Michigan Compiled Laws

Mich. Comp. Laws § 440.3302 (2026)

Holder in due course; notice of discharge as effective against holder; rights of holder; time and manner of notice; section subject to law limiting status.

✓ current as of July 2026

Find cases: SyfertCases citing this section MI-LEGlegislature.mi.gov JustiaChapter on Justia CornellLII Search CasesGoogle Scholar

UNIFORM COMMERCIAL CODE

Act 174 of 1962

440.3302 Holder in due course; notice of discharge as effective against holder; rights of holder; time and manner of notice; section subject to law limiting status.

Sec. 3302.

(1) Subject to subsection (3) and section 3106(4), "holder in due course" means the holder of an instrument if both of the following apply:

(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.

(b) 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 incurred 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 3306, and (vi) without notice that any party has a defense or claim in recoupment described in section 3305(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 (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.

(4) If under section 3303(1)(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 (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.

(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.

History: 1962, Act 174, Eff. Jan. 1, 1964 ;-- Am. 1993, Act 130, Eff. Sept. 30, 1993

Notes of Decisions

Cited in 20 cases, 1983–2016 · leading case: Conagra, Inc v. Farmers State Bank, 602 N.W.2d 390 (Mich. Ct. App. 1999).

Sort: Relevance Newest Treatment

Conagra, Inc v. Farmers State Bank, 602 N.W.2d 390 (Mich. Ct. App. 1999). · cites it 3× “] MCL 440.3302; MSA 19.3302 defines “holder in due course” and some of the rights associated with this status: (1) Subject to subsection (3) and section 3106(4), “holder in due course” means the holder of an instrument if both of the following apply: (a) The instrument when…”

El Camino Resources, Ltd. v. Huntington Nat'l Bank, 722 F. Supp. 2d 875 (W.D. Mich. 2010). · cites it 2× “The court may therefore find that El Camino was at least equally culpable and not in a position to seek equity.”

Rieth-Riley Constr. Co. v. First Sec. Bank (In Re Williams Bros. Asphalt Paving Co.), 59 B.R. 71 (Bankr. W.D. Mich. 1986). · cites it 6× “2403 (Callaghan)) (sales of goods); Mich.Comp.Laws § 440.3302 (1962) (Mich. Stat.”

Fed. Deposit Ins. Corp., in Its Corp. Capacity v. Richard M. Wood, 758 F.2d 156 (6th Cir. 1985). “Mich.Comp.Laws Ann. § 440.3302 (1967); U.”

Barbour v. Handlos Real Est. & Bldg. Corp., 393 N.W.2d 581 (Mich. Ct. App. 1986). · cites it 2× “"Notice” for purposes of MCL 440.3302; MSA 19.3302, defining holder in due course, includes receiving a notice or notification of a fact or having reason to know that the fact exists from all the facts and circumstances known at the time in question.”

Stone v. Mehlberg, 728 F. Supp. 1341 (W.D. Mich. 1990). “Even if HDC status were a defense to the Stones’ claim for rescission of the note and mortgage, the Mehlbergs do not enjoy such status.”

Fed. Deposit Ins. Corp. v. Stone, 578 F. Supp. 144 (E.D. Mich. 1983). · cites it 2× “does not meet all of the statutory requirements for a holder in due course under the Uniform Commercial Code § 3-302, Mich.Comp.Laws Ann. § 440.3302, this Court agrees, with the other courts which have examined this question, that the F.”

Allis Chalmers Leasing Servs. Corp. v. Byron Ctr. State Bank, 341 N.W.2d 837 (Mich. Ct. App. 1983). “MCL 440.3302, 440.3305; MSA 19.3302, 19.3305.”

Grand Rapids Auto Sales, Inc. v. MBNA Am. Bank, 227 F. Supp. 2d 721 (W.D. Mich. 2002). “§ 440.3302(l)(b). MBNA meets all of these requirements with regard to the GRAS checks.”

Mox v. Jordan, 463 N.W.2d 114 (Mich. Ct. App. 1990). · cites it 2× “” MCL 440.3302(1); MSA 19.3302(1) establishes the requirements for a holder of a negotiable instrument to be a holder in due course.”

Tibble v. Farmers Grain Express, Inc. (In re Michigan BioDiesel, LLC), 510 B.R. 792 (Bankr. W.D. Mich. 2014). “§ 440.3302(l)(b) (holder in due course); Id.”

Cessna Fin. Corp. v. Warmus, 407 N.W.2d 66 (Mich. Ct. App. 1987). “MCL 440.3302; MSA 19.3302. Holder-in-due-course status operates to insulate the holder from certain defenses to the instrument of any party with whom the holder has not dealt.”

Show all 20 citing cases →

— Mich. Comp. Laws § 440.3302(1) — 5 cases

Rieth-Riley Constr. Co. v. First Sec. Bank (In Re Williams Bros. Asphalt Paving Co.), 59 B.R. 71 (Bankr. W.D. Mich. 1986). “2403 (Callaghan)) (sales of goods); Mich.Comp.Laws § 440.3302 (1962) (Mich. Stat.”

Mox v. Jordan, 463 N.W.2d 114 (Mich. Ct. App. 1990). “” MCL 440.3302(1); MSA 19.3302(1) establishes the requirements for a holder of a negotiable instrument to be a holder in due course.”

Uni-Prods., Inc. v. Bearse (In Re Uni-Prods., Inc.), 153 B.R. 764 (Bankr. E.D. Mich. 1993).

Frank v. McLain (In Re Peet Packing Co.), 233 B.R. 387 (Bankr. E.D. Mich. 1999).

Thomas v. State Mortg., Inc, 439 N.W.2d 299 (Mich. Ct. App. 1989).

— Mich. Comp. Laws § 440.3302(2) — 1 case

— Mich. Comp. Laws § 440.3302(3)(c) — 1 case

Barbour v. Handlos Real Est. & Bldg. Corp., 393 N.W.2d 581 (Mich. Ct. App. 1986). “"Notice” for purposes of MCL 440.3302; MSA 19.3302, defining holder in due course, includes receiving a notice or notification of a fact or having reason to know that the fact exists from all the facts and circumstances known at the time in question.”

— Mich. Comp. Laws § 440.3302(l)(b) — 4 cases

Conagra, Inc v. Farmers State Bank, 602 N.W.2d 390 (Mich. Ct. App. 1999). “] MCL 440.3302; MSA 19.3302 defines “holder in due course” and some of the rights associated with this status: (1) Subject to subsection (3) and section 3106(4), “holder in due course” means the holder of an instrument if both of the following apply: (a) The instrument when…”

Stone v. Mehlberg, 728 F. Supp. 1341 (W.D. Mich. 1990). “Even if HDC status were a defense to the Stones’ claim for rescission of the note and mortgage, the Mehlbergs do not enjoy such status.”

Grand Rapids Auto Sales, Inc. v. MBNA Am. Bank, 227 F. Supp. 2d 721 (W.D. Mich. 2002). “§ 440.3302(l)(b). MBNA meets all of these requirements with regard to the GRAS checks.”

Tibble v. Farmers Grain Express, Inc. (In re Michigan BioDiesel, LLC), 510 B.R. 792 (Bankr. W.D. Mich. 2014). “§ 440.3302(l)(b) (holder in due course); Id.”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.