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Re: Who OWNS the Promissory Note?

PostPosted: Mon Dec 21, 2009 2:46 pm
by gepisar
I would say then, that having exhausted bearer bonds and their similarity, and pound notes, i would say the owner of a PN is the holder.

More specifically, The Bills of Exchange Act 1882:

83 Promissory note defined
(1)A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer.
(2)An instrument in the form of a note payable to maker’s order is not a note within the meaning of this section unless and until it is indorsed by the maker.
(3)A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof.
(4)A note which is, or on the face of it purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note.

84Delivery necessary
A promissory note is inchoate and incomplete until delivery thereof to the payee or bearer.

“Acceptance” means an acceptance completed by delivery or notification.
“Bearer” means the person in possession of a bill or note which is payable to bearer.
"Delivery” means transfer of possession, actual or constructive, from one person to another.
“Holder” means the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.

“Bill” means bill of exchange, and “note” means promissory note.

By rights, when you make good on your promise, the note should be returned to you. (Did i mention in an earlier post that the banks NEVER do this, and therefore lay claim on your abandoned PN after 6 years and place it into dormant accounts? Or so Ive heard?!)

So, specifically the OWNER isnt mentioned. Only holder. Which leads me to believe, the question "Who OWNS the Promissory Note" is akin to asking, "Who owns the promise?" and I think thats why terms such as holder and bearer are used.

So, next question, how does this help you out?

Re: Who OWNS the Promissory Note?

PostPosted: Mon Dec 21, 2009 4:59 pm
by bustthematrix
Hi GP

It does and it doesn't.

The real question I've been asking all along (check out the beginning of the thread :wink: ), relates to the rights of the issuer or maker of the note. Can they for example

a) Request it back once satisfied.
b) Can they ask to examine it at anytime etc?
c) Do they have a right to know if it's been sold on or destroyed or not?
d) What rights does the holder/owner have in respect to it? e.g. can they destroy it without reference to the maker etc?

Re: Who OWNS the Promissory Note?

PostPosted: Mon Dec 21, 2009 5:20 pm
by gepisar
bustthematrix wrote:Hi GP

It does and it doesn't.

The real question I've been asking all along (check out the beginning of the thread :wink: ), relates to the rights of the issuer or maker of the note. Can they for example

a) Request it back once satisfied.
Yes
b) Can they ask to examine it at anytime etc?
Yes
c) Do they have a right to know if it's been sold on or destroyed or not?
mmm, no i dont think so...maybe. I think it might depend on how the note is constructed. Is it payable to bearer or to a specific party.
d) What rights does the holder/owner have in respect to it? e.g. can they destroy it without reference to the maker etc?
Yes

a) If the note is satisfied, why would the payee not return it? Why would you not request it, for its proof of your obligation. You could ask the lender to write you note of satisfaction against your pN referring to the serial number to have a written confirmation of your discharge. Or simply stamped PAID, and returned.

b) Seems reasonable. But like a bearer bond, they're not likely to post the original to you for your inspection, therefore it would seem reasonable that you would have to go to them to see it.

c) They can sell on a PN. The obligation of the borrower is to the holder. The new holder should contact you when the terms of the note are to be called in. The original lender may contact you as courtesy, but, like other bonds and stocks, the maker is often not interested per se, in who trades their stocks beyond the initial release. (Of course for marketing and strategy they are...but thats another story)

{is this where the fraud starts, that the banks sell more money to other "borrowers" on the premise that your note is used as security?}

So, if I say, eh up, I bought a note from HSBC with your name on promissing to pay x amount on date y and I can show you that I have it, that seems fair too.
Now, the next question of indorsements and negotiable instruments arises as to whether this is possible where the payee is someone specific rather than bearer. Since in your PN you may have promised to pay a SPECIFIC party.

d) Well, if they destroyed the note... they cant prove the obligation. Im sure they could destroy it, but why would they. Same as bearer bonds and pound notes. You can burn them...exception being currency. POssibly because you are creating (small,negligable) deflation, and possibly damaging "crown" property or insulting an emblem of the crown...which is a serious offence. (I recall someone injured a swan once, and was done hard because swans are an emblem of the crown and offence by the crown was taken...but that was long ago)

Are we moving forward?