Case ID: ohio-law-abs_4/html/0522-02.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 633
    KERMAN et v. BUILDING & LOAN CO.
    No. 19863.
    Supreme Court
    On motion to certify.
    Dock. June 4, 1926.
    147. BILS & NOTES — When a construction loan has been granted on mortgage security and the note negotiated before the payment of the full amount of the loan, the mortgagee going into the hands of a receiver in the meantime, may the second holder of the note maintain an action in foreclosure and for personal judgment for the face of the note?
    Attorneys — S. J. Krohn, E. Blythin, Cleveland, for Pltf.; Tolies, Hogsett, Ginn & Morley, Cleveland, for Deft.
   The Ashland Building & Loan Company brought this action originally 'in the Cuyahoga Common Pleas against Mary S. Kerman et for foreclosure of a mortgage and for personal judgment on a note.

It appears that Kerman had been granted a construction loan for $12,500 by the Cleveland Discount Company and that a note for this amount and a mortgage seeking the same had been executed. The Discount Company paid $10,618 on said loan and then negotiated the note and its security to the Ashland^ Buildig & Loan Co. In the meantime a receiver had been appointed for the Cleveland Discount Company.

The Common Pleas decreed foreclosure and rendered personal judgment against Kerman for $10,618.

The Court of Appeals rendered judgment for the full amount called for by the note.

Kerman in the Supreme Court contends:

1. That the note was not complete on its face because of certain provisions contanied therein specifying the terms of the mortgage, thereby maknig it non-negotiable.

2. That the Building & Loan Company is not a bona fide holder in due course because under the law in a transaction of this kind the status of the transaction is known to the transferee.