final until disposition of timely filed motion for rehearing.
from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Barry Stone, Senior Judge; L.T. Case No. CACE
Kimberly S. Mello, Jonathan S. Tannen, and Danielle M. Diaz
of Greenberg Traurig, P.A., Tampa, and Michele L. Stocker of
Greenberg Traurig, P.A., Fort Lauderdale, for appellant.
Jonathan Kline of Jonathan Kline, P.A., Weston, for appellee.
successor in interest to the original mortgagee, appellant
Wells Fargo, N.A. had possession of the underlying note at
the time it filed a foreclosure action. On the back of the
note was a special indorsement- "PAY TO THE ORDER OF
FANNIE MAE WITH RECOURSE WORLD SAVINGS BANK, FSB" with
the signature of the "assistant custodian of
records" of the original lender, World Savings
Bank. Over the indorsement was stamped
the word "Cancelled."
bench trial, it was established that appellee executed the
note and mortgage in favor of World Savings Bank. Prior to
the filing of the foreclosure action, World Savings Bank
changed its name to Wachovia and later merged with Wells
Fargo. Wells Fargo established appellee's default and
evidence of damages.
trial court granted appellee's motion for involuntary
dismissal for the bank's failure to show that Fannie Mae
had taken some action to transfer the note back to Wells
Fargo. This was error, because Wells Fargo was entitled to
cancel the special indorsement.
of the original note is a significant event under the Uniform
Commercial Code. For example, a "negotiation"
requires "a transfer of possession, whether voluntary or
involuntary, of an instrument by a person other than the
issuer to a person who thereby becomes the holder."
§ 673.2011(1), Fla. Stat. (2014). Here, there are two
realistic possibilities of what happened to the note after
the special indorsement was placed upon it. Under either
possibility, Wells Fargo was entitled to cancel the note.
the most likely scenario is that because it had possession of
the original note, Wells Fargo reacquired the note from
Fannie Mae, "by negotiation or otherwise." §
673.2071, Florida Statutes (2014). As a former holder of the
note, Wells Fargo was entitled to cancel indorsements made
after it first became a holder of the note. This is the
procedure authorized by section 673.2071:
Reacquisition.-Reacquisition of an
instrument occurs if it is transferred to a former holder, by
negotiation or otherwise. A former holder who reacquires the
instrument may cancel indorsements made after the reacquirer
first became a holder of the instrument. If the cancellation
causes the instrument to be payable to the reacquirer or to
bearer, the reacquirer may negotiate the instrument. An
indorser whose indorsement is canceled is discharged, and the
discharge is effective against any subsequent holder.
Id. As the Uniform Commercial Code Comment explains,
the section 673.2071 procedure is an exception to the rule in
section 673.2051(1) that the person identified in a special
indorsement must indorse the note to allow a later transferee
to acquire the status of a holder:
Reacquisition refers to cases in which a former holder
reacquires the instrument either by negotiation from the
present holder or by a transfer other than negotiation. If
the reacquisition is by negotiation, the former holder
reacquires the status of holder. Although Section 3-207
allows the holder to cancel all indorsements made after the
holder first acquired holder status, cancellation is not
necessary. Status of holder is not affected whether or not
cancellation is made. But if the reacquisition is not the
result of negotiation the former holder can obtain holder
status only by striking the former holder's indorsement
and any subsequent indorsements. The latter case is an
exception to the general rule that if an instrument is
payable to an identified person, the indorsement of that
person is necessary to allow a subsequent transferee to
obtain the status of holder.
Commercial Code Comment to Section 673.2071 (italics
supplied). The Comment explains that section 673.2071
implements "a rule of convenience" which relieves
the reacquirer of "the burden of obtaining an
indorsement that serves no substantive purpose. The effect of