On February 2, 1996, Omni issued two checks, totaling $75,000, to Country Grain for grain it had purchased. Country Grain, in turn, indorsed the checks over to Carter & Grimsley as a retainer for future legal services. Carter deposited the checks on February 5; Country Grain failed the next day. On February 8, Carter was notified that Omni had stopped payment on the checks. Carter subsequently filed a complaint against Omni alleging that it was entitled to the proceeds of the checks, plus prejudgment interest, as a holder in due course.

CASE QUESTIONS

1. Did Carter take the instrument for value as defined in Article 3?

Why or why not?

2. Who prevails and why?