A holder in due course is based on four requirements that are
established in the UCC Section 3-302. According to Kubasek et al.,
(2020) p. 0634, these requirements include the holder of the
instrument of a complete and authentic negotiable, for value, in good
faith, and without notice of defects. In the Kane vs. Kroll case, the
evidence that indicates that Michael Kane was a holder in due course
because he met three of the requirements was when he took the
payment of $6,100 from Mr. Kroll's mother Grace to repay the debt
that Gerald Kroll owed him. The holder takes the instrument for
value which is another requirement that was met. The Section
403.302(1)(a) is when "a holder takes for value when he takes an
instrument in payment for an antecedent claim against any person"
(Kubasek et al., 2020 p. 0635). The requirement that met Section
401.201(19), STATS., is that the holder must take the instrument in
good faith. "In this case, Kane’s affidavit supports his contention that
he accepted the check in good faith for the payment of Gerald’s
antecedent debt. Moreover, none of the affidavits supplied by either
party suggests evidence of bad faith on Kane’s part. In the absence
of such evidence, we conclude Kane took the check in good faith as a
matter of law" (Kubasek et al., 2020 p. 0635). Grace didn't claim that
Mr. Kane had any knowledge of the defense when he took the check
from her which meets the requirement Section 403.302(1)(c), STATS.
Therefore, the holder must "take the instrument without notice that
it is overdue or has been dishonored or of any defense against it or
claim to it on the part of any person" (Kubasek et al., 2020 p. 0635).
The rules of law play into the court’s reasoning by Michael Kane
being considered as a holder in due course because Judge Myse
considered that he met the three requirements. Kane held up his part
of the deal by selling Kroll some cows and because of this the
instrument was provided. In this case, I don't believe that there are
any ambiguities present in these rules of law. I do believe that the
Judge Myse made a fair ruling because instead of Grace paying for
Gerald's debt, she could've mentioned to him to wait until he sold the
hay so he could afford to pay Kane and receive the cows. Grace
didn't have the right to stop the payment on the check to Kane all
because Gerald was unable to repay her since the sale of hay fell
through. Kane should not be held responsible for Gerald not being
able to repay the $6,100 to his mother back. The ethical value guided
this conclusion by the judge’s decision being fair. Mr. Kane is not
responsible for Gerald not repaying Grace back. He's a holder in due
course which prevents him from being at fault in this situation. Grace
made the incorrect choice to stop the payment of the check to Kane
and should've discussed the issue with her son. Grace made an
unethical decision so that she didn't have to lose the money that
Gerald wasn't able to pay her back with all because he was expecting
a load of hay to sell and instead took it out on Kane when he had
nothing to do with Gerald's problem.
Reference: Kubasek, N., Browne, M., Herron, D., Dhooge, L., Herron,
D., Barkacs, L. (2020). Requirements for Holder-in-Due-Course
Status. McGraw-Hill Connect. Retrieved from https://prod.reader-
ui.prod.mheducation.com/epub/sn_3b37d/data-uuid-
f862552324b34d41a55b0f8daade450c
