Falls Church Bank v. Wesley Heights Realty, Inc.

HOOD, Chief Judge:

The sole issue on this appeal is whether, and under what circumstances, may a depositary bank achieve the status of holder in due course of negotiable paper deposited with it by a customer. The facts are undisputed.

The appellees drew a check for $1,400.00, payable to the order of a customer of appellant bank. The customer deposited this check in his account with the bank and was given a provisional credit of this amount. The customer was permitted to withdraw $140.00 from this account prior to the bank’s discovering that appellees had stopped payment on the $1,400.00 check.…