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    15 Furbee v. Furbee

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    Patricia Sulit
    The court held that while a transferee of an unendorsed note payable to order does not become a holder in due course, they do become a holder who can maintain a legal action against the maker in their own name. Specifically: 1) If a note payable to order is transferred for value without endorsement, the transferee acquires the same title as the transferor, including the right to maintain a legal action against the maker. 2) While the transferee is not a holder in due course, as their title is subject to defenses against the transferor, they do step into the shoes of the transferor and can maintain an action in their own name. 3) Here

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    © All Rights Reserved
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    15 Furbee v. Furbee

    Uploaded by

    Patricia Sulit
    44 views2 pages
    The court held that while a transferee of an unendorsed note payable to order does not become a holder in due course, they do become a holder who can maintain a legal action against the maker in their own name. Specifically: 1) If a note payable to order is transferred for value without endorsement, the transferee acquires the same title as the transferor, including the right to maintain a legal action against the maker. 2) While the transferee is not a holder in due course, as their title is subject to defenses against the transferor, they do step into the shoes of the transferor and can maintain an action in their own name. 3) Here

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    The court held that while a transferee of an unendorsed note payable to order does not become a holder in due course, they do become a holder who can maintain a legal action against the maker in their own name. Specifically: 1) If a note payable to order is transferred for value without endorsement, the transferee acquires the same title as the transferor, including the right to maintain a legal action against the maker. 2) While the transferee is not a holder in due course, as their title is subject to defenses against the transferor, they do step into the shoes of the transferor and can maintain an action in their own name. 3) Here

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    44 views2 pages

    15 Furbee v. Furbee

    Uploaded by

    Patricia Sulit
    The court held that while a transferee of an unendorsed note payable to order does not become a holder in due course, they do become a holder who can maintain a legal action against the maker in their own name. Specifically: 1) If a note payable to order is transferred for value without endorsement, the transferee acquires the same title as the transferor, including the right to maintain a legal action against the maker. 2) While the transferee is not a holder in due course, as their title is subject to defenses against the transferor, they do step into the shoes of the transferor and can maintain an action in their own name. 3) Here

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Furbee v.

    Furbee
    117 W. Va. 722 – 29 Sep 1936
    Hatcher, President

    Topic: Transfer – Unindorsed Instruments


    Doctrine: If a note payable to order is negotiated for value without indorsement, the transferee does not
    become a holder in due course but a holder subject to the existing equities against the transferor. The
    transferee for value of an unendorsed note payable to order can maintain an action thereon in his own
    name if the transferor had legal title.

    Petitioners: the name of the party was not specified


    Respondents: the name of the party was not specified

    Case Summary:
    The payee of a note payable to order transferred such to a transferee for value without indorsing it.
    Transferee now wants to maintain legal action against the maker of the note. Maker argues that since
    the note was not indorsed, there was not transfer of rights to the transferee as per Sec 30 of the NIL.
    The Court held that following Sec 49 of the NIL, legal action can be maintained by the transferee for
    value as he stepped into the shoes of the transferor and acquired the latter’s rights.

    Facts:
     It is alleged that the payee transferred a note payable to order for value without indorsing it
     The maker of the note said that since the note was not indorsed, the transfer did not pass onto the
    transferee the right of legal action citing decisions under the law merchant and Sec 30 of the NIL.
     Sec 30 Negotiable Instruments Law provides: “An instrument is negotiated when it is transferred from
    one person to another in such manner as to constitute the transferee the holder thereof. If payable to
    bearer, it is negotiated by delivery, if payable to order, it is negotiated by the indorsement of the
    holder, completed by delivery.”

    Issues + Held:
    1. W/N legal action can be maintained against the maker of a note, by one to whom the payee allegedly
    transferred the note for value but without indorsement – YES
     The first sentence of Sec 30 defines negotiation.
     2nd sentence of Sec 30 should not be read to exclude other means of negotiation such as the one
    mentioned in Sec 49 which in part states that “where the holder of an instrument payable to his order
    transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferor
    had therein.” This vests the transferee with the entire title of the transferor whether legal or equitable,
    or both.
    o When this happens, the transferee becomes a “holder” of the instrument but not a “holder in due
    course” since his title is subject to all the equities against the transferor
     In this case, the transferor had legal title to the note in question. Such was acquired by the transferee,
    the holder, and has the right to maintain legal action thereon.
     Instead of taking equitable title only, the transferee, if for value, now acquires “such title as his
    transferor had therein.” This includes the right to maintain and action against the maker/acceptor or
    other party liable to the transferor.
     Basically, when an instrument payable to order is not indorsed when it is delivered to the transferee for
    value, the rights acquired by the transferee are no greater than that of the transferor. It doesn’t mean no
    right was transferred at all. There is an implied negotiation of such note by the transferor
    Ruling: Petition GRANTED/DENIED.

    Dissent – (J. xxx):

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