Betty issues a note payable to the order of John for $2,000.John properly indorses the note,but raises the amount to $20,000,and negotiates it to Mary.On the due date,Mary attempts to collect $20,000 from Betty.Betty refuses to pay.Assuming that Mary is a holder in due course,which parties can Mary recover from in a lawsuit?
A) $20,000 from Betty, but nothing from anyone else
B) $2,000 form Betty, but nothing from anyone else
C) $2,000 from Betty, and $18,000 from John
D) $20,000 from John, but nothing from anyone else
E) nothing from anyone

Question

Quizplus · Accepted Answer

Mary, as a holder in due course, can recover the original amount of $2,000 from Betty, as Betty is liable for the original amount she agreed to. Mary can also recover the additional $18,000 from John, who committed the fraud by altering the note.

Betty Issues a Note Payable to the Order of John