The bank will be able to collect the funds from Bill on the promissory note. The bank was the first transferee, the status of a holder through a holder in due course is unavailable. Only if the bank meets the requirements of a holder in due course. However, the value was given for the promissory note, and it was just a transaction of good faith. It also looks as if the bank had no notice of the defect. The bank's holder in due course status states the argument of breach of contract will not be effective, for it is a limited defense that is not available against a holder in due course.