The Court finds that Las Vegas Sands was a holder in due course. Arguello, District Judge Facts:

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“The Court finds that Las Vegas Sands was a holder in due course.” —Arguello, District Judge 

Facts: Ron Bryant wanted money to obtain promotional premiums from the Venetian Resort Hotel Casino located in Las Vegas, Nevada. The Venetian is owned by Las Vegas Sands, LLC (Sands). James Berwick agreed to supply the funds to Bryant in return for a promise by Bryant to repay Berwick the next day. On October 29, 2008, Berwick purchased a cashier’s check (check) in the amount of $250,000 from Bank of Colorado made payable to Ron Bryant. Thus, Bank of Colorado held $250,000 of Berwick’s money until the check was presented for payment, at which time it would pay the check. Berwick transferred the check to Bryant. The next day, October 30, Bryant presented the check to the Sands, who paid him the $250,000 value of the check. On the following day, October 31, Bryant did not repay Berwick the $250,000. On November 3, unbeknownst to the Sands, Berwick stopped payment on the check, alleging to Bank of Colorado that the check had been lost. Berwick knew that the check had not been lost. Berwick filed a police report with the Las Vegas Metro Police Department stating that Bryant had misappropriated the $250,000. On November 8 the Sands deposited the check at its bank, but when the check was presented to the Bank of Colorado for payment it refused to pay the check because of Berwick’s stop payment order. In a lawsuit in the U.S. district court, both Berwick and the Sands claimed the right to be paid the funds. The Bank of Colorado agreed to hold the funds until the court determined to whom the funds should be paid. The Sands alleged that it was a holder in due course and that Bryant’s fraud upon Berwick was fraud in the inducement, a personal defense that could not be raised against an HDC. Berwick claimed that he was due the funds because of his stop payment order. 

Issue: Is Sands an HDC against whom the personal defense of fraud in the inducement cannot be raised? 

Language of the Court: The Court finds that Las Vegas Sands was a holder in due course. The Court finds that Las Vegas Sands is entitled to the amount of the check because it received the check in good faith and for value, without knowledge of Bryant’s alleged fraudulent scheme against Berwick. Therefore, the loss must fall on Berwick; his recourse is against Bryant, who defrauded him. 

Decision: The court held that Las Vegas Sands was a holder in due course and that Bryant’s fraud upon Berwick was fraud in the inducement, a personal defense that could not be raised against an HDC. 

Ethics Questions: Did Bryant act ethically? Did Berwick act ethically in trying to place his loss on the Sands?

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