Colorado § 4-3-308 - Proof of signatures and status as holder in due course.

§ 4-3-308. Proof of signatures and status as holder in due course.

(a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under section 4-3-402 (a).

(b) If the validity of signatures is admitted or proved and there is compliance with subsection (a) of this section, a plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to enforce the instrument under section 4-3-301, unless the defendant proves a defense or claim in recoupment. If a defense or claim in recoupment is proved, the right to payment of the plaintiff is subject to the defense or claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder in due course which are not subject to the defense or claim.

Source: L. 94: Entire article R&RE, p. 858, § 1, effective January 1, 1995.

Editor's note: This section is similar to former § 4-3-307 as it existed prior to 1994.

ANNOTATION

I. General Consideration.

II. Presumption of Delivery.

I. GENERAL CONSIDERATION.

Law reviews. For note, "The Burden of Proof of a Holder in Due Course of a Defective Negotiable Instrument", see 4 Rocky Mt. L. Rev. 145 (1932). For article, "One Year Review of Contracts", see 36 Dicta 19 (1959).

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

Every holder of a negotiable instrument is deemed prima facie to be a holder in due course. Civic Fin. Co. v. Meintzer, 137 Colo. 572, 328 P.2d 379 (1958). See Myrick v. Garcia, 138 Colo. 298, 332 P.2d 900 (1958).

A holder is entitled to sue thereon. A holder of a promissory note is deemed prima facie to be a holder in due course and entitled to sue thereon. Waterman v. Sullivan, 156 Colo. 195, 397 P.2d 739 (1964).

A holder is entitled to recover. A plaintiff, being holder of a note in his possession, is entitled to have it admitted in evidence, establishing a prima facie right to recover thereon. Myrick v. Garcia, 138 Colo. 298, 332 P.2d 900 (1958).

Whether a promissory note is negotiable or not is immaterial, as the same result would obtain, a holder of an instrument being entitled to sue thereon as the prima facie owner. Myrick v. Garcia, 138 Colo. 298, 332 P.2d 900 (1958).

Assignee of negotiable instrument suing thereon need not plead specific facts from which his assignor derives the status of a holder in due course. Blake v. Samuelson, 34 Colo. App. 183, 524 P.2d 624 (1974).

A holder is entitled to the presumption of due course holding until the maker succeeds in showing a defense. Atkinson v. Englewood State Bank, 141 Colo. 436, 348 P.2d 702 (1960).

Where the answer of the maker denies that the holder is the owner of the note sued upon, such answer merely has the effect of putting this defense in issue, and thus the holder is not obliged to prove such ownership until maker's evidence challenges his prima facie title. Myrick v. Garcia, 138 Colo. 298, 332 P.2d 900 (1958), rev'g in part Marks v. Munson, 59 Colo. 440, 149 P. 440 (1915); Middlesex Safe Deposit & Trust Co. v. Jacobs, 87 Colo. 445, 290 P. 784 (1930).

The burden of establishing an affirmative defense against a holder in due course is on the maker. Atkinson v. Englewood State Bank, 141 Colo. 436, 348 P.2d 702 (1960) (fraud).

The burden is on the holder. When it is shown that the title of any person who has negotiated a promissory note is defective, the burden is on the holder to prove that he, or some person under whom he claims, acquired the title as a holder in due course. Delaney v. Brownwood, 73 Colo. 83, 213 P. 578 (1923). See McClellan v. Morris, 71 Colo. 304, 206 P. 575 (1922); Am. Nat'l Bank v. First Nat'l Bank, 130 Colo. 557, 277 P.2d 951 (1954).

By a preponderance of the evidence. Where the maker proves at least a prima facie defense, the burden is on the holder to establish by a preponderance of the evidence that he is a holder in due course. Atkinson v. Englewood State Bank, 141 Colo. 436, 348 P.2d 702 (1960).

That he is a bona fide holder. Where title is defective the burden of proof is upon the holder to show that he is a bona fide holder and that he took the paper before maturity, in good faith and for value. Johnson County Sav. Bank v. Gregg, 51 Colo. 358, 117 P. 1003 (1911).

Which may be sustained by proof of paying full value and good faith. Where the burden of showing due course is cast upon the holder, he sustains that burden by proof of payment of full value and by showing the full details of the transaction from which there can be no national inference of knowledge or bad faith on his part. Delaney v. Brownwood, 73 Colo. 83, 213 P. 578 (1923); Omaha Steel Works v. Martin, 78 Colo. 560, 243 P. 619 (1926).

Upon proof of full payment, a presumption of innocence prevails again as before the proof of defective title, subject, of course, to refutation by further evidence. This rule is reasonable, for who, with knowledge that a note was paid or invalid, would buy it at full price? Delaney v. Brownwood, 73 Colo. 83, 213 P. 578 (1923).

Evidence held to support finding that holder purchased note in due course. Stewart v. Pub. Indus. Bank, 85 Colo. 546, 277 P. 782 (1929).

Section determinative of sufficiency of allegations required to state claim. Although this statute on its face is concerned with evidentiary burdens of proof, it is also determinative of the sufficiency of allegations required to state a claim for relief in an action to recover on a negotiable instrument. Blake v. Samuelson, 34 Colo. App. 183, 524 P.2d 624 (1974).

Subsection (2) sets forth the requirements of a prima facie case. Blake v. Samuelson, 34 Colo. App. 183, 524 P.2d 624 (1974).

Parol evidence to show that a maker was only secondarily liable on a note is not a defense under subsection (2) and rejection of such evidence was not error. Metro Nat'l Bank v. Roe, 675 P.2d 331 (Colo. App. 1983).

Applied in First Nat'l Bank v. Cillessen, 622 P.2d 598 (Colo. App. 1980).

II. PRESUMPTION OF DELIVERY.

Under the N.I.L., as long as an instrument remained in the possession of a person whose signature appeared thereon, there was no presumption of delivery from that person. Norman v. McCarthy, 56 Colo. 290, 138 P. 28 (1914).

When the instrument was no longer in the possession of a party whose signature appeared thereon, a delivery from the persons whose signatures did appear thereon was presumed until the contrary appeared. Norman v. McCarthy, 56 Colo. 290, 138 P. 28 (1914). See Weaver v. First Nat'l Bank, 138 Colo. 83, 330 P.2d 142 (1958).

When the instrument was in the possession of a holder in due course, that presumption became conclusive. Norman v. McCarthy, 56 Colo. 290, 138 P. 28 (1914).

Where there was no evidence of the delivery, it was presumed that it was delivered to the named payee by the drawer. Weaver v. First Nat'l Bank, 138 Colo. 83, 330 P.2d 142 (1958).

Indorsement allegation implied delivery. In an action upon a negotiable promissory note by an indorsee, an allegation that the payee indorsed the note to the indorsee implied a delivery, and it was unnecessary to specifically allege a delivery. Louisville Coal Mining Co. v. Int'l Trust Co., 18 Colo. App. 345, 71 P. 898 (1903).

Presumption of delivery did not apply where fiduciary relationship. The general presumption of delivery was overcome by the specific presumption arising where there was a fiduciary relationship in which case the claimant had to overcome, by evidence, the presumption of undue influence with which the transaction was tainted because of the existence of the fiduciary relationship. Arnold v. Abernethy, 134 Colo. 573, 307 P.2d 1106 (1957).