terms, is not payable to the transferee and the transferee must account for possession of theunendorsed instrument by proving the transaction through which the transferee acquired it.
Proof of a transfer to the transferee by a holder is proof that the transferee has acquired therights of a holder.
U.C.C. ARTICLE 3 OFFICIAL COMMENTS COMMENT § 3-203Comment 2 (emphasis added).The Court of Appeals for the 1
Not being a holder, the FDIC had to show, as a prerequisite to enforcing the Note against theHoudes, that it was a transferee in possession entitled to the rights of a holder. See 11 M.R.S.A. § 3-1203.Comment 2 following § 3-1203 provides:If the transferee is not a holder because the transferor did not indorse, the transferee isnevertheless a person entitled to enforce the instrument ... if the transferor was a holder at thetime of transfer.... Because the transferee is not a holder, there is no presumption ... that thetransferee, by producing the instrument, is entitled to payment. The instrument, by its terms, isnot payable to the transferee and the transferee must account for possession of the unindorsedinstrument by proving the transaction through which the transferee acquired it.
Proof of atransfer to the transferee by a holder is proof that the transferee has acquired the rights of aholder.
At that point the transferee is entitled to the presumption.... (emphasis added)Thus, in order minimally to be entitled to the presumption under Maine law that it could enforcethe Note, the FDIC was required (1) to prove a sufficient transfer from a holder (here MNB, to which theNote was made payable by the Houdes) to the FDIC in its present capacity as receiver of NMNB, and (2) toproduce the Note at trial
FDIC v. Houde, 90 F. 3d 600 - Court of Appeals, 1st Circuit 1996.
, subsumed within the question of a transfer are the questions of
the transfer occurred because this would affect the rights and obligations of the partiesas well as the law controlling the transaction, and so would be a question of material factrequiring some external evidence.
Because Crescent was not a holder at the time of transfer, the Defendants can’t prove a
transfer from a holder as required by the UCC and upheld in
. Any claim the Defendantsmake under UCC 3-301 (ii) would also fail as a matter of black-letter law.