Exam 25: B: Transferability and Holder in Due Course

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If a person purchasing an instrument does not know and has no reason to know that it has been dishonored,the person cannot become an HDC.

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Colby fraudulently induces Dian to sign a note.Colby sells the note to Elen,who does not know of the fraud and takes the note for value and in good faith,and thus becomes an HDC.Elen sells the note to Fred,who sells the note back to Colby.Does Colby acquire Elen's HDC rights in the note?

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