Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

تمرين 12

FACTS Arnett Lee presented a $152.38 check for cashing to the plaintiff, liquor store operator Troy Davis. After Davis gave Lee the cash, Lee requested a bottle of scotch and a six-pack of beer. As Davis turned to fill the order, a thief stole $110.00 of the $152.38. Lee immediately contacted the defendant-drawer of the check, Watson Brothers Plumbing, Inc., and notified them of the loss. The defendant then issued another check for $152.38 and stopped payment on the first check held by Davis. Davis brought this action against the defendant for the full face amount of the check.
DECISION Judgment for Davis for $152.38.
OPINION Akin, J. ''Holder'' is defined in Tex. Bus. Com. Code Ann. [U.C.C.] § 1.201(20) as: ''[A] person who is in possession of a document of title or an instrument or an investment security drawn, issued or indorsed to him or to his order or to bearer or in blank.'' Under the undisputed facts, Lee, the payee indorsed the check in blank to plaintiff, who is now in possession of the check. Thus, as a matter of law, plaintiff is a ''holder'' under the code [U.C.C.] § 3.413(2), [Revised § 3-414(b)] which sets forth the rights of a holder, [and] provides, in pertinent part, that: ''The drawer engages that upon dishonor of the draft *** he will pay the amount of the draft to the holder or to any indorser who takes it up.'' Thus, the defendant is liable to the holder of the dishonored check unless the defendant has raised a valid defense against the holder.
Defendant here asserts that it may raise want or failure of consideration in the transaction between plaintiff and Lee, its payee, as a defense to plaintiff's enforcement of the instrument against it. We disagree.
[U.C.C.] § 3.408 [Revised §§ 3-303(b), 3-305] provides, in pertinent part that: ''Want or failure of consideration is a defense against any person not having the rights of a holder in due course ***.'' The comments to § 3.408 provide that: '''Consideration' to what the obligor has received for his obligation, and is important only on the question of whether his obligation can be enforced against him.'' Thus, any holder can enforce the obligation of a draft against the drawer regardless of whether the holder gave anything in consideration for the draft to his indorser. The drawer can assert as a defense to enforcement of the draft want or failure of consideration only to the extent such defense lies against the payee of the draft. Thus, the fact that a holder remote to the drawer's transaction with the payee did not give full consideration for the draft is not a defense available to the drawer. [Citation.]
This is true because the drawer's sole obligation on the check is to pay it according to its tenor. Consequently, the fact that the transfer of the check by the payee to the transferee is without consideration is immaterial to the drawer's obligation and is not a defense available to the drawer against the holder.
The rationale of this, and other decisions, reaching the same conclusion, is that the maker or drawer of an instrument admittedly owes the money and he should not be permitted to bring into the controversy equities of parties with which he has no connection. [Citation.]
Because defendant here may not assert want or failure of consideration in the transaction between plaintiff and Lee, and because defendant has asserted no other defense against plaintiff, plaintiff is entitled to recover the full face value of the check under § 3-413(b) [Revised § 3-414] of the Texas Uniform Commercial Code.
INTERPRETATION The drawer's liability is contingent upon dishonor of the instrument.
CRITICAL THINKING QUESTION Should the drawer be permitted to raise defenses of other parties to the instrument? Explain.