Brown v. AVEMCO Investment Corp.
United States Court of Appeals, Ninth Circuit
603 F.2d 1367 (1979)
On September 22, 1972, Robert Herriford obtained a loan from AVEMCO Investment Corp. (AVEMCO) (defendant). As security for the loan, Herriford agreed to grant AVEMCO an interest in an airplane. The security agreement between Herriford and AVEMCO stated that if Herriford sold, leased, transferred, mortgaged, or otherwise encumbered the interest in the airplane at any time, the full amount of the loan would immediately become due to AVEMCO. On July 4, 1973, Herriford entered into a lease and option agreement with Brown (plaintiff) and two others (plaintiffs). Under the agreement, Brown agreed to pay hourly rentals to Herriford for the plane and to make additional payments toward reducing Herriford’s debt to AVEMCO. The agreement also stated that upon full payment of Herriford’s mortgage with AVEMCO, Brown and the other plaintiffs would have the option to purchase the plane. On July 9, 1975, Brown and the other plaintiffs tendered the entire remaining balance on Herriford’s mortgage to AVEMCO. Brown informed AVEMCO that he and the other plaintiffs were exercising their option to purchase the plane. AVEMCO refused to accept Brown’s offer and informed Herriford that it was accelerating the payments on Herriford’s loan. AVEMCO stated that because Herriford leased the plane to Brown, the entire amount of Herriford’s loan plus interest and an insurance fee ($5,078.97 total) was immediately due to AVEMCO. On July 25, 1975, Brown and the other plaintiffs informed AVEMCO that they did not accept AVEMCO’s rejection of their offer to purchase the plane. On July 29, 1975, AVEMCO repossessed the plane from Herriford. On September 22, 1975, AVEMCO sold the plane to another party for $7,000. Brown and the other plaintiffs filed an action for conversion in federal district court against AVEMCO. At trial, the district court refused to instruct the jury that acceleration by AVEMCO could only be done if AVEMCO believed in good faith that its security interest in the plane was impaired by Herriford’s breach of the security agreement. The jury returned a verdict for AVEMCO, and Brown and the other plaintiffs appealed.
Rule of Law
Holding and Reasoning (Ferguson, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 166,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 13,800 briefs, keyed to 187 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.