Defenses Against Claims of Holder in Due Course

by John Gault

http://www.pstcc.edu/departments/lat/classes/2300/notes/chap23.htm

Real Defenses
Real or universal defenses are valid against all holders, including HDCs. Universal defenses include the following:

(1) Forgery,

(2) Fraud in the execution,

(3) Material alteration (complete defense against a holder, partial defense against an HDC),

(4) Discharge in bankruptcy,

(5) Minority,

(6) Illegality (when statute makes it void),

(7) Adjudicated Mental Incapacity, and

(8) Extreme Duress.

Each of these is pretty much self-explanatory except number two, fraud in the execution.

Fraud in the execution occurs when a person is deceived into signing a negotiable instrument believing that he is signing something other than a negotiable instrument. This defense cannot be raised, however if a reasonable inquiry would have revealed the nature and terms of the instrument. Thus, the signer’s age, experience, and intelligence are relevant.

Personal Defenses

Personal defenses are used to avoid payment to an ordinary holder of a negotiable instrument. Personal defenses are:

(1) Breach of contract or breach of warranty,

(2) Lack or failure of consideration,

(3) Fraud in the inducement,

(4) Illegality (when statute makes it voidable),

(5) Unadjudicated mental incapacity,

(6) Other defenses.

Imo, there are two very important things we need to fully understand to defend our homes: the UCC and the laws of evidence. The UCC may provide avenues of discovery, as well as reasonable argument that without that discovery, adjudication just can’t be made.

The laws of evidence will help us get meaningful discovery, and not allow the use of bs declarations / affidavits. To date, none or most of us have availed ourselves of these avenues I would call bright.

There is something about ‘assumed risk’ as an affirmative defense which I can’t find right now, so the ones listed above must not be inclusive and most of them don’t seem to apply, anyway, except maybe nos. 2 and 4 and whatever 6 is under personal defenses.

More of the UCC at

http://www.law.cornell.edu/ucc/3/article3.htm

The UCC cited is under article 3 and is relevant to negotiable instruments. But I can’t help remembering those 2 cases I have somewhere wherein the banksters claimed these notes are not negotiable instruments. Fwiw, I’ll link them when I find them.

The UCC imo provides defenses to foreclosure and to my knowledge, no one, including attorneys, is ‘going there’.
If you find a link to better defenses to notes, I would appreciate it since mine are whoknowswhere.

Part of what I’m trying to say is that there are defenses available against a holder v a hidc (I thought there were none available against a hidc, but apparently that’s not true, altho there are many more available against a ‘mere’ holder. In order for a homeowner to properly allege those defenses, one has to know if they’re available and therefore we have a need to know clearance on if the bankster is a holder or a holder in due course. Unfortunately, the UCC has some complicated tenets and one has to keep them all in mind. And btw, I have NO doubt changes to the UCC have been made in recent years which benefit the banksters. No surprise there, right?
Also, it appears to me and I’ve said before that enforcement of a note is either 1) unavailable to one who has paid nothing for it or 2) unavailable except to the extent (dollar amt) one has already paid for it (promise to pay does not cut it for ENFORCEMENT). This is grand, but it’s also a really bum steer if not true, so if anyone knows otherwise, please weigh in. It does seem to conflict with other UCC
rules, so it’s complicated. I’ll bet there’s reconciliation; I just don’t know it. I’m just saying as emphatically as I can it’s past time to quit ignoring what could be fully dispositive issues.