Recourse - sustany/dvg GitHub Wiki

Recourse has two possible legal meanings:

1. Recourse refers to the pursuit and procedure of enforcing one�s�rights. For example, Justice Sotomayor, dissenting in the 2020 U.S. Supreme Court case,�Our Lady of Guadalupe School v. Morrissey-Berru, takes issue with the fact that, in her view, the majority�s opinion means that if employees were classified as �ministers,� they �could be fired for any reason, whether religious or nonreligion, benign or bigoted, without legal recourse.�
2. A type of debt where the creditor can collect what is owed on the debtor�s personal assets even after taking collateral, as opposed to a nonrecourse debt where the creditor may only look to the collateral.�For example, the Seventh Circuit in Racine v. Commissioner classified a loan as recourse debt where the borrower �was personally liable for the full amount.� A creditor does not have free range to pursue the debtor�s personal assets, however, and must look first to the collateral. Only if the collateral does not satisfy the debt may the creditor pursue the debtor�s personal assets, such as by garnishing wages or levying bank accounts.�To determine whether a loan is recourse or nonrecourse, courts will look to the language of the debt instrument. For example, the Southern District of New York in Veleron Holding v. Stanley found that a debt was a recourse loan by looking to parts of the credit agreement. The court pointed to one section which stated that the creditor, �may ... bring suit at law, in equity or otherwise, for ... the recovery of any judgment for any and all amounts due in respect of the Obligations.� The court interpreted this to mean that the creditor may sue the borrower for �the full amount due under the loan, including any deficiency after the sale of the pledged collateral.� In some instances, however, whether a debt is recourse or nonrecourse does not alter the treatment of the debt. For example, in Crane v. Commissioner, the U.S. Supreme Court found that a taxpayer realized gain on the sale of a property when the buyer assumed the seller�s mortgage on the sold property, regardless of whether the mortgage was recourse or nonrecourse.