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ontemporary negotiable instruments law developed hundreds of years ago, before every important institution of the modern financiai world: incorporated banks, business corporations, developed capital markets, global monetary systems, electronic transfers, and even paper currency.l It is counterintuitive that this ancient law of negotiable instruments would have any relevance to one of the world's most sophisticated, cutting-edge tools of high finance - the pooling and securitization of mortgage loans. Yet, the courts routinely look to such law to resolve a foreclosure crisis spawned by the collapse of mortgage-backed securitization, a process which is as strained as trying to decide First Amendment issues using cases pre-dating the Constitution. It is all the more exttaordinary that, just as the nation begins to
awaken to "robo-signing" and other such pervasive and methodical abuses of the court systems, judges should find themselves slavishly compelled to apply a body of law shaped (and then abandoned) by the very authors of such scandals: the financial institutions.
complete chain of title from the original creditor invoke the equitable remedy of foreclosure.
to
The Private Currency of Merchants The concept of negotiability is rooted in European mercantile customs, which, as of the 17th century, had developed a means of paying for goods, principally in international transactions, using documents called "bills of exchange."2 Similar to a cashier's check today, the bill of exchange was an instrument representing an amount of money that the buyer had deposited with a third party. The bill instructed a fourth party, typically located near the foreign seller of the goods, to pay the seller upon presentment of the bill. Bills of exchange
offered the advantage ofbeing easier and safer to transport than precious metals or other valuables.3 As the use of these instruments became more common, merchants developed the practice of transferring the bills among themselves by endorsement.a Rather
than presenting the bill to the local "fourth party" for payment, the payee would endorse the bill to another merchant as payment for goods or services.s Such instruments were often transferred dozens of times and served the function that currency serves today.6 This practice of transferring the bill to additional parties by way of "negotiation" and "endorsement" was later extended to promissory notes two-party debt instruments.T As the courts came to recognize and enforce this endorsement-and-delivery method of transfer, documents that could be circulated in this manner came to be known as "negotiable" instruments. The "negotiability" of the instrument typically referred to its degree of "transferability'"8
THE FLORIDA BAR JOURNAUDECEMBER 201
is said to be, not only the primary feature of negotiable instrument law, but "the most important principle in the whole law of bills and
notes."s This doctrine grew out of an
Negotiability had become anachronistic and unnecessary.r5 Nevertheless, in 1952, the already antiquated holder in due course rules were codified into Article 3 of the Uniform Commercial Code (UCC).rG
was "a pro-bank statute."le Yet, as the technology of payment systems continued to advance, the banking
industry itself became dissatisfied with Article 3 as a means of transfer, particularly with respect to mortgage loans. The necessity of physical delivery of the documentation became a nuisance that hindered, rather than expedited transferabiiity.2o
original transaction
became. Merchants,
In response, the industry orchestrated a change to Article 9 of the UCC in 1998 that brought mortgage loans within its
purview.2l Specifical-
therefore, developed rules of negotiability to enhance the liquidity of the instruments by reducing the need for information about
transactions earlier in the chain.lo The most
important of these
was the "holder in due
officially sanctioned
the practice of using third-party agents as
document custodians to "possess" the in-
struments.2a When
ply acknorvledge the importantly, revised Article 9 applied regardless of whether the promissory notes were actually negotiable.26 Article 9, therefore, now provides all the benefits of negotiability, such as transferability and liquidity, without the outdated custom of transporting the note and mortgage.2T
change.2t' Most
lnfusion of the Concept of "Holder" into Foreclosure In the early days of the foreclosure crisis, the allegations ofstand-
ing in complaints fiied in Florida merely tracked the language of the foreclosure form approved by the Florida Supreme Court - that the plaintiff bank "owns and holds the note and mortgage."28 Over time, the complaints have evolved such that the word "holder" has
been substituted for the "owns and
the basis for arguing an evidentiary shortcut which not only discards
of proof, but which circumvents basic foundational evidence for the authenticity of the note itself. By claiming that promissory notes
are "self-authenticating" under the
The notion that a borrower is precluded from challenging a holder's expressed apothegmatically as : "Even a thiefis entitled to enforce a bearer instrument."3a Needless to say, the assertion that a thiefcan obtain or
holds" language approved by the Florida Supreme Court.2e Replacing the traditional language with the unrelated Article 3 term "holder"30 permits the bank to argue that mere possession of a document that its attorney asserts to be an original note endorsed in blank (or specially endorsed to the plaintiffbank) conclusively establishes its standing to
foreclose.
