you have a duty to rescue* you must rescue as a reasonably
prudent person don.t have to ris- own life!.
iii. If you choose to rescue even w1o a duty!* and you mess up*
you could be liable you have to rescue as a reasonably prudent
person!.
A! %ome states have Iood %amaritan statutes to prevent such
liability.
"! /= ) Iood %amaritan statute only applies to those with
professional training doctors* nurses* and veterinarians!.
;. /egligent Infliction of &motional #istress:
a. #ef..s negligent act does not leave Pl. with physical in@uries* but
leaves mentally distressed.
b. Pl. can get damages if:
i. Pl. was in a zone of danger Pl. was almost in@ured by the
negligent conduct!( and
A! e.g. ) almost hit by a car
ii. there are subseCuent physical manifestations of the distress.
A! e.g. ) heart attac-* miscarriage* rash
"! This element insures against fraud.
c. %econd theory of recovery:
i. "ystander theory ) see-s recovery for the emotion of grief as
opposed to fright above!.
A! Pl. witness an in@ury on a family member.
"! /= ) the distressed person must also be in the zone of
danger.
1! Thus can recover for own fright* and grief when family
member was in@ured.
2! &.g. ) parent is standing neBt to child* who is hit by a
car.
d. /= duty footnotes:
i. ?and occupiers ) /= does not calibrate the duty owed based on
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the categories mentioned above.
A! 9nly must act as a reasonably prudent person under the
circumstances.
"! 'owever* in determining how a reasonably prudent
person would act under the circumstances* the circumstances
include what type of an entrant we are dealing with.
ii. /= case ) attempted rape( assailant tries to drag women into
building( building door faulty.
A! $ourt ) don.t owe duty to passersby to -eep door in good
repair.
iii. /= case ) subcontractor did not owe duty to motorist whose
in@uries were eBacerbated by subcontractor.s negligence he only
owed a duty to perform under the contract!.
$. "reach:
1. "reach is the point where the Pl. points out eBactly what the #ef. did
wrong.
2. &ssay tip ) +'ere* the #ef. was unreasonable in that he.....,
6. Ges Ipsa ?oCuitor:
a. If Pl. can.t tell us eBactly what #ef. did wrong can.t fill in the
blan- above!* he must turn to the doctrine of res ipsa loCuitor.
i. Pl. must show that the accident that occurred is of the type that
does not normally occur in the absence of negligence.
ii. Pl. must also show that the #ef. being sued was probably the
negligent party #ef. must be in eBclusive control!.
b. If Pl. satisfies the two prongs* he gets to the @ury.
#.$ausation:
1. 7actual causation ) Pl. must demonstrate a cause and effect lin-age
between the breach and the ultimate damage.
a. +but for, test ) but for the carelessness of the #ef.* Pl. would be free
from in@ury today.
i. +"ut for, test not used in two specific multiple situations:
A! <ultiple Pl.s and mingled causation ) A and " go
camping separately!( A fails to eBtinguish his campfire( " fails
to eBtinguish his campfire( "oth fires become forest fires( the
combined fires destroy P.s house. P sues A and ".
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1! +"ut for, test doesn.t wor- well b1c each could argue
that if they put out their fire* the other fire would have still
have burned down the house.
2! Instead use substantial factor test with respect to each
did each contribute is a substantial wayD!.
a! If yes* both are @ointly liable.
"! Nnascertainable $ause ) hunting accident( one hunter
shot when other two fired at the same time( it is
unascertainable to -now who actually shot the hunter.
1! This is problematic: Pl. can.t show that any one of the
other hunters shot him by preponderance of the evidence
most li-ely than not!.
2! Thus burden of proof is shifted to #ef. each must show
that it was not his bullet!.
a! If neither can meet this burden* both s are @ointly Pl.
liable.
