Page 3 of 7118 Cal. App. 3d 1003, *1003; 173 Cal. Rptr.
Classified to California Digest of Official Re- ports, 3d Series
Commercial Paper § 9 > Transfer and Negotia-
tion > Indorsement > Affixation of Payees’ Signature
--In an action by the maker of a promissorynote secured by a deed of trust on real prop-erty for cancellation of the note that had been as-signed by allonge and an injunction against
the assignee’s foreclosure under the deed of
trust, the trial court properly found in support of its judgment granting the requested relief that
the payees’ assignment of the note by allonge
was ineffective as an indorsement, and thatthe assignee thus was not a holder in due courseand took the note subject to the
-fenses against the payees of fraudulent induce-ment and lack of consideration. The assign-ment by allonge was ineffective as anindorsement, where there was sufficient space
on the note itself for the payees’ indorsement.
Howser, Gertner & Brown and Da-vid L. Sanner for Defendant and Appellant.Stephen D. Johnson for Plaintiff and Respon-dent.
Opinion by Morris, J., with Kaufman,Acting P. J., and Garst, J.,
Defendant appeals from a
judgment enjoining the foreclosure of a trust
deed on plaintiff’s house, and ordering the can
-cellation of a promissory note signed by plain-tiff. Judgment was entered against defendantafter the trial court concluded that he was not aholder in due course.
747, **747; 1981 Cal. App. LEXIS 1724, ***1
, the son of Helen
(plain-tiff), owed $ 126,500 to Ford and Mary Wil-
liams. At Charles’ request, plaintiff executed a
promissory note for $ 126,500 and a trust
deed on plaintiff’s house to secure the note,
both in favor of the Williams. Charles deliv-ered the trust deed to Ford Williams, who caused itto be recorded. The note was never deliv-ered. Ford Williams then induced the plaintiff to execute a second promissory note for $126,500, the subject of this appeal.
The trial court made the finding, which is notnow challenged, that this note was executed onthe false representation by Williams that hewould hold the note and would make no use of it. The court also made the uncontroverted find-
ing that plaintiff received no consideration for
the note.Within a few months, Williams bought fromPhilip Bush (defendant) an option to purchase
Bush’s contractual rights to buy
apartment complex in Texas. As part of Wil-
liams’ written agreement with defendant Bush,
Williams assigned the trust deed on plain-
tiff’s house to defendant and transferred to de
-fendant the promissory note which Williamshad induced plaintiff to execute. Stapled to thenote was a paper, signed by Ford and MaryWilliams, which stated:
For a valuable consid-eration, the receipt and sufficiency of which ishereby acknowledged, the undersigned do
hereby assign the attached Note to Phillip L.
There was sufficient space on thenote itself to write an indorsement in the wordsthat were written on the paper stapled to thenote.After an unsuccessful effort to collect on the promissory note, defendant filed a
Breach and Default and of Election to Cause
Sale of Real Property Under Deedof Trust.
Plaintiff responded by initiating the present action, seeking
cancellation of instru-ment, declaratory relief, and injunction.
Following a trial on the merits, thecourt found for the plaintiff. Although the prom-issory note was a negotiable instrument pay-
Assigned by the Chairperson of the Judicial Council.