RAMON ALARCON AND TERESA ALARCON, APPELLANTS/CROSS APPELLEES,
v.
BRUNO FERRARI, APPELLEE/CROSS APPELLANT
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In this commercial law dispute, the Alarcóns sued to collect on a $50,000 check given as collateral for a loan. The court reversed the trial court's order granting a new trial and entered judgment for Ferrari, holding that the Alarcóns, as non-holders in due course, stand in the shoes of their transferor and cannot enforce a check issued without consideration.
The court held that the Alarcóns cannot collect on the check because they are not holders in due course and therefore stand in the shoes of Salinas. Since Salinas could not collect on a check issued for no consideration, neither can the Alarcóns.
[1] A party who is not a holder in due course of a check stands in the shoes of the party from whom they received the check and acquires no greater rights against the drawer…
[2] A party may be on notice requiring further inquiry regarding the validity of a check if the circumstances suggest such a need.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“the plaintiffs herein should have been on notice as to the need for further inquiry regarding the validity of the check”
Establishes that non-holders in due course have duty of inquiry under UCC
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Join FLexlaw to unlock all legal intelligenceFerrari made out a blank check to third party Salinas with no consideration. Salinas filled in the amount ($50,000), endorsed the check, and gave it t…
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PER CURIAM.
This is an appeal and cross appeal from an order granting a motion for new trial for the defendant [Bruno Ferrari] in a suit to collect on a $50,000 check which was given as collateral on a loan made by the plaintiffs [Ramon and Teresa Alarcon] to a third party [Tucapel Salinas]. The check in question was made out by the defendant Ferrari to the third party Salinas, who, in turn, endorsed the check, and gave it to the plaintiffs Alarcon as collateral for the loan in question. We reverse on the cross appeal of the defendant Ferrari — thereby making the main appeal moot — and remand with directions that judgment be entered in favor of the defendant Ferrari in accord with the latter’s motion for directed verdict. We reach this result based on the following briefly stated legal analysis.
First, the plaintiffs Alarcon concede on this appeal that they are not holders in due course of the check in this cause. It appears that, under the circumstances, the plaintiffs herein should have been on notice as to the need for further inquiry regarding the validity of the check. See §§ 673.-302(1)(c), 673.304(3)(c), Fla.Stat. (1983); J. White and R. Summers, Handbook of the Law Under the Uniform Commercial Code 565 (2d ed. 1980). This being so, the said plaintiffs stand in the shoes of the third party Salinas, to whom the said check was made out, and acquire no greater rights against the defendant Ferrari than Salinas would have had against Ferrari in collecting on the said check. Indeed, the cause was tried below on that theory.
Second, the evidence was uncontradicted at trial that (a) the said check was foolishly made out in blank by the defendant Ferrari and given to the third party Salinas for no consideration, and (b) Salinas filled in the amount of the said check, endorsed it, and used it as collateral to obtain a loan from the plaintiffs Alarcon. This being so, Salinas could not collect on the said check against the defendant Ferrari as the check was given for no consideration. United States v.
Second National Bank of North Miami, 502 F. 2d 535, 546 (5th Cir.1974), cert. denied, 421 U.S. 912, 95 S.Ct. 1567, 43 L.Ed.2d 777 (1975); § 673.306(3), Fla.Stat. (1983); J. White and R. Summers, supra, 575-76.
Therefore, plaintiffs Alarcon, who stand in the shoes of Salinas, cannot collect on the said check against the defendant Ferrari.
The order under review is reversed and the cause is remanded with directions that judgment be entered in favor of the defendant Ferrari in the cause below.
Reversed.
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Cited By
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Gildred v. Alverde, 500 So. 2d 307 (Fla. 3d DCA 1986)…2d 444 (Fla. 4th DCA 1976); Vernon v. Yanks, 303 So. 2d 375 (Fla. 3d DCA 1974); Courtesy Financial Services, Inc. v. Hughes, 424 So. 2d 1172 (La.Ct.App.1982); Dobbs-Maynard Company, Inc. v. Jumper, 388 So. 2d 879 (Miss.1980); cf. Alarcan v. Ferrari, 490 So. 2d 1047 (Fla. 3d DCA 1986). Second, there is an issue of material fact as to who was being accommodated when the appellant fixed her name to the note subsequent to the maker’s death, subsequent to the maturity of the note, and admittedly at the request of t…
Authorities Cited
- United States v. Second Nat'l Bank OF N. Miami, 502 F.2d 535 (5th Cir. 1974)
- Knight v. United States (W.D. Pa. 1975)