Mclean V. Paddock

The trial court found that Harper had orally agreed the note would be paid solely from the monthly installments on the purchase price of the motel, and that Paddocks were induced to sign the note by Harper's false representation that a note was required in order to authorize the escrow agent to make these monthly payments to Harper. The court concluded that McLeans were holders in due course, finding they had no knowledge of Harper's misrepresentations. Judgment was, accordingly, entered in favor of McLeans and against Paddocks. Finding that Paddocks had relied to their detriment upon Harper's misrepresentations, they were awarded a judgment against Harper on their third-party action. Paddocks and Harper have appealed.