In this case, the credit union brought an action alleging the defendant borrowed $6,000 and failed to repay the same. The credit union also produced a promissory note signed by the defendant (Shaham).

Defendant purchased disability insurance at the inception of this loan and thereafter became disabled. The insurance company did not honor his claim and refused to pay the credit union debt.

The debtor argued that the credit union should be prevented from collecting on this obligation since it had sold the debtor disability insurance.

The debtor claimed that representations were made to him by the credit union personnel indicating that he would not have to pay the loan in the event of his becoming disabled. Debtor further claimed that the credit union made misrepresentations to him concerning the disability insurance.

In this case, the court held that:

. . . there was no agency relationship between the credit union and the disability insurance carrier in order to absolve the defendant of liability to the credit union.

The court further found that the insurance was provided by a separate company which the credit union utilized to accommodate the credit union members; nor did the credit union make any representations as to insurability of the member.

Judgment was entered in favor of the credit union, including costs of $184 and attorney fees of $1,500. Textron Lycoming Federal Credit Union v. Shaham (Connecticut Superior Court, Dist. of Danbury, No.30-17-30).

Author: Charles R. Harroun, Attorney at Law