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Today I am going to be exploring the Dennegar Debt case and how it was ruled on by the courts.
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Dennegar Debt

Published on Mar 09, 2020

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1.

Dennegar Debt

Arianne N. James
Today I am going to be exploring the Dennegar Debt case and how it was ruled on by the courts.
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2.

Agenda

  • Introduction
  • Those Involved
  • Agency Law
  • Contract Liability
  • Summary
  • References
Over the course of the presentation, we are going to introduce the case and what has occurred, who is involved in the case, how both Agency Law and Contract Liability affected the outcome as well as summarizing why the case was decided as it was.
3.

Introduction

  • New Century Financial Service is looking to get the $14,752.93 they were due
  • Dennegar claims he had no knowledge of the card nor did he authorize to have it opened.
In February of 2001, AT&T Universal opened a credit card for Mark Knutson acting as the agent for Lee Dennegar. Over the next few years, the credit card was used by Mark Knutson until his death in 2003. After his death, the bills were not paid, and the debt was eventually sold to New Century Financial Services for $14,752.93. Dennegar claims that he had no knowledge of this card, the amount that was owed on it and he says that he did not give authorization for the card to be opened (FISHER, n.d.).
4.

Those Involved

  • Lee Dennegar
  • Mark Knutson
  • New Century Financial Service
Lee Dennegar and Mark Knutson shared a house from 1999 until Knutson's death in 2003. Dennegar was the owner of the home and it was his funds and income that were used to pay the mortgage and expenses and Knutson had no income or funds. In 2001 Dennegar had a breakdown that required him to be hospitalized, however even before this occurred he had authorized Knutson to pay the bills and manage his finances. Knutson continued to manage the finances and bills until he passed in 2003. Knutson was also the one who would go through the mail. Because of this, Dennegar never knew that a credit card had been opened and used by Knutson (Fisher, n.d.).

The relationship between the two men goes further than that of roommates Knutson acts as a fiduciary for Dennegar when it comes to all of the financial decisions (Rauterberg, 2020). Also involved in the case is the financial institution that was owed the money, New Century Financial Services.
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5.

Theories for Liability

There are two theories that play a role in the liability that Dennegar has in regard to the credit card payments he should be making and they are, agency law and contract liability.
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6.

Agency Law

  • Agent has been authorized to create new debt
  • Can create unwanted or unknown debt
  • Verbal agreements.
When it comes to looking at the legal side of the case, the courts must look at Agency law. Agency law is when one person authorizes another person to act on their behalf in many different situations. The Agent can create debts and other obligations on behalf of the person authorizing them. In this case, Knutson as the agent for Dennegar created debts that Dennegar was responsible for and had to pay after Knutson passed away and no longer controlled the finances (Dimitriu, 2017).
While there was no written agreement between the two men, there was enough of an understanding between them, that Knutson would pay the bills and sign checks for him. These checks were written off of Dennegar’s account with his knowledge even though he was not a signer. Which could also open (Mayer, et al., 2018).
Though Dennegar needed Knutson's help in paying his debts he also opened himself up for debts that he did not know or want, which is exactly what happened in this case where the credit card with AT&T was opened and used without his knowledge (Scordato, 2004).

7.

Contract Liability

  • Knutson signed a contract as his agent.
  • He did not make the agreed upon monthly payments
  • Verbal Contract was made
  • TILA (Truth in Lending ACT).
Knutson was the one who signed the contract, and as Dennegar's agent, he was saying that the Principal will make sure that this card will be paid even if I am unable to pay it. These payments continued until 2003 when Knutson passed away and Dennegar did not continue to pay the bill. Even though he was not privy to the contract or the deal and his signature is not located on the application he still had a responsibility to make sure that Knutson was acting on his behalf correctly (Contract - non-signatories personal liability, 2018). Because he did not, and never went through his mail that would have contained statements for the card he did not have a full knowledge of what Knutson was doing on his behalf.
While not signed or written out, there was a verbal contract between Dennegar and Knutson that has been found binding. As there was a contract giving Knutson authorization of contracts for Dennegar, he was able to open a card and use it to pay for the household without his permission or signature, (Mayer, et al., 2018).
Dennegar also contended that under the Truth in Lending ACT (TILA) he was not responsible for charges that he did not authorize. However, he had given authorization for Knutson to act on his behalf on financial issues, so it was found that this was within the authorized usage for his credit card and that he would be unable to dispute them (CFPB, 2015).
8.

Summary

  • Dennegar was responsible
  • Though he didn't make the purchases he must pay the credit card company back.
Through contract liabilities as well as agency law, the courts correctly ruled in favor of New Century Financial Services making it so that Dennegar did have to pay for the bill that was created by Knutson when he was taking care of the financial aspects of the home. Dennegar could have avoided this court case and situation just by paying more attention to what was going on within his home as well as not giving all the power through a contract to his roommate.

While he was not employed by Dennegar, Knutson still had the power to make decisions and assist Dennegar to keep the home running. Which under the term respondeat superior, means that as long as he is acting and doing what he is supposed to do per his agreement with Dennegar, then he is covered under Agency Theory (Crockett, & Gilmere 1999).

What it comes down to, is that there was a contract formed between the two men that allowed for Knutson to be able to run the finances of their household, which to him included getting the credit card and using it. While this may not have been what Dennegar was thinking when he gave Knutson this power, it is what occurred and he is now responsible for the $14,752.93 that is due to pay off the credit card debt.
9.

References

Thank you very much for exploring this case with me, I hope that you can see why the courts did make the correct decision in making their ruling against Lee Dennegar. Please find the references that I used for this presentation below.


CFPB (2015). Laws and regulations: Truth in Lending Act. Retrieved from https://files.consumerfinance.gov/f/201503_cfpb_truth-in-lending-act.pdf

Contract - non-signatories personal liability. (2018, Aug 16). Michigan Lawyers Weekly Retrieved from https://search.proquest.com/docview/2090980972?accountid=33575

Crockett, R. W., & Gilmere, J. A. (1999). Retaliation: Agency theory and gaps in the law. Public Personnel Management, 28(1), 39-49. Retrieved from https://search.proquest.com/docview/215930333?accountid=33575

Dimitriu, C. (2017). Agency law and odious debts. Ethics & Global Politics, 10(1), 77-97. doi:http://dx.doi.org/10.1080/16544951.2017.1389220

FISHER, J.A.D. (n.d.). New Century Financial Services INC, v. Dennegar. Retrieved from http://caselaw.findlaw.com/nj-superior-court-appellate-division/1263011.htm...

Mayer, D., Warner, D., Siedel, G., Lieberman, J., K. (2018). Business Law and the Legal Environment, v. 2.0. Flat World

Rauterberg, G. (2020). The essential roles of agency law. Michigan Law Review, 118(4), 609–653. https://doi.org/10.36644/mlr.118.4.essential

Scordato, M. R. (2004). Evidentiary surrogacy and risk allocation: Understanding imputed knowledge and notice in modern agency law. Fordham Journal of Corporate & Financial Law, 10(1), 129-166. Retrieved from https://search.proquest.com/docview/89069024?accountid=33575

Arianne James

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