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Thursday Morning July 29, 1999 Essay Questions 1 - 6
TEXAS BAR EXAMINATION COPYRIGHT © 1999 TEXAS BOARD OF LAW EXAMINERS THIS MATERIAL, OR ANY PORTION HEREOF, MAY NOT BE REPRINTED WITHOUT THE ADVANCE WRITTEN PERMISSION OF THE TEXAS BOARD OF LAW EXAMINERS
ANSWER
QUESTIONS 1 AND 2 IN THE GOLDENROD
ANSWER BOOK
QUESTION 1
In 1997, Ray, a 78-year old Texas
resident who was in declining physical and mental health, executed a valid Power
of Attorney for Health Care and a valid Designation of Guardian Before Need
Arises. The documents named his wife, Cleo, as the person designated to make
health care decisions for him should he become unable to do so and the person
designated to serve as guardian of his person and his estate should the need
arise. In 1999, Cleo filed for divorce
from Ray. The divorce action, including Cleo's disputed claims for division of
the marital property, is still pending. Over the last year, Ray's behavior
has become increasingly erratic. Recently, it has reached the point where it is
undisputed that a legal guardian needs to be appointed to care for him and his
estate. Ray has only one child, Joe. Joe
is serving a 15-year sentence in a Texas penitentiary for sexual assault. Ray has one living sibling, Mary,
who lives in Kansas. Mary owes Ray a balance of $30,000 on a $50,000 home loan
Ray made to her 10 years ago. Ray and Mary are the life
beneficiaries of a valid testamentary trust created by their deceased brother.
The deceased brother's widow, Tara, is the trustee. The trust instrument gives
Tara the power, "in her sole discretion, to pay to the beneficiaries such
amounts of trust income as are necessary for their support." Until a year ago, Tara made
semi-annual income distributions to Ray and Mary. She continues to make such
payments to Mary, but in the last year she has made no payments directly to Ray.
Instead, Tara has used trust income to pay directly to the mortgage lender the
payments on Ray's home and directly to the cook/housekeeper wages earned in
working for Ray. Tara has also reimbursed her 27-year old daughter, Nancy, who
is Ray's niece and lives just a few blocks from Ray, for payments Nancy has made
for Ray's utilities, prescriptions, and groceries. Tara has also used trust
income to purchase a prepaid funeral expenses plan for Ray's benefit. A. If Cleo, Joe, Mary, and Nancy
each seek to be appointed the guardian of Ray and his estate, which among them
would the court most likely appoint and why, and for what reasons would the
court not appoint each of the others? Discuss fully. B. Did Tara have authority as
trustee to make each of the above described payments from trust income for Ray's
benefit? Discuss fully.
Downtown Motors, Inc. ("DMI")
placed a newspaper ad offering to sell to the public certain cars specifically
identified in the ad as "best quality used cars." Responding to the
ad, Pat went to DMI's sales lot. DMI's salesperson, Sara, showed Pat several of
the used cars identified in the ad. Pat test drove one of them and decided to
buy it. He paid $12,000 for it, which was the average retail price for cars of
that year, make, and model listed in the N.A.D.A. Official
Used Car Guide, the industry standard. Sara knew at the time of the sale
that the car purchased by Pat had been involved in a collision, that DMI had
bought it damaged and rebuilt it before placing it on the lot for sale, and
that, as a result, the market value of the car was only one-half of that listed
in the N.A.D.A. Guide. Sara, however, did not mention these facts to Pat. Later,
Pat received his title document, which he placed without further inspection in a
drawer with other important papers. After using the car for eight
months, Pat attempted to trade it in on a new car. He noticed for the first time
a notation on the title document that the car had been "rebuilt after
collision." This meant that the fair market value of the car was only
$3,000. But for the notation on the title document, the car would have had a
trade-in value of $6,000. Upon learning these facts, Pat
became extremely upset. He suffered elevated blood pressure, insomnia, and
depression, for which he is receiving medical treatment and psychological
counseling. To date, his medical and counseling expenses have been $3,500. A. Did DMI's conduct violate the
Deceptive Trade Practices-Consumer Protection Act (the "Act") and, if
so, what particular violation(s) occurred? Discuss fully. B. What, if any, statutory
prerequisites must Pat satisfy before he can sue DMI for damages under the Act?
Discuss fully. C. What types of damages and other
recovery, and in what amounts, may Pat seek under the Act? Discuss fully.
