Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 29

Marie Hunt signed a promissory note in the amount of $35,000, payable to Robert Rice and secured by a mortgage on real property. Rice had given her only $23,354.87, which, Hunt claimed, she had repaid in full. For $25,000, Rice had assigned the note to Invest Co., which for $27,182.41 had assigned it to Chrysler First Financial Services Corporation. NationsCredit Financial Services Corporation was the successor corporation to Chrysler First and was the assignee of the note and mortgage. It had declared Hunt in default, had foreclosed on the mortgage, and had sold her property. Hunt sought a judgment declaring the foreclosure sale invalid, asserting the defense of failure (or partial failure) of consideration because Rice had given her as consideration for the note only $23,354.87 rather than $35,000 recited in the note. Nations Credit argued that Hunt could not assert the defense against it because it was a holder in due course. Was the defense valid against NationsCredit? [Hunt v. NationsCredit Financial Services Corp., 902 So.2d 75 (Ala. Civ. App.)]