[suijuris]

John P. McCAY, Jr. and Rosemary L. McCay v.

CAPITAL RESOURCES COMPANY, LTD.



96-200 ___ S.W.2d ___



Supreme Court of Arkansas

Opinion delivered March 24, 1997





1. Mortgages -- original note's terms could not be enforced by use of copy without proving it lost, destroyed, or stolen as required in code -- adequate protection to appellants from future claim not given. -- Where appellee apparently never possessed appellants' original note as provided in Ark. Code Ann.  4-3-309(a)(i) (Repl. 1991), but was required, even if it had, to have proven all three factors specified in  4-3-309(a) and did not do so, appellee could not enforce the original note's terms by the use of a copy; even if all three requirements in  4-3-309(a) had been proven, the trial court was still obligated to ensure that appellee provided adequate protection to the appellants from any future claim, and this, too, was not done.



2. Evidence -- argument that rules of evidence supersede requirements of UCC without merit -- appellee failed to either produce original of note or satisfy requirements for lost negotiable instrument. -- Appellee's argument that the trial court was correct in admitting the copy of the note as an exception under the best evidence rule and that the Arkansas Rules of Evidence superseded the requirements of the Uniform Commercial Code (UCC) was without merit; if a duplicate was allowed in place of the original note, the appellants could later be subjected to double liability if the actual holder of the note appeared; the rules of evidence are rules of the court involving legal proceedings, while the UCC is composed of statutes of law that established the rights and liabilities of persons; appellee, as an assignee of the appellants' note, could not sue on the underlying debt the appellants owed to the original lender; in order for appellee to have prevailed in enforcing the note, it was required either to produce the original or satisfy the requirements for a lost negotiable instrument under  4-3-309(a) and (b); because appellee failed to do either, the case was reversed and remanded.