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6

THE FEDERAL INSURANCE CO. v. SMITH

Smith. In another transaction, the trial judge considered a $56,000 check given to Susan Smith by Myron Smith. This check was drawn on the USAA bank account with instructions for Susan Smith to deposit the funds into their joint NWFCU account, and to use those funds to pay off the couple’s NWFCU loans. Susan Smith deposited the $56,000 check and directed that the funds be used to pay loans on which they were jointly obligated. Thus, the stolen funds or their equivalent were in her physical possession before her debts were paid with them. We therefore hold that the facts and circumstances are suf- ficient to support the trial judge’s determination that Susan Smith exercised dominion and control over the $4,500 check, and hold that she is liable to FIC for that portion of the converted money. We like- wise hold the facts and circumstances sufficient to support the trial judge’s finding that Susan Smith is liable to FIC for the conversion of the $56,000 check, money Susan Smith deposited to pay her joint obligations with Myron Smith.

A more difficult analysis is required when considering the funds over which Susan Smith exercised no physical dominion or control. One category of these funds involved Myron Smith issuing checks, totaling $57,261.52, drawn on his USAA checking account, to satisfy individual obligations of Susan Smith and joint obligations of the cou- ple. In effect, Myron Smith converted the funds, then transferred them to his bank account, and then used the funds to pay Susan Smith’s non-bank creditors to which she and Myron were jointly and severally liable.

If Susan Smith had actually handled the checks before they were used to satisfy her financial obligations, the transaction would be indistinguishable from the $56,000 check described above. We refuse to draw a distinction, however, based on the presence or lack of actual physical control over the funds. Susan Smith knew that when she incurred a debt, it would be paid by her husband from funds available to him, including funds derived from her salary as a Central Intelli- gence Agency employee. It was by their prior arrangement that Myron handled the couple’s finances and would pay bills as they were presented. Myron Smith, in sending the payment, was doing only what Susan Smith expected of him and knew he would be doing on her behalf. Thus, there was virtually no distinction between her delivering the checks to her creditors and her husband mailing the

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