Question: ABCO (Abbott Development Company) made a note payable to Western State Bank of Midland. The FDIC took over Western States operations after it failed. ABCO

ABCO (Abbott Development Company) made a note payable to Western State Bank of Midland. The FDIC took over Western State’s operations after it failed. ABCO had defaulted on the note, after which the FDIC permitted ABCO Homes to refinance the note, making its refinancing note payable to the FDIC. The FDIC indorsed its note to SMS Financial and inadvertently sent it to SMS as part of a large batch of documents. When litigation resulted on the note, SMS claimed it was the holder. Others challenged its status, saying that SMS never had the instrument delivered to it. The lower court held SMS was not a holder and SMS appealed. Is SMS a holder? Why or why not? [SMS Financial, L.L.C. v ABCO Homes, Inc., 167 F3d 235 (5th Cir)]

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