320; AEM NBA 560 Business Law I Fall, 2006 Property and Agency Review Problems 1. Dave, a computer science professor at Cornell, used the inheritance he received from his uncle to buy the Colonial Building on the Commons in downtown Ithaca. He entered into an agreement with Ajax Construction Company to totally renovate the building, both inside and out. Ajax had submitted a bid to do the work after reviewing blueprints furnished to Dave by Design, Inc., a local architectural firm and visiting the site to look at the building. Unfortunately, the project did not proceed smoothly and Dave has some serious problems. a. In renovating the exterior of the building, Ajax set up scaffolding to allow its workers to reach the top floors to refinish the window frames and sandblast the stone. While two men were sandblasting the front of the building one morning, the scaffolding started to give way. One of the workmen dropped the equipment he was using in an effort to keep from falling himself and the piece of equipment fell and struck Patsy who was walking along the sidewalk below. Patsy is suing Ajax and Dave, alleging that they should have restricted a larger portion of the sidewalk area so that this type of accident would not occur. Assuming that Ajax is negligent, does Dave need to worry about liability? Why or why not? b. Part of Dave's contract with the architects provided that Design, Inc. would oversee the construction process to insure that the work was done well and in a timely fashion. Several weeks into the project, Dave learns from the supervising architect that he had been contacted by Ajax and told that in removing the existing ceilings in the building they discovered asbestoswrapped pipes that had to be completely replaced at significant additional cost in order to comply with state law. Without informing Dave, the architect had given Ajax permission to replace the piping. In addition, Dave learned that the supervising architect and Ajax's president are cousins. Furious, Dave wishes to fire Design, Inc., hold the firm responsible for the additional costs incurred on the job, and perhaps recover damages if he can prove there was some kind of misconduct in the bidding process that had been supervised by the architects. Please advise Dave as to whether he has an legal basis for action.
2.
Patsy and Paul went out for the evening in downtown Emerald City, first having dinner and then attending a jazz club. Paul parked his car in a lot owned by Dan that is down the street from the restaurant. Paul and Patsy were walking back to their car around midnight when they are attacked by four men. Paul was knocked unconscious in the parking lot next to his car and his wallet and car keys were taken and his car stolen. Patsy was struck several times and then dragged into an office building owned by Dan located next to the parking lot. The men took her into the basement of the building, assaulted her and stole her money and jewelry. Paul and Patsy have recovered from their injuries but the muggers have not been arrested and their property has not been recovered. They are suing Dan for negligence. Deposition testimony and interrogatory answers indicate the following: 1. Patrons pay to park in the lot during the day but not at night when it is accessible but there is no attendant on duty or security provided. 2. While no attacks in Dans parking lot or near his building have been reported to the police in the previous 12 months, there have been a dozen muggings reported in the general neighborhood in the last year. 3. The security system in Dans building was malfunctioning and that is the only reason why the muggers were able to get Patsy inside to complete the assault. Should Dan be liable to Patsy? Please explain the reason[s] for your conclusion.
3.
In 1990, Bob and Betty bought a parcel of land with Bettys parents, Joe and Jackie. The deed conveyed title using the following language: To Bob and Betty, his wife, and Joe and Jackie, his wife, to take as joint tenants with right of survivorship, among all four individuals. Jackie died early in 2001. For a variety of reasons not relevant to this problem, Joe has not been getting along well with Bob and Betty since his wifes death. He is now in the process of finishing up the details of settling Jackies estate, including changing title to property that she owned. Joe argues that he now owns 50% of the parcel that the couples bought together. He wants to sell the land and claim his share of the proceeds. Bob and Betty maintain that the three of them each have a 1/3 interest, and they do not want to sell the property at this time.
a. What argument[s] can Joe make is support of his position that he now owns 50% of the property? Do you agree or disagree? Please explain your reason[s] for reaching this conclusion. a.Can Joe force a sale of the property? Why or why not?
