Colorado § 4-3-203 - Transfer of instrument; rights acquired by transfer.

§ 4-3-203. Transfer of instrument; rights acquired by transfer.

(a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

(c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.

(d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this article and has only the rights of a partial assignee.

Source: L. 94: Entire article R&RE, p. 850, § 1, effective January 1, 1995.

Editor's note: This section is similar to former § 4-3-201 as it existed prior to 1994.

ANNOTATION

I. General Consideration.

II. Transfer.

I. GENERAL CONSIDERATION.

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

Applied in Blake v. Samuelson, 34 Colo. App. 183, 524 P.2d 624 (1974); West Greeley Nat'l Bank v. Wygant, 650 P.2d 1339 (Colo. App. 1982); Hollemon v. Murray, 666 P.2d 1107 (Colo. App. 1982).

II. TRANSFER.

Transfer without indorsement vests same title as transferor. When no right of a creditor is involved, an instrument like a note may be transferred as a donation or for value by delivery without indorsement so as to vest in the transferee such title as the transferor had at least. Lane v. Lane, 57 Colo. 419, 140 P. 804 (1914). See Gumaer v. Sowers, 31 Colo. 164, 71 P. 1103 (1903); Bank of Bromfield v. McKinlay, 53 Colo. 279, 125 P. 493 (1912).

An indorsement by the payee is not a prerequisite to recovery by an assignee of a note, for if the transferor had a valid claim to the notes, the transferee would assume the same rights even though no formal indorsement by the transferor has taken place. Denver-Metro Collections, Inc. v. Kleeman, 30 Colo. App. 218, 491 P.2d 64 (1971); Pay Center, Inc. v. Milton, 632 P.2d 642 (Colo. App. 1981).

A transferee of a note may bring an action on the note even though unindorsed provided the note is delivered and he proves assignment of the note. Denver-Metro Collections, Inc. v. Kleeman, 30 Colo. App. 218, 491 P.2d 64 (1971).

Assignment of guaranty. A guaranty that does not expressly forbid assignment is assignable without the guarantor's express consent. Republic Nat'l Bank v. Meridian Props., Inc., 530 F. Supp. 169 (D. Colo. 1982).

Although delivery is not made until trial date. An assignee can maintain its suit although the unindorsed notes are not delivered until the date of trial, as it would be elevating form over substance to require a new trial merely because the payee failed to deliver the notes before trial where he had assigned them to the assignee before such date. Denver-Metro Collections, Inc. v. Kleeman, 30 Colo. App. 218, 491 P.2d 64 (1971).

Uncontradicted testimony of oral assignment suffices. Where the payee specifically testifies that he had made an oral assignment to the assignee and no evidence is offered to contradict this testimony, such testimony is sufficient to support the trial court's finding that an assignment had been made to the assignee. Denver-Metro Collections, Inc. v. Kleeman, 30 Colo. App. 218, 491 P.2d 64 (1971).

Where a note is assigned by the payee after maturity and is thus shorn of immunity from all defenses which might have been urged against it before assignment, or notice thereof, by the maker while yet in the hands of the payee while it still retained its negotiable character, it is subject to any defense which would have been available had it been nothing more than a simple contract or chose in action, transferred by assignment First Nat'l Bank v. Lewis, 57 Colo. 124, 139 P. 1102 (1914).

Transferee's rights on note. A transferee retains the right to sue on a note but is not aided by any presumption that he is entitled to recover and he takes the notes subject to all defenses and equities to which the notes were subject in the hands of the transferor. Pay Center, Inc. v. Milton, 632 P.2d 642 (Colo. App. 1981).

Applied in In re Miller, 666 F.3d 1255 (10th Cir. 2012).