Court Opinion

ID: 2729108
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:39:02.061776+00
Date Added: 2024-06-11T15:45:16.823864
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

                                NO. COA13-513
                       NORTH CAROLINA COURT OF APPEALS

                             Filed: 18 February 2014

IN THE MATTER OF THE FORECLOSURE
OF Tamara R. Cornish, Substitute
Trustee of a Deed of Trust                    Gaston County
executed by R. Blake McLean, dated            No. 11 SP 1539
December 26, 2006 and recorded on
January 22, 2007 in Book No 4288,
at Page 2406 of the Gaston County
Public Registry.

      Appeal by respondent from order entered 4 February 2013 by

Judge Robert C. Ervin in Gaston County Superior Court.                    Heard in

the Court of Appeals 22 October 2013.

      Geoffrey A. Planer for respondent-appellant.

      The Law Offices of John T. Benjamin, Jr., P.A., by John T.
      Benjamin, Jr., and James R. White, for petitioner-appellee.

      BRYANT, Judge.

      Where petitioner, at a foreclosure hearing before the trial

court, produced the original mortgage loan note reflecting a

blank indorsement and an affidavit stating that the lienholder

was in possession of the Note, such was sufficient to establish

the lienholder as the holder of the Note.
                                                 -2-
       On 9 December 2011, David A. Simpson, P.C., as substitute

trustee for petitioner The Bank of New York Mellon FKA The Bank

of    New    York    as       Trustee    for      the       benefit     of    the    certificate

holders      of    the    CWABS       Inc.,      asset-backed         certificates,          series

2007-2      (hereinafter         Bank       of    New       York    Mellon),        initiated    a

special      proceeding         to    institute         a   foreclosure        action    against

respondent R. Blake McLean.                      Per a letter sent to McLean on 9

November       2011,      a    debt     secured        by    a   Deed    of    Trust    lien    on

property located at 134 Goins Farm Road in Bessemer City was

past due and as a result the outstanding principal was due in

full.       “The creditor to whom the debt is owned is the [Bank of

New     York      Mellon].”           The     letter         gave     further       notice    that

foreclosure proceedings would be initiated against the property.

       On 4 September 2012, the Bank of New York Mellon, as holder

of the Note and the Deed of Trust creating the lien on the

property, removed the trustee and appointed Tamara R. Cornish as

substitute trustee.

       Also on 4 September 2012, an affidavit was submitted to the

Gaston County Clerk of Court providing copies of the Deed of

Trust and the Note securing the mortgage loan, as well as a

printout detailing respondent McLean’s loan repayment history.

The affidavit asserted that respondent McLean defaulted on the
                                       -3-
Note   by   failing    to   make     installment      payments   and   that   the

noteholder declared the entire amount secured by the mortgage

immediately due and payable.               The affidavit asserted that the

original holder of the Note and Deed of Trust, both executed by

McLean, was Ocwen Loan Servicing, LLC, and that subsequent to

the execution of the Note, Ocwen Loan Servicing “endorsed the

note in blank.”       The affiant further asserted that the Bank of

New York Mellon was in current possession of the Note determined

to be indorsed in blank.

       On 4 September 2012, the Gaston County Clerk of Superior

Court filed an order finding that The Bank of New York Mellon

was the holder of the Note and the Deed of Trust and that the

Note evidenced a valid debt secured by the Deed of Trust.                     The

Clerk of Court further found that the Note was in default and

that the Deed of Trust empowered the noteholder to foreclose on

the property by power of sale; that notice of the hearing had

been served on the record owners of the property; that the pre-

foreclosure notice was provided; and the noteholder attempted to

communicate with respondent McLean in an attempt to resolve the

matter voluntarily.         The Clerk of Court           determined    that the

foreclosure   was     not   barred    by    General    Statutes,   section    45-
                                    -4-
21.12A and authorized the substitute trustee to foreclose on the

property.

       Respondent McLean filed a notice of appeal to the Gaston

County   Superior    Court   requesting    a     de   novo    hearing     on   the

foreclosure proceeding.

       The matter came on for hearing during the 17 December 2012

Civil Session of Gaston County Superior Court, the Honorable

Robert C. Ervin, Judge presiding.         The parties advised the court

that “the only issue for the Court’s determination was whether

there was evidence to establish . . . the [Bank of New York

Mellon] as the holder of the note that was secured by the deed

of trust.”

