Kaw Valley State Bank & Trust Co. v. Riddle

John Riddle (defendant) bought construction equipment from Co-Mac, Inc. on credit through promissory notes, which Co-Mac sold in bulk (over 250 notes over ten years) to Kaw Valley State Bank and Trust Company (plaintiff). Riddle and Co-Mac had agreed to cancel one May 1971 note in favor of different equipment, and Co-Mac promised to destroy that note, but instead sold it to Kaw Valley anyway. When Riddle fell behind on payments, he met with both Co-Mac and Kaw Valley to consolidate his debt; Kaw Valley itself agreed at that meeting that a different, unrelated note was no longer valid because the equipment had been returned, and canceled it. The May 1971 note was never included among the notes presented or consolidated at that meeting. Kaw Valley later sued Riddle for both the consolidated renewal note and the separate May 1971 note, and the trial court found Kaw Valley was not a holder in due course of the May 1971 note.