SW Legal studies in Business

Destruction of Original Note Does Not Eliminate Right to Enforce the Note
Description Alabama high court held that the destruction of a promissory note did not mean it was not enforceable. Both the maker of the note, or an assignee who then had the same rights as the maker, could enforce the note so long as its existence could be proven.
Topic Negotiable Instruments/Commercial Paper
Key Words Promissory Note; Destruction; Assignment
C A S E   S U M M A R Y
Facts In 2003, Wachovia loaned McNamee $150,000. He signed a promissory note. At some point, Wachovia lost or destroyed the original note. The note matured in 2005 and Wachovia assigned it to Atlantic National Trust. Atlantic demanded McNamee repay the remaining principal balance of $138,620 plus interest. Atlantic cannot produce the original note, but has a copy. McNamee contended that because the original note was destroyed, the note cannot be enforced. Atlantic sued. The federal court certified a question to the Alabama high court to clarify what the law in Alabama is on that issue.

Question answered. Under Alabama common law, a valid assignment gives the assignee the same rights, benefits, and remedies that the assignor possesses, such that the assigned simply steps into the shoes of the assignor. An assignee of a promissory note that was lost, destroyed, or stolen can still be enforced. The evidence is clear that the note was genuine, the fact of the destruction of the original did not make it unenforceable either by the maker of the note, Wachovia, or by the assignee, Atlantic.

Citation Atlantic National Trust, LLC v. McNamee, ---So.2d--- (2007 WL 2898263, Sup. Ct., Ala., 2007)

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