2. ?egal causation ) Pl. must show that liability is fair under the
circumstances.
a. ?iability is not always fair.
i. &.g. ) M gets vasectomy* doctors botches procedure( M has baby
boy( at age L* the boy burns down the neighbor.s house( neighbor
sues the doctor( it does not seem fair for that doctor to pay
damages to that neighbor.
b. Test ) it is fair to ma-e people pay for the foreseeable conseCuences
of there carelessness.
c. 'ow testedD
i. #irect cause fact pattern ) #ef. acts( Pl. immediately suffers
in@ury almost always a legal cause ) unless seems ridiculous!.
ii. Indirect cause fact pattern ) #ef. commits the breach( time
passes( something else happens( then Pl. suffers the harm.
A! 7our well3settled cases where liable!: Pl.
1! Intervening medical negligence ) Pl. suffers a bro-en
leg when #ef. runs a red light( doctor puts on cast too tight(
leg has to be amputated def. liable for the amputation!.
2! Intervening negligent rescue ) Pl. suffers a bro-en leg
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when #ef. runs a red light( rescuer negligently dislocates
Pl.As shoulder is liable for both in@uries!.
6! Intervening reaction3protection forces 3 Pl. suffers a
bro-en leg when #ef. runs a red light( other pedestrians
stampede to get out of the way( one steps on the Pl. #ef. is
liable for both in@uries!.
;! %ubseCuent disease or accident ) Pl. suffers a bro-en
leg when #ef. runs a red light( Pl. put on crutches( Pl. falls
the neBt day when trying to use the crutches and brea-s his
arm #ef. is liable for both in@uries!.
"! Analysis when the case doesn.t fall into the four situations
above:
1! ?oo- at the breach* and as- yourself +what is it about
this conduct that causes me to label the #ef. negligent in the
first place what were you afraid of!D,
2! Then loo- at the what happened and see if there is a
match.
&. #amages:
1. 7or <ultistate:
a. eggshell s-ull doctrine ) a rule about the scope of recoverable
damages.
i. If the #ef. has committed all of the other elements of a tort* that
#ef* pays for all harm suffered by the no matter how great.
A! 1. e.g. ) you accidentally cut the Pl. but he is a
hemophiliac and dies.#ef. has to pay for the .s death.
"! This applies to all torts* not @ust negligence.
2. 7or /=:
a. /= has abandoned the collateral source rule rule that says we
ignore payments from other sources in calculating damages.
b. In /=* damage award will be reduced by the money you receive
from your own insurance company* etc.
7. &Cuitable Gemedies:
1. In@unctions:
a. Issue ) when can Pl. in a tort claim get an in@unction for a tortD
i. 7irst must have a tort.
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ii. 9nce there.s a tort* Pl. must show:
A! There is no adeCuate remedy at law money would be
inadeCuate!.
1! 0hen might money be inadeCuateD
a! #ef. has no money.
b! the harm is impossible to measure in monetary terms
good is one of a -ind ) #ef. is threatening to commit
conversion and destroy it!
c! $onduct is repetitive.
"! A protectable interest in the sub@ect3matter of the tort.
1! e.g. ) someone encroaching on your land( someone
threatening to reveal a trade secret( someone threats to
invade your privacy.
2! This reCuirement has been reduced to a mere formality.
$! In@unction must be enforceable.
1! &asy with negative in@unctions preventing #ef. from
doing something!
2! Positive in@unctions forcing #ef. to do something!:
a! The more compleB the conduct* the harder it will be
to enforce the conduct* and the more nervous a court will
be about issuing an in@unction.
b! The longer the time necessary for the tas-* the more
nervous a court will be about issuing an in@unction.
c! 'arder to enforce if the conduct is going to ta-e
place outside /=.
