State Farm insured a property damaged by fire and issued a cheque to Alfedany.
A person purporting to be Alfedany cashed the cheque at Money Mart.
Alfedany later claimed he had not received the cheque and disputed the endorsement as forged.
State Farm brought a motion for summary judgment to dismiss Money Mart's action seeking payment as a "holder in due course." The court found the cheque's negotiation was affected by fraud or illegality, meaning Money Mart was not deemed a "holder in due course" under s. 57(2) of the Bills of Exchange Act.
Furthermore, Money Mart failed to prove it was a "holder in due course" under s. 55(1) due to its wilful disregard of multiple discrepancies in the customer's identity, which indicated a lack of good faith.
The court also noted that even if Money Mart were a holder in due course, it would be barred from enforcing payment by s. 48(1) of the Act due to the forged signature, as State Farm was not estopped from raising this defence.
State Farm's motion for summary judgment was granted, and Money Mart's claim was dismissed.