## Facts

- A real estate development corporation defaulted on a $2,000,000 bank loan that had been personally guaranteed by multiple individuals, including Robert A. Ginsburg.
- The bank sued Ginsburg on the guaranty but entered separate agreements releasing another guarantor from further liability.
- Ginsburg settled the bank’s lawsuit by executing a new promissory note to the bank for $100,000 plus interest.
- After learning of the other guarantor’s release, Ginsburg refused to pay on the $100,000 note.
- The bank sold Ginsburg’s note to The Cadle Company as part of a bulk sale of many notes for a single lump-sum price; Cadle could not allocate a specific purchase price to Ginsburg’s note.
- Cadle sued to collect on the note; Ginsburg asserted defenses including lack of consideration and that Cadle was not a holder in due course because it did not take “for value,” in good faith, or without notice of defenses.
- The trial court found Cadle was a holder in due course, rejected Ginsburg’s defenses, and entered judgment for Cadle (including attorney’s fees).

## Issues

1. Whether a purchaser of a promissory note in a bulk, lump-sum transaction can satisfy the UCC requirement that the instrument be taken “for value” to qualify as a holder in due course.
2. Whether the purchaser took the note in good faith and without notice of the maker’s defenses where the note was acquired as part of a portfolio of distressed assets.
3. Whether the maker’s settlement note lacked consideration because another guarantor received a release or more favorable treatment from the original creditor.

## Decision

- The appellate court affirmed the judgment for Cadle.
- The court upheld the finding that Cadle was a holder in due course.
- The court held that a bulk, lump-sum purchase can constitute taking “for value” even if the buyer cannot assign a precise purchase price to the individual note.
- The court concluded Cadle took the note in good faith and without notice of Ginsburg’s asserted defenses.
- The court held the note was supported by consideration because it was given in exchange for settlement and forbearance of litigation and a compromise of a larger claimed liability.

## Legal Principles

- A transferee may qualify as a holder in due course if it takes an instrument for value, in good faith, and without notice of defenses; “value” is not defeated solely because the instrument was acquired in a bulk, lump-sum purchase without itemized pricing.
- General awareness that assets are distressed, without evidence of knowledge of a specific defense to a specific instrument at the time of transfer, does not establish notice or lack of good faith for holder-in-due-course purposes.
- Settlement of a disputed claim, compromise of a larger potential liability, and forbearance from pursuing litigation can constitute sufficient consideration to support a promissory note.
- Differential treatment or release of another obligor by the original creditor does not, by itself, negate consideration for the maker’s separate settlement note or bar enforcement by a holder in due course.

## Conclusion

The court enforced the settlement promissory note and affirmed judgment for the assignee, holding that a lump-sum bulk purchase can satisfy the UCC “value” element for holder-in-due-course status, that the assignee lacked notice of defenses, and that the note was supported by consideration through settlement and forbearance.


Cadle Co. v. Ginsburg, 51 Conn. App. 392, 721 A.2d 1246 (Conn. App. Ct. 1998)