MEE Sample Questions

Jurisdictions selected six of the following questions for administration as the July 2001 Multistate Essay Examination.

Question 1

Principal is an antiques dealer. As is common in the antiques business, Principal acquires inventory by using a group of buyers to purchase antiques on his behalf. Principal pays the buyers a percentage commission on the items they buy for Principal. Principal trains the buyers to be able to evaluate potential purchases and sends them into the field with specific instructions as to the items Principal wants them to buy. The buyers are given credentials identifying them as buyers for Principal, and they use these credentials to introduce themselves to potential sellers. The buyers, using Principal's contract forms, enter into contracts with sellers.

Agent, one of Principal's buyers, was sent out to purchase antiques for Principal. During the next several months, the following three transactions took place:

Using Principal's credentials, Agent bought an antique church bell for $3,500 from Bellseller, who believed that Agent was acting on behalf of Principal. The church bell was on Principal's acquisition list and the price was within the range authorized by Principal. However, Agent did not intend to purchase the bell for Principal. Instead, Agent bought the bell for Greta, a competing antiques dealer, who had agreed to pay Agent $250 to find such a bell. Agent's intention was to use Greta's money to pay for the bell. Greta rejected the bell. Principal, who has received a demand from Bellseller, has decided he does not want the bell and has refused to pay Bellseller.

Agent had a written authorization from Principal to buy several books, including Looking Backward by Edward Bellamy. Agent showed this authorization to Tomeseller, who had a first edition of Looking Backward. However, Agent did not tell Tomeseller that Principal had given Agent an oral instruction, not to be disclosed to anyone, that Agent should not pay more than $8,000 for the book. Agent bought the book on Principal's behalf for $12,500. Principal now refuses to pay Tomeseller.

When Principal learned of Agent's transactions with Bellseller and Tomeseller, he decided to stop using Agent as his buyer. Principal sent Agent a letter terminating his agency and asking Agent to return the credentials that Principal had provided to Agent.

Several days after Agent received the letter from Principal, Agent purchased for his own account a whale oil lamp for $5,000 from Lampseller. Agent told Lampseller that the purchase was for Principal's account, showed Lampseller his credentials from Principal, and purchased the lamp using the contract forms provided to him by Principal. Agent did not disclose to Lampseller that Principal had terminated Agent as his buyer. Principal now refuses to pay Lampseller because, at the time of the purchase, Principal had terminated Agent and Agent was no longer Principal's buyer.

Is Principal liable to:

1. Bellseller for the purchase of the church bell? Explain.

2. Tomeseller for the purchase of the book? Explain.

3. Lampseller for the purchase of the whale oil lamp? Explain.

Question 2

Harry, a widower, and Wanda, residents of State A, decided to marry. Prior to the wedding ceremony, they signed a prenuptial agreement in which Wanda waived her right to receive alimony in the event of a divorce. The agreement further stated that "in consideration of this waiver, Harry shall establish an inter vivos trust of the first $1 million he inherits from his mother, with himself as trustee to pay the income to Wanda for life." They agreed that Harry was free to designate any person to take the trust property at Wanda's death.

Three years later, Harry's mother died, leaving her substantial estate to him. In addition to Harry, her only surviving relatives were Charles, who is Harry's child from his first marriage, and Mary and Pat, Harry's two nieces.

Two months after his mother died, Harry orally declared himself trustee of $1 million. In making this oral declaration Harry stated: "I will pay all trust income to my wife, Wanda, for her life and, when she dies, if I don't have any issue who survive me, then I or my successor should distribute the trust principal to my surviving nieces and nephews." Harry did not state who would succeed him as the trustee if he died prior to the termination of trust.

Harry died two months ago at his home in State A. Until his death, he faithfully paid the trust income to Wanda. Harry was survived by Wanda and by Charles, Mary, and Pat. One month after Harry died, Wanda, who had recently inherited substantial property from her father, disclaimed her income interest in the trust property.

Under the laws of State A, Wanda's disclaimer of her interest in the trust property is valid. In addition, under the intestacy laws of State A, any property distributable as part of Harry's probate estate passes one-third to Wanda and two-thirds to Charles.

1. Was Harry's promise in the prenuptial agreement to create a trust in the future for Wanda legally enforceable? Explain.

2. Was the trust Harry later created for Wanda validly created? Explain.

3. Assuming the trust for Wanda was validly created, did the trust terminate at Harry's death because there was then no trustee? Explain.

4. Assuming the trust for Wanda was validly created, what is the effect of her valid disclaimer, and should the trust principal be immediately distributed and, if so, to whom? Explain.

