On January 22, 2002, as a result of a real estate transaction, First Service Title Agency issued three checks drawn on its account with Key Bank. The first check was for $850 and was payable to the order of "Richard G. Knostman, Atty. and Mark F. Foster, Atty. and Resa Kermani & Badri Kermani." The second check was for $36,295.80 and was made payable to "JD Properties and Resa Kermani & Badri Kermani." The third check was for $4,010 and payable to "Knab Mortgage." First Service Title subsequently learned that the underlying real estate transaction had been fraudulent. Consequently, on January 23, 2002, it put stop payment orders on all three checks and refunded the monies it had received in the transaction. First Service Title notified the parties and the payees of the stop payment orders.
On the same day that First Service Title Agency placed the stop payment orders on the checks, Randall Davis, who had various accounts at Firstar Bank, presented all three checks to Firstar Bank. Firstar Bank paid the checks to Davis even though Davis was not a party to any of the checks, the checks contained multiple indorsements that appeared to be in the same handwriting, and they all were marked "for deposit only." Key Bank subsequently returned the checks to Firstar Bank with the notation "Payment stopped." Firstar Bank then filed suit against First Services Title Agency and Davis. One of the issues in the suit against First Services Title Agency was whether Firstar Bank was a holder in due course of the three checks. Is Firstar Bank a holder in due course of the three checks that it paid to Davis and now wants to obtain payment on from the drawer, First Services Title Agency?