Walter Duester purchased a John Deere combine from St. Paul Equipment. John Deere Co. was the lender and secured party under the agreement. The combine was pledged as collateral. Duester defaulted on his debt, and the manager of St. Paul, Hansen, was instructed to repossess the combine. Hansen went to Duester’s farm to accomplish this. Duester told him that he had received some payments for custom combining and would immediately purchase a cashier’s check to pay the John Deere debt. Hansen followed Duester to the defendant, Boelus State Bank. Hansen remained outside, and Duester returned in a few minutes with a cashier’s check in the amount of the balance of his indebtedness payable to John Deere. The check had been signed by an authorized bank employee. When John Deere, however, presented the check to the bank for payment shortly thereafter, the bank refused to pay, claiming that Duester acquired the cashier’s check by theft. Is John Deere subject to this defense? Why or why not?
Walter Duester purchased a John Deere combine from St. Paul Equipment. John Deere Co. was the lender and secured party under the agreement. The combine was pledged as collateral. Duester defaulted on his debt, and the manager of St. Paul, Hansen, was instructed to repossess the combine. Hansen went to Duester’s farm to accomplish this. Duester told him that he had received some payments for custom combining and would immediately purchase a cashier’s check to pay the John Deere debt. Hansen followed Duester to the defendant, Boelus State Bank. Hansen remained outside, and Duester returned in a few minutes with a cashier’s check in the amount of the balance of his indebtedness payable to John Deere. The check had been signed by an authorized bank employee. When John Deere, however, presented the check to the bank for payment shortly thereafter, the bank refused to pay, claiming that Duester acquired the cashier’s check by theft. Is John Deere subject to this defense? Why or why not?
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