Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 11

Holly Hill Acres, Ltd., executed and delivered a promissory note and a purchase money mortgage to Rogers and Blythe. The note provided that it was secured by a mortgage on certain real estate and that the terms of that mortgage ''are by this reference made a part hereof.'' Rogers and Blythe then assigned the note to Charter Bank, and the bank sought to foreclose on the note and mortgage. Holly Hill Acres refused to pay, claiming that the note was not negotiable and therefore subject to the defense that Holly Hill Acres had been defrauded by Rogers and Blythe.
a. Present the position that the note is a negotiable instrument.
b. What is the position that the note is nonnegotiable?
c. Is the note negotiable or nonnegotiable? Explain.