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Problem: Hypothetical situation: Your company buys a computer from Midnight Computer Supplies.

Problem:
Hypothetical situation: Your company buys a computer from Midnight Computer Supplies. Unknown to your company, Midnight has removed the high storage hard drive that you ordered and replaced it with an inferior drive having inadequate storage. Your company pays Midnight with a $20,000 check. Midnight owes its vendor, Marvelous Monitors, $20,000, so Midnight endorses the $20,000 check over to Marvelous. Marvelous doesn't know that Midnight switched the hard drive. Your company then discovers that Midnight switched the drives. Meanwhile, Marvelous comes to your company for the $20,000 (or more likely goes to your company's bank to cash the check.)
Question:
Does your company (or your company's bank) have to pay Marvelous the $20,000? Why or why not? What other action could your company take to try to recoup its losses?
ME: (Does that mean that Marvelous is protected by the "Personal Defenses" and must be paid because they recieved the check in good faith and value? or my company doesnt have to pay them because of fraud from Midnight?...To recooup is losses can the company use stop payment?)

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