is now routinely, albeit incorrectly,32 established on a single unsworn representation by plaintiff's counsel that the document presented is the original note.
UCC,31 standing
Note?
The key to this evidentiary shortcut, this indifference to who actualiy owns the loan, is the idea that, under Article 3, mere possession,
Thus, despite the shift toward Article 9 as the real-world mechanism for transferring loans, Article 3 negotiability has become the dominant legal theory argued by plaintiffs in support oftheir standing to bring foreclosure actions. In the courtroom, Article 3 serves as
of the nofe because' even if the bank's possession is shown to be illegitimate, the matter does not
pass title to stolen property flies in the face of common law.35 It also offends the commonsense of the average citizen to say that a court of law has no choice but to employ its constitutionally granted powers on behalf of those with no legitimate right to the note so that they may profit from what must surely be a crime. Indeed, under negotiable instrument law prior to Article 3, only a holder in due course was immune to the defense of theft, not a mere holder.36 Even the claimed status of holder in due course could be impeached with evidence that the note was not acquired in good faith, at which time the burden "shifted
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orrowers in foreclosure are, for the most part, consumers who had no bar-
aligned by an interpretation of Article 3 that is consistent with prior negotiable instrument 1aw.
Specifically, the statutory declara-
gaining power
with which to influence a single term in t}te note
or is in wrongful possession of the instrument."ss The drafters' comments to Article 3 state without Still, after the adoption of the UCC, there was considerable debate as to whether its drafters meant to grant
such rights to thieves.ao At least one commentator has labeled this result an "authorization anomaly" and questioned whether any court will "accept such a daring theory"
"for the purpose of giving the person receiving delivery the right to enforce the instrument."4a Because no one intends to give a thief, or even a finder, the right to enforce an instrument, the two provisions
that payment made to a person
entitled to enforce the instrument
appear irreconcilable. Moreover, UCC $3.602a5 provides
of that instrument
and mortgage they signed. Most lacked even an understanding of the terms of those documents, much less, the destructive effect of negotiability on their defenses. In the context of credit transaetions involving goods and services, the federal government took steps in 7977 to limit the negative effects
of negotiability on consumers.a8 Specifically, the Federal Trade Commission promulgated a regulation entitled "Preservation of consurners'claims and defenses, unfair or deceptive acts or practices," also known as the "Holder Rule," which requires a notice on all consumer credit contracts that the holder would be subject to all claims and defenses that the consumer could assert against the seller of goods
or services.ae
thiefl, discharges the borrower, unless the borrower knows "that the instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument." Coupled with the thief's right of enforcement, this implies that the borrower can be compelled to pay an admitted thief, yet will still be liable to the rightful owner ofthe note. Similarly, UCC g3-501(b)(2)46 provides that, upon demand for payment, the borrower may ask that the person seeking payment give "reasonable identification" and if the demand is made on behalf of of authority to do so."a? If even a thiefis entitled to enforce the note, it seems inconsistent to require the
someone else, "reasonable evidence
In Tinker u. De Maria Porsche Audi, lnc.,459 So. 2d 487 (Fla. 3d DCA 1984), the court held that "the
effect of the federal lHolder Rule] is
tiation," which in turn is defined as a "transfer of possession [of an instrumentl whether voluntary or involuntary."a2 Yet, a "transfer" of an instrument is described as a delivery a "voluntary transfer of
to defeat the holder in due course status of the assignee institutional lender, thus, removing the lender's insulation from claims and defenses
which could be asserted against the seller by the consumer."so The FTC recently reaffirmed the rule, issuing
12
from affirmative recoveries under the Holder Rule unless rescission is warranted.s2 It is against this backdrop that the courts are being asked to make decisions in foreclosure actions based on a presumed negotiability of mortgage notes, often with no analysis as to whether Article 3 is even applicable. Given the general obsolescence of negotiability and the banking industry's own rejection ofArticle 3 in favor ofArticle 9, the courts should not only analyze whether the notes are negotiable, but should employ a healthy skepticism when doing so.
