Skip to content
Textbook Guides

Solution Manual For Business Law Today: The Essentials, 12th Edition

Solution Manual For Business Law Today: The Essentials, 12th Edition provides a roadmap to mastering textbook concepts with ease.

Preview 16 of 5234 pages

See the first 16 pages exactly as they appear in the document.

  1. Page 1
    Read page 1 as text

    1 Chapter 1 Law and Legal Reasoning I NTRODUCTION The first chapters in Unit 1 provide the ba ckground for the entire course. Chapter 1 sets the stage. At this point, it is important to establish goals and obj ectives. For your students to benefit from this course, they must understand that (1) the law is a set of general rules, (2) that, in applying these general rules, a judge cannot always fit a case to suit a rule, so must fit (or find) a rule to suit th e case, (3) that, in fitting (or find ing) a rule, a judge must also supply reasons for the decision. Law consists of enforceable rules governing relationships among individuals and between individuals and their society. The tension in the law between the need for stability and the need for change is one of the concep ts introduced in this chapter. How common law courts originated, and the rationale for the doctrine of stare decisis are also covered in this chapter. Another major concept in the chapter involves the distinctions among today’s sources of law and dis tinctions in its different classifications. The sources include the federal constitut ion and federal laws, state con stitutions and statutes (including the UCC), local ordinances, administrative ag ency regulations, and case law. The classifications include substantive and procedural, national and international, public and private, civil and criminal, and law and equity. These sources and categories give students a framework on which to hang the mass of principles known as the law. C HAPTER O UTLINE I. Business Activities and the Legal Environment A. M ANY D IFFERENT L AWS M AY A FFECT A S INGLE B USINESS T RANSACTION V arious areas of the law can affect a business decision (such as whether to enter into a contract). A businessperson should know enough about the law to know when to ask for advice. B. L INKING B USINESS L AW TO THE S IX F UNCTIONAL F IELDS OF B USINESS The text introduces a feature that appears in selected chapters, which explains how legal concepts can be useful to managers and other businesspersons in any functional field of business — • Corporate management • Production and transportation

  2. Page 2
  3. Page 3
    Read page 3 as text

    2 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS • Marketing • Research and development • Accounting and finance • Human resource management II. Sources of American Law A. C ONSTITUTIONAL L AW The federal constitution is a general document that distributes power among t he branches of the government. It i s the supreme law of the land. Any law that conflicts with it is invalid. The states also have constitutions, but the federal constitution prevails if their provisions conflict. B. S TATUTORY L AW Laws enacted by legislative bodies at any level of government, such as the statutes passed by Congress or by state legislatures, make up the body of law generally referred to as statutory law. When a legislature passes a statute, that statute ultimately is included in the federal code of laws or the relevant state code of laws. Much of the work of courts is interpreting what lawmakers meant when a law was enacted and apply ing that law to a set of facts (a case). 1. Local Ordinances Local legislative bodies enact ordinances — regulations passed by municipal or county governing units to deal with matters not covered by federal or state law. 2. Applicability of Statutes A federal statute applies to all states. A state statute applies only within the state’s borders. 3. Uniform Laws Panels of experts and scholars create uniform laws that any state’s legislature can adopt. 4 . The Uniform Commercial Code The Uniform Commercial Code (UCC) provides a uniform flexible set of rules that govern most commercial transactions. The UCC has been adopted by all the states (only in part in Louisiana), the District of Columbia, and the Virgin Islands. A DDITIONAL B ACKGROUND — National Conference of Commissioners on Uniform State Laws, Co - S ponsor of the Uniform Commercial Code As explained in the text, the Uniform Commercial Code (UCC) is an ambitious codification of commercial common law principles. The UCC has been the most widely adopted, and thus the most successful, of the many uniform and model acts that have been drafted . The National Conference of Commissioners on Uniform State Laws is respo nsible for many of these acts. The National Conference of Commissioners on Uniform State Laws is an organiz ation of state commissioners ap pointed by the governor of each state, the District of Columbia, and Pue rto Rico. Their goal is to pro mote unifo rmity in state law where uniformity is desirable. The purpose is to alleviate problems that arise in an increasingly interdependent society in which a single transaction may cross man y states. Financial s upport comes from state grants. The members meet

