(a) Subject to subsection (c) and Section 7-3-106(d), “holder in due course” means the holder of an instrument if:
(1) The instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
(2) The holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 7-3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 7-3-305(a).
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.
(d) If, under Section 7-3-303(a) (1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.
(e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.
(f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §1; added by Acts 1995, No. 95-668, p. 1381, §1.)
Notes of Decisions
Strickland v. Kafko Mfg., Inc., 512 So. 2d 714 (Ala. 1987).
· cites it 4× “Now, under §§ 7-3-302 and 7-1-201(20), a payee who can meet the requirements of holder-in-due-course status may qualify as a holder in due course; that is, he must take for value, in good faith, and without notice of any defense against or claim to the instrument by any person.”
Home Bank of Guntersville v. PERPETUAL Fed. S. & L. ASS'N, 547 So. 2d 840 (Ala. 1989).
· cites it 6× “e issues we address on appeal are whether the defendant's counsel was competent to testify by affidavit in behalf of his client; whether there was substantial *841 evidence supporting any issue of fact that would permit submission to the trier of fact; whether a "bank money…”
First Alabama Bank of Guntersville v. Hunt, 402 So. 2d 992 (Ala. Civ. App. 1981).
· cites it 11× “However, by so deciding we do not find that First Alabama Bank is a holder in due course under § 7-3-302(1), Code of Ala. 1975. That question is, in this instance, apparently a question of fact to be determined by the trier of fact.”
Sherrill v. Frank Morris, Etc., 366 So. 2d 251 (Ala. 1978).
“Holder in due course is defined in § 7-3-302 (Code 1975) as follows: "(1) A holder in due course is a holder who takes the instrument: (a) For value; and (b) In good faith; and (c) Without notice that it is overdue or has been dishonored or of any defense against or claim to it…”
Graveling v. BankUnited N.A., 970 F. Supp. 2d 1243 (N.D. Ala. 2013).
· cites it 2× “Ala.Code § 7-3-302. The Gravelings do not challenge BankUnited’s standing on any of these grounds.”
— Ala. Code § 7-3-302(1) — 2 cases
Home Bank of Guntersville v. PERPETUAL Fed. S. & L. ASS'N, 547 So. 2d 840 (Ala. 1989).
“e issues we address on appeal are whether the defendant's counsel was competent to testify by affidavit in behalf of his client; whether there was substantial *841 evidence supporting any issue of fact that would permit submission to the trier of fact; whether a "bank money…”
First Alabama Bank of Guntersville v. Hunt, 402 So. 2d 992 (Ala. Civ. App. 1981).
“However, by so deciding we do not find that First Alabama Bank is a holder in due course under § 7-3-302(1), Code of Ala. 1975. That question is, in this instance, apparently a question of fact to be determined by the trier of fact.”
— Ala. Code § 7-3-302(1)(a) — 1 case
Home Bank of Guntersville v. PERPETUAL Fed. S. & L. ASS'N, 547 So. 2d 840 (Ala. 1989).
“e issues we address on appeal are whether the defendant's counsel was competent to testify by affidavit in behalf of his client; whether there was substantial *841 evidence supporting any issue of fact that would permit submission to the trier of fact; whether a "bank money…”
— Ala. Code § 7-3-302(1)(b) — 1 case
Home Bank of Guntersville v. PERPETUAL Fed. S. & L. ASS'N, 547 So. 2d 840 (Ala. 1989).
“e issues we address on appeal are whether the defendant's counsel was competent to testify by affidavit in behalf of his client; whether there was substantial *841 evidence supporting any issue of fact that would permit submission to the trier of fact; whether a "bank money…”
— Ala. Code § 7-3-302(1)(c) — 2 cases
Strickland v. Kafko Mfg., Inc., 512 So. 2d 714 (Ala. 1987).
“Now, under §§ 7-3-302 and 7-1-201(20), a payee who can meet the requirements of holder-in-due-course status may qualify as a holder in due course; that is, he must take for value, in good faith, and without notice of any defense against or claim to the instrument by any person.”
Home Bank of Guntersville v. PERPETUAL Fed. S. & L. ASS'N, 547 So. 2d 840 (Ala. 1989).
“e issues we address on appeal are whether the defendant's counsel was competent to testify by affidavit in behalf of his client; whether there was substantial *841 evidence supporting any issue of fact that would permit submission to the trier of fact; whether a "bank money…”
— Ala. Code § 7-3-302(3)(c) — 1 case
First Alabama Bank of Guntersville v. Hunt, 402 So. 2d 992 (Ala. Civ. App. 1981).
“However, by so deciding we do not find that First Alabama Bank is a holder in due course under § 7-3-302(1), Code of Ala. 1975. That question is, in this instance, apparently a question of fact to be determined by the trier of fact.”
— Ala. Code § 7-3-302(a)(2) — 1 case
— Ala. Code § 7-3-302(l)(e) — 1 case
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