sion that negotiability is not at the forefront of the drafters' objectives. Fifteen years ago, one commentator argued that that the UI Note does not meet the requirements of negotiability because it contains an undertaking in addition to the payment of money, which is forbidden by UCC Article 3-104(a)(3).56 Specifically, he argued that the
lncorporation of Mortgage Terms; Opting for Security Over Transferability One of the well-settled rules of negotiability is that the instrument
cannot include obligations or condi-
tions that cannot be determined from the four corners of the note itself.ss Thus, incorporating the
terms of another document, such as
the mortgage, instantly destroys ne-
requirement that the borrower notify the note holder in writing of any prepayment is just such an additional undertaking.sT Courts, however, have recently begun to reject this argument, finding that the nonmonetary obligation is not
a condition placed on the borrower's
Negotiability of Modern Mortgage Notes It is perplexing that modern jurists often assume that all mortgage-backed promissory notes are
gotiability.d0 Mere reference to the mortgage without incorporating its terms, however, has no effect upon negotiability.6l This rule has led to bizarre tightrope walking by the banking industry attempting to integrate terms from the mortgage into the note while still maintaining negotiability. In Sims u. New Falls Corp.,37 So. 3d
358 (Fla. 3d DCA 2010), for example,
a benefit of which the borrower is not obliged to avail himself or herself.s8 Still, there are other more cornpelling reasons to conclude that modern mortgage notes are not negotiable.
sued
- 6((s6g1ls1 without luggage."53 In reality, a mortgage note is laden with the mortgage itself a veritable steamer trunk full of additional
rights and obligations that must accompany the note on all its travels. The Permanent Editorial Board for the Uniform Commercial Code has itself warned that "[ijt should not be assumed that all mortgage notes
are negotiable instruments."sa The more intuitive stance is that
,'. Lrsii:
..1!:
LEWIS
ui Uur i'*:!
Ft
today's complex mortgage loan transactions produce lengthy interrelated documents that do not qualify as negotiable instruments. Indeed, the banking industry's abandonment of Article 3 in favor ofArticle 9 transfers suggests there would be little reason for the industry to ensure that the notes it drafts
for loans intended for securitization would comply with all the rules of
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Water. Real Estate. Health Care. Intellectual Property. Natural Resources. Legislative and Covernment Aifairs. And, more.
negotiability.
