Pershing & Co. discovered that five Royal Dutch negotiable certificates issued to Hilson & Co. were missing from its inventory. Pershing applied to its bank for replacements. The bank required that Pershing execute an “Affidavit for Lost Securities,” stating that the certificates had been lost, stolen, or destroyed, and purchase an indemnity bond. Sixteen years later, in 1991, Haber received four of the original missing stock certificates in a sealed envelope as a wedding present from his uncle. His uncle directed that he not open the envelope until he and his wife decided to have children. Haber’s uncle did not take the certificates by indorsement and was not a holder in due course (HDC).
Haber did not open the envelope until 1996. Haber sold the certificates, and the bank originally credited his account with $2,770,000. However, the bank later informed Haber that it was rescinding the sale, and it debited his account for the amount of the proceeds. Haber contended he was the HDC of the certificates. Do you think Haber qualified as HDC of the stock certificates? Why or why not? Note: for sake of this question, you may assume that Article 3 is applicable to the certificates in question.