Northern Bank v. Pefferoni Pizza Co.

Sievers, Judge.

Northern Bank (Northern) brought suit against Pefferoni Pizza Co. (Pefferoni) on a promissory note issued as security for the underlying obligation of Walter Peffer, Jr. The Douglas County District Court granted Northern’s motion for summary judgment, having found that the note was a negotiable instrument and that Northern was a holder in due course of the note. For the reasons set forth below, we reverse.

FACTUAL BACKGROUND

On September 30, 1987, Duane J. Dowd, as president of Pefferoni, signed a promissory note in the amount of $125,000 payable to W. E. Peffer Enterprises, Inc.…