Kane v. Kroll

In Kane v Kroll, 196 Wis. 2d 389, 538 N.W.2d 605 (Wis App 1995), the court held that the plaintiff-payee could enforce a check written by a defendant-maker to satisfy the pre-existing obligation of the maker's son. Gerald was indebted to Kane as a result of a pre-existing debt incurred when Gerald purchased some cows. Gerald arranged with his mother, Grace, to satisfy this obligation with the promise that he would repay her with the proceeds from a load of hay he expected to sell in the immediate future. In accordance with that agreement, Grace issued a personal check for $ 6,100 to Kane in satisfaction of Gerald's debt. The next day, Gerald informed Grace that he would be unable to repay her because the party who had planned to buy the load of hay had cancelled the order. Grace immediately stopped payment of the check. When Kane subsequently presented the check, the bank refused to pay because of the stop payment order. (196 Wis 2d at 392; 538 N.W.2d at 606-07.) On these facts, Kane was entitled to collect from Grace. Grace argues that Kane was on notice that she had no pre-existing obligation to pay her son's debt and that this constitutes knowledge of a defense. We disagree. Section 403.303(2), Stats., clearly allows a holder in due course to accept payment from one person for payment of the debt of another. Additionally, the fact that Grace, like any drawer, had the power to stop payment on the check does not constitute a defense that would prevent Kane from being a holder in due course. If it did, no holder would be a holder in due course because any drawer has the power to issue a stop payment order. (196 Wis 2d at 396; 538 N.W.2d at 608.)