HERBERT S. SHAPIRO, ET AL., APPELLANTS,
v.
FAMILY BANK OF HALLANDALE, ET AL., APPELLEES
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The court affirmed that a lender's security interest in a note is not defeated by the borrower's physical possession when the lender was wrongfully prevented from retaining possession of a note that was initially validly transferred to it.
A lender's security interest in a note is not defeated by the borrower's subsequent wrongful reacquisition and retention of physical possession when the note was initially validly transferred to the lender.
[1] A lender's security interest in a promissory note is not defeated by the borrower's physical possession when the lender was initially given valid possession and was there…
Previewing 1 of 1 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“cannot apply when the party was prevented from taking possession and thus perfecting his legal lien by [a] wrongful detention”
The court explained why the possession doctrine does not apply when a lender is wrongfully prevented from retaining possession of a note.
A borrower possessed a note in a note and mortgage financing transaction, but the lender had recorded an assignment of the mortgage. The borrower's po…
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SCHWARTZ, Chief Judge.
It is unnecessary in this case to decide whether, as the appellant contends, a borrower’s physical possession of the note involved in a note and mortgage financing transaction ordinarily prevails over the security interest of the lender notwithstanding that the lender has recorded an assignment of the mortgage. See J. White & R. Summers, Uniform Commercial Code § 23-7, at 270-72 (3d ed. 1988). Contra Rucker v. State Exchange Bank, 355 So. 2d 171 (Fla. 1st DCA 1978), cited in General Elec. Credit Corp. v. Air Flow Indust., 432 So. 2d 607 (Fla. 3d DCA 1983). This is because the possession of the particular note in question here was, in fact, initially validly transferred to the lender and was only then wrongfully reacquired and thereafter retained by the borrower. Even the asserted doctrine that the appellee-lender’s security interest fails because of its lack of possession
cannot apply when the party was prevented from taking possession and thus perfecting his legal lien by [a] wrongful detention....
In re Bruce Farley Corp., 612 F. 2d 1197, 1201 (9th Cir.1980); see In re Atlantic Mortgage Corp., 69 B.R. 321 (E.D.Mich. 1987) (lender deemed in legal possession of note physically held by borrower as constructive trustee). The latter rule applies here.
AFFIRMED.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Authorities Cited
- In re Bruce Farley Corp. v. Bruce Farley Corp., 612 F.2d 1197 (9th Cir. 1980)
- Nell Rucker & the Fed. Land Bank of Columbia v. State Exch. Bank, 355 So. 2d 171 (Fla. 1st DCA 1978)
- Major Mktg. Corp. v. Haynes, 355 So. 2d 171 (Fla. 4th DCA 1978)
- Gen. Elec. Credit Corp. v. AIR Flow Indus., Inc., 432 So. 2d 607 (Fla. 3d DCA 1983)