A copy of the opinion is available at: http://www.ca7.uscourts.gov/tmp/1O0W3Z5B.pdf
The purchaser/assignee of a mortgage loan tried to foreclose on a mortgage, but its action was dismissed in state court because it could not produce the original note. Because the assignee could not produce either an original or a copy of the underlying note in a subsequent foreclosure action, the property owners in that action contended that the assignee was not a mortgagee entitled to foreclose. The trial court agreed and entered a directed verdict against the assignee. The Illinois Appellate Court affirmed, concluding that the assignee "had not proved it was a noteholder because it never received the note from [the assignor] or otherwise possessed it and therefore was not entitled to foreclose upon the mortgage." This breach of contract lawsuit against the assignor followed. The district court entered summary judgment in favor of the assignor, this appeal followed, and the Seventh Circuit reversed.
In reversing the district court, the Seventh Circuit addressed the following two questions: (1) whether the parties' agreement required the assignor to deliver the original or a copy of the note secured by the mortgage when it sold the mortgage; and (2) whether the assignor's failure to deliver an original or a copy of the note caused the assignee's foreclosure action to fail.
As to the issue of causation, the Court held that "had [the assignor] delivered the original or a copy of the note, [the assignee] would in turn have been able to produce it in the foreclosure proceeding and thus fill the evidentiary void on which the Illinois trial and appellate courts rested their adverse decisions."
Ralph T. Wutscher
Kahrl Wutscher LLP
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