Planters Trust & Sav. Bank v. Langley, Civ. A. No. 83-2612 L.

• Decision Date: 20 June 1985
• Docket Number: Civ. A. No. 83-2612 L.
• Citation: 615 F. Supp. 749
• Parties: PLANTERS TRUST & SAVINGS BANK v. W.T. LANGLEY, et al.
• Court: U.S. District Court — Western District of Louisiana

615 F. Supp. 749

PLANTERS TRUST & SAVINGS BANK v. W.T. LANGLEY, et al.

Civ. A. No. 83-2612 L.

United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.

June 20, 1985.

William C. Shockey, Baton Rouge, La., for W.T. and Mary Langley.

David S. Rubin, Baton Rouge, La., for Federal Deposit Ins. Corp.

W. Shelby McKenzie, Baton Rouge, La., for Federal Land Bank of Jackson.

MEMORANDUM RULING

DUHE, District Judge.

On March 8, 1982, W.T. Langley and Mary Ann Langley executed a promissory note in the amount of $468,124.41, made payable to Planters Trust and Savings Bank. The Langleys defaulted and Planters Bank instituted an action in state court in September 1983 to recover the balance due on the note. That action was subsequently transferred to this Court, and consolidated with other actions arising out of the collapse of the Planters Bank in May 1984. Among those actions were certain claims by the Langleys against Planters Bank.

In May 1984, Planters Bank was closed by the Commissioner of Financial Institutions for the State of Louisiana. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver of Planters Bank. Subsequent to its appointment as receiver of the Planters Bank, the FDIC in its corporate capacity acquired all of the assets of Planters, including the note at issue in this matter. The FDIC now moves for summary judgment against the Langleys as to their liability on the note.

I. THE CLAIM ON THE NOTE

The Langleys contend that they are not liable on the note because of fraudulent inducement by officers of Planters. Specifically, they allege that officers of Planters misrepresented certain essential facts about real property which was the consideration for the note. In response, the FDIC argues that 12 U.S.C. § 1823(e) shields it from any affirmative defenses the Langleys might have on the note.

12 U.S.C. § 1823(e) provides:

No agreement which tends to diminish or defeat the right, title, or interest of the Corporation in any asset acquired by it under this section, either as security for a loan or purchase, shall be valid against the Corporation unless such agreement (1) shall be in writing, (2) shall have been executed by the bank and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank, (3) shall have been approved by the board of directors of the bank or its loan committee, which approval shall be reflected in the minutes of said board or committee, and (4) shall have been, continuously, from the time of its execution, an official record of the bank.

The question presented to this Court is whether § 1823(e) bars extrinsic proof that a written document in fact does not reflect any valid agreement.

The Fifth Circuit has not yet answered this question. In FDIC v. Lattimore Land Corporation, 656 F.2d 139 (5th Cir.1981), the defendants-makers on a promissory note alleged fraud in the inducement which vitiated the obligation. The Court concluded that the defendants had not made a sufficient showing of fraud in the inducement under state law and avoided resolving the question of whether § 1823(e) protects the FDIC from such affirmative defenses. The Court, however, noted that:

Our failure to put this case on that ground does not indicate that our answer to that question would be negative. Although there is authority holding that the FDIC is subject to the defense of fraud in the inducement, FDIC v. Webb, 464 F.Supp. 520, 525 (E.D.Tenn.1978), there is also authority holding that the FDIC takes its interest free of such defenses either because § 1923(e) gives the FDIC the same protection available to a holder in due course, FDIC v. Rockelman, 460 F.Supp. 999, 1002 (E.D.Wis. 1978). ... Without entering a holding on this ground we simply note that, to this Court, an assertion of this defense against the FDIC seems merely to convert a claim of breach into a claim of fraud. If an obligor may successfully void a note and recoup damages against the FDIC based on claim of fraudulent

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