2012
.13
(equivalent to a mortgage). In that case, the term at issue was a choice of law provision that appeared in
conditions under which the borrower may be required to make immediate payment in other words,
provisions of $15 of the mortgage, without ever describing the specifics of those provisions (emphasis
added):
a conscious effort had been made not to incorporate the term by reference to the mortgage for fear it would "destroy the negotiability of promissory notes and open all foreclosure actions to otherwise barred
If Lender exercises this option [to accelerate upon sale or transfer of the property to a third partyl, Lender shall
give Borrower notice of acceleration. The notice shall provide a period ofnot less
collateral
defenses."62
Still, wanting
to have their cake and eat it, too, Fannie and Freddie maintained that in a foreclosure action (as opposed
to an action to enforce the note), the
word "someo unmistakably communicates that the mortgage contains additional promises of the borrower with respect to the loan that do not
sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument
is given in accordance utith Section 15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these
contract and that the choice of law provision in the [mortgage] would govern the enforcement of the [n] ote."63 So, Slrzs reveals an important banking industry concession that, in a foreclosure context, its standard characteristic - it can effectively adopt terms outside its own four
corners. note has a decidedly non-negotiable
appear within the four corners of the note. Those additional promises include 1) payment of taxes;2) payment of casualty insurance; 3) payment of mortgage insurance; 4)
One example of an additional promise made by the borrower in $15 of the UI Mortgage is to "promptly notify Lender of Borrower's change of address." Under the UI Note, the borrower is not obligated to provide a change of
address.6s
furnishing
the lender with notices of amounts due for taxes, assessments, and community association charges; and 6) furnishing the lender with receipts evidencing payments of taxes, assessments, and community asso-
This desire to incorporate terms from the mortgage, without appearing to, is most evident in $10 of the UI Note. Here, Freddie and Fannie begin by merely referencing the mortgage, which, by itself,
would have no effect on the note's negotiability: In addition to the protections given
Another complication is that the UI Mortgage defines the term "borrowero as the "mortgagor." To ensure that the lien applies equally to anyone on the deed, such as nonborrowing spouses or business partners, the practice is to include the names of property
owners who borrowed no money as a borrower (and, thus, mortgagor) on the mortgage. The borrower on
to the Note Holder under this Note, a Mortgage, Deed of Trust, or Security Deed (the'Security Instrument"), dated the same date as this Note, protects the Note Holder from possible losses which might result if I do not keep the prornises which I make in this Note.
cites verbatim language from $18 of the UI Mortgage6T that permits acceleration upon alienation of the collateral real estate. In doing so, it
incorporates by reference the notice
promises by strangers to the note be - parties whose identity cannotthe ascertained without looking at mortgage. In the end, despite the drafters'
studious avoidance of the word "incorporate," it cannot be disputed that the intended effect was to
incorporate the terms of the mortrather than merely reference them. While it might be said that the careful wording is a passing
gage,
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THE FLORIDA BAR JOURNAUDECEMBEB 2012
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possession" of the note, may not take a home as payment for the debt.Ta Requiring a greater showing of entitlement to foreclose than that to obtain a money judgment, i.e., greater than mere possession of a note, is also entirely consistent
protecting homeownership as reflected in Florida's Constitution.Ts
ignored, since an Article 3 holder of the note need not be its owner, the abstract claim by a holder that the
Does the Mortgage Follow the Holder of the Note or the Owner? Even if the court decides that a note is negotiable (and that the plaintiff bank is its holder), the bank's work in a foreclosure case is only half done. Successfully claiming to be an Article 3 holder only entitles the bank to a money judgment on the note. It must now prove that it is entitled to enforce the mortgage.6s For this, the foreclosing bank turns to the common law rule that the "mortgage follows the note."?o Thus, so the syllogism goes, no document is needed to show that the plaintiff is entitled to enforce the mortgage because that right was transferred to it along with the note itself.?r Notably, the most often cited case for this proposition, Johns u. Gillian, 184 So. 140 (Fla. 1938), actually held that, when there is no written assignment of the mortgage, the plaintiff "would be entitled to foreclose in equity upon proof of his purchase of the debt."72 But because even a thief can be a holder entitled to enforee a negotiable instrument, mere presentment of the original note is not evidence ofan actual purchase of that note. The "mortgage follows
the evidentiary shortcut it is professed to be, but just the opposite. It requires proofofpurchase ofthe note, something that the Article 3 holder was able to skip on the way to enforcing just the note.
bank is not the original lender, it must prove a purchase and an intent to transfer the mortgage with the note. Such proof of ownership
Accordingly, when the foreclosing
the note or the holder of the note. Ifthe transfer is one that occurs by operation of"equity," then it strains logic to suggest that equity would strip the true owner of the right to collect upon the collateral securing
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15
the note and give that right to a potential thief or finder. Happily, the court need not ponder too long on the puzzle because the very architecture of the UCC
answers the question. The common
605, 607 (1981); Jalres Srrvnw RocnRs, Tne Eanr,y Hrsrony or rnr Lew on Btr-r-s euo Noros, A Sruov oF rHE ORrctlis or ANcr,o-AlrERrcAN CouneRcrar- Lew (Cambridge University Press 1995); Ali
Iaw concept that the lien faithfully tags along after the note is
found in Article
9,?6
presentment of a note endorsed to the plaintiff is alone sufficient to prove standing to foreclose are
misguided.
not Article 3.