  4. Page 4
    Read page 4 as text

    CHAPTER 1: LAW AND LEGAL REASONING 3 ann ually to consider drafts of proposed legislation. The American Law Institute works with the National Conference of Commissioners on Uniform State Laws on some of the uniform state laws. C. A DMINISTRATIVE L AW Administrative law consists of the rules, orders, and decisions of administrative agencies. The creation of federal administrative agencies, agencies’ powers, and the administrative process (rulemaking, investigation, and adjudication) are discussed in the text. 1. Federal Agencies Executive agencies within the cabinet departments of the executive branch are subject to the power of the president to appoint and remove their officers. The officers of independent agencies serve fixed terms and cannot be removed without just cause. 2. State and Local Agencies These agencies are often parallel federal agencies in areas of expertise and subjects of regulation. Federal rules that conflict with state rules take precedence. 3. Agency Creation Congress creates an agency through enabling legislation to perform certain functions with respect to specific subjects. The functions may include legislative powers (rulemaking), executive capabilities (investigation and enforcement), and judicial authority (adjudication). 4. Rulemaking An agency’s creation and changing of its rules is subject to the requirements of the Administrative Procedure Act of 1946. a. Legislative Rules Legislative rules implement federal laws and are legally binding. Creating a legis lative rule typically involves — • P ublic notice through the publication of a proposed rule in the Federal Register. • R eceipt and revi ew of public comments. • D rafting and publication of the final rule in the Federal Register . b. Interpretive Rules Interpretive rules declare policy — how an agency will interpret and apply its regulations. These informal guidelines are not legally binding. 5. Enforcement and Investigation An agency can request an individual’s or a business’s records. An agency can conduct an on - site inspection, which may require a search warrant. The purpose is to uncover regulatory violations against which an agency may issue a formal complaint. 6. Adjudication On a formal complaint, an agency’s administrative law judge may conduct a trial - like hearing and render a decision, which may compel a fine or prohibit certain behavior. This may be appealed to the board or commission that governs the agency and ultimately to a federal court.

  5. Page 5
    Read page 5 as text

    4 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS D. C ASE L AW AND C OMMON L AW D OCTRINES Another basic source of American law consists of the rules of law announced in court decisions. These rules include judicial interpretations of constitutional provisions, of statutes enacted by legislatures, and of regulations created by administrative agencies. A DDITIONAL B ACKGROUND — Restatement (Second) of Contracts The American Law Institute (ALI), a group of American legal scholars, is responsible for the Restatements. These scholars also work with the National Conference of Commissioners on Uniform State Laws on s ome of the uniform state laws. Members include law ed ucators, judges, and attorneys. Their goal is to promote uniformity in state law to encourage the fair administration of jus tice. The ALI publishes summaries of common law rules on selected t opics. Intended to clarify the rules, the summaries are published as the Restatements . Each Restatement is further divid ed into chapters and sections. Accompanying the sectio ns are explanatory comments, ex amples illustrating the principles, relevant case c itations, and other materials. The following is Restatement (Second) of Contracts , Section 1 (that is, Section 1 of the second edition of the Restatement of Contracts ) with excerpts from the Introductory No te to Chapter 1 and Comments ac companying the section. Chapter 1 MEANING OF TERMS * * * * Introductory Note: A persistent source of difficulty in the law of contracts is the fact that words often have different meanings to the speaker and to the hearer. Most words are commonly used in more than one sense, and the words used in this Restatement are no exception. It is arguable that the diffi culty is increased rather than diminished by an attempt to give a word a single definition and to use it only as defined. But where usage varies widely, definition ma kes it possible to avoid circumlocu tion in the statement of rules and to hold ambiguity to a minimum. In the Restatement, an effort has been made to use only words with connotations familiar to the le gal profession, and not to use two or more words to e xpress the same legal concept. Whe re a word fre quently used has a variety of distinct meanings, one meaning has bee n selected and indicated by def inition. But it is obviously impossible to capture in a definition an entire complex institution su ch as “contract” or “promise.” The operative facts necessary or sufficient to create legal relations and the legal relations created by those facts will appear with greater fullness in the succeeding chapters. § 1. Contract Defined A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Comment: * * * * c. Set of promises. A contract may consist of a single promise by one person to another, or of mu tual promises by two persons to one another; or there may be, indeed, a ny number of persons or any number of

