Transfer of Instruments. In July 1988, Chester Crow executed a promissory note payable to the order ...

Transfer of instruments
Although the court dismissed Credit Recoveries' suit and denied its subsequent motions to set aside the judgment and grant a new trial, Credit Recoveries appealed to a state intermediate appellate court, which reversed the judgment of the lower court and remanded the case for further proceedings. The appellate court noted that under UCC 3-109(a), A promise or order is payable to bearer if it: (1) states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment; (2) does not state a payee; or (3) states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person. Under UCC 3-203(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. The court concluded that under these provisions, this preprinted note payable to either the named payee or to bearer was, at its inception, bearer paper. Accordingly, the note could be negotiated, not merely transferred, by physical delivery. Whatever person thereafter was in possession of the note became the holder    and any future holder had the right to enforce the instrument. Here, Credit Recoveries was in possession of the note and had the right to seek its enforcement.

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