Greg buys what was represented to be a new computer from Aaron's Electronics. Greg issues a check to Aaron's Electronics for $3500 drawn on Long Island Bank. Greg is the drawer of the check.
Aaron's Electronics negotiated Greg's check to Tina's business, Dark Horse Hardware, in payment for hardware Aaron's Electronics had purchased from Tina's business in order to recondition the computers that he sold.
Tina as the sole proprietor of Dark Horse Hardware had no knowledge of Greg Jones or if Greg had any personal defenses to liability to the check he wrote to Aaron's Electronics. Tina was a holder that took the instrument for value, in good faith, and met the requirements of being a holder in due course.
In the meantime, Greg discovered that what he paid $3500 for was really a reconditioned laptop worth only $350. He called his bank, Long Island Bank, and put a stop payment order on the check.
When Tina took the check to Long Island Bank to cash the check and put the funds into the Dark Horse Hardware business' checking account, Long Island Bank refused to pay the check based on Greg's stop payment order.
As a result, Tina sued Greg on his drawer's liability.
HISTORY: The trial court ruled in favor of Greg based on his personal defense of misrepresentation by Aaron's Electronics of the prior use of the computer as a reason for not paying Tina.
Tina appealed the ruling of the trial court on behalf of Dark Horse Hardware.
Whats the rule, analysis and conclusion? *Consider: Holder in Due Course and Drawer's Liability, specifying the applicable rules
ISSUE 1: Will Tina win the appeal of the lower court ruling in favor of Greg since she is a holder in due course?
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