Jelmoli Holding v. Raymond James Financial Services
United States Court of Appeals for the First Circuit
470 F.3d 14 (2006)
William Potts, an employee of Jelmoli Holding (plaintiff) responsible for handling company funds, began writing unauthorized checks from Jelmoli's account to his own brokerage firm, Raymond James Financial Services (RJ) (defendant), falsely telling RJ that he personally owned Jelmoli. Over several months, Potts funneled $1.5 million to RJ to cover personal debts before the fraud was discovered and the account emptied. Jelmoli sued RJ for unjust enrichment; RJ claimed it was a protected holder in due course under the UCC. A jury largely sided with Jelmoli, and RJ appealed.
Whether, under the UCC, a claim based on breach of fiduciary duty must satisfy § 3-307's requirement that the taker of the negotiable instrument knew the transferor was acting as a fiduciary.