Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 24

E G Food Corp. (E G) was in the business of cashing checks for its customers for a fee. It cashed four checks that were allegedly issued by Cumberland Farms Inc. (Cumberland), but the drawee bank refused to honor them because they were counterfeits. E G sued Cumberland, alleging it was a holder in due course. The court found that Cumberland had not been negligent in any way. State law stated that the right to enforce the obligation to pay an instrument was nullified by the illegality of the transaction. Can E G recover?