       In an order filed 4 February 2013, the trial court found

the Note was produced by “the attorney for the lienholder in

open   court.”      The   trial   court   also    found      that   the   Note’s

indorsement had been left blank and did not indicate to whom it

was payable.     Further, “[t]he debtor and property owner did not

offer any evidence and did not present any material to challenge

the validity of the [Note’s indorsement].”                   The trial court

concluded that the Note reflected a valid “blank indorsement.”

As such, the Note became payable to its bearer and could be

negotiated by transfer of possession to the lienholder.                        “In
                                        -5-
this instance, the production of the note is sufficient to prove

the lender’s status as the holder of the note.”                        The court

concluded that “the lienholder [was] the holder of the note and

[was] consequently entitled to foreclose on the deed of trust.”

Respondent appeals.

                     _____________________________________

         On appeal, respondent argues that the trial court erred in

finding the Bank of New York Mellon to be the holder of the

Note.     We disagree.

                  When an appellate court reviews the
             decision of a trial court sitting without a
             jury, findings of fact have the force and
             effect of a verdict by a jury and are
             conclusive on appeal if there is evidence to
             support them, even though the evidence might
             sustain   a   finding   to   the   contrary.
             Conclusions of law drawn by the trial court
             from its findings of fact are reviewable de
             novo on appeal.

In   re    Bass,   ___    N.C.   ___,   ___,   738   S.E.2d   173,    175   (2013)

(regarding the transfer of a mortgage instrument).

         Whether a party is the holder of the Note evidencing debt

is   a    question   of    law   controlled    by    the   [Uniform   Commercial

Code], as adopted in Chapter 25 of the North Carolina General

Statutes.     See id. at ___, 738 S.E.2d at 175-76.             “The holder of

a[] [negotiable] instrument is defined in G.S. 25-1-201 . . . .”

Hotel Corp. v. Taylor and Fletcher v. Foremans, Inc., 301 N.C.
                                           -6-
200,    203,   271    S.E.2d    54,   57    (1980)      (an   action      to   obtain   a

deficiency judgment for an amount owing on a promissory note).

General Statutes, section 25-1-201 defines a “Holder” as “[t]he

person in possession of a negotiable instrument that is payable

either to bearer or to an identified person that is the person

in possession[.]”        N.C. Gen. Stat. § 25-1-201(b)(21)(a.) (2013).

“If    an   indorsement   is    made    by       the   holder   of   an    instrument,

whether payable to an identified person or payable to bearer,

and the indorsement identifies a person to whom it makes the

instrument payable, it is a ‘special indorsement’.”                            N.C. Gen.

Stat. § 25-3-205(a) (2013).             “If an indorsement is made by the

holder of an instrument and it is not a special indorsement, it

is a ‘blank indorsement’. When indorsed in blank, an instrument

becomes payable to bearer and may be negotiated by transfer of

possession alone until specially indorsed.”                     N.C.G.S. § 25-3-205

(b).    It is unchallenged that the Note which is the subject of

this    appeal       contains    a     blank       indorsement       rendering       the

instrument payable to the bearer.                See id.

       Here, on 4 September 2012, an affidavit was filed with the

Gaston County Clerk of Court to which was attached copies of the

relevant Deed of Trust and the Note.                       The affiant made the

following averment: “The holder of the Note is [the Bank of New
                                -7-
York Mellon].   The [Bank of New York Mellon] is in possession of

the note which is endorsed in blank.”

    The record reflects that during the 17 December 2012 de

novo hearing before Judge Ervin, a copy of the original Note

along with a copy of the Deed of Trust was presented to the

court   while   attached   to   the     aforementioned   affidavit.

Furthermore, the original Note was presented by petitioner for

inspection by the court and by respondent.      In its 4 February

2013 order, the trial court found that “[t]he note itself was

produced by the attorney for the lienholder in open court.”

Such is sufficient to establish that the Bank of New York Mellon

is in possession of the Note and is thus, the holder of the

Note.   See N.C.G.S. ' 25-1-201(b)(21)(a.); see also In re Bass,

___ N.C. at ___, 738 S.E.2d at 175.      Accordingly, respondent’s

argument is overruled.

    Affirmed.

    Judges McGEE and STROUD concur.

    Report per Rule 30(e).