Commercial Factors of Denver v. Roche Constructors, Inc
In Commercial Factors of Denver v. Roche Constructors, Inc., 802 P.2d 1129, 1130 (Colo. Ct. App. 1990), Roche was a general contractor. Roche's subcontractor took a $ 45,317 loan from Commercial and assigned to Commercial, as security, its right to payment under its contract with Roche. Id.
Roche was aware of the assignment and made an initial payment to Commercial of $ 23,909. Id. Commercial then loaned an additional $ 10,528 to the subcontractor. Id.
Roche paid Commercial another $ 26,323, but when the subcontractor failed to perform under the contract with Roche, Roche ceased payments to Commercial. Id.
Roche apparently sought restitution from Commercial for the full amount of the payments it had made, $ 50,232. Id. The Colorado Court of Appeals found that Commercial, by making a further loan to the subcontractor, had changed its position and was not required to pay restitution for the amount of that further loan. Id. In evaluating whether a change of position precludes restitution, the court reasoned as follows:
"The decisive factor here in determining whether a change of position precludes a reimbursement of payments received is whether Commercial retained the benefit of the payments or was left in a worse position than if payment had been refused originally by Roche. If Commercial changed its position because of Roche's payments so that it no longer had possession of the money or was in a worse position than if Roche had refused to make that payment then the payee is exonerated from repayment, to the extent of such payment or payments.
Here, the position of Commercial was detrimentally changed by the $ 10,528 it paid out on the basis of the payments received from Roche. Thus, we conclude that Roche is entitled to reimbursement of $ 50,232, the total sum of the two payments, minus $ 10,528, the subsequent loan amount." Id. at 1130-31.