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.NegotiabilityAn instrument is not necessarily negotiable when it is issued, and the one who isholding it is not necessarily a holder in due course.All of the six requirements listedin 3-302(A)(2) must be met for one to be a holder in due course.The first is that theinstrument be taken for value .According to the Oklahoma case, UCC 3-303 says aholder takes for value when it acquires a security interest in the instrumentotherwise than through a judicial proceeding.Make a note of this It is the holderwho acquires a security interest in the instrument, IF he takes the instrument forvalue.It is not the issuer who has the security interest; it is the holder.The issuer hasthe liability.The holder can waive the security interest with a blank endorsement, oraccept it with a qualified endorsement.With a qualified endorsement, the holder isaccepting the security interest, not the liability.Judicial court orders can transfer rights in property, creating a security interest inthe title to the subject property, but that is not how it works with an instrument that isissued for value.An order for a judicial court-created security interest is not the typeof instrument that a transferee would take for value; but, an order for an executivecourt-created security interest is a type of instrument that a transferee would take forvalue.United States courts are not judicial courts; they are territorial courts and werecreated through Article 1 Section 8 Clause 9 by the power granted to the Congress to constitute Tribunals inferior to the supreme Court .Their orders do not result insecurity interests through judicial proceedings.A check is negotiable when it is transferred to a payee.It is a note because it isthe Maker s promise to pay the Payee.It is also an order to a third party, so it is aPage 25 of 50 draft signed by a Drawer.A named third party, the Payer, on a negotiable instrumenthas a duty to pay it if he is a party to a preexisting arrangement with the Drawer to doso.On a normal check, a bank is the Payer.The Drawer is the party ordering thepayment on a draft.The Payee negotiates the check by endorsing it and presenting itto a bank for deposit.If the Payee and the Drawer bank at the same bank, the bankwhere the check is deposited can also be the Payer.The Payee is usually a holder indue course.If the check is lost, a person who finds it is not a holder in due course andis not entitled to enforce the instrument.The one who endorses it takes on theliability if the bank where it is deposited cannot collect on it.He has recourse againstthe Drawer.A check is not an instrument that the Payee would take for value, but thebank where it is deposited might take it for value, in the event it believes there may bedifficulty in collecting on it.If you endorse a check without recourse , you aregiving notice that you do not agree to take on the liability, but you may not be able toconvince a bank to accept it with that qualified endorsement.If you endorse a checkwith just your signature and present it to a bank for deposit, you are giving your rightsas holder in due course over to the bank.You are also agreeing to take on the liabilityfor the tax on that instrument.An IOU is not negotiable, because there is no third party.An IOU is a promise topay, and is signed by a Maker.The holder of an IOU can only present it forcollection to the Maker.Other instruments that are notes (promises) are notnecessarily negotiable either.United States Notes (promises) were originallynegotiable because the holder could take them to any federal reserve bank (thirdparty) and redeem them for gold or silver.Federal Reserve Notes are obligations ofthe United States that are not negotiable.They are promises to pay.They areobligations that are not redeemable.See 12 USC 411 as amended.Federal Reserve Notes are considered to be a benefit U.S.citizens get to usewithin the United States.A promise can be value.Suffering can be value.A benefitcan be consideration sufficient to support a simple contract.Using Federal ReserveNotes is considered taking advantage of a benefit (consideration) in exchange forrights the United States has to enforce the terms of a preexisting citizenship contract(a pledge).That is the implied basis for its agents to issue bills (instruments) to U.S.citizens, but they have to be issued for value.The terms of that pledge are the hiddenbasis for issuing instruments for value.There is a default presumption that every U.S.citizen has made a pledge to the United States and its statutes.Other than the issuer sobligation to pay an instrument that is issued for value, there is no value in theinstrument, when it is issued.It is not negotiable when it is issued.It is seeking anegotiable instrument.An issuer has a defense for issuing instruments withoutconsideration, if they are issued for value, and a promise previously made by thetransferee (U.S.citizen) is due and has not been performed.The payment on thenational debt is always due and has not been performed.If an employee of the United States transfers a bill (instrument) for value to aU.S.citizen, the man who represents him might recognize that the bill has been issuedfor value so he can accept it for value and return it for value to close the account onbehalf of the U.S.citizen.The U.S
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