Desmond v. Green (In re Harborhouse of Gloucester, LLC), 505 B.R. 365 (Bankr. D. Mass. 2014) -
The assignee of a mortgage note that was lost prior to the assignment filed a secured proof of claim in a chapter 7 bankruptcy. The trustee asked the court to disallow the claim on the basis that the assignee was not entitled to enforce the note or the mortgage.
The debtor acquired a restaurant and two residential apartments in consideration for $1.00 and assumption of encumbrances of record. At that time the property was subject to a mortgage securing a note in the original principal amount of $360,000.
The original mortgagee (Hansbury) assigned the note and mortgage, and the assignee (CPIC) in turn reassigned the note and mortgage to a third party (Green) as security for a loan from Green to CPIC. However, the original note was lost before the first assignment. Consequently, in connection with the initial assignment to CPIC, Hansbury executed a lost note affidavit. Attached to the affidavit were (1) a copy of the note, (2) an allonge to the note purporting to transfer rights under the note, and (3) an assignment of the mortgage. In connection with the second transfer, CPIC executed an assignment of the mortgage and an allonge to the note transferring its rights to Green.
The trustee objected to...
