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Citigroup v Brigade Capital Management: Difference between revisions
Citigroup v Brigade Capital Management (view source)
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{{Quote|We conclude that Citibank is entitled to prevail under the New York rule expressed in Banque Worms because (i) under the standards of New York law, ''the Defendants had [[constructive notice]] of Citibank’s error'', and (ii) ''the Defendants were not entitled to the money at the time of Citibank’s accidental payment'', as required by the ''[[Banque Worms]]'' ruling.}} | {{Quote|We conclude that Citibank is entitled to prevail under the New York rule expressed in Banque Worms because (i) under the standards of New York law, ''the Defendants had [[constructive notice]] of Citibank’s error'', and (ii) ''the Defendants were not entitled to the money at the time of Citibank’s accidental payment'', as required by the ''[[Banque Worms]]'' ruling.}} | ||
===Real world effects | |||
===[[Constructive knowledge]]=== | |||
We are fond of the constructive quality of this adjective. It has helped many an importuned old lady to justice. It is a magnificent tool of equity. It the appeals court stated it thus: | |||
{{Quote|“If a person has knowledge of such facts as would lead a fair and prudent man, using ordinary thoughtfulness and care, to make further accessible inquiries, and he avoids the inquiry, he is chargeable with the knowledge which by ordinary diligence he would have acquired.”}} | |||
As we have seen the recipients, serially, swore blind it dawned on none of them them the payment might be mistaken. | |||
The appeals court stroked its proverbial chin, muttered a proverbial “[[Jimmy Hill]]” and without needing to call these witnesses liars implied they were wilfully blind: at the very least, more delinquent in interior monologue than a prudent lender would be. | |||
The test in any case was not whether the recipients ought to have known the payment was mistaken, but simply whether there were enough warning flags over to the payment to justify making an ''enquiry'' about it: | |||
{{Quote|The test is not whether the recipient of the mistaken payment reasonably believed that the payment was genuine and not the result of mistake. The test is whether a prudent person, who faced some likelihood of avoidable loss if the receipt of funds proved illusory, would have seen fit in light of the warning signs to make reasonable inquiry in the interest of avoiding that risk of loss.}} | |||
==Real world effects== | |||
Leaving the legal conundrums aside, this cleaves to a few interesting management observations, and themes dear to the JC’s heart: | Leaving the legal conundrums aside, this cleaves to a few interesting management observations, and themes dear to the JC’s heart: | ||
*[[Operator error]] | *[[Operator error]] | ||