Lamont and Marcel collaborate to defraud Nina, who is induced to give Marcel a note payable to Marcel's order. Marcel indorses the note for value to Orson, an HDC. Later, Orson sells the note to Lamont. Under the shelter principle,
A)Orson's right to repurchase the note from Lamont is limited.
B)Lamont cannot acquire HDC rights in the note.
C)Lamont attains HDC status by acquiring the note.
D)the principal amount of the note is sheltered without recourse.

Question

Quizplus · Accepted Answer

Lamont cannot acquire HDC rights in the note because the shelter principle allows a transferee to acquire the same rights as the transferor (in this case, Orson, an HDC), but it does not allow parties involved in fraud (like Lamont) to claim HDC status.

Lamont and Marcel Collaborate to Defraud Nina, Who Is Induced