Gary Executes a Negotiable Note and Mortgage in Favor of Coastal

question 23

Multiple Choice

Gary executes a negotiable note and mortgage in favor of Coastal State Bank to finance his house.Coastal transfers the note to Mountain Bank.Gary later loses all his money at the craps tables in Las Vegas, defaults on the note, and declares bankruptcy.Assuming that Mountain Bank is a holder in due course:

• A)Gary will still owe Mountain Bank if the sale of his house is insufficient to pay the amount left on the loan, since bankruptcy is a personal defense.
• B)Gary will not owe Mountain Bank because bankruptcy is a real defense that discharges the debt even against a holder in due course.
• C)Gary will not owe Mountain Bank, but only if the bank signed a waiver of defense.
• D)Gary will still owe both Mountain Bank and Coastal State Bank if the sale of the house is insufficient to pay the amount on the loan.

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Definitions:

Hostility to Reason

A negative attitude or opposition towards logical argumentation, critical thinking, or the rational resolution of conflicts.

Critical Thinking

A skill of objectively assessing evidence and arguments, to identify biases and assumptions, and make reasoned judgments.

Qualitative Improvements

Enhancements or upgrades in the quality or nature of something rather than in its quantity or numerical aspects.

Critical Thinking Skills

The cognitive abilities used to analyze facts, generate and evaluate arguments, and synthesize information in order to arrive at well-founded conclusions.