Triffin v Dillabough and American Express - Essay Example

1. Why does the fact that the money orders were completed without authorization and not delivered not affect the negotiation of an instrument?

It was interesting to note that the Courts held, contrary to the interests of AE, that even though the money orders had been stolen and completed without authorization and had not been “delivered” in that there was never any voluntary transfer of possession, they still amounted to negotiable instruments. The Courts pointed out that the requisites to negotiability never included references to proper delivery or authorized completion and so these factors did not affect the negotiability of the money orders. If the money orders satisfied the four-part test that was applied in recognizing negotiable instruments, the further factors of a lack of proper delivery or unauthorized completion did not reverse the results of that test.

The Courts further pointed out that the UCC provides (see section 3115) for the enforcement of incomplete and undelivered instruments and as such these factors cannot affect the negotiation of an instrument.

2. Why could Triffin not become a holder in due course?

This question was relevant to the fact that AE could escape liability based on unauthorized completion of the money orders only if Triffin was (as per section 3407) a “holder in due course” (HDC). To be an HDC, as described in section 3302(a), Triffin must have acted in good faith, acquired the money orders for value, and have had no notice that the money orders were overdue or had been dishonored or of the existence of any defense against or claim to it on the part of any person. Unfortunately for Triffin, the last condition was not fulfilled as the Courts held that Triffin had notice of AE’s defenses when he took over the instruments from Chuckie’s. As such, Triffin could not be an HDC in his name.

3. Why could Triffin acquire the status of a holder in due course?

The Courts held that as Triffin was the transferee or assignee of all the rights under the money orders, he stepped into the shoes of the transferor, Chuckie. As long as Chuckie’s was an HDC, Triffin could be too by way of being the assignee of the rights. It was irrelevant that Triffin had notice of the defenses-this did not preclude him from acquiring the status of an HDC from his transferor.

As Chuckie satisfied all the requirements of section 3302(a), Triffin by way of assignment, acquired the status of an HDC, and as such AE was liable to pay on the money orders. Read More