Question 3

Arcade, Inc. is in the business of selling pinball machines. Arcade needed funds to buy furniture for its showroom. On February 1, Arcade borrowed $10,000 from Bank and signed a valid financing statement, which stated that it covered all of Arcade's "inventory now owned or hereafter acquired." Bank neglected to obtain a signed security agreement from Arcade but properly filed the financing statement in the correct locations on February 12.

On June 1, Arcade borrowed $40,000 for working capital from Finance and signed a valid security agreement granting to Finance a security interest in its "inventory now owned or hereafter acquired." Also on June 1, Arcade signed financing statements, which properly described the collateral. On June 5, Finance filed proper financing statements in the correct locations.

On July 1, Bank realized that it had failed to obtain a security agreement from Arcade. On that date and at Bank's request, Arcade signed a valid security agreement, properly describing the collateral as "inventory now owned or hereafter acquired."

On August 20, Arcade purchased three pinball machines from Supplier on credit. The three machines were set aside in Supplier's warehouse and tagged "Sold to Arcade." Supplier took a security interest in the three pinball machines to secure payment of the purchase price. Also on August 20, Arcade signed both a valid security agreement covering the three pinball machines and valid financing statements. Supplier filed the financing statements in the correct locations on August 21 and sent proper notice of its security interest to Bank and Finance, both of whom received and read the notice by August 25. Arcade took possession of the machines on August 31 and placed them in its showroom for sale to customers.

On October 1, Oscar purchased a pinball machine from Arcade. This machine was one of the three machines that Arcade had purchased from Supplier. Oscar had no actual knowledge of any of the security interests held by Arcade's creditors.

Arcade defaulted on its loans to Bank and Finance and failed to pay Supplier. At the time of the default, Arcade's inventory consisted only of the two remaining pinball machines that had been previously purchased from Supplier. Bank, Finance, and Supplier are all claiming security interests in the two remaining pinball machines, as well as in the pinball machine purchased by Oscar.

1. What is the order of priority among Bank, Finance, and Supplier in their respective claims to a security interest in the two remaining pinball machines left in Arcade's inventory? Explain.

2. Can Bank, Finance, or Supplier successfully enforce a security interest in the pinball machine purchased by Oscar? Explain.

Question 4

On May 18, 1997, Testator duly executed a typewritten will in the presence of three witnesses.

The will contained only the following three paragraphs:

1. I give my watch to my brother, Ben.

2. I give my dining room table to my sister, Sarah.

3. I give the balance of my tangible personal property to the person named in a letter I signed and dated May 7, 1997, which I have placed in the desk in my home.

Testator died on January 2, 2000, a domiciliary of State A. The foregoing will was found in the desk in Testator's home. However, in paragraph 2 of the will, the phrase "dining room table" had been scratched out and immediately above it the word "automobile" was typed. And, on the back of the will, the following language appeared in Testator's handwriting: "I don't want Ben to have my watch. I want it to go to my first cousin, Chris." No signatures appeared on the back of the will beneath this writing.

The letter referred to in paragraph 3 of the will was found in the desk, and named Nicole, the daughter of Sarah, as the beneficiary.

Testator's only surviving blood relatives are Ben, Sarah, Chris, and Nicole. In addition to the watch, dining room table, and automobile, Testator left a $10,000 bank account.

State A permits wills to be completely or partially revoked by the execution of a subsequent will or codicil, by physical act or by cancellation, when accompanied by an intent to revoke. State A law also provides that "unsigned holographic wills or codicils are valid."

To whom should Testator's estate be distributed? Explain.

Question 5

Father and Mother divorced one year ago after a 14-year marriage. At the time of the divorce, Mother and Father lived in State A. They were both 39 years old, each had a college education, and they had two children, aged 10 and 12.

As part of the divorce decree, the court awarded custody of the two children to Mother. The court also ordered Father to pay Mother $2,000 per month in child support. In addition, the court ordered Father to pay Mother $500 per month in spousal support for five years. After their property was divided, they each ended up with $50,000 and a car.

Mother continued living in State A with the children. Mother had been working full time for $28,000 per year at a daycare center prior to the divorce. Five months after the divorce, she had a heart attack. This forced her to cut back to three-quarter-time work, resulting in a pay reduction to $21,000 per year. Her doctor recommends that she not resume full-time work, because full-time work and caring for the children and the home would be too stressful.

For the first six months after the divorce, Father paid Mother the full amount he owed; but, for the past six months, Father has paid Mother nothing. Three months ago, Father was terminated from his $100,000-per-year job because of company downsizing. He received a lump sum severance payment of $50,000. Father decided to move to State B, in part because he hoped he could avoid paying Mother and in part because the job prospects were better there. He transferred all his bank accounts to State B. Although he has had several interviews and his prospects are good for finding a job comparable to the one he had, he does not yet have another job.