  6. Page 6
    Read page 6 as text

    CHAPTER 1: LAW AND LEGAL REASONING 5 promises. One person may make several promises to one perso n or to several persons, or sev eral per sons may join in making pr omises to one or more persons. To constitute a “set,” promises need not be made simultaneously; it is enough that several promises are regarded by the parties as constituting a single contract, or are so related in subject matter and performance that they may be considered and enf orced together by a court. III. The Common Law American law is based on the English common law legal system. Kno wledge of this tradition is nec essary to students’ understanding of the nature of our legal system. A. E ARLY E NGLISH C OURTS The English system unified its local courts after 1066. This unified system, based on the decisions judges make in individu al cases, is the common law system. The common law sys tem involves the consistent applica tion of principles applied in earlier cases with similar facts. B. S TARE D ECISIS The use of precedent forms the basis for the doctrine of stare decisis . 1. The Importance of Precedents in Judicial Decision Making A court’s application of a specific principle to a certain set of facts is binding on that court and lower courts, which must then apply it in future cases. A controlling precedent is binding authority. Other binding authorities include constitutions, statutes, and rules. 2. Stare Decisis and Legal Stability This doctrine permits a predictable, quick, and fair resolution of cases, which makes the application of law more stable. E NHANCING Y OUR L ECTURE —    I S AN 1875 C ASE P RECEDENT S TILL B INDING ?     In a suit agains t the U.S. government for breach of contract, Boris Korczak sought compensation for services that he had allegedly performed for the Central Intelligence Agency (CIA) from 1973 to 1980. Korczak claimed that the government had failed to pay him an annuity and other compensation required by a secret oral agreement he had made with the CIA. The federal trial court dismissed Korczak’s claim, and Korczak appealed the decision to the U.S. Court of Appeals for the Federal Circuit. At issue on appeal was whether a U.S. Supreme Court case decided in 1875, Totten v. United States , a remained the controlling precedent in this area. In Totten , the plaintiff alleged that he had formed a secret contract with President Lincoln to collect information on the Confederate A rmy during the Civil War. When the plaintiff sued the government for compensati on for his services, the Court held that th e agreement was unenforceable. According to the Court, to enforce such agreements could result in the di sclosure of information that “might compromise or embarrass our government” or cause other “ser ious detriment” to the public. In Korczak’s case, the federal appellate court held that the Totten case precedent was still “good law,”

  7. Page 7
    Read page 7 as text

    6 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS and therefore Korczak, like the plaintiff in Totten, could not recover compensation for his services. Said the court, “ Totten , despite its age, is the last pronouncement on this issue by the Supreme Court. . . . We are duty bound to follow the law given us by the Supreme Court unless and until it is changed.” b T HE B OTTOM L INE Supreme Court precedents, no matter how old, remain controlling until they are overruled by a subsequent decision of the Supreme Court, by a constitutional amendment, or by congressional legislation. a. 92 U.S. 105 (1875). b. Korczak v. United States , 124 F.3d 227 (Fed.Cir. 1997). 3 . Departures from Precedent A judge may decide that a precedent is incorrect, however, if there may have been changes in technology, for exam p le, business practices, or society’s at titudes. 4. When There Is No Precedent When determining which rules and policies to apply in a given case, and in applying them, a judge may examine: prior case law, the principles and policies behind the deci sions, and their historical set ting; statutes and the policies behind a legislature’s passing a specific statute; society’s values and custom; and data and principles from other disciplines. 5 . Stare Decisis and Legal Reasoning Through the use of legal reasoning, judges harmonize their decisions with those that have been made before, as the doctrine of stare decisis requires. The IRAC me thod of legal reasoning is an a cronym for Issue , Rule, Application , and Conclusion. C. E QUITABLE R EMEDIES AND C OURTS OF E QUITY A court of law is limited to awarding payments of money or property as compensation. 1. Remedies in Equity Equity is a branch of unwritten law founded in justice and fair dealing and seeking to supply a fairer and more adequate remedy than a remedy at law. A court of equity can order specific performance, an injunction, or rescission of a contract. 2. The Merging of Law and Equity Today, in most states, a plaintiff may request both legal and equitable remedies in the same action, and the trial court judge may grant either form — or both forms — of relief. 3. Equitable Maxims These guide the application of equitable remedies. D. S CHOOLS OF L EGAL T HOUGHT 1. The Natural Law School Adherents of the natural law school believe that govern ment and the legal system should reflect universal moral and et hical principles that are inherent in the na ture of human life.

