Lei signs a 30-day note payable to Yuan Appliances Inc. for $500 and gives it to Yuan as payment for a washing machine. When Yuan asks Lei for payment, she refuses to pay because the washing machine does not work properly. Yuan informs a bank about Lei's refusal to pay and then negotiates the note to the bank. Which of the following statements is true of this case?
A. Yuan is the holder in due course.
B. The bank is not a holder in due course of the note.
C. The bank is a holder in due course of the note.
D. A dishonored instrument always makes the indorser the holder.
Answer: B
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