§3-302. Holder in due course
(a) Subject to Subsection (c) and R.S. 10:3-106(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 R.S. 10:3-306, and (vi) without notice that any party has a defense or claim in recoupment described in R.S. 10:3-305(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 R.S. 10:3-303(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 1992, No. 1133, §3, eff. July 1, 1993; Acts 1993, No. 948, §10, eff. Jan. 1, 1994.
Notes of Decisions
Cited in
50
cases (
2 in the last 5 years), 1979–2025 · leading case:
Am. Bank v. Saxena, 553 So. 2d 836 (La. 1989).
Am. Bank v. Saxena, 553 So. 2d 836 (La. 1989).
· cites it 2× “R.S. 10:3-302(1). Against a holder in due course, the maker is limited to asserting "real" defenses, including fraud in the factum and duress, as provided in R.”
Am. BK. & TRUST CO. v. Sunbelt Env't, 451 So. 2d 1111 (La. Ct. App. 1984).
· cites it 3× “" LSA-R.S. 10:3-302(1)(c). Here, the American Bank clearly took the note knowing there would be a valid defense on the part of Sunbelt if all claims were not discharged in accordance with the instructions of Steve Robertson, counsel for Sunbelt.”
Courtesy Fin. Servs., Inc. v. Hughes, 424 So. 2d 1172 (La. Ct. App. 1982).
· cites it 3× “R.S. 10:3-302. Thus, a payee who is an immediate party to the transaction is not automatically entitled to holder in due course status.”
Thistlethwaite v. Fed. Deposit Ins. (In Re Pernie Bailey Drilling Co.), 111 B.R. 565 (Bankr. W.D. La. 1990).
· cites it 2× “R.S. 10:3-302(1). The Court in Murray found that technically the FSLIC could not be a holder in due course because it had acquired the notes in bulk, through a purchase and assumption agreement, rather than in the ordinary course of business.”
Fed. Sav. & Loan Ins. Corp. v. Brocato, 569 So. 2d 17 (La. Ct. App. 1990).
· cites it 3× “R.S. 10:3-302(1). La.R.S. 10:3-305 provides, in pertinent part, that one who is a holder in due course takes an instrument free from: (1) all claims to it on the part of any persons; and (2) all defenses of any party to the instrument with whom the holder has not dealt except .”
Lacey v. Baywood Truck & Mach., 381 So. 2d 863 (La. Ct. App. 1980).
· cites it 2× “R.S. 10:3-302, 305. Lacey's position is that the following Federal Trade Commission regulation makes Capital Bank vulnerable to his defense: 16 C.”
Simon v. Metoyer, 383 So. 2d 1321 (La. Ct. App. 1980).
“Even if they did apply, plaintiff would still be subject to defendant's [sic] defense as he has not attained holder-in-due-course status under LSA-R.S. 10:3-302[1](a) and 3-303(a). Ashley v.”
In re Jarrell, 240 So. 3d 266 (La. Ct. App. 2018).
· cites it 2× “See LSA-R.S. 10:3-302(2), also Courtesy Financial Services v.”
Arthur Dooley & Son, Etc. v. Johnson, 422 So. 2d 1270 (La. Ct. App. 1982).
· cites it 2× “R.S. 10:3-302. A purchaser has notice of a claim or defense if he has notice that the obligation of any party is voidable in whole or in part.”
Diamond Servs. Corp. v. Benoit, 757 So. 2d 23 (La. Ct. App. 2000).
“R.S. 10:3-302, a holder of a note is a holder in due course if: (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…”
La. Rev. Stat. § 10:3-302(1): 11 cases
Am. Bank v. Saxena, 553 So. 2d 836 (La. 1989).
“R.S. 10:3-302(1). Against a holder in due course, the maker is limited to asserting "real" defenses, including fraud in the factum and duress, as provided in R.”
Thistlethwaite v. Fed. Deposit Ins. (In Re Pernie Bailey Drilling Co.), 111 B.R. 565 (Bankr. W.D. La. 1990).
“R.S. 10:3-302(1). The Court in Murray found that technically the FSLIC could not be a holder in due course because it had acquired the notes in bulk, through a purchase and assumption agreement, rather than in the ordinary course of business.”
Fed. Sav. & Loan Ins. Corp. v. Brocato, 569 So. 2d 17 (La. Ct. App. 1990).
“R.S. 10:3-302(1). La.R.S. 10:3-305 provides, in pertinent part, that one who is a holder in due course takes an instrument free from: (1) all claims to it on the part of any persons; and (2) all defenses of any party to the instrument with whom the holder has not dealt except .”
La. Rev. Stat. § 10:3-302(1)(b): 1 case
La. Rev. Stat. § 10:3-302(1)(c): 1 case
Am. BK. & TRUST CO. v. Sunbelt Env't, 451 So. 2d 1111 (La. Ct. App. 1984).
“" LSA-R.S. 10:3-302(1)(c). Here, the American Bank clearly took the note knowing there would be a valid defense on the part of Sunbelt if all claims were not discharged in accordance with the instructions of Steve Robertson, counsel for Sunbelt.”
La. Rev. Stat. § 10:3-302(2): 5 cases
Am. BK. & TRUST CO. v. Sunbelt Env't, 451 So. 2d 1111 (La. Ct. App. 1984).
“" LSA-R.S. 10:3-302(1)(c). Here, the American Bank clearly took the note knowing there would be a valid defense on the part of Sunbelt if all claims were not discharged in accordance with the instructions of Steve Robertson, counsel for Sunbelt.”
Am. Bank v. Saxena, 553 So. 2d 836 (La. 1989).
“R.S. 10:3-302(1). Against a holder in due course, the maker is limited to asserting "real" defenses, including fraud in the factum and duress, as provided in R.”
Courtesy Fin. Servs., Inc. v. Hughes, 424 So. 2d 1172 (La. Ct. App. 1982).
“R.S. 10:3-302. Thus, a payee who is an immediate party to the transaction is not automatically entitled to holder in due course status.”
In re Jarrell, 240 So. 3d 266 (La. Ct. App. 2018).
“See LSA-R.S. 10:3-302(2), also Courtesy Financial Services v.”
La. Rev. Stat. § 10:3-302(3)(c): 2 cases
Fed. Sav. & Loan Ins. Corp. v. Brocato, 569 So. 2d 17 (La. Ct. App. 1990).
“R.S. 10:3-302(1). La.R.S. 10:3-305 provides, in pertinent part, that one who is a holder in due course takes an instrument free from: (1) all claims to it on the part of any persons; and (2) all defenses of any party to the instrument with whom the holder has not dealt except .”
Thistlethwaite v. Fed. Deposit Ins. (In Re Pernie Bailey Drilling Co.), 111 B.R. 565 (Bankr. W.D. La. 1990).
“R.S. 10:3-302(1). The Court in Murray found that technically the FSLIC could not be a holder in due course because it had acquired the notes in bulk, through a purchase and assumption agreement, rather than in the ordinary course of business.”
La. Rev. Stat. § 10:3-302(a): 2 cases
In re Jarrell, 240 So. 3d 266 (La. Ct. App. 2018).
“See LSA-R.S. 10:3-302(2), also Courtesy Financial Services v.”
La. Rev. Stat. § 10:3-302(a)(2)(i): 1 case
La. Rev. Stat. § 10:3-302(c): 1 case
La. Rev. Stat. § 10:3-302(l)(a)(b)(c): 1 case
La. Rev. Stat. § 10:3-302(l)(c): 2 cases
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