Mother has brought an action in State B court to collect child support and spousal support from Father. She claims that the spousal support obligation should be increased to $1,000 per month because she is in poor health. She also asks that the spousal support be extended for an additional five years.

Father claims that the State A child support order is no longer effective and cannot be enforced because he has moved to State B. In the alternative, he claims that his child support obligation should be reduced from $2,000 to $1,000 per month because of his unemployment. In addition, he asks that this modification be made six months retroactive. Father also opposes any increase in his spousal support obligation.

Both State A and State B are in compliance with federal law concerning the enforcement of child support orders.

1. Is State B required to recognize the State A child support order? Explain.

2. Does the State B court have jurisdiction to modify Father's child support obligation? Explain.

3. Without regard to jurisdictional issues, how should a court rule on Father's requests to modify his child support obligation? Explain.

4. Without regard to jurisdictional issues, how should the State B court rule on Mother's request for an increase in and extension of the spousal support obligations? Explain.

Question 6

Singer was a famous musician. Agent was authorized to collect payment for all of Singer's performances. Agent had no rights in any of the payments due Singer.

In payment for a completed performance by Singer, Concert issued a $20,000 check drawn on Bank One. As instructed by Singer, Concert made the check payable to the order of "Agent, as agent for Singer," and delivered the check to Agent. On the memo line on the face of the check, Concert had written, "For Singer's June 19th performance."

Agent visited Bank Two, where both she and Singer maintained separate checking accounts. Agent's personal account, #12345, was overdrawn. Agent spoke with Bank Two's manager, Manager, and apologized for being overdrawn in her personal account. Agent told Manager that, as a "temporary arrangement to cover the overdrafts," she wanted to deposit the $20,000 check from Concert into her own personal account at Bank Two. Agent indorsed the check as follows: "For Deposit To Account #12345 s/Agent."

Manager made the deposit as indicated by Agent although he knew that on all prior occasions Agent had deposited checks for Singer's performances into account #56789, which was Singer's checking account with Bank Two. The check was credited to Agent's personal account with Bank Two, clearing Agent's overdrafts, and the check was then timely presented to and paid by Bank One. Within the next few days, Agent withdrew the remaining balance from account #12345 and closed the account.

Subsequently, Agent and Singer had a falling out. Singer discovered the above facts and demanded that Bank Two pay him $20,000. Bank Two refused. Agent cannot be located.

Under the Uniform Commercial Code:

1. Can Singer successfully sue Bank Two for conversion and recover the $20,000? Explain.

2. What rights, if any, does Singer have to recover from Bank One? Explain.

3. What rights, if any, does Singer have to recover from Concert? Explain.

Question 7

Shortly after Plaintiff's initial filing, the SEC filed a public enforcement lawsuit against Silver, SEC v. Silver, in another federal district court. The claim asserted by the SEC, that the registration statement for the IPO contained false and misleading representations, was identical to the claim asserted in the Plaintiff v. Silver lawsuit. The SEC lawsuit went to trial very quickly, and Silver vigorously contested the misrepresentation issues in the SEC lawsuit. The SEC won its lawsuit. A declaratory judgment was entered finding that Silver's registration statement contained false and misleading information and enjoining Silver from making those misrepresentations in the future. That judgment became final, and Silver did not appeal.

Plaintiff then moved for partial summary judgment against Silver based on the judgment in SEC v. Silver. Plaintiff argued that the SEC v. Silver judgment conclusively determined the issue whether the information contained in the registration statement was false and misleading. Silver opposed the motion on the ground that it had the right to litigate this issue against Plaintiff because Plaintiff had not been a party to the SEC v. Silver lawsuit.

The district court judge denied Plaintiff's motion for partial summary judgment on the ground that Plaintiff, a non-party to the SEC v. Silver action, could not rely upon the judgment in that case to preclude Silver from relitigating issues that were central to Plaintiff's claim. Plaintiff filed an appeal from this decision, although

Plaintiff's case against Silver is still going forward in the district court.

Silver has moved to dismiss Plaintiff's appeal on the following grounds: (a) that the district court's denial of Plaintiff's judgment was not a final judgment subject to review; (b) that the collateral order exception is inapplicable; and (c) mandamus does not lie.

1. Did the district court properly refuse to give preclusive effect to the SEC v. Silver judgment when it denied Plaintiff's motion for partial summary judgment? Explain.

2. How should the appellate court rule on each of the grounds asserted in Silver's motion to dismiss the appeal? Explain.