Court Opinion

ID: 9596432
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:49:34.216742+00
Date Added: 2024-06-11T18:01:34.884003
License: Public Domain

CALLISTER, Chief Justice
(concurring in the result).
I concur in the result of the majority opinion that this matter must be remanded to the trial court; however, I believe the relevant issue to be tried is whether plaintiff was a holder in due course, as provided in Section 70A-3-302(l), U.C.A. 1953.
The certificate of deposit, in the instant action, comports with the requirements of 70A-3-104(l), U.C.A.1953, and, therefore, may be deemed a negotiable instrument. The defendant, bank, claims a security interest therein. Under Section 70A-9-304(1), U.C.A.1953, a security interest in an instrument can be perfected only by the secured party’s taking possession, with certain limited exceptions not applicable herein. Under Section 70A-9-309, U.C.A.1953, a holder in due course of a negotiable instrument takes priority over an earlier security interest even though perfected. A filing under Chapter 9, Secured Transactions, does not constitute notice of the security interest to a holder in due course; this principle is reiterated in Section 70 A-3-304(5), U.C.A.1953.
The defendant concedes that plaintiff was a holder; the issue to be resolved is whether he took the instrument (a) for value; (b) in good faith; and (c) without notice of the bank’s claim to it; so as to qualify as a holder in due course, Section 70A-3-302(l), U.C.A.1953.
The element of value appears to be established, Section 70A-3-303, U.C.A.1953. “Good faith” is defined as honesty in fact in the conduct or transaction concerned, Section 70A-1-201(19), U.C.A.1953. A person has notice of a fact when (a) he has actual knowledge of it; (b) has received notification of it; or (c) from all the facts and circumstances known to him at the time in question he has reason to know that it exists, Section 70A-1-201(25), U.C.A.1953. As previously noted, any'filing by defendant would not constitute notice so as to defeat plaintiff’s status as a holder in due course. • Furthermore, mere notice on the part of plaintiff of the existence of a separate agreement (the pledge) *68does not prevent him from taking in due course. It is only if he had notice of Roberts’ default under the separate agreement, which gave rise to defendant’s claim against the instrument, that plaintiff is on notice to the same extent as in the case of any other information as to the existence of a claim or defense, Section 70A-3-304(4) (b), U.C.A.1953.1
Finally, I do not believe the principle cited in the main opinion is controlling in the instant fact situation, that is, that the delivery of pledged property by the pledgee for a temporary, limited, or special purpose does not divest the pledgee of his lien.
In the Restatement, Security, Section 16, Comment a, p. 63, it is stated:
Possession may be delivered to a pledgor, without terminating the pledge, only for a temporary and limited purpose relating to the maintenance of the value of the pledgee’s interest and having to do with the protection, improvement or sale of the chattel, or where the chattel is an instrument or document, its handling or collection. Even in such a case, however, the bona fide purchaser from the pledgor, who has relied on the latter’s possession will prevail against the pledgee (see Section 11, Subsection 2, and Comment c).

. Also see Official Comment, 9 U.C.C.