1aw77
and the court must presume that the legislature, in adopting these
provisions, intended that mortgages follow Article 9 owners, not Article 3 holders. Moreover, if there is any conflict between Article 9 and Article 3, the rules in Article 9
govern.78 And finally, while possession is a means of perfection under
Care should be taken in the rush to extricate ourselves from the current mortgage foreclosure crisis not to elevate negotiability
beyond the narrow mercantile milieu from which it developed, where merchants transacted business on an equal footing. In the foreclosure
ntent Systems 60 S.C.L. Rsv. 426, 434, n. 45 (2008). 3 Kurt Eggert, Held. Up in Due Course: Codification and the Victory of Form Ouer Intent in Negotiable Instrument Lau,35 Cnntcu'roN L. Rrv. 363,377-'18 Q002).
5
Article 9, enforcement of the security interest requires proof that the buyer gave value to purchase the mortgage loan from a seller entitled to sell it.7e As a result, enforcement of a mortgage transferred under Article 9 (i.e. by following the note) requires proofofa sale,just as was required by common law under Johns. And because the foreclosing bank must show that it obtained the mortgage loan from a seller authorized to sell it, the bank must ultimately prove the sale at each
tems,44 UCLA L. Rnv. 951, 957 (1997). 6 RocrRs, Tsr Ervo oF Npcorrnel,n INsrRUMENrs at 71. ("What gave rise to the iaw of bilis and notes in general, and negotiability in particular, was the circumstance that privately issued instruments circulated as a form ofcurrency substitute."); see also id. at 93. 7 Eggert, Held Up in Due Course at
388-389. 8 Rocens, Tun ENo
or Nroorreat-o
IN-
s Rocrns, Tsn ENo ol Nrcorrenle INsrnunpNrs at 22 (quoting Wrr,lrau EvrRnrr Bnrtrorv, Haroeoox oF THE LAw or Law op Brlr-s eNo Norns 25 (1943)J. r0 Mann, Seorching for Negotiability in
srnulrrNrs at
8.
161,
16
15 16
Id. at 71,93.
Gregory Maggs, Determining the
Rights and Liabilities of the Remitter of a Negotiable Instrttment: A Theory Applied to Some Unsettled Questions,
36 B.C.L. Rnv. 619, 626 (1995).
1?
the bother of taking physical possession ofthe notes in question, a process that they often consider irksome"); H. Bruce Bernstein, Commercial Finance Association: Summary of the Uniform Contmercial Code Reuised Article 9, auailable al https://rvww.cfa.
eom/erv eb/DynamicPage a spx? Site= cfa&WebKey=9d83ef78-8 268 - 4 aae 95el-7f4085764e46 (revised Article 9 facilitated mortgage-backed securitization); David Peterson, Cracking the Mortgage Assignment Shell Game,85
-
2e The typical standing allegation is now that the plaintiff bank is the
CnnrcstoN L. Rnv. 44L,448 (1979). t8 Id. aL 461 (Article 3 is "a museum of antiquities - a treasure house crammed fuli of ancient artifacts whose use and function have long since been
"hoider of the [n]ote and the fmlortgage and/or is entitled to enforce them." 30 The rvord "holds" in the phrase "owns and hoids" appears to be unrelated to the Article 3 term "holder." A search of Florida law reveals that the phrase "orvns and holds" is a ubiquitous legalism used in many contexts outside of
Article
forgotten.").
ls
275,
Articie 9 addressed the needs of banks in the securitization chain by treating mortgages as personal property that could be transferred without regard to
the real estate records).
