Abbreviated Indorsement Did Not Identify The Trustee And Was Not Competent Evidence That Trustee Is The Holder Of The Note

In re David A. Simpson, P.C., (NC Ct. of Appeals, COA10-361, May 3, 2011), a foreclosure action, the trial court found that the petitioner was the owner and holder of the mortgage after it produced the original note and allonge for the trial court’s inspection, as well as affidavits attesting to the petitioner’s ownership. Borrowers appealed the trial court’s finding arguing that petitioner did not prove it was the holder of the note and thus the party entitled to proceed with the foreclosure. In reversing the trial court’s finding, the court of appeals observed that the petitioner was Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6. The note’s indorsement contained an allonge reading: PAY TO THE ORDER OF Deutsche Bank Trust Company Americas as Trustee. The court of appeals found that the indorsement did not identify the petitioner as required by North Carolina’s codified version of § 3-110 of the UCC, which state: For the purpose of determining the holder of an instrument, the following rules apply: … (2) If an instrument is payable to (i) a trust, an estate, or a person described as trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named…. The court of appeals concluded that the abbreviated name on the indorsement was insufficient as it was not the same as the petitioner. It therefore was not competent evidence that petitioner was the holder of the note. The court of appeals also rejected the affidavits of two employees of petitioner’s servicer in support of its claim that was the holder. The court ignored one affidavit because it contained inadmissible legal conclusions that the petitioner was the current owner and holder of the note. The court was also particularly troubled that the same affiant was found to have submitted a false affidavit in a separate case in the United States District Court of Maine. As to the second affidavit, which attested that petitioner had the possession of the original note and mortgage, the court held that the affidavit provided no basis upon which the court could conclude the affiant had personal knowledge of this alleged fact. The affidavit did not show how the affiant came to have such knowledge.

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