Wisconsin Statutes 403.302 – Holder in due course
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Terms Used In Wisconsin Statutes 403.302
- Acquire: when used in connection with a grant of power to any person, includes the acquisition by purchase, grant, gift or bequest. See Wisconsin Statutes 990.01
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
(1) Subject to sub. (3) and s. 403.106 (4), “holder in due course” means the holder of an instrument if all 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:
1. For value;
2. In good faith;
3. 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;
4. Without notice that the instrument contains an unauthorized signature or has been altered;
5. Without notice of any claim to the instrument described in s. 403.306; and
6. Without notice that any party has a defense or claim in recoupment described in s. 403.305 (1).
(2) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under sub. (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 that 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 in any of the following ways:
(a) By legal process or by purchase in an execution, bankruptcy or creditor’s sale or similar proceeding.
(b) By purchase as part of a bulk transaction not in ordinary course of business of the transferor.
(c) As the successor in interest to an estate or other organization.
(4) If under s. 403.303 (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 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 shall 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.