Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 30

Cactus Roofing, LLC issued a check to "Espino Roofing and/or Tomas Hernandez" for $4,768.47 for roofing work that Hernandez had performed for Cactus. That morning, Hernandez cashed the check at Hurst Enterprises, LLC, d/b/a Mr. Payroll Check Cashing. Hernandez had previously cashed three other checks from Cactus at Mr. Payroll. All three checks had cleared without problems. Mr. Payroll paid Hernandez the amount of the check minus a 1 percent check-cashing fee and deposited the check in its account at Bank of the Panhandle. A day after issuing the check, Cactus discovered that Hernandez's work had not been adequately completed. After unsuccessfully trying to contact Hernandez, Cactus stopped payment on the check. Mr. Payroll received the check back from its bank with notice that a stop payment had been issued. The manager of Mr. Payroll discovered that the stop payment had been issued three days after Hernandez had cashed the check. Mr. Payroll sued Cactus, alleging it was a holder in due course. Was it?