Is Pomerantz a holder? Is Pomerantz a holder in due course? Explain.
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Turman executed a deed of trust note for $107,500 payable to Ward’s Home Improvement, Inc. (Ward’s). The note was in consideration of a contract for Ward’s to build a house on Turman’s property. On the same day, Ward’s executed an assignment of the note to Robert Pomerantz for which Pomerantz paid Ward’s $95,000. Although the document uses the word assignment, no notation or indorsement was made on the note itself. Is Pomerantz a holder? Is Pomerantz a holder in due course? Explain. |
Explanation
Individual RP has paid Individual W a total of $95,000 in return for the assignment of the note. The note is not an indorsement and does not contain any notation either. Because of this reason, Individual RP is not a holder or a holder in due course. An assignment is not an indorsement, in any way. Individual RP is an assignee and Individual W is an assignor. Individual RP is only subject to the defense that the performance is due or the performance has not yet been performed against Individual W. But if the transaction carried out between Individual RP and Individual W is an indorsement, Individual RP is going to have the status of a holder.
Verified Answer
Individual RP is not a holder since the transaction that has taken between Individual W and Individual RP is only an assignment and not an indorsement. Individual P is also not a holder in due course because of the same reason.
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