Losack

This is a suit by Citizens Bank of Costa Mesa (formerly Bank of Costa Mesa, hereinafter Bank) against Gerard G. Losack (hereinafter defendant) for damages Bank allegedly sustained as a holder in due course. Losack gave three of his checks to Fountain Valley Appliances (hereinafter depositor) which in turn deposited them in the Fountain Valley checking account at plaintiff bank. Bank contends that, in reliance upon the deposits, it paid checks drawn upon its depositor’s account. Thereafter Bank received notice that defendant had dishonored the checks. Defendant contends Bank was not a holder in due course to the total amount of the checks, if at all.

Statement of Facts

Defendant gave depositor three checks (No. 104—$2,000, No. 105—$2,100, No. 106—$2,200) totaling $6,300 on January 8 and 9, 1975. The money so given was pursuant to a purchase agreement pertaining to a portion of depositor’s inventory.

On or about January 8, 1975, Bank notified depositor that it was holding checks, drawn against depositor’s account, which it could not honor because of insufficient funds. Depositor thereupon deposited defendant’s three checks (No. 104 on January 8 and No. 105 and No. 106 on…