(a) Subject tosubsection (c) of this section and G.S. 25‑3‑106(d), "holderin due course" means the holder of an instrument if:
(1) The instrument whenissued or negotiated to the holder does not bear such apparent evidence offorgery or alteration or is not otherwise so irregular or incomplete as to callinto question its authenticity; and
(2) The holder took theinstrument (i) for value, (ii) in good faith, (iii) without notice that theinstrument is overdue or has been dishonored or that there is an uncureddefault with respect to payment of another instrument issued as part of thesame series, (iv) without notice that the instrument contains an unauthorizedsignature or has been altered, (v) without notice of any claim to theinstrument described in G.S. 25‑3‑306, and (vi) without notice thatany party has a defense or claim in recoupment described in G.S. 25‑3‑305(a).
(b) Notice of dischargeof a party, other than discharge in an insolvency proceeding, is not notice ofa defense under subsection (a) of this section, but discharge is effectiveagainst a person who became a holder in due course with notice of thedischarge. Public filing or recording of a document does not of itselfconstitute notice of a defense, claim in recoupment, or claim to theinstrument.
(c) Except to theextent a transferor or predecessor in interest has rights as a holder in duecourse, a person does not acquire rights of a holder in due course of aninstrument taken (i) by legal process or by purchase in an execution,bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as partof a bulk transaction not in ordinary course of business of the transferor, or(iii) as the successor in interest to an estate or other organization.
(d) If, under G.S. 25‑3‑303(a)(1),the promise of performance that is the consideration for an instrument has beenpartially performed, the holder may assert rights as a holder in due course ofthe instrument only to the fraction of the amount payable under the instrumentequal to the value of the partial performance divided by the value of thepromised performance.
(e) If (i) the personentitled to enforce an instrument has only a security interest in theinstrument and (ii) the person obliged to pay the instrument has a defense,claim in recoupment, or claim to the instrument that may be asserted againstthe person who granted the security interest, the person entitled to enforcethe instrument may assert rights as a holder in due course only to an amount payableunder the instrument which, at the time of enforcement of the instrument, doesnot exceed the amount of the unpaid obligation secured.
(f) To be effective,notice must be received at a time and in a manner that gives a reasonableopportunity to act on it.
(g) This section issubject to any law limiting status as a holder in due course in particularclasses of transactions. (1899, c. 733, ss. 45, 52, 53, 55, 56; Rev., ss. 2194,2201, 2202, 2204, 2205; C.S., ss. 3026, 3033, 3034, 3036, 3037; 1965, c. 700,s. 1; 1995, c. 232, s. 1.)
(a) Subject tosubsection (c) of this section and G.S. 25‑3‑106(d), "holderin due course" means the holder of an instrument if:
(1) The instrument whenissued or negotiated to the holder does not bear such apparent evidence offorgery or alteration or is not otherwise so irregular or incomplete as to callinto question its authenticity; and
(2) The holder took theinstrument (i) for value, (ii) in good faith, (iii) without notice that theinstrument is overdue or has been dishonored or that there is an uncureddefault with respect to payment of another instrument issued as part of thesame series, (iv) without notice that the instrument contains an unauthorizedsignature or has been altered, (v) without notice of any claim to theinstrument described in G.S. 25‑3‑306, and (vi) without notice thatany party has a defense or claim in recoupment described in G.S. 25‑3‑305(a).
(b) Notice of dischargeof a party, other than discharge in an insolvency proceeding, is not notice ofa defense under subsection (a) of this section, but discharge is effectiveagainst a person who became a holder in due course with notice of thedischarge. Public filing or recording of a document does not of itselfconstitute notice of a defense, claim in recoupment, or claim to theinstrument.
(c) Except to theextent a transferor or predecessor in interest has rights as a holder in duecourse, a person does not acquire rights of a holder in due course of aninstrument taken (i) by legal process or by purchase in an execution,bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as partof a bulk transaction not in ordinary course of business of the transferor, or(iii) as the successor in interest to an estate or other organization.
