Question

Sid Slick represents himself as Richard Rich to Ortie Ozarka. Ortie, believing that Sid was really Richard, gave Sid a check payable to Richard's order. Sid endorses the instrument "pay to Art Arbuckle" and gave it to Art. Art gives it to Harry. Is Harry a proper holder of the instrument?

Answer 1

Answer:

Harry is a proper holder of the instrument

Explanation:

Impostor rule is the legal principle which states that an imposter endorsement of a negotiable instrument is not a forgery. The loss falls on the drawer of cheque and not on the third party or the bank that clears it. Art and Harry acted in good faith for the consideration.  Hence, Harry is a proper holder of the instrument as any person in its possession is its holder.