4. Sam and Jack own adjoining parcels of land in the Catskill Mountains. Jack is subdividing his property and building a handful of luxury homes. In order to provide water and sewer service to the new houses, Jack must cross Sam's parcel with his pipes and drains. Jack has acquired and paid for an easement from Sam to allow him to do this. Jack has hired Ajax Contractors to lay the pipes. In the course of excavating for the project, Fred, the backhoe operator, finds a dinosaur bone and several pottery shards estimated to be several thousand years old. These discoveries lead to a number of problems that require your advice. Sam, Jack, Ajax and Fred all claim rights to the bone and pottery fragments. Who has the superior claim? Please explain your reasoning.
5. Excited about the possibility of an extensive new bed of ancient artifacts [see (5), above], the state Historic Preservation Commission wishes to halt construction in the vicinity of the find and take title to the acre of land most likely to contain further fossils and artifacts. Can the Commission take these actions? Please explain why you reach the conclusion that you do.
6. Fred and Jane Hooper bought two adjoining lots in the Flower Hill Development. While there is no local zoning ordinance covering these lots, the Hooper's deed as those of all the other lot owners in the development contains the following provision: "No lot in the Flower Hill Development shall be used for any purpose other than for residential purposes." The Hoopers plans are to erect a house on one lot and on the other a substantial storage building to store their boats, cars, a tractor, a camper, a 32 foot travel trailer, a washer and dryer, and some rock-cutting equipment Fred uses in his business. The storage building would be designed to complement the appearance of the house but would not be attached to the house and, in fact, would be
more than 60 feet from it. Other lot owners have told the Hoopers that they oppose their planned construction of the storage building. a. b. Can the Hoopers' neighbors prevent their construction of the storage building? Explain your answer. Assume instead that the lots were subject to a local zoning ordinance that limited their use in exactly the same manner as the deed provision. How, if at all, would your answer to (a) change? Would the Hoopers be better or worse off as far as getting their proposed storage building erected? Explain your answer.
7. Disappointed by his sales figures for the last 2 quarters, Paul fires Andy, one of the salesmen working in his wholesale liquor business. Paul then sends an e-mail message to all of his customers letting them know that Dave will be handling their accounts in the future. Sheilas Restaurant is one of Pauls customers. Sheila is in the process of switching to Roadrunner so her e-mail isnt functioning and she does not get Pauls message. Andy stops by the restaurant, takes an order for several cases of wine and liquor and accepts the check that Sheila gives him to pay for last months liquor order. Andy takes the check, forges Pauls signature and disappears with the money. Paul sends Sheila a bill for last months liquor order and she reports that she gave the check to Andy. Since he has not been paid, Paul sues Sheila for the outstanding balance. Should Paul recover? Please briefly explain the reason[s] that you reach the conclusion that you do.
8. Phil hired Alex to manage his farm, giving him the title of General Manager of Farming Operations. Phil gave Alex express authority to purchase seed up to a maximum of $500 a year, to collect the monthly rental for a house located on the farm property, and to purchase a forty-acre tract, adjacent to the farm if it became available. Alex has vanished and Phil has now discovered: a. Alex contracted to purchase $600 worth of seed on Phil's behalf from the Supplier Seed Company. Discuss Phil's liability to supplier on the seed order. Alex absconded with the monthly rent for the house which he had collected from the tenant just before he disappeared.
b.
Discuss Phil's right to recover from the tenant of the house for the rental payment Alex took. c. Alex signed a contract to purchase the forty-acre tract but did not tell the owner he was purchasing it on Phil's behalf. Discuss Phil's rights and obligations on the contract Alex made for the purchase of the forty-acre tract.
9. Harold and David Brown (brothers) were conveyed a parcel of real property located in Ithaca, New York as co-owners by their father. Harold and David decided to sell the parcel and engaged Mary Smith as a real estate agent to find a purchaser for the parcel. Mary showed the parcel to Larry Green and shortly thereafter Larry presented Mary with a purchase offer to buy the parcel. Copies of the purchase offer were sent to both Harold and David. Two days later, a telegram was sent by Harold to both Mary and Larry reading "We accept your offer. Signed copies of purchase offer to follow by mail," signed Harold Brown. Two days later Harold Brown suddenly died. No signed purchase offers were ever received. a. b. David Brown claims that as the surviving co-owner, he is the sole owner of the parcel. Is he correct in this claim? David asserts that he never knew of Larry's offer until after Harold's death, never authorized Harold to act on his behalf to accept the offer, would not have accepted if it he had known about it, and thus is not bound to honor any alleged contractual commitment. Discuss David's and Larry's rights and obligations under these circumstances.
