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VI. ANSWERS TO PROBLEMS AND PROBLEM
CASES:
1. No. Elgin Bank had to repay O.K. Moving
&
Storage for all the restrictively indorsed
checks
payable to it that the bank had deposited to Raye Walker's account. The bank had a duty
to
2. Because the checks were indorsed in blank, it constituted an authorized indorsement
(3-304)
in that no particular indorsee was specified. Thus the bank was not guilty of conversion.
To
3. Yes. Western Auto is a holder in due course of the stolen check since it was indorsed
in
blank, value was given in good faith, and the check gave no notice of any claim to it by
any
4. Yes. The payee was the holder of the check at the time of his death and was in
possession.
The son
received
possession of the note by virtue of his father's will. Because the note
was
5. Halbert is a partial holder in due course for the amount of $8,000 because this represents
the
6. No. Under New Jersey law, a check-cashing service is prohibited from cashing a post-dated
7. No. The court ruled that Nationwide was not a holder in due course. The note was
not
regular on its face because of the obvious alteration. Thus the note was irregular paper.
A
8. No. The Hutchinsons did not have a valid real defense. This was not the kind of
situation
where a person could justify being "tricked" into signing a negotiable instrument in the belief
9. Yes. Even though Bucci, as payee, could in some circumstances be a holder in due
course,
here he could not because he had knowledge of the possible
defense-the
defective quality
of
10. No. The effect of inclusion of the FTC notice is to preclude a subsequent holder
from
becoming a holder in due course because it subjects the subsequent holder to the claims
and
