One of my first solo trips to court as a baby lawyer was to get a default judgment on a promissory note. The judge reviewed the file of my meticulously prepared papers, looked up and asked for the original note, so that he could cancel it and put it in the court’s file.
Two problems flashed across my cortex: First, I’d gotten all the way through law school without learning that the original promissory note must be surrendered and canceled as a condition of enforcement. Second, I didn’t have the original promissory note, and neither did my client. The client had a copy, but the original had gone missing years before and couldn’t be found.
Well, when my 27-year-old Adam’s apple began bobbing like a yo-yo, the judge took pity on me and said “Look at the UCC and come back with an affidavit, and I will revisit this.”
Requiring the holder of a promissory note to surrender it as a condition of enforcement is intended to protect the payor from claims of multiple creditors on the same instrument. The Uniform Commercial Code, enacted in Utah as Title 70A, provides specific provisions in Section 3-309 that cover enforcement of a lost or stolen instrument, such as a promissory note. An instrument that one does not have possession of can still be enforced if: (1) you were in possession of it and were entitled to enforce it when possession was lost; (2); the loss of possession was not the result of a transfer or lawful seizure of the instrument; or (3) it was lost, destroyed, stolen or is in the wrongful possession of a person who cannot be brought into court.
So, if the creditor can come forward with an affidavit or proffer testimony the note was in the creditor’s possession when it was lost or stolen, that when it was lost or stolen you were entitled to enforce it, and that it has not been transferred or legally seized by third party. The creditor must also be able to provide proof of the terms of the lost instrument. Where you have a copy that can be authenticated as a true copy of the original, it is easy to prove the terms. Where you don’t, testimonial evidence will be required.
In addition, the UCC requires that the court must require the creditor seeking to enforce the lost or stolen note to provide “adequate protection” against any loss that might befall the payor under the instrument by reason of a third-party claim of right to enforcement; in other words, if the instrument turns up later or someone else claims the right to enforce it. Adequate protection may be provided by any “reasonable means,” which usually is a written undertaking or an insurance bond.