Korea Export Insurance Corp. v. Audiobahn, Inc.
California Court of Appeal
67 U.C.C. Rep. Serv. 2d 339 (2008)
Mega Power, Inc. (Mega) agreed to ship goods from Korea to Audiobahn, Inc. (defendant), a corporation in the United States. To finance these shipments, Mega sold bills of exchange, underwritten by Korea Export Insurance Corporation (KEIC) (plaintiff) to Kookmin Bank (Kookmin). Mega also assigned its rights under its sales agreement with Audiobahn to Kookmin. The bills of exchange named Kookmin as payee and were payable following acceptance of the bills of exchange by Audiobahn. Audiobahn accepted the bills of exchange but failed to pay Kookmin or Mega, originally because of cash-flow difficulties and subsequently because of offsetting amounts allegedly owed by Mega to Audiobahn from prior disputes. KEIC, as the underwriter of the bills of exchange, paid Kookmin the amount Kookmin was owed pursuant to the bills of exchange. KEIC, invoking its subrogation and assignment rights, then sued Audiobahn to recover the amount KEIC paid Kookmin. The trial court found that Kookmin was a holder in due course (HDC) of the bills of exchange and that KEIC, as subrogee, stood in Kookmin’s shoes in terms of the right to be paid by Audiobahn. The trial court also found, however, that the letters of assignment between Mega and KEIC required KEIC to promptly notify Audiobahn of the assignment, even though Mega was contractually obligated to give that notice while KEIC simply had the option to do so. Neither Mega nor KEIC notified Audiobahn of the assignment. The trial court held that providing that notice was a condition subsequent to KEIC’s maintaining its HDC status and entered judgment for Audiobahn because the condition was not met. KEIC appealed.
Rule of Law
Holding and Reasoning (Aronson, 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 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead 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.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 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.