199 Conn.App. 734
Conn. App. Ct.2020Background:
- In the 2005 divorce, Donald transferred his interest in 11 Billow Road to Katherine; Katherine executed a $160,000 promissory note to Donald payable on either sale of the property or her death; the note also stated that if title were transferred the unpaid principal could become due at the holder's option.
- In 2013 Castle (trustee) sued Donald, obtained judgment, and the court ordered a postjudgment attachment/garnishment of the promissory note with a court order that the original be turned over; the original note was never delivered and Castle never possessed the original.
- In 2014 Katherine quitclaimed title to her daughter for love and affection but retained a life use; plaintiff recorded a judgment lien and demanded payment claiming the transfer triggered acceleration under the note.
- Castle sued Katherine (2015) for payment on the note (count 1) and to foreclose the mortgage (count 2), alleging she was the holder/assignee by virtue of the court attachment; defendant moved for summary judgment.
- The trial court granted summary judgment for Katherine, relying on extrinsic evidence that "transferred" meant transfer for value; on appeal the Appellate Court held Castle lacked standing and directed dismissal for lack of subject matter jurisdiction.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to enforce the promissory note | Castle: court attachment/garnishment made her successor/holder and a copy suffices | DiMugno: Castle never possessed original; UCC § 42a-3-309 requires possession when loss occurred | Castle lacks standing to enforce the note; she did not meet § 42a-3-309 requirements |
| Standing to foreclose mortgage without assignment of the debt | Castle: attachment of the note/judgment lien supports foreclosure | DiMugno: no assignment of debt and no secondary evidence of ownership; statutory garnishment/execution procedures not followed | Castle lacks standing to foreclose; she produced no proper secondary evidence and did not execute garnishment procedures |
| Whether quitclaim to daughter triggered acceleration under the note | Castle: "title transferred" language is clear and triggered payment | DiMugno: "transferred" means transfer for value; life-use/quitclaim for love and affection is not a sale | Appellate court did not decide the merits; standing was dispositive (trial court had interpreted "transfer" as requiring value) |
| Admissibility of extrinsic/parol evidence to construe "transferred" | Castle: note unambiguous; parol evidence should be excluded | DiMugno: extrinsic evidence shows parties intended "transferred" to mean transfer for value | Appellate court declined to resolve construction; dismissed case on standing grounds before reaching parol-evidence issue |
Key Cases Cited
- J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307 (Conn. 2013) (discusses UCC standards for who is a person entitled to enforce an instrument and standing to enforce notes)
- Seven Oaks Enterprises, L.P. v. DeVito, 185 Conn. App. 534 (Conn. App. 2018) (assignee not in possession of a lost note cannot enforce it absent meeting § 42a-3-309)
- New England Savings Bank v. Bedford Realty Corp., 238 Conn. 745 (Conn. 1996) (mortgagee may pursue equitable foreclosure without possession of the lost note; secondary evidence can prove the debt underlying a mortgage)
- Guaranty Bank & Trust Co. v. Dowling, 4 Conn. App. 376 (Conn. App. 1985) (pre-1991 statutory approach to lost notes distinguished from current § 42a-3-309)