Recent Cases: Bills and Notes — Separate Instruments Read as One and Affecting Status as Holder in Due Course and Negotiability of Promissory Note

Abstract

Plaintiff finance company followed a policy of refusing to take up negotiable notes from appliance dealers unless the notes were accom­panied by a statement signed by the maker of the note that all mer­chandise had been installed. A dealer forged the signature of defendant maker on the certificate, warranting that all merchandise had been installed. Plaintiff finance company sued the maker on the note. Held: the finance company forfeited its status as a holder in due course by requiring the additional instrument as a condition precedent to acceptance of the note. The court reasoned that since the finance com­pany required the certificate of installation, it was to be held as an original party not only to the certificate but also to the note which accompanied it, and would be subject to all defenses maker could set up on either instrument