Skip to content
Subscriber Only
Business
QuickTake

‘Unjust Enrichment’ and Citi’s $900 Million Error

From

Citigroup Inc. says an employee error caused it to mistakenly pay out more than $900 million of its own money to a group of lenders expecting an interest payment on behalf of Revlon Inc. So far at least one of the lenders has given the money back, but the bank is suing 11 others -- including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management -- who say the money should be regarded as payment of Revlon’s debt. The case, which is set for a November trial, raises the question of what happens when somebody comes into money by accident. Do courts follow the schoolyard rule of “finders, keepers?” Or does the money have to be returned?

As a general rule, people who mistakenly receive things to which they’re not entitled have to give them back. That’s as true when a cashier accidentally slips an extra $20 into your change as when a bank mistakenly transfers a larger amount. The law views the recipient as being unjustly enriched and therefore obligated to return the property. A recipient who refuses can be sued. The doctrine dates to 18th century England and enshrines fairness, as opposed to contract or injury, as the basis for a legal remedy.