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Angelini executed a promissory note for home improvements, which did not specify a commencement date. Angelini's contract provided that payments were to begin 60 days after completion of the work. The note was endorsed and delivered, together with the contract, General Investment, a finance company which regularly did business with the contractor and was familiar with its contracts.
The endorsement stated that work had been completed, but General Investment never made inquiry, and the work was allegedly never completed. In an action on the note, the lower courts granted judgment for General Investment. On appeal, the court reversed, holding that General Investment was not a holder in due course and was therefore subject to the defense of failure of consideration. General Investment did not take the note in good faith under N.J. Stat. Ann. § 12A:3-302, because the circumstances, including the fact that the contractor endorsed the note only 10 days after its execution, justified an inference that plaintiff willfully failed to inquire as to completion. In addition, the court held that under N.J. Stat. Ann. § 12A:3-119, General Investment took the note subject to the contract, and it therefore took with notice of a possible defense.The judgment was reversed. General Investment was not a holder in due course because it did not take the note in good faith, and it took with notice of a possible defense of failure of consideration. The court remanded for determination of the validity of the defense.
Thus, Angelini wins.