Lassleben

This appeal deals with the enforceability of contract commitments made in the course of reorganization of a rubber sandal distribution business. We conclude that the trial court erred in ruling that no consideration supported commitments made by the corporation in connection with the reorganization, and we also determine that the trial court erred in not recognizing the provisions of the California Uniform Commercial Code which govern the rights of a transferee of a negotiable instrument.

Factual and Procedural Background

The parties to this transaction are two families and one corporation. The first family is that of Brian M. Lassleben, an importer and distributor of rubber sandals. His involved family member is his father, William Lassleben, who guaranteed debts for the benefit of his son and his son’s corporation. The corporation is Flojo International, Inc., created and originally owned by Brian Lassleben. The second family is that of Antonio Santana, a sandal distributor from Mexico. Santana’s involved “family” consists of his wife and other relatives (denominated herein Santana), who succeeded to his interests in the transaction upon his death, which occurred…