10. Kelly Green is a feature violinist in the orchestra of the Metropolitan Opera Company. On the evening of May 20, 1996, while appearing with the opera company at Bailey Hall, Kelly, during a break in the performance, wandered out behind Bailey Hall to smoke a cigarette. During her sojourn, she stumbled over a discarded soda can, fell and severely broke her ankle. a. Discuss the potential liability of the Metropolitan Opera Company (her employer) and Cornell University (the owner of Bailey Hall and the area where she fell) for the injuries she sustained.
b.
How, if at all, would your answer to (a) change if instead of falling Kelly had been robbed and severely beaten by an unknown assailant?
11.
John Doe owns the Tavern, a popular Ithaca bar. The place is so popular that John employs a "bouncer" to screen patrons as they enter to be sure that no intoxicated person is allowed inside and that the maximum occupancy for the premises set by the fire code is observed. The bouncer is also responsible for escorting intoxicated patrons from the premises when the bartender signals him that someone is annoying other customers.
John's long-time bouncer gives notice that he has been offered a pro football contract and John interviews a number of applicants before hiring Butch, a 25-year-old man with a college degree who says he is interested in the job to make extra money since he is taking courses toward his MBA during the day. Butch leaves his resume which includes three references, including his academic advisor and his last employer at an unspecified job. Everything goes exceedingly well at the Tavern for the first three weeks. One evening in the fourth week that Butch is on the job he loses his temper when a young lady ignores his request to stay outside as the bar is too crowded and he injures her when he drags her out into the street. He threatens to strike, and then punches, a young man on the sidewalk who has the bad luck to mention that Butch's conduct seems erratic. Butch is arrested by the Ithaca police and eventually pleads guilty to criminal assault. John Doe has been served with a complaint in two lawsuits, one by each of the people injured by Butch. Besides the facts leading to the plaintiffs' injuries, each complaint alleges that Butch was fired from his last job for missing work and that he quit school after admitting to cheating on an exam. What are the legal issues to be raised by the plaintiffs as the bases for their complaints? Please discuss briefly. 12. Bill purchased a newly-constructed home from Ajax Development Corp. in a new neighborhood outside of Ithaca. Bill originally learned of the development from Rose Realtor who arranged the sale between Bill and Ajax's real estate broker. A year after moving in, Bill and his neighbors have learned that just over the hill from their expensive new
homes lies a closed landfill suspected of containing toxic waste. Bill realizes that Ajax knew of the existence of the landfill at the time of the sale of his house. In addition, Rose knew it was there but she honestly believed it to be harmless. Bill would like to sue both Ajax and Rose for the diminution in market value of his house since the public disclosures about the possible toxic waste contamination in his neighborhood. a. What is the theory of recovery in an action involving Ajax? Please discuss briefly, indicating whether Bill is likely to succeed in such a lawsuit. b. What is the theory of recovery in a lawsuit against Rose? Please discuss briefly, indicating whether Bill is likely to recover damages against Rose. 13. In Voyeur Dorm, L.C. v. City of Tampa, the 11th Circuit reversed the District Court holding that Voyeur Dorm is an adult use business operating illegally in a Tampa residential neighborhood. Using the principles of property and zoning law covered in this course, please explain why the court reached this conclusion. Do not just recite the holding of the circuit court, please explain it.
14. John has a very successful retail business, selling pottery, jewelry and other handcrafts made by Ithaca artisans. Intrigued by the potential market available outside of Ithaca, John hired Nancy to help him develop a web page, design the advertising to appear there and develop a marketing strategy to reach as many new customers as possible. Nancy has an MBA from the Johnson School, with an undergraduate degree in computer science. She is also the mother of two young children who keep her very busy. Nancy works out of her home, using her own computer equipment, communicating regularly with John using e-mail and fax. She has spent approximately 20 hours a week over the last two months researching the internet market for handmade crafts, building a webpage with extensive links to related sites and designing a comprehensive set of advertising and marketing materials for John to review. They have met weekly at the store, usually for no more than an hour, so that John can approve the final ad layout as it is finished. John is paying Nancy $20 per hour for her time. She works when it is convenient for her, with the exception of the weekly meeting that
always occurs at the same time to accomodate Johns schedule. Nancy knows that when the webpage is up and the marketing plan in place, John will no longer need her services, but at this point neither party is sure exactly when that will be. On her way to meet with John last week, Nancy was struck by a drunk driver and severely injured. Is she entitled to collect benefits as an employee under Johns workers compensation policy?
