Kaw Valley State Bank & Trust Co. v. Riddle
Supreme Court of Kansas
549 P.2d 927 (1976)
John Riddle (defendant) engaged in numerous transactions with Co-Mac, Inc. (Co-Mac) to purchase construction equipment. Several of these purchases were on credit, pursuant to promissory notes. The Kaw Valley State Bank and Trust Company (Kaw Valley) (plaintiff) purchased over 250 promissory notes from Co-Mac over a 10-year period, including the promissory notes from Riddle. On May 11, 1971, Riddle entered into a promissory note to purchase some Caterpillar equipment. However, prior to the delivery, Riddle and Co-Mac agreed to cancel the agreement and replace the equipment with different machinery. Co-Mac agreed to destroy the May 11, 1971 note. This was not done, and the note was sold to Kaw Valley. Riddle fell behind on the payments and met with Kaw Valley and Co-Mac to consolidate the debt and reduce the monthly payments. Kaw Valley presented eight notes at the meeting, and Riddle objected to one of those, because the equipment had been returned to Co-Mac. Kaw Valley agreed that the note objected to was not outstanding and cancelled the balance. The seven remaining notes were consolidated into a renewal note on February 24, 1972. The May 11, 1971 note was not included in the eight notes presented by Kaw Valley in the meeting and was, therefore, not included in the renewal note. Eventually, Kaw Valley sued Riddle for the amount outstanding on the renewal note and the May 11, 1971 note. The trial court ruled that Kaw Valley was not a holder in due course (HDC) of the May 11, 1971 note.
Rule of Law
Holding and Reasoning (Fromme, J.)
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