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Law Pro
Law Pro, Attorney
Category: Business Law
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Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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I made a buisness loan (30k) to a company I own 15% of. Terms

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I made a buisness loan (30k) to a company I own 15% of. Terms were 45 days, 10% penalty every 15 days late. It has been almost a year over due. I have extended and extended (not in writing ) and it's beginning to look like it's not coming back. Company offered titles to vehicles as security, turns out all titles still have bank leans. Partner, who signed on behalf of company keeps saying then sue me...he says I can't sue company even though he signed as company representative (president) there are 2 other share holders besides myself. How can I get repaid? Can I threaten to stop all buisness till repayment is made? I also hold building lease, and liquor license (shared). Any help would be great, I don't even know what type of layer to use..
Submitted: 10 months ago.
Category: Business Law
Expert:  Law Pro replied 10 months ago.
Hi! My name is XXXXX XXXXX I'll be the attorney assisting you.

First, if there is a written contract evidencing the loan - then you have till the expiration of the statute of limitations to file suit.

In Oregon - the statute of limitations is 6 years. The statute of limitations starts running when they miss a payment they should have made.

What I am concerned about - if a violation of the usury law.

Each state has its own regulations on the maximum interest rate that can be charged for a loan. The maximum interest is also commonly referred to as the "usury limit". When you build your loan you should make sure that you check the usury rate for the state in which the loan is being made. If your loan's interest rate exceeds a state's usury limit it could impact the legality of your loan.

Interest Rate Limit Maximum legal interest rate on loans less than $50,000 is the greater of:

12%
5% above the FR Discount Rate at the time the loan is made

Exceptions There is no interest rate limit if:

The loan is secured by real property
The loan is from a tax qualified retirement plan to a person then a participant under the plan


That interest and penalty provision is clearly beyond Oregon's usury law limits.

That being the case - that makes the agreement viod but you are entitled to your money back certainly.

You stated:

Partner, who signed on behalf of company keeps saying then sue me...he says I can't sue company even though he signed as company representative (president) there are 2 other share holders besides myself. How can I get repaid?

You can most certainly sue the company - he had either the authority to sign on behalf of the company or apparent authority to sign on behalf of the company.

Either way - the company owes you the monies.


So you file suit and then execute against the company's assets to get your money.


Can I threaten to stop all buisness till repayment is made? No.



I also hold building lease, and liquor license (shared). Any help would be great, I don't even know what type of layer to use..


The type of attorney you should seek is a general commercial litigation attorney - they specialize in debt collection.

Since you are also a co-owner and a creditor - you could be liable for tortuous interference with business relations if you take any steps like being the landlord or giving them problem with the liquor license.

Your only option is to file suit, get an award, then execute against the company's assets and bank accounts.

Customer: replied 10 months ago.

I made an offer attempting for repayment that I was completley willing to overlook any interest as long as I could get repayed on principle amount. The contract is very loose, it shows the amount loaned, the agreement to repay and the penty for nonpayment (which w as a clause he entered. I also offered to resell my equity back at same rate I paid, as my goal is to be out of buisness with this group. I also recieved 2 checks for 5k each as repayment that then bounced. I still have checks but if I deposit them all hell will break loose. I feel trapped into this company, as I have recieved nothing for my ownwership in over a year. One partner collects resisuals, other who keeps name off of everything (felony for bank fraud) gets a salary, I work as an employee and keep getting told company is still in red..I know we make moneu..we have 3 buisnesses going. I made a huge mistake getting into buosness with friend

Expert:  Law Pro replied 10 months ago.

Does an individual signing a corporation's check commit the individual to personal liability, should the check be returned NSF? Generally no.

Article 3 of the Uniform Commercial Code deals with checks. Revised Article 3 provides that a party with authority to sign a corporate check no longer has to indicate his or her representative capacity on the check.

Revised Article 3 recognizes that the party signing the check in a representative capacity, such as a controller for the company, is not personally liable for the NSF check.

However, you, the vendor, may have a separate claim for fraud against against the signer, depending on the jurisdiction. Under a fraud claim, the vendor must establish that the individual signed the corporate checks aware that they would not clear as there were insufficient funds on deposit in the corporate account to cover the checks.

So, I would contact the person back and inform them that you are going to sue the company for breach of contract and them personally for fraud.

A state court of appeals recently considered a vendor's fraud claim against a corporate bookkeeper for signing checks when there was insufficient funds. In that case, bookkeeper signed two checks for payment to a vendor that later bounced. The vendor sued the bookkeeper for fraud. The court recognized that corporate signers of checks who sign checks when they know the corporate accounts contain insufficient funds may be liable.

That would get them moving I would think - their potential personal liability for fraud.

Regardless, I would file suit against the corporation for breach of contract. That although you are an owner - you are also a creditor.

The result is - potentially you could own this company 100% even (if you would want it).

Customer: replied 10 months ago.

Not sure if it makes a difference, but as a small company, at the time all checks were written thru personal account of one of the 35% owners. I was given checks in order to show they were attempting to repay debt, but then requested next day I hold from depositing. Checks were written in may 2013..thanks for ur help...I think I have recieved enuff info ti get started. I should have found out more about partners before lending them money! I will give u great rating for ur time!

Expert:  Law Pro replied 10 months ago.
Then they are liable not only for fraud - but the crime of writing a bad check too - because it was their personal account.

I would contact these "partners" and state that you are going to pursue filing suit against the company
Section 165.065¹

Negotiating a bad check

(1) A person commits the crime of negotiating a bad check if the person makes, draws or utters a check or similar sight order for the payment of money, knowing that it will not be honored by the drawee.

(2) For purposes of this section, unless the check or order is postdated, it is prima facie evidence of knowledge that the check or order would not be honored if:

(a) The drawer has no account with the drawee at the time the check or order is drawn or uttered; or

(b) Payment is refused by the drawee for lack of funds, upon presentation within 30 days after the date of utterance, and the drawer fails to make good within 10 days after receiving notice of refusal.

(3) Negotiating a bad check is:

(a) A Class A misdemeanor, except as provided in paragraph (b) of this subsection.

(b) Enhanced from a Class A misdemeanor to a Class C felony if at the time of sentencing it is established beyond a reasonable doubt that the person has been convicted in this state, within the preceding five years, of the crime of negotiating a bad check or of theft by deception by means of a bad check. [1971 c.743 §161; 1979 c.594 §1]


  • The court may place a civil penalty on bad check writers amounting anywhere from $100 to triple the amount of the check. The penalty, however, may not exceed the original amount by more than $500. Such penalties are made in addition to the original amount the check was written for.


  • The court also has the discretion to waive these penalties if the violation was a result of economic hardship. The check writer will then only be responsible for fees owed to the drawee, including attorney fees.

  •  

    Oregon gives district attorneys the option of creating a bad check diversion program to teach bad check writers how to better manage their checking accounts. The program is offered as an opportunity to forgo trial, but full restitution must still be paid to the drawee. If accepted, the check writer will need to attend check writing classes for six months.





    Wow, I think you really have them now with that additional information - I think you have some serious leverage to mandate you either get paid or you pursue all your legal remedies including both civil and criminal.


    I would notice them they have 10 days or you will pursue all your legal remedies.
    Law Pro, Attorney
    Category: Business Law
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    Experience: 20 years experience in business law - sole proprietor, partnership, and corporations
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