NEW CENTURY FINANCIAL SERVICES INC v. DENNEGAR
Published on Aug 01, 2020
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PRESENTATION OUTLINE
NEW CENTURY FINANCIAL SERVICES INC v. DENNEGAR
Jennifer Genther
MBA 530
08/01/2020
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Decision Overview
In the case, the court must decide “whether defendant was properly held liable for a credit card debt despite his contention that he never applied for or used the credit card. Because the evidence supported the trial judge's determination that defendant either expressly applied for the card, or authorized his roommate-to whom he ceded authority over his finances-to apply for and use the card, we affirm the judgment entered in plaintiff's favor” (Fisher, n.d.).
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Introduction
Lee Dennegar (defendant) had a card issued to him from AT&T Universal in February of 2001. Shortly after, the account accrued $14,752.93 and was eventually assigned to New Century Financial Services, Inc. after payments went to collections.
Dennegar claims that Mark Knutson, his roommate from 1999 to 2000, opened the account and charged the card without his knowledge. Knutson died in June of 2003 and soon after Dennegar found out about the card, leaving the defendant to pay all bills without being able to seek justice for the theft.
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RESTATEMENT (SECOND) OF AGENCY, § 26
“Authority to do an act can be created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal's account”
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“Actual authority can be express, which involves spoken or written manifestations by the principal that the agent is authorized, or implied, which involves nonverbal manifestations of authority” (Rauterberg, 2020).
Dennegar gave Knutson permission to open his mail and take over his finances as he saw fit. Dennegar would often sign checks or gave permission to Knudson to sign the checks for him.
Under Restatement of Agency, "authority to do an act can be created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal's account”
Under Restatement of Agency, "authority to do an act can be created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal's account”
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15 U.S.C.A. § 1643:
Congress defined “unauthorized use,” as
“A use of a credit card by a person other than the cardholder who does not have actual, implied, or apparent authority for such use and from which the cardholder receives no benefit.”
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“An agent is not liable on contracts [he or] she makes on the principal’s behalf; the agent is not a party to a contract made by the agent on behalf of the principal” (Mayer et al, 2017).
Allowing Knutson to access and maintain Dennegar’s finances gave him authority over accounts under Dennegar’s name. Even though the cardholder claims that he did not receive benefits from this, there is no proof that the money did not go to household requirements or other beneficial means.
Congress defined “unauthorized use,” as
“A use of a credit card by a person other than the cardholder who does not have actual, implied, or apparent authority for such use and from which the cardholder receives no benefit.”
Congress defined “unauthorized use,” as
“A use of a credit card by a person other than the cardholder who does not have actual, implied, or apparent authority for such use and from which the cardholder receives no benefit.”
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98 F.3d at 709-10
Minskoff states:
“Cardholder's failure to examine credit card statements that would reveal fraudulent use of the card constitutes a negligent omission that creates apparent authority for charges that would otherwise be considered unauthorized under the TILA.”
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“For oral contracts, courts may determine the intention of the parties by considering the circumstances of the contract’s formation, as well as the course of dealing between the parties” (JEC, n.d.).
Dennegar failed to look into accounts and credit reports under his name during the time Knutson opened the account. Checking accounts for unauthorized purchases is the responsibility of the individual and could have been investigated if the individual had found these charges early on.
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DBI Architects, supra, 388 F.3d at 891 (quoting Minskoff, supra, 98 F.3d at 709):
“cardholders are in a better position than card issuers to discover fraudulent charges, and that ‘[n]othing in the TILA suggests that Congress intended to sanction intentional or negligent conduct by the cardholder that furthers the fraud or theft of an unauthorized card user.’ ”
The card issuers are not responsible for discovering unauthorized charges. For all they knew, the charges were done by the defendant and the card issuers shouldn’t be held liable for these charges.
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Conclusion
Dennegar should be held responsible for the accrued money managed by New Century Financial Services, Inc. because he:
• Gave oral consent to Knutson to take care of his finances
• Gave him the authorization to sign checks on his behalf
• Had payments made to the card throughout the time it was open
• Didn’t check credit reports for discrepancies
• Has no proof that the money didn’t go towards household necessities
• Has no proof that he himself didn’t open the accounts and use the money
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References
FISHER, J.A.D. (n.d.). NEW CENTURY FINANCIAL SERVICES INC v. DENNEGAR. Retrieved from http://caselaw.findlaw.com/nj-superior-court-appellate-division/1263011.htm...
JEC. (n.d.). Elements of a Contract.
Retrieved from http://jec.unm.edu/education/online-training/contract-law-tutorial/contract...
Mayer, D., Warner, D., Siedel, G., Lieberman, J., K. (2017, March). Business Law and the Legal Environment, v. 2.0 Flat World Knowledge.
Rauterberg, G. (2020, February). THE ESSENTIAL ROLES OF AGENCY LAW. Michigan Law Review, 118(4), 609+. Retrieved from https://link.gale.com/apps/doc/A615490148/EAIM?
u=lirn13050&sid=EAIM&xid=615fd993
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