New Randolph Halsted Currency Exchange, Inc. v. Regent Title Insurance Agency, LLC

In December 2005, New Randolph Halsted Currency Exchange (plaintiff) cashed two checks from Regent Title Insurance Agency (defendant) made out to Charae Pearson. On January 11, 2006, Pearson tried to cash a third check from Regent, which, unlike the prior checks, stated a far greater amount, misspelled Pearson’s name, and indicated that it had been received as a loan payoff. Pearson, however, told New Randolph that it had been received as compensation for commissions she was owed from Regent. Pearson presented New Randolph with her state identification card, which had been issued on December 30, 2005. Prior to cashing the check, two agents of New Randolph separately confirmed that Pearson had cashed two other checks from Regent and that those checks had cleared and called Regent to confirm that it had issued the check to Pearson for the stated amount. On January 23, 2006, police arrested Pearson for check fraud. Regent subsequently told its bank to dishonor the check. New Randolph initiated suit on grounds that its status as a holder in due course entitled it to recover the amount of the check, despite the evidence of fraud. The trial court entered judgment in favor of Regent after finding that New Randolph was not a holder in due course because the check bore certain irregularities that should have alerted New Randolph to the possibility of fraud. New Randolph appealed.