The Library Book - Unsecured Transactions

In Episode 5 season 3, "The Library", Jerry learns he has a fine on an unreturned library book from 1971, Tropic of Cancer. Jerry is convinced that he did indeed return the book, as he remembers the girl he was with that day, Sherry Becker, and her orange dress which is "burned into his memory". Jerry must go down to the library to sort it out, and he invites Kramer, who enthusiastically accepts.1

At the end of the episode Jerry reluctantly pays the fine, however what if he had not paid? The issue presented here is how does an unsecured creditor collect from a debtor who fails to pay a debt in breach of a contract. We will assume this is not a small claims court case. In which case the creditor Librarian will need to go through the judicial process. The creditor will need to get a judgment from the court, which debtor likely will not contest and thus credit will receive a default judgment. With judgment in hand, the creditor will get a writ of execution in order to levy on the debtor. Yes, the courts still sue these antiquated term, lawyers need to get paid. The write of execution is a document explaining how the creditor thinks the sheriff should be able collect the monies from the debtor. In this case, the library could have a write asking the sheriff to knock on the door of the Seinfeld apt., and attempt to gain entry to the house to try and take cash and Jerry's belongings which the sheriff would then sell.

Unfortunately, the sheriff likely will not try very hard to follow the instructions, because she will face personal liability for screwing up and taking someone elses property. Sheriff's may request a bond (some money deposited with the sheriff) in order to secure his work. However, if Jerry refused to open the door the Sheriff may or may not have the ability to force entry into the home depending on state law. Problem is, creditor Librarian will be stuck with attorney fees, and Sheriff's fees, thus leaving them little to do but take away library privileges. (Note: as a state actor the Library may have additional remedies in order to recover)





1- wikipedia

Seinfeld's Corporate Law Journey

In Episode 158, "The Voice" Kramer creates a corporation called Kramerica Industries (facebook fan page here, https://www.facebook.com/pages/Kramerica-Industries/120549141899) in order to develop some of his ideas. Kramer hires an intern to help him work on ideas such as an oil tanker bladder. The episode raises issues of piercing the corporate veil as Kramer's business according to the university is "a solitary man with a messy apartment which may or may not contain a chicken".

In a nut shell, corporations exist in order to create an economic unit that diffuses liability from shareholders to the corporation. For instance, a company like Exxon can raise billions of dollars from shareholders, but if they have a massive oil spill, the only entity on the hook is Exxon itself, not mom and pop investor. However, if a corporation is just owned by one person using the corporation as a sham, then individuals can "pierce" the corporate veil in order to find the individual liable.

The general test for liability of individuals has two prongs, unity of interest and ownership and refusing to allow piercing of the veil would either sanction a fraud or promote injustice. Clearly Kramerica is "a plaything of" Kramer, as this was actually the intent of Kramer to create a company that he used as a plaything. Typical evidentiary considerations also include lack of corporate formalities, commingling of funds and assets, severe under capitalization and treating corporate assets as ones own. Because Kramer operated the company from his own apartment, with or without a chicken, and merely had one unpaid employee, it appears a summary judgment motion could suffice. However, the question remains, would an injustice be caused if the veil is not pierced.

In Sea-Land Services, Inc. v. Pepper Source, the court had a difficult time proving that refusing to allow PCV(piercing of the corporate veil) would sanction fraud or promote an injustice. Even if Kramer caused a tort, and people would not recover as a result of the corporation, that is not enough to pierce the veil. It is not enough to simply say that you would not be able to collect a judgment. The second prong needs to be met. In order to qualify for a promotion of injustice a party would need to prove that there is some unjust enrichment done, or other intent to defraud going on.

The fact that Kramer is able to create this corporation and avoid liability is a truly unique aspect of American corporate law. This protection for incorporators honest intent is what allows innovative people to create companies with little worry as long as they have a sincere business aspiration. Even with Kramer's cockamamie idea, courts would likely protect him from liability, unless he had an intentional scheme to squirrel out of liability.

In fact, the legal theory is tested in the episode, when Kramer tries out his oil tank bladder in Georges "Play Now" office. The test goes awry and Claire, Jerry's girlfriend, gets hit by the oil. Kramer blames his intern (which in agency law would not suffice), however George's company is tagged with liability because the accident occurred on their property. Kramerica survives.

"The Handicap Spot" (1993) Season 4, Episode 22

Issue: Can the Seinfeld gang be held liable for an accident occurring due to their illegal use of a handicapped parking space?

Facts: While looking for an engagement present for the Drake at the mall the George decides to take a handicapped spot with his dad's fancy car. George is convinced by Kramer who claims most handicapped people don't want to use the handicapped spot anyway, or do not drive at all. Upon return to the parked car they realize that a woman has sustained major injuries as a result of having to park further away, and a real "gang" has formed in order to make the illegally parked vehicle pay the price.

As for the store's liability, it is clear from case law that the mall should be safe. In URHAUSEN v. LONGS DRUG STORES (155 Cal. App. 4th 254), the California Court of Appeals ruled that an individual was barred from having private cause of action under the California Disabled Persons Act ("DPA"), if the facility in which the individual was injured in was found to conform to the handicapped access standards.

The more interesting question is the one of proximate cause. "But for" their parking in the handicapped spot, could the injury have been prevented. The burden of proof on the