StandingApril 9, 2018
McCormack v Maloney, 2018 NY Slip Op 02385 (3d Dept. 2018)
This is a commercial paper case, but I blog about standing because it is an issue we deal with at various times. Here are relevemt snippets from an upstate case involving holder of notes that are not indorsed in blank.
“Defendant argues, and we agree, that the complaint should have been dismissed for lack of standing. Because defendant raised the issue of standing as an affirmative defense in his answer, plaintiff had to prove his standing to maintain this foreclosure action in order to be entitled to relief….”
“At trial, plaintiff testified that he purchased the note and mortgage from Trustees Capital in September 2006, and a written assignment effectuating the transfer of both such instruments to plaintiff was admitted into evidence. The testimonial and documentary evidence adduced at trial further established, however, that plaintiff subsequently assigned both the note and mortgage to his then-bankruptcy attorney in March 2008 as partial payment for legal services, and there is not a scintilla of proof in the record that the note was reassigned to plaintiff prior to the commencement of this foreclosure action in June 2010. Nor did the trial evidence establish that plaintiff was the holder of the original note at the time that he commenced this action. “Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff” (Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376  [citations omitted]; see UCC 1-201 [b] ; 3-202, 3-204; Hartford Acc. & Indem. Co. v American Express Co., 74 NY2d 153, 159 ; U.S. Bank N.A. v Brody, 156 AD3d 839, 840 ). While there was testimony that plaintiff possessed the original note at the time of trial in 2015, there was no proof that he was in possession of the original note when he commenced this foreclosure action five years earlier. Even if he was, the note — which was payable to Trustees Capital — was neither indorsed in blank nor specially indorsed to him. Consequently, plaintiff’s physical possession of the note could not render him the lawful holder thereof for purposes of enforcing it .”
Now, another interesting question here is whether the 6 month period to recommence the action would run upon dismissal since the dismissal is not on the merits?