Section 28 Payees and Drawees as Holders in Due Course

• Library: Commercial Law 2007

Under Missouri’s negotiable instruments law in effect before the UCC, payees often enjoyed holder in due course status under the common law but were often denied that privilege under the statutory Uniform Negotiable Instruments Law of 1896 (NIL)—see §2.1, supra. Mo. Ann. Stat. § 400.3-302 cmt. 4 (Westlaw through 2006 legislation); Dalton & Marberry, P.C. v. NationsBank, N.A., 982 S.W.2d 231 (Mo. banc 1998); Long v. Mason, 200 S.W. 1062 (Mo. banc 1918); Gate City Nat. Bank v. Bunton, 296 S.W. 375 (Mo. 1927) (payee was not a holder in due course under the NIL, and a note in his hands was subject to the same defenses as if it were nonnegotiable). Former UCC § 400.3-302(2), RSMo 1986, sought to resolve this split of authority by stating expressly that “[a] payee may be a holder in due course” of a negotiable instrument. Mo. Ann. Stat. § 400.3-302 cmt. 4; Wyckoff v. Commerce...