Jones v. Approved Bancredit Corp.

Jones (defendant) signed a promissory note to Dell (a home builder) for construction financing, which Dell immediately sold to Bancredit (plaintiff), its corporate affiliate under common ownership with the same officers and directors. When Dell's builder abandoned the job after a bulldozer damaged the partially built house, Jones raised fraud defenses against Dell; Bancredit sued to collect the note, arguing it was a holder in due course unaffected by Jones's defenses against Dell, relying on evidence that Bancredit prepared Dell's financing documents, preapproved all its transactions, and had checks countersigned by their shared parent company. The superior court agreed Bancredit was a holder in due course and entered judgment for Bancredit.