Born v. Born

Sharon Born, the cousin of John Born, held two installment promissory notes upon which the inter vivos revocable trust created by John (“the Born Trust”) assets had been pledged as security when John died. When Betty Born, John’s wife, attempted to make payments on the notes, Sharon asserted that the notes were in default because of John’s death, that the entire remaining balances were immediately due and payable under the notes’ acceleration clauses, and that Sharon’s only remedy under the security agreements was to accept all of the Born Trust’s pledged assets in full satisfaction of the note balances. Betty, in her capacity as a Born Trust trustee, brought this injunction and declaratory judgment action against Sharon, challenging Sharon’s right unilaterally to effect an acceptance-of-collateral remedy. The district court granted summary judgment for Sharon and ordered the Born Trust to turn over the collateral to Sharon. The court of appeals affirmed. The Supreme Court reversed, holding that the Born Trust had the right under the promissory notes to pay the accelerated balances due thereon to prevent Sharon’s acceptance of the pledged assets under the security agreement. Remanded. View "Born v. Born" on Justia Law