Opinion ID: 1246568
Heading Depth: 1
Heading Rank: 3

Heading: did the obligors establish a defense?

Text: We preface a discussion of this topic with the observation that since the lower court was correct in deciding that VNB was a holder in due course, it is unnecessary that we consider alleged defenses. Code § 8.3-305 provides in pertinent part: To the extent that a holder is a holder in due course he takes the instrument free from (1) all claims to it on the part of any person; and (2) all defenses of any party to the instrument with whom the holder has not dealt .... (Emphasis added.) The further argument is made that even if the Levins are liable on the deed of trust note, the extent of their liability should be reduced to $17,253.35 because the note of FCC to VNB had been reduced to that amount. However, it should be borne in mind that the original security agreement dated August 23, 1968, provided in part: Debtor [FCC] hereby transfers and assigns to, and grants to Secured Party [VNB] a security interest in Debtor's notes receivable (herein sometimes called notes) as indicated below, and in all proceeds of any and all such notes, to secure any and all Obligations as hereinabove mentioned. All notes receivable of Debtor, now existing or hereafter acquired, which have been or may hereafter be delivered to or come into the possession of Secured Party, together with all security therefor. The Levin note was used by FFC as collateral for its ongoing obligations to VNB as the security agreement provided. We see no legal objection to this and reject the argument. Didier v. Patterson, 93 Va. 534, 536-37, 25 S.E. 661, 662-63 (1896); First National Bank v. Turnbull and Co., 73 Va. 695, 701-06 (1880); Code § 8.9-204(3)-(5). Despite the plethora of testimony, the issue in its final analysis resolved itself into one of credibility which the trial court has settled by its decree. Affirmed.