23 Peterson, Cracking the Mortgage Assignment Shell Game at 12. 2a See Fre. Srer. $679.3131(3) Q0l2). 25 26
out" of the American Law Institute and the Commission of Uniform Laws to the banking lobby). 20 Dale A. Whitman, Ilow Negotiability has Fouled Up the Secondary Mortgage Market, and What to Do About It, 37 Pnpp. L. REr'. 737, 740 (20LA) ("[N]egotiability requires that, for every loan sold on the secondary market, the original promissory note must be delivered to the purchaser. In a national or global
334,362-63 (1952) (calling the UCC a "Lawyers and Bankers ReliefAct" and railing against what he called a "se11-
Id.
RrpoRr oF THE
PERITANENT EDrroRrAL
can Law Institute and the National Conference of Commissioners on Uniform State Larvs 2011)lhereinafter PEB Reponrl.
Loan Seruices, LLC,36 So.3d 932 (Fla. 4th DCA 2010). 32 The Florida evidence rule on selfauthentieation of commercial papers
Procedure,391 So. 2d 165 (Fla. 1980). 31 FLe.. Evro. Cooe $90.902 (8) (SelfAuthentication). ,See Riggs u. Aurora
market, this requirement is extremely recent years, has been widely ignored, much to the detriment of mortgage
purchasers."); see also Mann, Searching for Negotiability in Payment and Credit Systems at 961. 2r Dale Whitman,Transfers of Mortgage Notes under New Article 9, auailable ctt http: / / d.irt. umkc.edu/files/newart9i. htm. These changes were enacted in
'?? See Mann, Searching for Negotiability in Payntent and Credit Systents at 969. 25 Fle. R. Cn'. P. Form 1.944.
provided in the Uniform Commercial Code." Drafted in the days before highresolution color copiers, scanners, and printers, horvever, the UCC speaks only
on
NewJersey Referrals
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14
22 Steven Schwarcz, The Impact of Securitization of Reuised UCC Articl.e 9, 74 Cnrcaco-Ke:vr L. Rer'. 947 (1999); Whitman, Transfers of Mortgage Notes under New Article I (appatent purpose of change was to insulate issuers of mortgage-backed securities from attacks by bankruptcy trustees "without
(ESRA), and the American Land Title Association (ALTA), auailable at http:// wwrv. mo rtgageb anke rs. org/files/ResourceCenter / emortgage/ eNote WhitePaper.pdf).
(e73) 635-s400 'Jersey City ' North Bergen ' Red Bank www.niatty.com
work participation may be paid to NewJersey Coure Rule l:39-6(d) 2012
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17
documents, not the authenticity of the documents themselves. J3 See Haruey u. Deutsche Bank Nat. Trust Co.,69 So. 3d 300, 304 (Fla. 4th DCA 2011) (even ifthe borrower could prove that an assignment vi'as fraudulent, the dispute wouid be between the plaintiff and the actual ow'ner of the
(2012). The requirement that there be an intent to give the recipient the
{6
1992) (a thiefcannot convey good title to stolen property, even to a good faith
25 (B.A.P. 9th Cir. 2011) (noting that the ability of a thief to obtain payment on bearer instruments has factored in Iiterature and film storylines). 36 Battles u. State,602 So. 2d1287 (Fla.
note ). 2a See
{'-
(Fla. 1938). 71 Haruey,69 So. 3d at 304. 72 Johns, 184 So. at 143-414 (emphasis
added).
to both substance and procedure, the enforcement ofreal estate mortgages by foreclosure is primarily the providence of a state's real property law...."). 70 Johns u. Gillian,184 So. 140, 743
n.
the purchase of homes state that the borrower waives the right to require the holder to make a formal demand
horvever, expressly waive the borrower's
for payment. The ianguage does not, right to require identification and evidence of authority to enforce the note once that demand for payment has been
made. 48 16 C.F.R. $433.2. re .Id. The Holder RuIe notice destroys the negotiability ofany note upon rvhich
i3 See Smith u. Kleiser,107 So. 262,263 (Fla. 1926) (foreclosure, as an action in equity, "shouid be in the name of the
OiI Co.,660
purchaser); Alamo Rent-a-Car, Inc. u. Williamson Cadillac Co., 613 So. 2d 517, 518 (Fla. 3d DCA 1993) (a thief
cannot pass good title).
