Mennen v. J.P. Morgan & Co., Inc.

689 N.E.2d 869 (1997)

From our private database of 46,100+ case briefs, written and edited by humans—never with AI.

Mennen v. J.P. Morgan & Co., Inc.

New York Court of Appeals
689 N.E.2d 869 (1997)

SH

Facts

Mennen Medical, Inc. bought-out its shareholders (plaintiffs) in exchange for a note to each. Each note called for five equal annual disbursements and contained an acceleration clause to cover defaults. To secure the notes, Mennen obtained irrevocable letters of credit from J.P. Morgan & Co. (defendant) that called for prompt disbursement to plaintiffs after presentation of a draft accompanied by a notarized statement that the draw represented an unpaid note installment or that the outstanding balance was due as a consequence of default. Mennen paid the first two installments due under the notes, but Odyssey Partners, L.P., who had assumed Mennen’s obligations thereunder, defaulted on the third installment. The plaintiffs accelerated the notes and drew upon the maximum amount allowed under the letters of credit. Morgan promptly paid the respective draws to each of the plaintiffs. Several months later, however, Morgan discovered that the amounts it had paid exceeded the amounts due under the notes themselves and demanded reimbursement from the plaintiffs for such excess amounts. Morgan alleged misstatements of the amounts declared to have been owed in the notarized draw statements. On the other hand, the plaintiffs argued that the amounts allegedly paid in excess represented a premium negotiated at the time of purchase that was designed to compensate them for increased tax liabilities upon acceleration of the notes and for the loss of future interest. The plaintiffs sued for a declaration that their draws under the letters of credit were correct in amount and that Morgan had no separate rights against them. The lower court held against Morgan, concluding that it had violated the independence principle. Morgan appealed.

Rule of Law

Issue

Holding and Reasoning (Bellacosa, J.)

What to do next…

  1. 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 744,000 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
  2. 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 744,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,100 briefs, keyed to 987 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.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 744,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,100 briefs - keyed to 987 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership