Petitioner BCCFI issued crossed checks to George King in consideration of tobacco bales, which the latter sold to respondent SIHI in a discounted price. George King failed to deliver the consideration. BCCFI ordered to stop payment. SIHI failed to encash the crossed checks.
Whether or not respondent SIHI here have shown legal absence of good faith.
YES. In failing to inquire about crossed checks, the holder SIHI is declared guilty of gross negligence amounting to legal absence of good faith, contrary to Sec. 52(c) of the Negotiable Instruments Law, and as such the consensus of authority is to the effect that the holder of the check is not a holder in due course.