  8. Page 8
    Read page 8 as text

    CHAPTER 1: LAW AND LEGAL REASONING 7 2. Legal Positivism Followers of the positivist school believe that there can be no higher law than a nation’s positive law (the law created by a particular society at a particular point in time). 3. The Historical School Those of the historical school emphasize legal principles that were applied in the past. 4. Legal Realism Legal realists believe that judges are influ enced by their unique individual beliefs and attitudes, that the application of precedent should be tempered by each case’s specific circum stances, and that extra - legal sources should be considered in making decisions. IV. Classifications of Law • Substantive law defines , describes, regulates, and creates rights and du ties. Procedural law includes ru les for enforcing those rights. • Other classifications include splitting law into federal and state divisions or private and public categories. • Cyberlaw is an informal term that describes the body of case and statutory law dealing specifically with issues raised by Internet transactions. A. C IVIL L AW AND C RIMINAL L AW Civil law regulates relation ships between persons and between persons and their governments, and the relief available when their rights are violated. Criminal law regulates relationships between individuals and society, and prescribes punishment for proscribed acts. B. N ATIONAL AND I NTERNATIONAL L AW 1. National Law National law is t he law of a particular nation. Laws vary from country to country, but generally each nation has either a common law or civil law system. A common law system, like ours, is based on case law. A civil law system is based on codified law (statutes). 2. International Law International law includes written and unwritten laws that independent nations observe. Sources include treaties and international organizations. International law represents attempts to balance each nation’s need to be the final authority over its own affairs and to benefit economically from relations with other nations. T EACHING S UGGESTIONS 1. Emphasize that the law is not simple — there are no simple solutions t o complex problems. Legal prin ciples are presented in this course as “black letter law” — that is, in the form o f basic principles generally ac cepted by the c ourts or expressed in statutes. In fact, the law is not so concr ete and static. One of the pur poses of this course is to acquaint students with legal problems and issues that occur in society in general and in business in particular. The limits of time and space do not allow all of the principles to be presented

  9. Page 9
    Read page 9 as text

    8 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS against the background of their development and the r easoning in their application. By the end of the course, students should be able to recognize legal problems (“spot the issues”) when they arise. In the real world, this may be enough t o seek professional legal assistance. In this course, students should al so be able to recognize the com peting interests involved in an issue and reason through opposing points of view to a decision. 2. Point out that the law assumes everyone knows it, or, as it’s often phrased, “Ignorance of the law is no excuse.” Of course, the volume and expanding proliferation of statutes, rules, and court deci sions is beyond the abi lity of anyone to know it all. But pointing out the law’s presumption might en courage students to study. Also, knowing the law allows business people to make better business decisions. 3. As Oliver Wendell Holmes noted, “The life of the law has not been logi c” — that is, the law does not respond to an internal logic. It responds to social change. Emphasize that l aws (and legal systems) are man made, that they can, and do, change over time as society changes. To what specific so cial forces does law respond? Are the changes always improvements? 4. One method of introducing the subject matter of each class is to give st udents a hypothetical at the be ginni ng of the class. The hypothetical should illustrate the competing interests involved in some part of th e law in the assigned reading. Students should be asked to make a decision about the case and to explain the reasons behind their decision. Once the law has been discussed, the same hypothetical can be considered from an ethical perspective. 5. You might want to remind your students that the facts in a ca se should be accepted as given. For example, under some circumstances, an oral contract may be enforceable. If there is a statement in a case about the existence of oral contract, it should be accepted th at there was an oral contract. Arguing with the statement (“How could you prove that there was an oral contract?” for instance) will only undercut their learning, Once they have learned the principle for which a case is presented, then they ca n ask, “What if the facts were different?” Cyberlaw Link Ask your students, at this early stage in their study of business law, what they feel are the chief legal issues in developing a Web site or doing business online. What are the legal risks involved in transacting business over the Internet? As their knowledge of the law increases over the next few weeks, this question can be reconsidered. D ISCUSSION Q UESTIONS 1. If justice is defined as the fair, impartial consideration of opposing interests, are law an d justice the same thing? No. There can be law without justice — as happened in Nazi - occupied Europe, for ex ample. There cannot be justice without law. 2. What is jurisprudence? Jurisprudence refers to the study of law an d the ethical values used in defin ing what the law should be. Which of the schools of jurisprudence matches the U.S. system? None of the approaches mentioned in these sections is an exact model of the A merican legal system. They repre sent frameworks that can be used in evaluating the moral and ethical considerations that are an integral part of the law.