#! the balance of hardships tips in the Pl..s favor. P
1! The benefit to the Pl. outweighs the burden on the #ef.
b. #efenses to in@unctions:
i. Pl. has unclean hands. Pl.
ii. ?aches unreasonable delay! ) Pl. has been so tardy is see-ing an
in@unction and the #ef. has incurred eBpenses such that it is no
longer fair to issue an in@unction.
iii. 1st Amendment ) prior restraints
c. Preliminary in@unction 3 issued at the beginning of a trial to
maintain the status Cuo
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i. Pl must show:
A! a li-elihood of success on the merits(
"! he would suffer irreparable in@ury if the in@unction is not
given.
I.Affirmative defenses to negligence:
1. $omparative fault:
a. Pl. failed to eBercise the proper degree of care for his own safety
i. e.g. 3 Pl. was hit by a drun-3driver but was @aywal-ing.
b. Mury will have to ma-e a comparative weighing and come up with
percentage numbers that will reduce the Pl.As damages.
c. This is the scheme in the ma@ority of states.
d. Two schemes:
i. pure comparative fault ) always go strictly by numbers even if
the Pl. is more at fault than the #ef.
A! This is the default rule on the multistate.
"! This is the /= rule.
ii. modified partial! comparative negligence ) Pl..s fault of more
than >8Q is an absolute bar on recovery.
'.$ounterclaims:
1. 0e will get one allocation of fault* but then apply the numbers to their
separate damages numbers.
I. %trict ?iability:
1. In@uries caused by animals:
a. #omesticated animals ) general rule is that you are not strictly
liable for your dog can be liable on a negligence theory!.
i. eBception ) if you have -nowledge that you dog has vicious
propensities* you are strictly liable.
A! =ou have -nowledge if your dog has bitten someone
before.
"! $an be liable on negligence theory for the first bite.
ii. Trespassing cattle ) owner of the cattle is strictly liable.
iii. 0ild animals ) if you -eep wild animals* strict liability.
2. Nltrahazardous Activities:
a. Three criteria for an ultrahazardous activity:
i. It can.t be made safe given eBisting technology(
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ii. &Bposes a severe ris- of harm(
iii. The activity is uncommon in the community where it is
being conducted.
b. &Bamples:
i. &Bplosives(
ii. #angerous chemicals or biological agents(
iii. /uclear energy or radiation not B3rays* etc.!
c. A party engaged in an ultrahazardous activity is strictly liable
safety precautions are irrelevant!.
6. Tort of /uisance:
a. Involves inconsistent land uses when one landowner annoys
another by way he uses his property!.
i. #ef. is liable for a nuisance if .s activity interfere with Pl..s
ability toPl. use or en@oy his land to an unreasonable degree a
strict liability tort ) +unreasonable, here means to an eBcessive
degree!.
;. Product3related in@uries:
a. 0hen a party is in@ured by a defective product* he li-ely has many
claims negligence* breach of warranty* fraud* etc.!.
i. Analyze a Cuestion based on the theory that the Pl. sues on.Pl.
b. Three -ey elements for strict liability claim:
i. #ef. is a merchant someone who routinely deals in goods of that
type!.
A! $asual sellers are not merchants.
"! %ervice providers are not merchants of items incidental to
the service.
$! The commercial lessor is a merchant e.g. ) rental car
company!.
#! #ef. need not be party with whom Pl. dealt directly can
be asserted against people remote in the distribution chain ) no
reCuirement of privity of contract!.
ii. Pl. must show that the product is defective.
A! 2 types of defects:
1! manufacturing defect ) eBists when the item that hurt
the Pl. differs from all the others that came off the same
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assembly line in a way that ma-es it more dangerous than
you would eBpect safety precautions are irrelevant!.
2! design defect ) eBists when there is another way to
construct the product and that hypothetical alternative
design meets three tests:
a! it would be safer than the version mar-eted(
b! it would be cost3effective(
c! it is practical doesn.t ma-e the product difficult to
use or defeat the purpose of the product!.
d! Product Information is also considered part of a
product.s design:
i!Instructions(
ii! 0arnings(
If sell without a warning* could ma-e design
defective if would ma-e safer!.
