N.C. Supreme Court Clarifies Requirements to Transfer Note

Authored Article


In a ruling filed March 8, 2013, the Supreme Court of North Carolina held that a stamped indorsement of a note without an individual signature is presumed to constitute a valid indorsement under the North Carolina Uniform Commercial Code (“UCC”). The case, In Re Foreclosure of Bass, No. 554PA11 (N.C. Mar. 8, 2013), arose as a contested foreclosure proceeding. At issue in In Re Foreclosure of Bass was whether a stamp indicating the names of the transferor and transferee of a Note but without a long-form writing of an individual person’s name authorizing the transfer was a sufficient indorsement under North Carolina law. Reversing the North Carolina Court of Appeals, the Supreme Court found that the stamp constituted a valid signature and indorsement. In the opinion, Justice Martin tersely commented, “This foreclosure case presents the question of whether a mortgagor’s bare assertion that ‘you must have more than a mere stamp’ to transfer a mortgage instrument excuses her from her debt obligation. We hold that it does not.”

The Court ruled that provisions of the UCC control when determining the validity of an indorsement, defined as “a signature… that alone or accompanied by other words is made on an instrument for the purposes of … negotiating the instrument.” The Court interpreted the UCC definition of “signature” broadly to include a symbol executed or adopted with present intention to adopt or accept a writing, including a stamp. The Court ruled that a stamp with the name of the intended transferor and transferee located on the page of the Note where other, uncontested indorsements were placed constituted a “signature” under the UCC. The Court found that the signature was a proper indorsement of the note because there was “no ambiguous evidence indicating that the signature was made for any other purpose.” Finally, the Court ruled that the person challenging the validity of the transfer bears the burden of proving the indorsement was not valid or authorized.

The decision in In Re Foreclosure of Bass expressly overruled common law predating the adoption of the UCC in North Carolina (codified in Chapter 25 of the North Carolina General Statutes).