  10. Page 10
    Read page 10 as text

    CHAPTER 1: LAW AND LEGAL REASONING 9 3. Define and discus s the sources of American law: What is t he supreme law of the land? The federal constitution. What are statutes? Laws enacted by Congress or a state legislative body. What are ordinances? Laws enacted by local legislative bodies. What are administrative rules? Law s issued by administrative agen cies under the authority given to them in statutes. 4. What is the Uniform Commercial Code? The Uniform Commercial Code (UCC) was created through the joint efforts of the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute. The UCC was first issued in 1952. The UCC facilitates commerce among the states by providing a uniform, ye t flexible, set of rules govern ing commercial transactions (sales of goods, commercial paper, bank deposits and collections, letters of credi t, bulk transfers, warehouse re ceipts, bills of lading, investment securities, and secured transactions). The UCC assures businesspersons, for example, that their contracts, if validly en tered into, normally will be enforced. Uniform laws are often adopted in whole or in s ubstantial part by the states. The UCC has been adopted in its entirety by nearly all states (except Louisiana, which has not adopted Article 2). 5. What is the common law? Students may most usefully understand common law to be case law — that is, the body of law derived from judicial decisions. The body of common law originated in England. The term common law is sometimes used to refer to the entire common law system to distinguish it from the civil law system. 6. Under what circumstance might a judge rely on case law to determine the intent and purpose of a statute? Case law includes c ourts’ interpretations of stat utes, as well as const itu tional provisions and admin istrative rules. Statutes often codify common law rules. For these reasons, a judge might rely on the common law as a guide to the intent and purpose of a statute. 7. Discuss the differences between remedies at law and in equity. Remedies at law were once lim ited to payments of money or propert y (including land) as damages. Remedies in equity were available only when there was no adequate remedy at law. Today, in most states, either or both may be granted in the same action. Remedies in equity are still discretionary, guided by equitab le principles and maxims. Reme dies at law still include payments of money o r property as damages. T he major practical difference between actions at law and actions in equity is the right to demand a jury trial in an action at law. 8. Identify and describe remedies available in equity. Specific per formance is available only when a dispute involves a contract. The court may order a party to per form what was promised. An injunction orders a person to do or refrain f rom doing a particular act. Re scission undoes an agreement, and the parties are returned to the positions they were in before the agreement. 9. Discuss the differences within the classification of law as civil law and criminal law. Civil law con cerns rights and duties of indivi duals between themselves; crimi nal law concerns offenses against soci ety as a whole. (Civil law is a term that is also used to refer to a legal system based on a code rather than on case law.) A CTIVITY AND R ESEARCH A SSIGNMENTS 1. Have students research the laws of other common law jurisdictions (En gland, India, Canada), other le gal systems (civil law systems, contemporary China, Moslem nations), and ancient civilizations (the Hebrews, the Babylonians, the Romans), and compare the laws to those of the United States. In looking at other legal systems, have students consider how international law might devel op, given the differences in le gal systems, laws, traditions, and customs.

  11. Page 11
    Read page 11 as text

    10 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS 2. Assign specific cases and statutes for students to find, eithe r in a library or online, or as sign a list of citations, including uniform resource locators (URLs), for students to decipher. 3. Ask students to read newspapers and magazines, listen to radio news and podcasts , watch television news, and find online sources for developments in the law — new laws passed by Congress or signed by the presi dent, laws interpreted by the courts, proposals for changes in the law. The om nipresent effect of law on soci ety should be easy to see. E XPLANATIONS OF S ELECTED F OOTNOTES IN THE T EXT Footnote 7 : In Brown v. Board of Education of Topeka, the United States Supreme Court unanimously held that the sepa rate but equal concept had no place in educati on. The case involved four con soli dated cases focusing on the per missibility of local governments conducting school systems that segre gated students by race. In each case blacks sought admission to public schools on a non - segregated basis, and in each case the lower court based its decision on the separate but e qual doctrine. The Court inter p reted the principles of the U.S. Constitution’s Fourteenth Amendment as t hey should apply to modern soci ety and looked at the effects of segregation. The justices found that segregation of children in public schools solely on the basis of race depr ives the children of the mi nority group of e qual educational opportunities. To separate black children “from others of similar age and qualifications solely because of their race generates a feeling of inferiority as to their status in the community that may affect their hearts and minds in a way unlikely ever to be undone.” Footnote 8 : In Plessy v. Ferguson , the United States Supreme Cou rt adopted the doctrine of separate but equal. A Louisiana state statute required that all railway companies provide separate but equal accommodations for black and white passengers, imposing criminal sanctions for violations. Plessy, who al leged his ancestry was seven - eighths Caucasian and one - eighth African, attempte d to use the coach for whites. The Court said that the U.S. Constitution’s Thirteenth and Fourteenth Amendments (the Civil War Amen dments) “could not have been in tended to abolish distinctions based on color, or to enforce social . . . equality, or a commingling of the two races upon terms unsatisfactory to either.” According to the Court, laws requiring rac ial separation did not necessar ily imply t he inferiority of either race. In a lone dissent, Justice Harlan expressed the opinion that the Civil War Amendments had removed “the race line from our governmental systems,” and the Constitution was thus “color - blind.”

