Maine Family Federal Credit Union v. Sun Life Assurance Co.

After Elden Guerrette died, Sun Life Assurance Company (defendant) issued life insurance checks to his three children, but Sun Life's own agent and an associate fraudulently induced the children to endorse the checks in blank and hand them over to invest in the agent's company. The associate deposited the checks at Maine Family Federal Credit Union (plaintiff), which had an internal policy permitting it to hold out-of-state checks of this size for up to nine days, but instead made the funds immediately available, letting the associate withdraw everything before the fraud was discovered; the next day, the Guerrette children asked Sun Life to stop payment, which it did, dishonoring the checks. The Credit Union sued Sun Life claiming it was a holder in due course entitled to payment, but the jury found the Credit Union hadn't acted in good faith, and the trial court entered judgment for Sun Life; the Credit Union appealed.