McIntyre v. Harris

Brief Fact Summary. Brian P. McIntyre, (Appellant), filed a complaint against Twin Oaks Savings Bank and Robert E. Harris, (Appellees), after Appellees erroneously paid out a check over Appellant’s valid stop payment order. Appellant alleged that Appellees coerced him into signing a $2,000 personal note payable to Twin Oaks Savings Bank and Appellees counter-claimed demanding payment on the overdue note. Appellant appeals the trial court ruling in favor of Appellees.

Synopsis of Rule of Law. A payor is subrogated to the rights of the payee or any other holder against the drawer on the item or under the transaction out of which the item arose.

Facts. Appellant referred Sandra Bennett to Ray Archie for repairs to her roof. Appellant told Sandra Bennett that in order to complete the job it was necessary for her to give Ray Archie $2,000 but if the repairs were not completed by a certain date, she could cash Appellant’s check for $2,000. The work was not completed and Sandra Bennett cashed the Appellant’s check. Appellant admitted the work had not been completed yet he ordered Appellees to stop payment on the check. Appellees erroneously paid out on Appellant’s check over his stop payment order. Appellant met with Appellees and told them the withdrawal would cause his account to be overdrawn. He then signed an agreement to pay $2,000 with interest if Appellees left the $2,000 in his account. Appellant never paid on the note.

Issue. Whether Appellees can become subrogated to the rights of another party to prevent unjust enrichment.

Held. Yes. Appellant was unjustly enriched and Appellees were properly subrogated to Sandra Bennett’s interest as the holder of Appellant’s check.

Discussion. Appellant was unjustly enriched because he cashed Sandra Bennett’s check for work that was not performed. Appellees are subrogated to Sandra Bennett’s rights as a payee. Sandra Bennett, as a payee of the instrument, obtained the right to pursue Appellant. Appellees as payors are subrogated to the rights of the payee or any other holder against the drawer on the item or under the transaction out of which the item arose. The bank was properly subrogated to Sandra Bennett’s interest as the holder of Appellant’s check.