For nearly a century, Ohio courts have held that whenever a promissorynote is secured by a mortgage, the note constitutes the evidence of thedebt and the underlying mortgage is a mere incident to the obligation.Therefore the negotiation of a note operates as an equitable assignmentof the mortgage, even though the mortgage is not assigned or delivered.
The Note is endorsed from Unison Financial Group, Inc. to SIB Mortgage Corp., ThePlaintiff cannot claim that this Note is owned by it for unlike a blank endorsement which becomes payable to bearer and may not be negotiated by transfer of possession alone untilspecially endorsed, this Note is specially endorsed to SIB Mortgage Corp., not the Plaintiff.Various sections of the Ohio’s Uniform Commercial Code also support the conclusionthat the owner of a promissory note should be recognized as the owner of the related mortgage.A promissory note is usually a negotiable instrument, which provides the person entitledto enforce the note the right to payment of the obligation it represents.
A person is entitled toenforce a note when that person falls into one of three categories.
One such category is when the person is a holder of the note. Generally, a person is a holder of the note by having physical possession of the note, which has either been endorsed to that person or endorsed in blank.
Anote may be endorsed by an allonge, which is a paper “affixed to the instrument,” which then becomes part of the instrument.
Once a note is endorsed, its negotiation is complete upon transfer of possession.
Thetransfer of possession requires physical delivery of the note “for the purpose of giving the person
U.S. Bank National Association v. Marcino
(2009), 181 Ohio App. 3d 328, 900 N.E. 2d 1032 citing Kuck v.Sommers (1950) 50 Ohio Abs 400, 100 N.E.2d 68.
ORC. 1303.03, 1303.31
ORC 1303.22, Comment 1;
Citizens Federal Savings & Loan Assn of Dayton v. Core Inc
.,(1992) 78 Ohio App 3d284, 287, 604 N.E. 2d 772, 774, dismissed 64 Ohio St. 3d 1410
ORC 1303.24(A)(2); Adams v Madison Realty dev. Inc (3d Cir 1988) 853 F2d 163, 167.
ORC 1303.24(A), 1303.21 (A)