Opinion ID: 2300328
Heading Depth: 1
Heading Rank: 5

Heading: absence of endorsement

Text: The final question involved is whether the absence of endorsement of the Bevko, Inc. notes by, respectively, Alrich, O'Hara and Corson, defeats the pledge. The pertinent Pennsylvania statutory provision expressly negatived the necessity of endorsement. 56 P.S. § 101 (1901, May 16, P.L. 194, Ch. I, Art. III, § 49) provided: Where the holder of an instrument, payable to his order, transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferer had therein; and the transferee acquires, in addition, the right to have the indorsement of the transferer; but for the purpose of determining whether the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made. 56 P.S. § 101, supra, is identical with section 49 of the Uniform Negotiable Instruments Law, 5 U.L.A. ( Part I, 1943), sec. 49, pp. 12, 492. Cf. Blaney v. Mellor Co., 351 Pa. 10, 39 A. 2 d 825 ( Sup. Ct. 1944); R.S. 7:2-49; City Nat. Bank & Trust Co. of Chicago v. Oberheide Coal Co., 307 Ill. App. 519, 30 N.E. 2 d 753 ( App. Ct. 1941); Brannan's Negotiable Instruments Law (7 th Ed., Beutel, 1948), sec. 49, p. 650 et seq. In American Exchange Nat. Bank of New York v. Federal Nat. Bank, 226 Pa. 483, 75 A. 683, 684, 685, 27 L.R.A., N.S., 666 ( Sup. Ct. 1910), it was held that a pledge of a book account must be made by written transfer, but it was also held that a pledge of incorporeal property such as negotiable instruments or bank deposits could be made by mere delivery of the negotiable instrument or of the bank deposit book. It was held in Camden National Bank v. Fries-Breslin Co., 214 Pa. 395, 63 A. 1022 ( Sup. Ct. 1906), that one receiving negotiable paper as collateral security is entitled to be protected, as a bona fide holder, to the same extent as one who becomes the owner of such paper. Cf. Munn v. McDonald, 10 Watts 270, 273 ( Pa. Sup. Ct. 1840). A negotiable note is transferred for value when it is transferred to the holder as and for collateral security. Todd v. National Union Bank, 132 Pa. 312, 19 A. 218 ( Sup. Ct. 1890). Cf. Camden National Bank v. Fries-Breslin Co., supra . Value, under the Pennsylvania negotiable instruments statutes applicable at the time of the transactions involved herein, was defined as any consideration sufficient to support a simple contract, including an antecedent or preexisting debt. 56 P.S. § 62 (1901, May 16, P.L. 194, Ch. I, Art. II, sec. 25). Cf. R.S. 7:2-25; Sladkin v. Ruby, 103 N.J.L. 449 ( E. & A. 1927); sec. 25 of the Uniform Negotiable Instruments Law, 5 U.L.A. ( Part I, 1943), sec. 25, pp. 8, 287, anno. pp. 320-321; Brannan's Negotiable Instruments Law (7 th Ed., Beutel, 1948), sec. 25, pp. 490, 495, 516. There is little doubt that under section 25 of the Uniform Negotiable Instruments Law one who has taken a negotiable instrument in payment of or as collateral security for a debt, including a preexisting debt, is a holder for value. See 45 Mich. L. Rev. 214 et seq. (1947). The Pennsylvania statutes further provided: Where the holder has a lien on the instrument, arising either from contract or by implication of law, he is deemed a holder for value to the extent of his lien. 56 P.S. § 64. Cf. R.S. 7:2-27. Compare Blaney v. Mellor Co., supra. We find that under the pertinent principles of Pennsylvania law, hereinbefore discussed, the trial court's determination that there was a valid pledge of the Bevko, Inc. notes in question, without endorsement, by delivery to Blumberg on February 25, 1953, was not erroneous.