1. Subject to subsection 3 and section 554.3106, subsection 4, “holder in due course” means the holder of an instrument if:
a. 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
b. the holder took the instrument for value, in good faith, 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, without notice that the instrument contains an unauthorized signature or has been altered, without notice of any claim to the instrument described in section 554.3306, and without notice that any party has a defense or claim in recoupment described in section 554.3305, subsection 1.
2. Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection 1, 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.
3. 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 by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or as the successor in interest to an estate or other organization.
4. If, under section 554.3303, subsection 1, paragraph “a”, 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.
5. If the person entitled to enforce an instrument has only a security interest in the instrument and 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. 6. To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
7. This section is subject to any law limiting status as a holder in due course in particular classes of transactions. 94 Acts, ch 1167, §37, 121, 122; 2013 Acts, ch 30, §261 Referred to in §523G.7, 554.3103, 554.4104, 554.4205, 554.4211, 554.9102, 554D.118 \n
Notes of Decisions
Allison-Kesley Ag Ctr., Inc. v. Hildebrand, 485 N.W.2d 841 (Iowa 1992).
· cites it 4× “Iowa Code § 554.3302 (l)(a) (1991). Significantly, value is defined to include the giving of a negotiable instrument in return for the negotiable instrument that one receives.”
Beal Bank v. Siems, 670 N.W.2d 119 (Iowa 2003).
· cites it 3× “Iowa Code section 554.3302(2) states that a defense of discharge “is effective against a person who became a holder in due course with notice of the discharge.”
Fed. Deposit Ins. Corp. v. Ohlson, 659 F. Supp. 490 (N.D. Iowa 1987).
· cites it 4× “The reason the FDIC cannot be considered a holder in due course as defined in Iowa Code § 554.3302 is that the note and mortgage were purchased as part of a bulk transaction not in the ordinary course of business.”
Agriliance, L.L.C. v. Farmpro Servs., Inc., 328 F. Supp. 2d 958 (S.D. Iowa 2003).
· cites it 4× “To qualify as holders in due course, the instrument must have been taken “a) for value, b) in good faith, and c) without notice that it was overdue or had been dishonored, or of any contrary claim to rights in the instrument, and without notice that any party has a defense or…”
Willow Tree Investments, Inc. v. Wagner, 453 N.W.2d 641 (Iowa 1990).
· cites it 4× “They point to Iowa Code section 554.3302(3)(c) (1989) for the proposition that a holder of an instrument does not become a holder in due course by purchasing it as part of a bulk transaction.”
Phariss v. Eddy, 478 N.W.2d 848 (Iowa Ct. App. 1991).
· cites it 2× “Iowa Code section 554.3302(1) (1991) defines a holder in due course: A holder in due course is a holder who takes the instrument a.”
Valley Nat'l Bank v. Porter, 705 F.2d 1027 (8th Cir. 1983).
“See Iowa Code Ann. § 554.3302 (West 1967). The district court 2 held that it had subject matter jurisdiction on the bank’s claim against Porter “by virtue of the legal fiction which provides that actions such as the one at bar can be litigated against the individual tax official…”
Husker News Co. v. South Ottumwa Sav. Bank, 482 N.W.2d 404 (Iowa 1992).
“1201 (20) (“holder” is one in possession of an instrument “drawn, issued or endorsed to that person”) and § 554.3302 (holder in due course defined); see White & Summers U.”
Matter of Est. of Bolton, 444 N.W.2d 482 (Iowa 1989).
· cites it 2× “See Iowa Code § 554.3302 (1)(a). Because she was not a holder in due course Joyce held the check subject to all valid claims and defenses.”
— Iowa Code § 554.3302(1) — 2 cases
Phariss v. Eddy, 478 N.W.2d 848 (Iowa Ct. App. 1991).
“Iowa Code section 554.3302(1) (1991) defines a holder in due course: A holder in due course is a holder who takes the instrument a.”
— Iowa Code § 554.3302(2) — 1 case
Beal Bank v. Siems, 670 N.W.2d 119 (Iowa 2003).
“Iowa Code section 554.3302(2) states that a defense of discharge “is effective against a person who became a holder in due course with notice of the discharge.”
— Iowa Code § 554.3302(3)(c) — 1 case
Willow Tree Investments, Inc. v. Wagner, 453 N.W.2d 641 (Iowa 1990).
“They point to Iowa Code section 554.3302(3)(c) (1989) for the proposition that a holder of an instrument does not become a holder in due course by purchasing it as part of a bulk transaction.”
Annotations are extracted automatically from the opinions in the
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treatment. Dots show Syfertize treatment of the citing case itself.