On September 2, 2011, Levine executed a mortgage bond under which she promised to pay the Mykoffs a preexisting obligation of $54,000
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On September 2, 2011, Levine executed a mortgage bond under which she promised to pay the Mykoffs a preexisting obligation of $54,000. On October 14, 2017, the Mykoffs transferred the mortgage to Bankers Trust Co., indorsing the instrument with the words “Pay to the Order of Bankers Trust Company Without Recourse.” The Lincoln First Bank, N.A., brought this action asserting that the Mykoffs’ mortgage is a nonnegotiable instrument because it is not payable to order or bearer; thus, it is subject to Lincoln’s defense that the mortgage was not supported by consideration as an antecedent debt is not consideration. Is the instrument payable to order of bearer? Discuss. |
Explanation
Under the Uniform Commercial Code, a writing, to be flexible, should be payable to the command or to the holder. Since the debt does not contain any such language, it may not be a passable instrument. Person M's agreement cannot change the tool to a flexible one. The debt bond may be inflexible and unlawful because it lacks legal consideration. Company B's claim may be unsecured; as the assignee, Company B may be subject to the security of lack of consideration.
Verified Answer
The tool may not be due to command or beneficiary. The previous debt may be a complete consideration to support a flexible tool, but not a inflexible one since it may lack the lawful perquisites.
