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In the example below, why is there so many negotiating? It even has a part where Trotz negotiates the check to Point, who then negotiates the check back to Trotz? What’s up with that? It looks just silly, like a game of hot potato.
(by the way the answer and explanation below isn’t really related to what I am asking, but I just included it there if you’re curious as to what the actual question was)
McGee fradulently induced Howards into making a personal check to him. Mcgee negotaited the check by endorsement to Trotz, who was aware of the fraud. Trotz negotiated the check to Point who qualified as a holder in due course. Point negotiated the check back to Trotz. When Trotz tried to cash the check, the bank refused, saying a stop payment order had been issued. Trotz then tried to collect the check from Howards. Which of the following is correct?
Answer: Trotz cannot collect the check from either howards or the bank.
Expanation: Trotz cannot qualify as a holder in due course because he knew of the fraud. He cannot qualify as a holder through a holder in due course because he cannot improve his status over what he had the first time he held the check. Therefore, he cannot enforce this check against Howards or the bank.
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