For purposes of determining its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, if the bank otherwise complies with the requirements of Section 55-3-302 NMSA 1978 on what constitutes a holder in due course.

History: 1953 Comp., § 50A-4-209, enacted by Laws 1961, ch. 96, § 4-209; 1978 Comp., § 55-4-209, recompiled as 1978 Comp., § 55-4-211 by Laws 1992, ch. 114, § 177.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

The section completes the thought of the previous section and makes clear that a security interest in an item is "value" for the purpose of determining the holder's status as a holder in due course. The provision is in accord with the prior law (N.I.L. Section 27) and with Article 3 (Section 3-303) [55-3-303 NMSA 1978]. The section does not prescribe a security interest under Section 4-210 [55-4-210 NMSA 1978] as a test of "value" generally because the meaning of "value" under other Articles is adequately defined in Section 1-201 [55-1-201 NMSA 1978].

Repeals. — Laws 1992, ch. 114, § 237B repealed former 55-4-211 NMSA 1978, as enacted by Laws 1961, ch. 96, § 4-211, relating to media of remittance, effective July 1, 1992. For provisions of former section, see the 1991 NMSA 1978 on NMOneSource.com.

The 1992 amendment, effective July 1, 1992, substituted "Section 55-3-302 NMSA 1978" for "Section 3-302" and made minor stylistic changes throughout the section.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 10 Am. Jur. 2d Banks § 694; 11 Am. Jur. 2d Bills and Notes §§ 337, 339.

Crediting proceeds of negotiable paper to depositor's account, as constituting bank a holder in due course, 59 A.L.R.2d 1173.

9 C.J.S. Banks and Banking § 383 et seq.; 10 C.J.S. Bills and Notes §§ 185, 186.