ANSWER
QUESTIONS 3 AND 4 IN THE GREY
ANSWER BOOK
On May 30, 1999, Fred Jones made a
promissory note in the amount of $3,000 payable to the order of his 12-year old
nephew, Billy Blake, as a reward for having made all A's on his report card. He
delivered the note to Billy on the same day. The note stated that it was due and
payable on or before July 8, 1999. On June 1, 1999, Tim Thomas agreed
to pay and Billy agreed to accept $2,000 for the promissory note. On that date,
Billy wrote on the back of the note, "Pay to the Order of Tim Thomas, Billy
Blake" and delivered the note to Tim. Tim paid Billy $1,000 and said he
would pay the other $1,000 in a few days. Tim failed to pay Billy anything
further. Billy told Fred that he had sold the note to Tim and that Tim still
owed him the remaining $1,000. On July 8, 1999, Tim presented the
note to Fred and demanded payment of $3,000. Fred refused to pay any amount. A. May Fred successfully assert as
defenses against Tim that he is not obligated to pay Tim the $3,000 or any part
of it because: (i) Billy is a minor? Discuss
fully. (ii) Tim failed to pay Billy the
remaining $1,000 he promised to pay? Discuss fully. B. What rights, if any, does Billy
have against Tim? Discuss fully. QUESTION
4 On February 1, Don Sanders
purchased on credit from Video Hut, Inc. a video recorder that Sanders intended
to use on his vacation. The cash price was $2,250. Sanders signed an installment
credit agreement that added $750 in finance charges, making the total purchase
price $3,000. Sanders agreed to pay the purchase price in 15 monthly
installments of $200 each, commencing on March 1. The installment credit agreement
conveyed to Video Hut a valid security interest in the video recorder to secure
payment of the purchase price. Video Hut properly perfected the security
interest and filed a financing statement in all appropriate places. After making the first two
payments, Sanders defaulted by failing to make the payment due on May 1. On May
18, a representative of Video Hut called Sanders by telephone to inquire about
the default. Sanders told him, "I can't make the payments, I'm washing my
hands of the entire matter, and I don't want to have anything more to do with
Video Hut." On May 19, Sanders returned the recorder to Video Hut. Video Hut advertised a public sale
of repossessed merchandise, including the video recorder returned by Sanders, to
be held on May 30. On May 28, Video Hut sent to Sanders, properly addressed and
by regular mail, a written notice that the video recorder would be put up for
public sale at the time and place of the advertised sale on May 30. Because of
an error by the Post Office, the notice never reached Sanders and was returned
to Video Hut marked, "Address Unknown - No Forwarding Address." On May 30, Jim Mitchell, a buyer
who had no prior relationship to Video Hut and had no notice of any possible
defect in the sale, attended the public sale and purchased the video recorder
for $1,450. The price paid by Mitchell was the fair market value of the video
recorder on the date of the sale. On July 1, Video Hut sued Sanders
for $500, the deficiency due on the installment credit agreement after crediting
the proceeds of the sale to Mitchell and the unearned finance charges. A. What, if any, rights does
Sanders have against Mitchell? Discuss fully. B. Does Sanders have any right to
recover damages against Video Hut in the deficiency action and, if so, in what
amount? Discuss fully. Answer
the next two questions in the BLUE answer book ANSWER
QUESTIONS 5 AND 6 IN THE BLUE
ANSWER BOOK Jim Jones, age 71, and his wife,
Wendy, age 70, were married in 1960. They have one child, Sam, age 30, and one
grandchild, Trey. Jim has interests in the following
property: 1. An 800 acre Texas ranch, valued
at $700,000, title to which is in Jim's name alone and was acquired in 1970 with
money earned by Jim during marriage; 2. The family home in Jim's name,
where Jim and Wendy reside in Austin, Texas, which, together with the furniture
and contents, are valued at $200,000 and were inherited by Jim from his parents
in 1975; 3. A joint savings account
containing $200,000 which Jim inherited from his parents in 1975, opened by Jim
in the names of "Jim Jones and Wendy Jones, as joint tenants with the right
of survivorship," with an account agreement signed by Jim but not by Wendy,
that provided, "On death of one party, all funds belong to the surviving
party as his/her separate property and estate;" and 4. A vacant lot valued at $400,000
and located in an adjoining state, acquired in 1990 and purchased in Jim's name
and paid for with the interest accumulated on the savings account mentioned
above. Jim is not in good health and does
not expect to live much longer. His stated goals are: to see to it that Wendy's
needs are taken care of for her lifetime, giving her the right to use or sell
the property as necessary; and to see to it that Sam receives whatever then
remains. He seeks your advice on the following questions: A. If he dies intestate and is
survived by Wendy, Sam and Trey, what interests, if any, will such survivors
have in the items of property enumerated above? Discuss fully. B. What testamentary instrument
would you recommend be prepared and that Jim consider executing and what
provisions should be included in it to achieve his stated goals? Discuss the
reasons, including any estate tax considerations, for your advice. In 1991, Ted Testator, a widower,
executed a will valid in Texas. The will provided as follows: 1. I leave my 100 shares of stock
in XYZ Company to my oldest son, Sam; 2. I leave my 400-acre ranch in
Harris County, Texas plus $40,000 cash to my youngest son, Bob; and 3. I leave all the rest and residue
of my property and estate, including any lapsed legacy, to my only daughter,
Sue. On May 10, 1999, Ted died in
Harris County, Texas while on a visit there. On May 13, 1999, Sam died in a
tragic accident, survived by his wife, Ginger, and two children, Courtney and
Wyatt. Courtney was born on May 9, one day before Ted's death. Sam's will left
his entire estate to his wife. Bob survives Ted and has one
child, Elizabeth, age 20. Sue also survives Ted; she has no children. At the time of Ted's death, he
owned the following property: (a) 200 shares of XYZ Company stock as a result of
a 2-for-1 stock split declared by XYZ in 1995; (b) $50,000 cash dividends that
had been paid on the XYZ stock and deposited in a bank account in Ted's name in
Harris County; (c) a $250,000 promissory note received as part of the sale price
of the Harris County ranch in 1997; and (d) his residential homestead in Dallas
County, which homestead is valued at $300,000. Ted's estate owes $100,000 in
debts and expenses. A. To whom should Ted's estate be
distributed, and what interests does each distributee take? Discuss fully. B. In what county should Ted's will
be probated? Explain your answer. C. From what property should the
estate's debts and expenses be paid? Discuss fully. D. If Bob disclaims rights to the
$40,000 cash bequest, who becomes entitled to receive the disclaimed $40,000?
Explain your answer. THIS
IS THE END OF QUESTION 6 AND THIS TESTING SESSION. |
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