Rohan executed and delivered a promissory note and a mortgage securing the note to Acme Mortgage Company, which was named as payee in the note and as mortgagee in the mortgage. The note included a statement that the indebtedness evidenced by the note was "subject to the terms of a contract between the maker and the payee of the note executed on the same day" and that the note was "secured by a mortgage of even date." The mortgage was promptly and properly recorded. Subsequently, Acme sold the Rohan note and mortgage to XYZ Bank and delivered to XYZ Bank a written assignment of the Rohan note and mortgage. The assignment was promptly and properly recorded. Acme retained possession of both the note and the mortgage in order to act as collecting agent. Later, being short of funds, Acme sold the note and mortgage to Peterson at a substantial discount. Acme executed a written assignment of the note and mortgage to Peterson and delivered to him the note, the mortgage, and the assignment. Peterson paid value for the assignment without actual knowledge of the prior assignment to XYZ Bank and promptly and properly recorded his assignment. The principal of the note was not then due, and there had been no default in payment of either interest or principal. If the issue of ownership of the Rohan note and mortgage is subsequently raised in an appropriate action by XYZ Bank to foreclose, the court should hold that
Peterson owns both the note and the mortgage. XYZ Bank owns both the note and the mortgage. Peterson owns the note and XYZ Bank owns the mortgage. XYZ Bank owns the note and Peterson owns the mortgag
Question: Rohan executed and delivered a promissory note and a mortgage securing the note to Acme Mortgage Company, which was named as payee in the note and as mortgagee in the mortgage. The note included a statement that the indebtedness evidenced by the note was "subject to the terms of a contract between the maker and the payee of the note executed on the same day" and that the note was "secured by a mortgage of even date." The mortgage was promptly and properly recorded. Subsequently, Acme sold the Rohan note and mortgage to XYZ Bank and delivered to XYZ Bank a written assignment of the Rohan note and mortgage. The assignment was promptly and properly recorded. Acme retained possession of both the note and the mortgage in order to act as collecting agent. Later, being short of funds, Acme sold the note and mortgage to Peterson at a substantial discount. Acme executed a written assignment of the note and mortgage to Peterson and delivered to him the note, the mortgage, and the assignment. Peterson paid value for the assignment without actual knowledge of the prior assignment to XYZ Bank and promptly and properly recorded his assignment. The principal of the note was not then due, and there had been no default in payment of either interest or principal. If the issue of ownership of the Rohan note and mortgage is subsequently raised in an appropriate action by XYZ Bank to foreclose, the court should hold that
A. Peterson owns both the note and the mortgage.
B. XYZ Bank owns both the note and the mortgage.
C. Peterson owns the note and XYZ Bank owns the mortgage.
D. XYZ Bank owns the note and Peterson owns the mortgag
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