(d) If, under G.S. 25‑3‑303(a)(1),the promise of performance that is the consideration for an instrument has beenpartially performed, the holder may assert rights as a holder in due course ofthe instrument only to the fraction of the amount payable under the instrumentequal to the value of the partial performance divided by the value of thepromised performance.
(e) If (i) the personentitled to enforce an instrument has only a security interest in theinstrument and (ii) the person obliged to pay the instrument has a defense,claim in recoupment, or claim to the instrument that may be asserted againstthe person who granted the security interest, the person entitled to enforcethe instrument may assert rights as a holder in due course only to an amount payableunder the instrument which, at the time of enforcement of the instrument, doesnot exceed the amount of the unpaid obligation secured.
(f) To be effective,notice must be received at a time and in a manner that gives a reasonableopportunity to act on it.
(g) This section issubject to any law limiting status as a holder in due course in particularclasses of transactions. (1899, c. 733, ss. 45, 52, 53, 55, 56; Rev., ss. 2194,2201, 2202, 2204, 2205; C.S., ss. 3026, 3033, 3034, 3036, 3037; 1965, c. 700,s. 1; 1995, c. 232, s. 1.)
(a) Subject tosubsection (c) of this section and G.S. 25‑3‑106(d), "holderin due course" means the holder of an instrument if:
(1) The instrument whenissued or negotiated to the holder does not bear such apparent evidence offorgery or alteration or is not otherwise so irregular or incomplete as to callinto question its authenticity; and
(2) The holder took theinstrument (i) for value, (ii) in good faith, (iii) without notice that theinstrument is overdue or has been dishonored or that there is an uncureddefault with respect to payment of another instrument issued as part of thesame series, (iv) without notice that the instrument contains an unauthorizedsignature or has been altered, (v) without notice of any claim to theinstrument described in G.S. 25‑3‑306, and (vi) without notice thatany party has a defense or claim in recoupment described in G.S. 25‑3‑305(a).
(b) Notice of dischargeof a party, other than discharge in an insolvency proceeding, is not notice ofa defense under subsection (a) of this section, but discharge is effectiveagainst a person who became a holder in due course with notice of thedischarge. Public filing or recording of a document does not of itselfconstitute notice of a defense, claim in recoupment, or claim to theinstrument.
(c) Except to theextent a transferor or predecessor in interest has rights as a holder in duecourse, a person does not acquire rights of a holder in due course of aninstrument taken (i) by legal process or by purchase in an execution,bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as partof a bulk transaction not in ordinary course of business of the transferor, or(iii) as the successor in interest to an estate or other organization.
(d) If, under G.S. 25‑3‑303(a)(1),the promise of performance that is the consideration for an instrument has beenpartially performed, the holder may assert rights as a holder in due course ofthe instrument only to the fraction of the amount payable under the instrumentequal to the value of the partial performance divided by the value of thepromised performance.
(e) If (i) the personentitled to enforce an instrument has only a security interest in theinstrument and (ii) the person obliged to pay the instrument has a defense,claim in recoupment, or claim to the instrument that may be asserted againstthe person who granted the security interest, the person entitled to enforcethe instrument may assert rights as a holder in due course only to an amount payableunder the instrument which, at the time of enforcement of the instrument, doesnot exceed the amount of the unpaid obligation secured.
(f) To be effective,notice must be received at a time and in a manner that gives a reasonableopportunity to act on it.
(g) This section issubject to any law limiting status as a holder in due course in particularclasses of transactions. (1899, c. 733, ss. 45, 52, 53, 55, 56; Rev., ss. 2194,2201, 2202, 2204, 2205; C.S., ss. 3026, 3033, 3034, 3036, 3037; 1965, c. 700,s. 1; 1995, c. 232, s. 1.)
