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Triffin v. Angelica

A-5051-01T1 (N.J. Super. App. Div. 2003) (Unpublished)

CHECKS; HOLDER IN DUE COURSE—A person is not a holder in due course of a check that bears apparent evidence of forgery or alteration or is otherwise so irregular or incomplete as to call in question its authenticity.

A buyer of dishonored checks attempted to recover, from the drawer, the amount stated on two fraudulent reproductions of the same check. A bank refused to honor the reproductions and marked “fraud” on the face of both reproductions. The lower court dismissed the complaint because the documents were fraudulent. The buyer appealed, claiming that, as a holder in due course, it purchased the documents free of defenses. Unfortunately for the buyer, a person is not a holder in due course if the document bears “apparent evidence of forgery or alteration or is otherwise so irregular and incomplete as to call in question its authenticity.” A negotiable instrument which is fraudulent is void, even against a holder in due course, provided that the drawer was not negligent. The lower court found, and the Appellate Division agreed, that the buyer knew that the documents were fraudulent reproductions of checks since the bank marked “fraud” on them. Therefore, it was not a holder in due course. Further, the drawer was not negligent.


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