Federal Insurance Company I.C. & Aetna Insurance Company v. Banco de Ponce
United States Court of Appeals for the First Circuit
751 F.2d 38 (1984)
- Written by Whitney Waldenberg, JD
Facts
An executive of a company called International Charter Mortgage Company (ICMC) ran up personal debts on various credit cards and wrote ICMC checks to cover those debts. Upon receiving the checks, Banco de Ponce (defendant) applied the funds from the checks to satisfy the charges on the executive’s personal credit cards, which included money owed to hotels and merchants. After the misuse of ICMC funds was discovered, ICMC’s insurers, Federal Insurance Company I.C. and Aetna Insurance Company (the insurers) (plaintiffs), sued Banco de Ponce, alleging that Banco de Ponce was negligent because the bank converted the funds and claiming that allowing the bank to retain the funds would unjustly enrich the bank. Banco de Ponce counterclaimed, alleging that because one of the insurers was also the insurer for Banco de Ponce against liability for negligence, that insurance company should reimburse any judgment entered based on negligence. The insurers then amended their claims to withdraw the negligence theory and instead relied solely on their claims for conversion and unjust enrichment. The district court rejected the insurers’ claims for recovery, and the insurers appealed.
Rule of Law
Issue
Holding and Reasoning (Breyer, J.)
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