A QUESTION OF ETHICS: Primary and Secondary Liability. Clarence Morgan, Jr., owned Easy Way…

A QUESTION OF ETHICS: Primary and Secondary Liability.
Clarence Morgan, Jr., owned Easy Way Automotive, a car dealership in DLo,
Mississippi. Easy Way sold a truck to Loyd Barnard, who signed a note for the
amount of the price payable to Trustmark National Bank in six months. Before
the note came due, Barnard returned the truck to Easy Way, which sold it to
another buyer. Using some of the proceeds from the second sale, Easy Way sent a
check to Trustmark to pay Barnards note. Meanwhile, Barnard obtained another
truck from Easy Way, fi nanced through another six-month note payable to

A QUESTION OF ETHICS: Primary and Secondary Liability.
Clarence Morgan, Jr., owned Easy Way Automotive, a car dealership in DLo,
Mississippi. Easy Way sold a truck to Loyd Barnard, who signed a note for the
amount of the price payable to Trustmark National Bank in six months. Before
the note came due, Barnard returned the truck to Easy Way, which sold it to
another buyer. Using some of the proceeds from the second sale, Easy Way sent a
check to Trustmark to pay Barnards note. Meanwhile, Barnard obtained another
truck from Easy Way, fi nanced through another six-month note payable to
Trustmark. After eight of these deals, some of which involved more than one
truck, an Easy Way check to Trustmark wasdishonored. In a suit in a Mississippi
state court, Trustmark sought to recover the amounts of two of the notes from
Barnard. Trustmark had not secured titles to two of the trucks covered by the
notes, however, and this complicated Barnards efforts to reclaim the vehicles
from the later buyers. [Trustmark National Bank v. Barnard, 930 So.2d 1281
(Miss.App. 2006)]

(a) On what basis might Barnard be liable on the Trustmark
notes? Would he be primarily or secondarily liable? Could this liability be
discharged on the theory that Barnards right of recourse had been impaired
when Trustmark did not secure titles to the trucks covered by the notes?
Explain. (b) Easy Ways account had been subject to other recent overdrafts,
and a week after the check to Trustmark was returned for insufficient funds,
Morgan committed suicide. At the same time, Barnard was unable to obtain a
mortgage because the unpaid notes affected his credit rating. How do the
circumstances of this case underscore the importance of practicing business
ethics?