In order for someone to be considered a holder in due course, they must meet three
requirements. “The holder must take the instrument for value” (Kubasek et al., 2019). Here
Kane took the check from Grace as payment for the cows that Kroll was buying from
Kane. Grace made the check payable to Kane as the payment. The next requirement is “the
holder must take the instrument in good faith” (Kubasek et al., 2019). As we read about
the affidavits, no one is suggesting that the check was not taken in good faith.
Furthermore, we are not told whether Kane was aware of the agreement between Kroll and
his mother Grace, all we know is that grace wrote a check payable to Kane for the cow.
Taking this at face value one would believe that Kane was not aware of the agreement
between Kroll and Grace and that he would not have given his cow in exchange for the
check if he thought it would not be honored, he would be better off keeping the cow and
selling it to someone else. This brings us to the third requirement “The holder must take
the instrument without notice that it is overdue or has been dishonored or of any defense
against or claim to it on the part of any person”. (Kubasek et al., 2019). Again, we have no
reason to think that Kane had any information about the check being dishonored. No
person in their right mind would give someone a product knowing they might not get the
payment for it.
,,,,,,,,,,, The one thing Grace tries to use as her defense is that she had no preexisting
obligation to pay her son's debt. The court used” Section 403.303(2), Stats., which clearly
allows a holder in due course to accept payment from one person for payment of the debt
of another” (Kubasek et al., 2019), to combat her claim. I agree with the court as Grace’s
arraignment with her son has no bearing on the transaction of purchasing the cow. These
were two separate transactions, and she would have to take it up with her son rather than
prevent Kane from cashing the check. The ethical value that I believe guided this decision
is protecting the unsuspecting and upholding a standard by which business deals are made.
Kane had no way of knowing that Grace would place a stop payment, thus making him the
unsuspecting victim. If people are allowed to get away with placing a stop payment on
their checks just because something fell through what would stop them from it just placing
a stop payment just because they don’t want to pay an item, like buyer’s remorse. When
you write a check it needs to be reliable, otherwise the innocent are taken advantage of.
This was unethical for Grace to do. If she wanted to get her money back, she should have
taken it up with her son.,
References
Kubasek, N. K., M Neil Browne, Dhooge, L. J., Herron, D. J., & Barkacs, L. L.
(2019).,Dynamic business law.,Mcgraw-Hill Education.