15.
Sam is a salesman based in Ithaca whose territory includes western New York and northwestern Pennsylvania. After a breakfast meeting with his regional sales manager in Buffalo, Sam headed south to meet a customer in Jamestown. Driving down the highway, Sam saw a car stranded in the road with a woman trying to push it on to the shoulder. Realizing that there were two young children in the car, Sam stopped to help. Just as they pushed the car on to the shoulder of the road, Sam was struck by a car coming down the highway.
Sam survived the accident but was severely injured. He has just learned that his employers insurance company has opposed his application for workers compensation and the case is to be heard by the workers compensation board. Should Sam receive workers compensation for his injuries? Please explain why you reach the conclusion that you do?
16. The Harrisons purchased a newly constructed house on Cayuga Lake from Ajax Builders. Just after they moved in they encountered the following problems: a. Three months after the Harrisons moved in, a crack opened in one of the retaining walls across the backyard built of treated railroad ties and slate. Ajax, with the Harrisons' agreement, had constructed the retaining wall to help divert surface water away from the house in a rainstorm. It cost the Harrisons $2,000 to repair the wall. Can they recover this cost from Ajax Builders? Discuss briefly. When the Harrisons were considering purchasing the house they noticed it contained a large-screen television and VCR unit bricked into the fireplace wall of the family room, and a lighted,
b.
100-gallon aquarium mounted in the wall of the sunken living room. While the purchase agreement does not mention these items, the Harrisons thought they "went with the house." Finding them absent when they took possession, the Harrisons demand their return but Ajax refuses. Who has a superior claim to these items? Please explain why.
17.
Stan is selling his house; Rose is the selling broker who has shown the house to several potential buyers, including Betty. Betty is moving to Ithaca from California to work at Cornell. She has two young children and she is seriously interested in buying Stans house as both the house and its location are perfect for her family. Betty had the house inspected by an engineer and found no problems. She also asked Stan and Rose directly if there were any problems with the house that she should be concerned about. They both told her no.
Rose has come to you for advice. Both she and Stan are aware that the man who lives next door to the house has been convicted and has served jail time for sexually molesting children. Both Rose and Stan assume that if Betty knew this, she would not buy the house. a. b. Must Stan tell Betty about his neighbor? Please explain the reason for your conclusion. Must Rose tell Betty about the neighbor? Please explain the reason for your conclusion.
18. Since the early 1900's, the Emerald City Railroad has been the holder of the record title to a parcel of land along the east shore of Emerald Lake north of the city. This property is a narrow strip of land (20 to 30 feet wide at the most) several miles long which is situated between the scenic highway that circles the lake and the lake shore. Individuals who own residential property on the side of the highway away from the lake and others, such as boat owners, who own no adjacent property, have utilized portions of the railroads lakeside property for years. The railroad seeks your advice as to potential claims, rights, defenses, etc. that each of the following individuals might assert if it attempts to prevent them from continued use of its property.
a.
Sam has a summer cottage across the road from the lake. For years he has maintained and used a dock for fishing, swimming and mooring his boat on a portion of the disputed parcel across the road from his dwelling. Moreover, when a previous dock began to deteriorate, Sam replaced it and also then erected a light pole and a retaining wall along the lake shore so that he and his family could use the area more extensively. Tim owns a cottage down the road from Sam which he occupies during the summers and rents to EMC University students during the school year. Tim and his wife have planted trees along the lakefront on the property opposite their cottage and have cut the grass regularly during the summer.
b.
c. Dave for the past three summers has used Sam's dock, with Sam's permission, to moor his boat.