James borrowed $2000 from Danny. James issued two $1000 notes, each payable to the order of Danny as an evidence of debt. Each of the notes was due and payable 5 years after the date of issue.
Danny died 3 years after the issue date of the notes, leaving the notes and his estate to his son, Timmy. On the due date of the notes Timmy presented both notes to James, demanding payment. James refused to pay the notes claiming that Timmy is not a hold of the notes since neither of the notes were endorsed over to him by the payee, and that since Timmy is not a holder he has no right to attempt to collect or enforce the notes. Timmy agrees that he is not a holder, but argues that he is nevertheless entitled to collect on both notes as the heir to Danny, his father.
According to Timmy, the notes were transferred to him, giving him the legal right to enforce the notes at their maturity.
How should this case be determined? In answering this question you should address:
What is the status of Timmy with regard to the notes? Why?
Who should prevail in this lawsuit? Why?