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ANDERSON v. BURSON | MD Appeals Court requires full proof of note transfer

ANDERSON v. BURSON | MD Appeals Court requires full proof of note transfer


IN THE COURT OF APPEALS
OF MARYLAND
No. 8

September Term, 2011

HOSEA ANDERSON, et ux.

v.

JOHN S. BURSON, et al.

Bell, C.J.,
Harrell
Battaglia
Greene
*Murphy
Adkins
Barbera,
JJ.
Opinion by Harrell, J.

Filed: December 20, 2011

EXCERPT:

A nonholder in possession, however, cannot rely on possession of the instrument
alone as a basis to enforce it. The transferee’s right to enforce the instrument derives from
the transferor (because by the terms of the instrument, it is not payable to the transferee) and
therefore those rights must be proved. Com. Law § 3-203 cmt. 2; accord Leavings v. Mills
175 S.W.3d 301 (Tex. Ct. App. 2004 ) (“A person not identified in a note who is seeking to
enforce it as the owner or holder must prove the transfer by which he acquired the note.”)
The transferee does not enjoy the statutorily provided assumption of the right to enforce the
instrument that accompanies a negotiated instrument, and so the transferee “must account for
possession of the unindorsed instrument by proving the transaction through which the
transferee acquired it.” Com. Law § 3-203 cmt. 2. If there are multiple prior transfers, the
transferee must prove each prior transfer. U.S. Bank Nat’l Assoc. v. Ibanez, 941 N.E.2d 40,
53 (Mass. 2011) (citing In re Parrish, 326 B.R. 708, 720 (Bankr. N.D. Ohio 2005)). Once
the transferee establishes a successful transfer from a holder, he or she acquires the
enforcement rights of that holder. See Com. Law § 3-203 cmt. 2. A transferee’s rights,
however, can be no greater than his or her transferor’s because those rights are “purely
derivative.” Lawrence, supra, § 3-203:15R. Thus, the Substitute Trustees here, who possess
an unindorsed note and wish to enforce it, had the burden of proving their status as nonholder
in possession.

[…]

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