Section 15 Generally

• Library: Commercial Law 2007

“It is the general rule that the negotiable instruments law does not prescribe an exclusive method of transferring negotiable instruments, but only the manner in which their independence of equities may be preserved.” See Butler v. Kopplin, 253 S.W.2d 514, 516 (Mo. App. E.D. 1952); Carter v. Butler, 174 S.W. 399 (Mo. banc 1915). In most cases, negotiable instruments may be transferred from one person to another by assignment or pledge under common law contract principles or by transfer or negotiation under UCC Article 3. See Audsley v. Allen, 774 S.W.2d 142, 144 (Mo. banc 1989); Means v. Clardy, 735 S.W.2d 6 (Mo. App. W.D. 1987). Assignment refers to the transfer of title to the instrument whereby the assignee generally takes such title as the assignor had, but “stands in the shoes” of the assignor with respect to all defenses and equities so that a defense valid against the assignor is valid against the assignee. Doss v. EPIC Healthcare Mgmt. Co., 901 S.W.2d 216 (Mo. App. S.D. 1995); State ex rel. Gentry v. Hostetter, 125 S.W.2d 72 (Mo. 1938); Credit Alliance Corp. v. Bryan, 27 S.W.2d 441 (Mo. App. E.D. 1930). A pledge is “a legal obligation, effectuated by the pledgor depositing with the pledgee” certain personal property, such as a negotiable instrument, as security for a debt or other obligation, “with an implied power of sale in the pledgee on default” by the pledgor. Kaw Valley State Bank & Trust v. Commercial Bank of Liberty, N.A., 567 S.W.2d 710, 712 (Mo. App. W.D. 1978); Tennent v. Union Cent. Life Ins. Co., 112 S.W. 754 (Mo. App. E.D. 1908). As with an assignment, a pledgee’s interest is identical to that of the pledgor. Means, 735 S.W.2d 6; Kaw Valley, 567 S.W.2d 710; Ill. State...