This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The case arose from a mistaken payment made by a bank to a beneficiary of a joint account. After the death of one account holder, the bank erroneously issued a cashier's check for $12,256.51 to the beneficiary, who was not entitled to the funds under the terms of the account. The bank sought restitution, claiming unjust enrichment, as the funds belonged to the surviving joint account holder.
Procedural History
- District Court, May 1992: The trial court ruled in favor of the bank, finding that the payment was made by mistake and that the beneficiary was unjustly enriched. The court ordered restitution of $12,256.31 but denied prejudgment interest and set postjudgment interest at a variable rate.
Parties' Submissions
- Defendant-Appellant: Argued that the trial court misapplied the doctrine of unjust enrichment by failing to consider whether the enrichment was truly unjust and whether it was at the bank's expense. Additionally, the defendant claimed the bank's negligence and lack of due diligence caused the harm, and restitution should not be granted.
- Plaintiff-Appellee: Contended that the trial court erred in denying prejudgment interest and in setting postjudgment interest at a variable rate, arguing that both should have been awarded at statutory rates.
Legal Issues
- Did the trial court correctly apply the doctrine of unjust enrichment in finding the defendant liable for restitution?
- Was the bank entitled to prejudgment interest as a matter of right under New Mexico law?
- Did the trial court err in setting postjudgment interest at a variable rate instead of the statutory rate?
Disposition
- The Supreme Court of New Mexico affirmed the trial court's finding of unjust enrichment and the restitution award.
- The court reversed the trial court's denial of prejudgment interest and remanded for further proceedings to determine whether countervailing equities justified denial.
- The court reversed the trial court's award of postjudgment interest at a variable rate and held that it must be calculated at the statutory rate.
Reasons
Per Montgomery CJ (Franchini and Frost JJ. concurring):
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Unjust Enrichment: The court found substantial evidence supporting the trial court's conclusion that the defendant was unjustly enriched. The mistaken payment conferred a benefit on the defendant at the bank's expense, and retention of the funds was deemed unjust. The bank's negligence in making the payment did not preclude restitution, as the negligence caused no harm to the defendant.
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Prejudgment Interest: The court held that prejudgment interest was awardable as a matter of right under Section 56-8-3(B) because the defendant retained money belonging to the bank without its consent. The trial court's failure to provide reasons for denying prejudgment interest constituted an abuse of discretion. The case was remanded to determine whether any countervailing equities justified denial and to set the appropriate rate, up to the statutory maximum of 15%.
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Postjudgment Interest: The court ruled that postjudgment interest is mandatory under Section 56-8-4(A) and must be calculated at the statutory rate of 15% applicable at the time the complaint was filed. The trial court erred in awarding a variable rate tied to the bank's borrowing costs.