JP Morgan [Chase] Bank v. Frank
A mortgage is a conveyance of real property and must comply with the statute of frauds in Connecticut General Statutes §§47-5 and 52-550. The plaintiff bank filed a foreclosure action against the defendant, Catherine Frank, alleging that although Frank neglected to sign the mortgage, because of an error at the closing, she benefitted from the loan. The bank alleged that the mortgage and note are in default. Frank denied that there was any error at the closing and claimed that the bank only intended to obtain a mortgage from the joint owner, Kurt Zemba. Frank alleged that the mortgage and note violate the statute of frauds, because Frank did not execute them. C.G.S. §47-5 provides, "All conveyances of land shall be: (1) [i]n writing; (2) if the grantor is a natural person, subscribed . . . by the grantor with his own hand . . .; (3) acknowledged by the grantor . . . to be his free act and deed; and (4) attested to by two witnesses." Frank adequately alleged that the mortgage and note did not comply with the statute of frauds, and that the bank is attempting to enforce a document that Frank did not execute. The court denied the bank's motion to strike the statute-of-frauds defense. The court granted the bank's motion to strike Frank's special defense that the mortgage and note lacked consideration. The bank adequately alleged that Frank benefitted, because loan proceeds were used to pay prior liens and Frank obtained the use of the proceeds. Frank also alleged that the bank was not a holder in due course, because when it acquired the debt the bank knew, or should have known, about Frank's special defenses. A holder in due course is the holder of an instrument if the instrument, when issued or negotiated, does not bear such apparent evidence of forgery or alteration, or is not otherwise so irregular or incomplete, as to call into question the instrument's authenticity. Frank adequately alleged that the bank is not a holder in due course, and the court denied the motion to strike the special defense.