  12. Page 12
    Read page 12 as text

    11 website, in whole or in part. Appendix to Chapter 1 Finding and Analyzing the Law I NTRODUCTION Laws pertaining to business consist of both statutory law and case l aw. The statutes, agency regula tions, and case law referred to in this text establish the rights and duties of businesspersons. The cases in this book provide students with concise, real - life illustrations of the interpretation and applic ation of the law by the courts. The importance of knowing how to find statutory and case law is the reason for this appendix. A PPENDIX O UTLINE I. Finding Statutory and Administrative Law Publications collecting statutes and administrative regulations are discussed in the text. II. Finding Case Law A brief introduction to case reporting systems and legal citations is also included. III. Reading and Understanding Case Law To assist students in reading and analyzing court opinions, the formats of cases in the text are di gested, terms are defined, and a sample case is annotated. A DDITIONAL B ACKGROUND — The Federal Reporter Federal court decisions are published unofficially in a variety of publications . T hese reports are organized by court level and issue d chronologically. Opinions from the United States Court of Appeals, for example, are reported in the Federal Reporter . Thomson Reuters publishes these decisions with headnotes condensing

  13. Page 13
    Read page 13 as text

    12 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS important legal points in the cases. The head notes are assigned key numbers that cross - reference the point s to similar points in cases re port ed in other publications. The following are excerpts from Ferguson v. Commissio ner of Internal Revenue, as pub lished with headnotes in the Federal Reporter . Betty Ann FERGUSON, Petitioner - Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent - Appellee. No. 90 - 4430 Summary Calendar. United States Court of Appeals, Fifth Circuit. Jan. 22, 1991. Taxpayer filed petition. The United States Tax Court, Korner, J., dismissed for lack of prosec ution, and appeal was taken. The Court of Appeals held that court abused i ts discretion in refusing testi mony of taxpayer, who refused, on religious grounds, to swear or affirm. Reversed and remanded. 1. Constitutional Law 92K84(2) Protection of free exercise clause extends to all sincere religious beliefs; courts may not evaluate reli - gious truth. U.S.C.A. Const. Amend. 1. Ferguson v. C.I.R. 921 F.2d 588, 67 A.F.T.R.2d 91 - 459, 91 - 1 USTC P 50,052 2. Witnesses 410K227 Court abused its discretion in refusing testimony of witness who refused, on religious grounds, to swear or affirm, and who instead offered to testify accurately and comple tely and to be subject to penal ties for perjury. U.S.C.A. Const. Amend. 1; Fed.Rules Evid.Rule 603, 28 U.S.C.A. Ferguson v. C.I.R. 921 F.2d 588, 67 A.F.T.R.2d 91 - 459, 91 - 1 USTC P 50,052 Betty Ann Ferguson, Metairie, La., pro se. Peter K. Scott, Acting Chief Counsel, I.R.S., Gary R. Allen, David I. Pincus, William S. Rose, Jr., Asst. Attys. Gen., Dept. of Justice, Tax Div., Washington, D.C., for respondent - appellee. Appeal from a Decision of the United States Tax Court. Before JOLLY, HIGGINBOTHAM, and JONES, Circuit Judges. PE R CUR IAM: Betty Ann Ferguson appeals the Tax Court’s dismissal of her petition for lack of prosecution after she refused to swear or affirm at a hearing. We find the Tax Court’s failure to accommodate her objections inconsistent with both Fed.R.Evid. 603 and the First Amendment and reverse.

