U.S. Bank Natl. Assn. v. George
2016 Ohio 7788
| Ohio Ct. App. | 2016Background
- Douglas and Robin George executed a promissory note and mortgage in 2002 in favor of M/I Financial; the note was indorsed to Wells Fargo Home Mortgage, Inc. (WFHMI) and later referenced as being in a Wachovia trust. U.S. Bank sued on the note and to foreclose, claiming successor/trustee status.
- U.S. Bank moved for summary judgment attaching copies of the note and an affidavit by Megan Jones; those attachments omitted certain indorsements and an allonge that U.S. Bank later said existed.
- At a Civ.R. 30(B)(6) deposition, U.S. Bank’s corporate representative identified what was represented as the original note, but he lacked personal knowledge of chain-of-custody and merger documents.
- The trial court granted summary judgment to U.S. Bank; the appellate court (this decision) reversed, holding U.S. Bank failed to prove it was the person entitled to enforce the note.
- On reconsideration, U.S. Bank argued it was a “nonholder in possession with the rights of a holder” under Ohio’s UCC; the court declined to reverse, finding evidentiary gaps (missing indorsements/allonges, lack of merger certificate or other quality proof) left material factual disputes about standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was U.S. Bank the person entitled to enforce the note? | U.S. Bank: it possessed the original note (or produced it) and thus, as holder or nonholder-in-possession with rights of a holder, had standing. | Georges: U.S. Bank failed to show a valid, continuous chain of negotiation/indorsement or evidentiary proof of transfers/merger; therefore not entitled to enforce. | Held: U.S. Bank failed to supply evidentiary-quality proof of holder status or of being a nonholder with holder rights; summary judgment reversed. |
| Can transfer/assignment of the mortgage alone vest note-enforcement rights? | U.S. Bank: mortgage assignments (which referenced the note) show transfer of rights and, combined with possession, support enforcement. | Georges: assignment of the mortgage does not substitute for negotiation/indorsement of the note. | Held: Under Ohio precedent (Holden), assignment of the mortgage does not automatically transfer the right to enforce the note; mortgage assignment did not cure gaps. |
| Does mere physical possession without indorsement suffice under R.C. 1303.31/1303.22? | U.S. Bank: R.C. 1303.31(A)(2) permits a nonholder in possession to enforce if there is possession plus evidence of transfer; reliance on R.C. 1303.22 transfer provisions. | Georges: possession alone (non-bearer note) is insufficient; transferee only gets what transferor had—absent valid indorsements/negotiation the chain is broken. | Held: Possession alone of a non-bearer note is insufficient; UCC requires negotiation/indorsement or other clear evidence; record lacked such proof. |
| Were the trial court’s summary-judgment findings proper re: the original note and custodial testimony? | U.S. Bank: production at deposition and custodian testimony established possession and supported summary judgment. | Georges: custodian lacked personal knowledge and there were unexplained discrepancies between versions of the note; evidence must be construed for nonmovant. | Held: Trial court erred by not construing evidence in favor of defendants; deposition/custodian testimony did not provide admissible, undisputed chain-of-custody. |
Key Cases Cited
- Acordia of Ohio, L.L.C. v. Fishel, 133 Ohio St.3d 345, 978 N.E.2d 814 (Ohio 2012) (merger effects: absorbed entity’s rights/pass-through to surviving company)
- Morris v. Investment Life Ins. Co., 27 Ohio St.2d 26, 272 N.E.2d 105 (Ohio 1971) (describing legal effect of corporate merger)
- In re Wells, 407 B.R. 873 (Bankr. N.D. Ohio 2009) (note enforcement requires negotiation under UCC; assignment alone doesn’t transfer enforcement rights)
- Dauenhauer v. Bank of N.Y. Mellon, [citation="562 F. App'x 473"] (6th Cir. 2014) (borrowers generally lack standing to challenge compliance with pooling-and-servicing agreements)