Unico v. Owen
Supreme Court of New Jersey
232 A.2d 405 (1967)
On November 6, 1952, James Owen (Owen) (defendant) agreed to purchase 140 records from Universal Stereo Corporation (Universal) for $698. Owen was to pay monthly installments and signed a promissory note to that effect. The signed promissory note was immediately assigned to Unico (plaintiff). This was a typical practice for Universal because Unico was specifically created to finance Universal. Unico participated in setting the standards of the sales agreements between Universal and prospective purchasers. After signing the sales agreement with Universal, Owen paid the monthly installments for 12 months until Universal stopped delivering records. In July 1964, Unico informed Owen that Unico held Owen’s promissory note and Owen was to pay Unico regardless of Universal’s failure to deliver the records. Owen refused and Unico sued. The trial court held that because of Unico’s extension participation in creating the sales agreement between Universal and Owen, Unico was not a holder in due course and subject to Owen’s defenses. The court of appeals affirmed. Unico appealed.
Rule of Law
Holding and Reasoning (Francis, J.)