(specially concurring).
I concur in the foregoing opinion even though the result it reaches, as one commentator states, “seems questionable.” See 4 W. Hawkland, UCC Series § 3-201:09 at 285 (1984):
[I]f [an] instrument is payable to order, ... the transferee does not become a holder until the instrument has been properly indorsed; until then, he is a mere transferee. In order to become a holder in due course, he must be without notice and in good faith both at time of acquiring holder status and at the time of giving value. Since holder status is not acquired until the instrument has been indorsed, if prior to that time he receives notice of a claim or defense, he will be denied holder in due course status. Thus a good faith purchaser for value who merely forgets to obtain an indorsement and receives notice of a defense prior to obtaining the indorsement is denied the right to become a holder in due course. This result, which is clearly compelled by the Code, seems questionable.
Professor Hawkland goes on to point out that a transferee who gives value for the instrument is entitled to compel indorsement by the transferor, citing UCC § 3-201(3) (NMSA 1978, Section 55-3-201(3)). Since the transferee has this “specifically enforceable right,” I would be inclined to favor applying the equitable maxim, “Equity regards that as done which ought to be done,” 2 J. Pomeroy, Equity Jurisprudence § 363 (5th ed. 1941), and hold in favor of the S & L on the holder-indue-course issue in this case. As Professor Hawkland states, if the transferee
has clear title and at the time of purchase was in good faith and without notice, there is no reason to subject him to the defense of any obligor with whom he has not dealt. Unlike the holder who has not given value and therefore can, after notice, protect himself by refusing to give the agreed consideration, the transferee who has merely failed to obtain the indorsement has no means of protecting himself. The failure to obtain the indorsement should not affect the relative equities between him and the obligor.
Nevertheless, except in the case of depository bank/transíerees [citing Bowling Green, Inc. v. State Street Bank & Trust Co., 307 F.Supp. 648 (D.Mass.1969), aff'd, 425 F.2d 81 (1st Cir.1970)], the clarity of subsection 3-201(3) has discouraged any court from holding otherwise.
Hawkland, op. cit. supra at 285-86.
Thus, a leading commentator in the commercial law field finds that the result in this case, although “questionable,” is compelled by the Uniform Commercial Code and that the clarity of the statute has discouraged any court from reaching a contrary result. Professor Hart, another distinguished commercial law commentator, seems to approve this reading of the statute and the case law. He points out that the holdings in the Bowling Green cases— that the depository bank need not take by indorsement in order to be a holder — have been questioned and states:
It would appear that the Code should be read to require an indorsement.. Comment 7 to Section 3-201 states that “there is no effective negotiation until the indorsement is made. Until that time the purchaser does not become a holder
* * * * ff
2 F. Hart, Bender’s UCC Service Commercial Paper, § 3.10 at 3-66 (1989).
There comes a time when judges, along with commentators, must put aside their inclinations and perceptions of the “relative equities” between the parties and yield to the language the legislature has enacted. Of course, commercial law has long favored the bona fide purchaser — a transferee for value, without notice — in order to promote the free flow of commerce, whether in land, commercial paper or other things of value. See, e.g., First Nat’l Bank of Albuquerque v. Stover, 21 N.M. 453, 155 P. 905 (1916) (bona fide holder of negotiable paper protected against defenses when without notice of defect). This policy, however, has now been implemented, insofar as negotiable instruments are concerned, in the specific language of Article 3 of the Uniform Commercial Code. A holder in due course gets the protection so long afforded by general principles of commercial law; a “mere transferee” does not. The Code tells us, specifically, who is and who is not a holder in due course. In this case, as the Chief Justice’s opinion rules, the S & L was not a holder in due course.