36 Antonacci v. Denner,149 So. 2d 52, 53 (Fla. 3d DCA 1963). 31 Id. at 53-54. The Fifth District later noted that there was a split of authority
appears because its very presence makes the promise to pay conditional. A revision to Article 3 restored limited
it
Banh, 50I F.zd 1322, 1325 n. 3 (5th Cir. 1974). While the court deciined to decide rvhich party bears the evidentiary burden, the fact that evidence of ownership of the instrument could be introduced against an alleged holder in
due course was taken for granted. 3s Fr-.r. Sr,rr. $673.3011(2012) (emphasis added). 3e Comments of the drafters of Article 3, Fr,r. Srer. $673.2031 (2012) ('A ihief lvho steals a check payable to bearer becomes the holder of the check and
&
notice, but withheid a key attribute. It declared that no one may be a holder in due course of a note imprinted with the notice. U.C.C. $3-106(d); Fla. Star.
$673. 106 1(4) (2012); see also, Cohen, The
Calamitous Law of Notes aL 163-L64. 'ro Tinker, 459 So. 2d at 492; see also Florida Auto. Fin. Corp. u. Reyes,7I0 So. 2d 216, 218 (Fla. 3d DCA 1998). 5t Schatter u. Gen. Motors Acceptance Corp.,819 So. 2d 809, 813 (F1a. 4th DCA
t2 Opinion Letter of the Federai Trade Commission, NIay 3, 2012, auailable at http ://rvww ft c. gov / osl20 L2 / 0 5 / 120 5 l0 a
2002).
to the fraudulent transaction nor that the fraud was perpetrated upon a third
party.").
75
also Yost u. Rieue Dnters., Inc., 461 So. 2d L78 (F).a.1st DCA 1984) ("There is no bar to applying the doctrine ofunclean hands to a case in which both the plaintiff and the defendant are parties to a fraudulent transaction perpetrated on a third party."); Hauer u. Thum, 67 So. 2d 643,645 (Fla. 1953) ("It would matter not that the [defendants] were parties
76
instrument is payable to bearer and it is stolen by Thiefor is found by Findeq Thief or Finder becomes the holder of the instrument when possession is obtained. In this case there is an involun-
dvisoryopinionholderrule.pdf, 53 See, e.g., Gen. Motors Acceptance Corp. u. Honest Air Conditioning & Heating, lnc.,933 So. 2d 34, 37 (Fla. 2d
DCA 2006). i4 PEB Rrponr at 4, n. 13. ;5 The version ofthe form discussed in this article is Form 3210, the Florida
tary transfer
{o
of possession
that results
'j6 Mann, Searching for Negotiability in Payntent anc! Credit Systems at 969-73.
t7
t'8
In re Walker,
Id.
mercial Code - A Reply to Professor white, !3 B.c.L. Rnr'. 1 (1971). One of the drafters of the UCC publicly lamented its exaltation of transferabilitv over property rights, as being out of step with modern economic realities. Grant Gilmore, The Good
$673.106 1(1Xb).
Charter Banh
Commercial Code: Confessions of a Repentant Draftsman,lS Groncrn L. Rev. 605 (1981). n' Khan, A Theoretical Analysis of Payment Systenzs at 2 n. 9 and 22. '2 U.C.C. $3.201; Fl,r. Srer. $6?3.2011
(2012).
43
Mae/Freddie
Form 3010.
68 6s
6i
UI Note $7. PEB Rpponr at 1 ("The UCC, of course, does not resolve all issues in this field lthe transfer and enforcement of notes secured by a mortgage
Thornas Erskine lce is the founder and principal legal strategist of lce Legal, PA,, in. West Palm Beach and Miami, and has practiced law in South Florida for more tltan 25 years. He is licensed to appear in the courts of Florida and the U.S. federal courts. He handles complex mdtters including banhruptcy, commercial litiga' tion, personal injury, and wrongful death cases, and is a graduate af the uniuersity
of
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