## Facts

- Tonya R. Bass executed an adjustable-rate promissory note in October 2005 for $139,988.00, payable to Mortgage Lenders Network USA, Inc., secured by a deed of trust.
- The note stated Bass would be in default if she failed to pay the full monthly payment when due.
- The note was transferred in a chain reflected by stamped indorsements on the instrument and an allonge: Mortgage Lenders → Emax Financial Group, LLC → Residential Funding Corporation → U.S. Bank National Association, as Trustee.
- The first transfer (Mortgage Lenders → Emax) was shown by a stamp stating “Pay to the order of” Emax “without recourse” and “By: Mortgage Lenders Network USA, Inc.” without a handwritten individual signature.
- Bass defaulted, and U.S. Bank, as Trustee, initiated a power-of-sale foreclosure.
- Bass opposed foreclosure, arguing the first stamped indorsement was not a valid signature; therefore, U.S. Bank was not the “holder” and lacked authority to foreclose.
- The superior court dismissed the foreclosure, finding the first stamp “unsigned” and the note not properly negotiated; the Court of Appeals affirmed.

## Issues

1. Whether a stamped indorsement without a handwritten individual signature can constitute a valid indorsement/signature under the North Carolina UCC.
2. Whether the stamped indorsements and allonge established an unbroken chain of negotiation making U.S. Bank the “holder” entitled to enforce the note through foreclosure.

## Decision

- The Supreme Court of North Carolina reversed the Court of Appeals and the superior court.
- The Court held the stamped indorsement could qualify as a UCC “signature” because a signature may be any symbol executed or adopted with present intent to authenticate.
- The Court concluded the indorsements and allonge unambiguously showed an intent to transfer the note through the chain to U.S. Bank.
- Because U.S. Bank possessed the note bearing valid indorsements, it was the note’s holder and had authority to pursue foreclosure.
- The case was remanded for further proceedings consistent with recognizing U.S. Bank’s holder status.

## Legal Principles

- Under the North Carolina UCC, a “signature” may be made by a word, mark, or symbol adopted with present intent to authenticate a writing; a handwritten individual signature is not required.
- A negotiable instrument is negotiated by transfer of possession plus indorsement; the person in possession of an instrument payable to that person (or properly indorsed to that person) is the “holder.”
- When indorsements and related transfer documents on the instrument unambiguously evidence a chain of transfer, courts should treat the transferee in possession as entitled to enforce the instrument, including by foreclosure of the securing deed of trust.

## Conclusion

The Supreme Court of North Carolina held that a corporate stamp can function as a valid UCC signature for an indorsement, and that the stamped indorsements and allonge established U.S. Bank’s status as holder of the note, authorizing it to proceed with foreclosure.


In re Foreclosure of a Deed of Trust Executed by Bass, 738 S.E.2d 173 (N.C. 2013)