  14. Page 14
    Read page 14 as text

    APPENDIX A: FINDING AND ANALYZING THE LAW 13 I. This First Amendment case ironically arose out of a hearing in Tax Court. Although the govern ment’s brief is replete with references to income, exemptions, and taxable years, the only real issue is Betty Ann Ferguson’s refusal to “swear” or “affirm” before te stifying at the hearing. Her objection to oaths and affirmations is rooted in two Biblical passages, Matthew 5:33 - 37 and James 5:12. * * * Ms. Ferguson, proceeding pro se, requested that Judge Korner consider the following statement set forth by the Supreme Court of Louisiana in Staton v. Fought, 48 6 So.2d 745 (La.1986), as an alterna tive to an oath or affirmation: I, [Betty Ann Ferguson], do hereby declare that the facts I am about to give are, to the best of my knowledge and belief, accurate, correct, and complete. Judge Korner abruptly denied her request, commenting that “[a]sking you to affirm that you will give true testimony does not violate any religious conviction that I have ever heard anybody had” and that he did not think affirming “violates any recognizable religious scruple.” Because Ms. Ferguson could only introduce the relevant evidence through her own testimony, Judge Korner then dismissed her petition for lack of prosecution. She now appeals to this court. II. [1] The right to free exercise of religion, guaranteed by the First Amendment to the Constitution, is one of our most protected constitutional rights. The Supreme Court ha s stated that “only those inter ests of the highest order and those not otherwise served can overbalance legitimate claims to the free exercise of religion.” Wisconsin v. Yoder, 406 U.S. 205, 215, 92 S.Ct. 1526, 1533, 32 L.Ed.2d 15 (1972). Accord Hobbie v. Unemployment Appeals Comm’n of Florida, 480 U.S. 136, 141, 107 S.Ct. 1046, 1049, 94 L.Ed. 2d 190 (1987); and Sherbert v. Verner , 374 U.S. 398, 403, 83 S.Ct. 1790, 1793, 10 L.Ed.2d 965 (1963). The protection of the free exercise clau se extends to all sincere relig ious beliefs; courts may not evalu ate religious truth. United States v. Lee , 455 U.S. 252, 257, 102 S.Ct. 1051, 1055, 71 L.Ed.2d 127 (1982); and United States v. Ballard, 322 U.S. 78, 86 - 87, 64 S.Ct. 882, 886 - 887, 88 L.Ed. 1148 (1944). Fed.R.Evid. 603, applicable in Tax Court under the Internal Revenue Code, 26 U.S.C. § 7453, requi res only that a witness “declare that [she] will testify truthfully, by oath or affirmation adminis tered in a form calculated to awaken the witness’ conscience and impress the witness’ mind with the duty to do so.” As evidenced in the advisory committee notes accompanying Rule 603, Congress clearly intended to minimize any intrusion on the free exercise of religion: The rule is designed to afford the flexibility required in dealing with religious adults, atheists, conscientious objectors, mental defectives, and children. Affirmation is simply a solemn undertaking to tell the truth; no special verbal formula is required. Accord Wright and Gold, Federal Practice and Procedure § 6044 (West 1990). The courts that have considered oath and affirmation issues have similarly attempted to accommodate free exercise objections. In Moore v. United States, 348 U.S. 966, 75 S.Ct. 530, 99 L.Ed. 753 (1955) ( per curiam ), for example, the Supreme Court held that a trial ju dge erred in refusing the testi mony of witnesses who would not use the word “solemnly” in their affirmations for religious reasons. * * * * [2] The government offers only two justifications for Judge Korner’s refusal to consider the Staton statement. First, the government contends that the Tax Court was not bound by a Louisiana decision. This argum ent misses the point entirely; Ms. Ferguson offered Staton as an alternative to an oath or affirmation and not as a precedent.

