Question: A business associate of an elderly man persuaded the man

A business associate of an elderly man persuaded the man to issue a $10,000 check to recover a failed investment as part of a scam perpetrated on the maker of the check. The business associate (endorser) presented the check to the check-cashing center, which paid it to the endorser after unsuccessfully trying to contact the maker. The maker stopped payment on the check after realizing the check had been paid. The check for $10,000 was cashed by someone identifying himself as a broker; the transaction was not the typical type handled by the check-cashing center; and reasonable commercial standards required that more care be taken than was usual for the normal transactions that occurred at the center. By releasing funds without verifying the check with its maker, the center did not observe reasonable commercial standards. The issue in this case is whether the check-cashing store qualifies as a holder in due course so that it can collect on a $10,000 check written by the elderly man who was fraudulently induced to issue the check by the person who cashed it. How do you think the court ruled? Was the check-cashing store a holder in due course? Did the procedures it used meet the requirements for good faith to be an HDC?

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  • CreatedOctober 21, 2015
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