Discharge. Mary Ann McClusky and her husband Curtis borrowed $75,000 and signed a note payable to Francis and Thomas Gardner. As collateral, Mary Ann gave the Gardners a mortgage on a farm owned in her name only. After the McCluskys divorced, Mary Ann

Question

found, in a file in the basement of her house, the note with the word "Paid" written across it. When the Gardners refused to cancel the mortgage, she filed a suit in an Indiana state court against them. During the trial, she testified that she did not know how the note came to be in her basement or who wrote "Paid" across it. The Gardners testified that they had not surrendered it. Should the court presume that the note had been discharged, given that it was in Mary Ann's possession and had the word "Paid" written across it? Discuss.

Answer 1

Discharge
The jury returned a verdict for Mary Ann, and the court issued a judgment that, in part, discharged the note. The Gardners appealed, arguing that Mary Ann's finding the note in a file in the basement was not enough to prove they surrendered the note because Mary Ann did not know how it got there. The Indiana Court of Appeals affirmed that part of the trial court's judgment discharging the note. The state intermediate appellate court explained that "Mary Ann's possession of the original note marked ‘Paid' raises the presumption that it was surrendered with the intent to discharge. It was for the [jury] to determine whether Defendants rebutted that presumption with the evidence that [they] had not returned the note and that no one could say who had written ‘Paid' on the note. The jury found that the note had been discharged and the evidence supports that finding."