Landscaping company Phyllrox Co. purchased a forklift from Brown's Equipment Co. Phyllrox made a down payment in cash and signed a promissory note for $7,500. For $7,200 Brown's sold the note to Corporate Bank, who took it in good faith without notice of any problems with it. After Phyllrox used the forklift for two weeks, it broke down and could not be repaired. Phyllrox refuses to make any more payments to Corporate Bank. In this case:

Question

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Corporate Bank is considered a holder in due course because it took the promissory note in good faith, for value, and without notice of any defect or problem with the note. This status generally protects the bank from defenses that Phyllrox might have against Brown's Equipment Co., such as the failure of the forklift.

Landscaping Company Phyllrox Co