Maine Family Federal Credit Union v. Sun Life Assurance Co

Facts

Mr. Elden Guerrette purchased a life insurance policy from the appellee, Sun Life Assurance Co., naming his three children (the “appellees”) as beneficiaries. Upon Mr. Guerrette’s death, Steven Hall, an agent of Sun Life, was given three checks drawn on a Sun Life banking account to distribute to the appellees. Hall and an associate, Paul Richard, then fraudulently induced the appellees to make a blank indorsement of the checks to Hall and Richard so the money could e invested in a corporation formed by Hall and Richard. The checks were indorsed and Richard deposited the checks in his account at the appellant bank, Maine Family Federal Credit Union (the “appellant”). The appellant immediately made the funds available to Richard. The appellees learned of the scheme and informed Sun Life to stop payment on the checks. When the checks were presented to Sun Life’s bank, the bank refused to pay the checks and returned the checks to the appellant. By the time the appellant received the returned checks, Richard had withdrawn over $42,000.00 from his account and the appellant was only able to recover $80,000.00. The appellant filed a complaint against Sun Life but did not seek any recovery from the three Guerrette children. Sun Life filed a third party complaint against Daniel Guerrette and Paul Richard, whose signatures appeared on the back of one of the checks. The appellant then filed a cross-claim against third-party defendants, Guerrette and Richard. Daniel Guerrette then filed cross claims against the appellant and Sun Life. Sun Life eventually filed third-party complaints against the remaining two beneficiaries, Joel and Claire Guerrette. The jury found that the Credit Union had not acted in good faith and therefore was not a holder in due course. Therefore, the Superior Court entered judgment in favor of Sun Life, Daniel, Joel, and Claire, and against the Credit Union.