Stafford Surety Co. agreed to act as the conditional guarantor of collection on a debt owed by Preston Decker to Cole. Stafford was paid a premium by Preston to serve as surety. Preston defaults on the obligation. What are Cole’s rights against Stafford Surety Co.?
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Stafford Surety Co. agreed to act as the conditional guarantor of collection on a debt owed by Preston Decker to Cole. Stafford was paid a premium by Preston to serve as surety. Preston defaults on the obligation. What are Cole’s rights against Stafford Surety Co.?
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- Holly Hill Acres, Ltd., executed and delivered a promissory note and a purchase money mortgage to Rogers and Blythe. The note provided that it was secured by a mortgage on certain real estate and that the terms of that mortgage “are by this reference made a part hereof.” Rogers and Blythe then assigned the note to Charter Bank, and the bank sought to foreclose on the note and mortgage. Holly Hill Acres refused to pay, claiming that the note was not negotiable and therefore subject to the defense that Holly Hill Acres had been defrauded by Rogers and Blythe. a. Present the position that the note is a negotiable instrument. b. What is the position that the note is nonnegotiable? c. Is the note negotiable or nonnegotiable? Explain.Debtholders receive note contracts, one for each note, that describe the payments promised by the issuer of the debt. In addition, the issuing corporation frequently enters a supplementary agreement, called a note indenture, with a trustee who represents the debtholders. The provisions or covenants of the indenture may place restrictions on the issuer for the benefit of the debtholders. For example, an indenture may require that the issuers debt to equity ratio never rise above a specified level or that periodic payments be made to the trustee who administers a sinking fund to provide for the retirement of debt. Consider Roswell Manufacturings debt indenture, which requires that Roswells debt to equity ratio never exceed 2:1. If Roswell violates this requirement, the debt indenture specifies very costly penalties, and if the violation continues, the entire debt issue must be retired at a disadvantageous price and refinanced. In recent years, Roswells ratio has averaged about 1.5:1 ($15 million in total liabilities and $10 million in total stockholders equity). However, Roswell has an opportunity to purchase one of its major competitors, Ashland Products. The acquisition will require $4.5 million in additional liabilities, but it will double Roswells net income. Roswell does not believe that a stock issue is feasible in the current environment. The Financial Accounting Standards Board issued a new standard concerning accounting for post employment benefits, which is strongly supported by the Securities and Exchange Commission. Implementation of the new standard will add about S2 million to Roswells long-term liabilities. Roswells CEO. Martha Cooper, has written a strong letter of objection to the FASB. The FASB received similar letters from over 300 companies. Required; 2. If you were a member of the FASB and met Martha Cooper at a professional meeting, how would you respond to her objection?Debtholders receive note contracts, one for each note, that describe the payments promised by the issuer of the debt. In addition, the issuing corporation frequently enters a supplementary agreement, callcd a note indenture, with a trustee who represents the debtholders. The provisions or covenants of the indenture may place restrictions on the issuer for the benefit of the debtholders. For example, an indenture may require that the issuers debt to equity ratio never rise above a specified level or that periodic payments be made to the trustee who administers a sinking fund to provide for the retirement of debt. Consider Roswell Manufacturings debt indenture, which requires that Roswells debt to equity ratio never exceed 2:1. If Roswell violates this requirement, the debt indenture specifies very costly penalties, and if the violation continues, the entire debt issue must be retired at a disadvantageous price and refinanced. In recent years, Roswells ratio has averaged about 1.5:1 ($15 million in total liabilities and $10 million in total stockholders equity). However, Roswell has an opportunity to purchase one of its major competitors, Ashland Products. The acquisition will require $4.5 million in additional liabilities, but it will double Roswells net income. Roswell does not believe that a stock issue is feasible in the current environment. The Financial Accounting Standards Board issued a new standard concerning accounting for post employment benefits, which is strongly supported by the Securities and Exchange Commission. Implementation of the new standard will add about S2 million to Roswells long-term liabilities. Roswells CEO. Martha Cooper, has written a strong letter of objection to the FASB. The FASB received similar letters from over 300 companies. Required; 1. Write a paragraph presenting an analysis of the impact of the new standard on Roswell Manufacturing.
- A lender whose mortgagor has defaulted may be offered a deed in lieu of foreclosure. If he accepts, which of the following will be TRUE? a. Because it is voluntary, it will not be an adverse item on the buyer's credit. b. The lender will take the title subject to any junior liens. c. The lender will usually retain his rights under mortgage insurance or VA guarantee. d. The loan will still be assumable.D obliged himself to allow C the use of his car until C passes the CPA Examination. This is an example of: a pure obligation an obligation with a suspensive condition an obligation with a resolutory condition an obligation with a suspensive periodThe debtor owes his creditor several debts, all of them due, to wit: (1) an unsecured debt; (2) a debt secured with mortgage of the debtor’s property; (3) a debt bearing interest; (4) a debt in which the debtor is solidarily liable with another. Partial payment was made by the debtor. Assuming that the debtor had not specified the debts to which the payment should be applied and, on the other hand, the creditor had not specified in the receipt he issued the application of payment, state the order in which the payment should be applied and your reason therefor.
- Suppose the obligation of the debtor is to do something and he fails to do it or performs it in contravention of the agreement, what are the the remedies available to the creditor?nayla received a bill of exchange for value from Ahmed who had obtained the intrunment fraudulently. Nayla fearing the bill might lapse, presented it for payment where upon, it was dishonoured. state with reasons whether nayla can claim to be a holder in due course.On January 1, 1999, A signs a promissory note and binds himself to pay X P100,000 plus 15% per annum interest on June 30, 1999. Before June 30, 1999, X can demand payment IF on June 30, 1999, A is paying X, X can refuse the payment Because the period is for the benefit of the debtor, A can compel the creditor X to accept payment any date before June 30, 1999. Because the period is for the benefit of the debtor and the creditor, X can refuse any rendered payment before June 30, 1999.
- I. A, B and C are solidary debtors of X and Y, solidary creditors, for P60,000. X makes a demand to A but the latter paid Y. In here, the obligation is not extinguished.II. A and B solidary debtors of X, Y and Z, solidary creditors. X demands payment from A, but B, upon whom no demand is made paid Z the entire obligation. In here, the obligation is totally extinguished. True;true true;false false;false false;trueIt refers to the right of mortgagor to redeem the mortgaged property after his default of the performance of his obligation by paying the secured obligation in order to prevent the public sale of his mortgaged property. a. Equity of redemption b. Right of redemption c. Right of preemption d. Equity of preemptionOne of the following is deductible as claim against the estate An obligation contracted by the decedent one day before he died An obligation of the decedent which prescribed while the decedent was still alive An obligation which was not reduced in writing under the Statutes of Fraud An obligation which shall be paid by the heirs.