Gaetani

California statutory and case law preceding our state’s 1963 enactment of the Uniform Commercial Code established that the indorser of a promissory note could avoid liability for any default by the maker by adding the words “without recourse” or words of equivalent effect—what we will call “the equivalency rule.” Specifically, case law held that words assigning all of one’s right, title and interest in the note were equivalent to indorsing it without recourse. (Kern v. Henry (1934) 138 Cal.App. 46, 50-51 [ 31 P.2d 454 ]; Mathes v. Bangs (1932) 128 Cal.App. 171, 172-173 [ 16 P.2d 749 ].)

In the case at hand, Tony E. Gaetani, Sr. (Gaetani) took a note indorsed to him in 1989 with those equivalent words by a trustee for Goss-Golden West Sheet Metal Profit Sharing Plan (Goss) as part of a real estate sale. He then brought this suit in part against Goss after the maker’s default, and the trial court held, against Gaetani’s arguments to the contrary, that the cited authority remained controlling and barred relief. We will affirm.

Background

The note, for $300,000 (the Bond note), was given by Arthur E. Bond to Goss in 1988 and was secured by a deed of trust on land in San…