  15. Page 15
    Read page 15 as text

    14 UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS The government also claims that the Staton statement is insufficient because it does not acknowledge that the government may prosecute false statements for perjury. The federal perjury statute, 18 U.S.C. § 1621, makes the taking of “an oath” an el ement of the crime of perjury. Accord Smith v. United States , 363 F.2d 143 (5th Cir.1966). However, Ms. Ferguson has expressed her willingness to add a sentence to the Staton statement acknowledging that she is subject to penalties for perjury. The gov ernment has c ited a number of cases invalidating perjury convictions where no oath was given, but none of the cases suggest that Ms. Ferguson’s proposal would not suffice as “a n oath” for purposes of § 1621. See Gordon , 778 F.2d at 1401 n. 3 (statement by defendant t hat he understands he must accu rately state the facts combined with acknowledgment that he is testifying und er penalty of perjury would sat isfy Fed.R.Civ.P. 43(d)). The parties’ briefs to this court suggest that the disagreement between Ms. Ferguson and Judge Korner might have been nothing more than an unfortunate misunderstanding. The relevant portion of their dialogue was as follows: MS. FERGUSON: I have religious objections to taking an oath. THE COURT: All right. You may affirm. Then in lieu of taking an oath, you may affirm. MS. FERGUSON: Sir, may I present this to you? I do not — THE COURT: Just a minute. The Clerk will ask you. THE CLERK: You are going to have to stand up and raise your right hand. MS. FERGUSON: I do not affirm either. I have with me a certified copy of a case from the Louisiana Supreme Court. THE COURT: I don’t care about a case from the Louisiana Supreme Court, Ms. Ferguson. You will either swear or you will affirm under penalties of perjury that the testimony you are about to give is true and correct, to the best of your knowledge. MS. FERGUSON: In that case, Your Honor, please let the record s how that I was willing to go un der what has been acceptable by the State of Louisiana Supreme Court, the State versus — THE COURT: We are not in the state of Louisiana, Ms. Ferguson. You are in a Federal court and you will do as I have instructed, or you will not testify. MS. FERGUSON: Then let the record show that because of my religio us objections, I will not be al lowed to testify. Ms. Ferguson contends that Judge Korner insisted that she use either the word “swear” or the word “affirm”; the government suggests instead that Judge Korner only required an affirmation which the government defines as “an alternative that encompasses all remaining forms of truth assertion that would satisfy [Rule 603].” Even Ms. Ferguson’s proposed alternative would be an “affirmation” under the government’s definition. If Judge Korner had attempted to accommodate Ms. Ferguson by inquiring into her objections and considering her proposed alternative, the entire matter might have been resolved without an appeal to this court. Instead, however, Judge Korner erred not only in evaluating Ms. Ferguson’s religious belief, and concluding that it did not violate any “recognizable religious scruple,” but also in conditioning her right to testify and present evidence on what she perceived as a violation of that belief. His error is all the more apparent in light of the fact that Ms. Ferguson was proceeding pro se at the hearing. We therefore REVERSE the decision of the Tax Court and REMAND this case for further proceedings not inconsistent with this opinion.

  16. Page 16
    Read page 16 as text

    APPENDIX A: FINDING AND ANALYZING THE LAW 15 A DDITIONAL B ACKGROUND — State Codes: Pennsylvania Consolidated Statutes State codes may have any of several names — Codes, General Statutes, Revisions, and so on — de - pending on the preference of the states. Also arranged by subject, some codes indicate subjects by numbers. Others assign names. The following is the text of one of the state statutes whose citations are explained in the textbook — Section 1101 of Title 13 of the Pennsylvania Consolidated Statutes (13 Pa. C.S. § 1101). PURDON’S PENNSYLVANIA CONSOLIDATED STATUTES ANNOTATED TITLE 13. COMMERCIAL CODE DIVISION 1. GENERAL PROVISIONS CHAPTER 11. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER OF TITLE § 1101. Short title of title This title shall be known and may be cited as the “Uniform Commercial Code.” 1984 Main Volume Credit(s) 1979, Nov. 1, P.L. 255, No. 86, § 1, effective Jan. 1, 1980. California Commercial Code The text of another of the state statutes whose citations are explained in the textbook follows — Section 1101 of the California Commercial Code (Cal. Com. Code § 1101). WEST’S ANNOTATED CALIFORNIA CODES COMMERCIAL CODE DIVISION 1. GENERAL PROVISIONS CHAPTER 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER OF THE CODE § 1101. Short Title This code shall be known and may be cited as Uniform Commercial Code. 1964 Main Volume Credit(s) (Stats.1963, c. 819, § 1101.)

5218 more pages in the full document

Unlock it once and it stays in your library, ready to chat with or turn into flashcards.

Unlock the full document

More Business Law study materials

See all

Study this document with CramX

Once it is in your library, every tool can work from it.