Meadow Homes Development Corp. v. Bowens
Colorado Court of Appeals
211 P.3d 743 (2009)
A water district issued a bond under an agreement giving the Horvats the right to keep it if they closed on certain property, or otherwise requiring them to sell it to Meadow Homes Development Corp. (plaintiff) for $50,000; when the Horvats failed to close, Meadow closed instead and demanded the bond, but the Horvats had already secretly transferred it to Ronald Bowens (defendant), who was himself a party to the agreement establishing Meadow's rights. The trial court ordered Bowens to transfer the bond to Meadow upon payment, finding Bowens was not a protected purchaser under UCC § 8-303 because he knew of Meadow's adverse claim when he acquired the bond, and Bowens appealed.
Whether, under the Uniform Commercial Code, a transferee of a security may acquire the security free from any adverse claims only if the transferee qualifies as a protected purchaser.