Maine Family Federal Credit Union v. Sun Life Assurance Co.
Supreme Judicial Court of Maine
727 A.2d 335 (1999)
Elden Guerrette obtained a life insurance policy from Sun Life Assurance Company of Canada (Sun Life) (defendant) and named his three children, Daniel, Joel, and Claire, as the beneficiaries. Elden passed away in September 1995. Sun Life then issued three checks, one to each of the children, each in the amount of $40,759.35. Sun Life’s agent, Steven Hall, and his associate, Paul Richard, then fraudulently induced each of the children to indorse the checks in blank and transfer them to Hall and Richard in order to invest in a corporation they had formed. Richard then deposited the checks at the Maine Family Federal Credit Union (Credit Union) (plaintiff) in October 1995. The Credit Union’s internal policy permitted the Credit Union to hold these checks for up to nine days. However, the Credit Union made the funds immediately available to Richard, who quickly withdrew the full amount. The following day, the Guerrettes requested that Sun Life stop payment on the checks. Sun Life then directed its bank to stop payment, and the checks were dishonored. The Credit Union sued Sun Life, alleging that Sun Life was obligated to honor the checks as negotiable instruments, because the Credit Union was a holder in due course of the checks. The trial court entered judgment in favor of Sun Life based on a jury verdict that the Credit Union had not acted in good faith. The Credit Union then appealed to the Supreme Judicial Court of Maine.
Rule of Law
Holding and Reasoning (Saufley, J.)
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