Horton wrote a check for $20,000 to Axe, who in turn indorsed it to Halbert. In return,

Question:

Horton wrote a check for $20,000 to Axe, who in turn indorsed it to Halbert. In return, Halbert advanced $8,000 in cash to Axe and promised to cancel a $12,000 debt owed him by Axe. The check, when presented by Halbert to the bank, was not paid due to insufficient funds. Halbert thus never regarded the debt as canceled. To what extent can Halbert be a holder in due course of the check?