Margo Maker executed and delivered a negotiable promissory note for $10,000 to A
ID: 421206 • Letter: M
Question
Margo Maker executed and delivered a negotiable promissory note for $10,000 to Acme Bank and Trust. The note, while in Acme’s possession, was altered from $10,000 to $100,000. Acme sold the altered note to Wherever Life Insurance Company for $95,000. The endorsement from Acme to Wherever is without recourse. Wherever Life Insurance Company then sells the note to Harrison Holder for $95,000. Wherever’s endorsement to Harrison Holder is without recourse and warranty. At maturity, Harrison Holder presents the note to Margo Maker for payment. Can Harrison Holder recover $100,000 from Margo Maker? Does Harrison Holder have a right to recover against Acme Bank and Trust? Does Harrison Holder have a right to recover against Wherever Life Insurance Company?
Explanation / Answer
As per Negotiable instrument act, A "promissory note" is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
Considering the law Mr. Margo make the promssory note of $10000 not of $100000. but Acme bank and Trust to whom it issued they altered the amount for their benefit it is totally fraudaulent activity and will be covered under civil court.After that Acme sold the note to Life Insurance Company who is unaware about the fraud so they are inncoent as they are as per law. Now same note issued to Harrison holder who is also in good faith and unawre about fraud practice he is correct at his place.
Harrison holder can not recover $100000 from Margo Maker as Margo maker issue note of $10000 only. so upto that amount he can recover from him. harrison Holder have right to recover from Life Insurance Company as he know that party not the party who make fraud. But Life Insurance Company have poer to sue Acne Trust and Bank and to recover the amount with them also file suit for penalty and loss incurred to them.