/ot all warnings are eCual some are more
conspicuous than others!.
iii. Pl. was ma-ing a foreseeable use of the product.
A! A misuse may be entirely foreseeable and thus not defeat
recovery!.
1! e.g. ) standing on a chair to get someone off a shelf is
foreseeable.
>. %trict ?iability #efenses:
a. $omparative fault principles also apply to strict liability claims see
above!.
HII. Hicarious ?iability:
A.Hictim sues party other than tortfeasor b1c of that party.s relationship
with the tortfeasor.
1. Gelationships:
a. &mployer1employee ) an employer is liable for the torts of the
employee if they are made in the scope of employment.
i. %cope of employment:
A! 7rolic or detour distinction ) minor departures mere
detours! do not ta-e you outside of the scope of employment.
2. Intentional torts ) generally an employer is not liable for the
2;122
intentional torts of the employee.
a. $an come bac- into the scope of employment if foreseeable or
designed to serve the boss.s purpose e.g. ) bouncers!.
b. 'iring party1independent contractor ) general rule is no vicarious
liability
i. eBception ) a land occupier is vicariously liable if an independent
contractor hurts an invitee.
c. Automobile owner1authorized driver ) an automobile owner is not
liable for the torts of a driver.
i. eBception ) if owner lends car so driver can do an errand for him.
ii. If give -eys to drun- driver* not vicariously liable* but liable for
negligent entrustment.
iii. /= distinction ) the owner of the car is always vicariously
liable if the driver gets in an accident permissive use doctrine!.
iv.There is a presumption that anyone driving an owner.s car does
so with the owner.s permission owner must prove otherwise!.
d. Parents1children ) parents are not liable for the torts of their
children.
i. /= ) statutory liable for parents but liability amount is very low.
ii. "e careful: leaves a gun out
e. In /= a bar owner is liable for torts committed by a customer that is
served alcohol unlawfully not vicarious liability b1c negligent to
serve!.
i. 0hen unlawful:
A! serving minors(
"! serving intoBicated person.
HIII. 0or-ers $ompensation:
A.A statutory insurance scheme serving as the eBclusive remedy for
wor-ers who get in@ured on the @ob.
1. &mployee does have to prove any fault* but can.t bring a tort claim
against the employer.
2. /o pain and suffering or punitive damages.
6. 0ho is coveredD
a. &mployees* not independent contractors.
i. Three types of employees outside wor-er.s comp. scheme:
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A! Teachers and other non3manual laborers at non3 profit
organizations(
"! Part3time domestic employees or household servants(
$! $lergy.
;. Ienerally can claim for any @ob related in@ury
a. /9T:
i. If in@ury is solely due to employee.s intoBication(
ii. If employee intentionally in@ures himself or others(
iii. If in@ury occurs in a voluntary out3of3wor- athletic activity
b. Illegal Acts 3 will be covered if in@ury doing these illegal acts
c. 'orseplay ) can go either way depends on how closely3related to
wor-!
>. 0hat do you getD
a. <edical eBpenses(
b. 216 of wee-ly wages
c. if die* funeral eBpenses and a lump sum death benefit(
2. 0or-ers comp supplants claim against the boss* but employee is free
to sue anybody else.
IE. Moint Tortfeasors:
A.$omparative $ontribution ) if one @oint tortfeasor pays in full* Pl. can
get percentage contribution from a @oint tortfeasor based on that
tortfeasor comparative fault.
1. A vicariously liable party gets full reimbursement from the tortfeasor
indemnification!.
2. A non3manufacturer held strictly liable for a defective product can get
full indemnification from the manufacturer.
E.?oss of $onsortium:
A.0henever a married person is the victim of a tort* the non3in@ured spouse
has a separate cause of action against the tortfeasor to recover for three
causes of action:
1. ?oss of services(
2. ?oss of society my closest companion is no longer with me!(
6. ?oss of seB.
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