A holder in due course is not immune to real defenses that render an instrument and its underlying obligation entirely void.
A defendant seeks a writ of mandamus to compel a district court to grant summary judgment after the court denied his motion in a suit to recover proceeds from checks. The defendant asserts that the checks were drawn for the purpose of gambling, which renders them void and unenforceable under state law. The bank argues it is a holder in due course and should be immune to such defenses. The court determines that a holder in due course is not immune to real defenses that render an instrument void ab initio. Because the checks are void due to illegality, the bank cannot maintain the action, and summary judgment is appropriate.
614 P.2d at 11 Statutory change affecting the rule of law2 citing caseschanged by later statutory enactment, Nev.Rev.Stat. § 463.368 (1983)
- Kramer v. Bally's Park Place, Inc., 535 A.2d 466 (Md. 1988).published(changed by later statutory enactment, Nev.Rev.Stat. § 463.368 (1983))
- Nat'l Recovery Sys. v. Feltman, 511 A.2d 1307 (N.J. Super. Ct. App. Div. 1986).publishedCt., Etc., 96 Nev. 622 , 614 P.2d 10, 11 (Sup.Ct.1980).
v.
Eighth Judicial District Court of the State of Nevada, in and for the County of Clark, and Honorable William Beko, and Nevada National Bank, a Nevada Corporation, Real Party in Interest
OPINION
By the Court,
Batjer, J.:Nevada National Bank filed suit against Jerrold Sandler to recover the proceeds from several checks written by Sandler. Sandler wrote the checks on a Maryland bank account to John Hutchings and others for gambling and to cover gambling losses incurred by Sandler, and by Hutchings in Sandler’s behalf, during private “freeze out” games of “21”. The checks were all negotiated to Nevada National Bank. The district judge denied Sandler’s motion for summary judgment. Sandler petitions this court for a writ of mandamus to compel the district judge to grant summary judgment in his favor.
A writ of mandamus will issue to compel entry of a summary judgment when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Manufacturers & Traders Trust v. District Court, 94 Nev. 551, 583 P.2d 444 (1978); Hoffman v. District Court, 90 Nev. 267, 523 P.2d 848 (1974); Holloway v. Barrett, 87 Nev. 385, 487 P.2d 501 (1971); Dzack v. Marshall, 80 Nev. 345, 393 P.2d 610 (1964); see NRCP 56(c); NRAP 3A(b)(5). In this case it is[*624] undisputed that the checks were drawn by Sandler to engage in gambling or delivered to John Hutchings for the express purpose of engaging in gambling ventures. As a matter of law, checks drawn for the purpose of gambling are void and unenforceable in this state. See Air Support, Inc. v. Herrmann, 96 Nev. 574, 613 P.2d 413 (1980); Corbin v. O’Keefe, 87 Nev. 189, 484 P.2d 565 (1971); Wolpert v. Knight, 74 Nev. 322, 330 P.2d 1023 (1958).
Nevada National Bank seeks to avoid the defense that the checks are void and unenforceable (Statute of 9 Anne, C. 14, § 1) by claiming to be a holder in due course immune to that defense. NRS 104.3305 provides that a holder in due course takes an instrument free from: “2. All defenses of any party to the instrument with whom the holder has not dealt except: . . . (b) Such other incapacity, or duress, or illegality of the transaction, as renders the obligation of the party a nullityf.]” A holder in due course is not immune to real defenses; that is, those defenses which render the check, and the underlying obligation created thereby, entirely void. Bankers Trust Co. v. Litton Systems, 599 F.2d 488 (2d Cir. 1979); Middle Georgia Livestock Sales v. Commercial Bank & Trust Co., 182 S.E.2d 533 (Ga. App. 1971); White & Summers, Uniform Commercial Code § 1410 at 487-488. Because the Statute of Anne renders the checks herein void ab initio, the defense may be asserted against Nevada National Bank. Pacific National Bank v. Herneich, 398 S.W.2d 221 (Ark. 1966). Therefore, summary judgment in favor of Sandler must be granted.
Accordingly, a writ of mandamus shall issue directing the district judge to grant Sandler’s motion for summary judgment.[1]
Writ granted.
Mowbray, C. J., and Thompson and Gunderson, JJ., and Torvinen, D. J.,[2] concur.This case was consolidated with Sea Air Support, Inc. v. Herrmann, 96 Nev. 574, 613 P.2d 413 (1980), Docket No. 10786, for the purpose of oral argument.