State Street Bank & Trust Co. v. Strawser
United States District Court for the Middle District of Pennsylvania
908 F. Supp. 249 (1995)
Chester and Connie Strawser (defendants) issued an adjustable-rate promissory note to Homestead Savings Association in exchange for a $350,000 loan, with a provision allowing acceleration of the full balance upon default following notice; Homestead assigned the note to State Street Bank (plaintiff), which sent the Strawsers a default notice after they fell behind, and when they didn't respond, sued for the remaining balance and moved for summary judgment as a holder in due course. The Strawsers argued State Street wasn't a genuine holder in due course because it had notice, through a letter the Strawsers had sent Homestead, of a potential defense under state commercial law based on Homestead's own alleged violation of state law.
Whether, under commercial law, a holder in due course has the right to enforce an instrument free of any defenses that the instrument's maker might raise.