651 F.Supp. 718 (W.D.Mo. 1986), 83-0335-CV-W-0, Anheuser-Busch Employees Credit Union v. Federal Deposit Ins. Corp.

Docket Nº:83-0335-CV-W-0.
Citation:651 F.Supp. 718
Case Date:December 01, 1986
Court:United States District Courts, 8th Circuit, Western District of Missouri

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651 F.Supp. 718 (W.D.Mo. 1986)




No. 83-0335-CV-W-0.

United States District Court, W.D. Missouri, Western Division.

Dec. 1, 1986

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Laurence R. Tucker, Morris, Larson, King, Stamper & Bold, Leon G. Kusnetzky, Kansas City, Mo., for plaintiffs.

Kenneth E. Weinfurt, Asst. U.S. Atty., Kansas City, Mo., for defendant.


ROSS T. ROBERTS, District Judge.

This action arises from the failure of the Oklahoma City, Oklahoma based Penn Square Bank, N.A. ("Penn Square"). The plaintiffs are six Missouri credit unions (Anheuser-Busch Employees Credit Union, Emerson Credit Union, St. Louis Federal Center Credit Union, Brentwood Credit Union, Monsanto Community Credit Union, and Gateway Credit Union), each of which had invested funds in excess of $100,000 in certificates of deposit issued by Penn Square. 1 On July 5, 1982, the Comptroller of the Currency closed Penn Square because of its insolvent condition.

Deposits in Penn Square were insured by the defendant, the Federal Deposit Insurance Corporation ("FDIC"). Although finding that a deposit insurance payout was in order, the FDIC also determined that, under its regulations, each of the plaintiffs was eligible for no more than a maximum of $100,000 coverage per credit union, and accordingly limited its payments in that fashion. 2 This suit resulted, plaintiffs contending that their status as credit unions placed them under one or more of the "multiple coverage" sections of the FDIC regulations, entitling them to insurance coverage at a maximum of $100,000 per each of their individual members. The case reaches me on defendant's motion for summary judgment.

Defendant urges that credit unions, as chartered in Missouri, are corporations and thus fall within the regulation set forth at

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12 C.F.R. § 330.5, providing (in effect) that corporations are insured only up to a maximum of $100,000 per corporation, notwithstanding the number of shareholders who may own stock in the corporation. In addition, defendant suggests, the relationship which exists between a credit union and its members is not, in any event, such that credit unions are entitled to "multiple coverage" under any of the applicable regulations. Finally, defendant contends that even if a relationship creating entitlement to "multiple coverage" did exist, there was no notification of it on Penn Square's books, as required by the regulations at 12 C.F.R. §§ 330.1(b)(1) and 330.1(b)(2).

Plaintiffs respond that although credit unions chartered in Missouri are corporations, the court should look beyond such technical characterizations and determine whether the members of a credit union are in essence the "beneficial owners" or "equitable owners" of the funds held and invested by that credit union. Plaintiffs further argue that, if such is the case, the notation on the Bank's books that the deposit was made by a "credit union" was itself sufficient notification to the Bank and the FDIC of a relationship which created entitlement to "multiple coverage." Related to all of this, plaintiffs also contend that the nature of the relationship between a credit union and its members is a question of fact, and that summary judgment is therefore inappropriate in any event.

After giving full consideration to the arguments of the parties, and for the reasons set forth below, I have determined that defendant's motion for summary judgment should be granted.



It is true that in many instances the nature of a relationship between persons, be it agency, custodial, trust or otherwise, will turn on factual issues. In the present case, however, what plaintiffs actually seek is a determination that a particular legal (or regulatory) characterization will be given to certain facts which are themselves undisputed. I do not view such a controversy as one involving a "genuine issue as to ... material fact" within the meaning of Rule 56(c). See generally, Northern v. McGraw-Edison Co., 542 F.2d 1336, 1343 (8th Cir. 1976); Bowers v. S-H-S Motor Sales Corp., 481 S.W.2d 584, 588-89 (Mo.Ct.App.1972); Baker v. St. Paul Fire & Marine Insurance Co., 427 S.W.2d 281, 293 (Mo.Ct.App.1968) (all standing for the proposition that when the facts are not in dispute, a question of agency is one of law for the court; a proposition equally applicable, it seems to me, to trust, custodial and other fiduciary relationships).

There is no suggestion that the relationship at issue hinges upon the parties' intent, as such, or is based upon specific, individualized agreements between the credit unions and their members. Indeed, such a circumscribed approach would be self-defeating for plaintiffs, since it would destroy their argument that the existence of the necessary relationship may be ascertained, on the depository bank's records, from the mere fact that the depositor is shown as a "credit union." Plaintiffs' basic premise, rather, is that given certain general facts (undisputed by defendant) concerning the history of credit unions, 3 and their method of operation under the statutes which govern them, the necessary relationship is shown as a matter of law. If, beyond this, there are other facts at issue, plaintiffs have offered no hint as to their nature.

True, plaintiffs have alluded to the deposition testimony of their expert witnesses. However, a reading of those depositions

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discloses that, aside from the general facts referred to above, such testimony is confined to the expression of opinions concerning whether those facts demonstrate an agency, trust, custodial or other fiduciary relationship. That issue, of course, is for the court. The presence of those opinions does constitute a genuine issue as to a material "fact."

Finally, and perhaps of more ultimate importance, if the FDIC regulations are in fact designed to preclude multiple coverage for plaintiffs, despite the fact that their relationship with their members might involve certain agency or other fiduciary incidents, then even plaintiffs' basic premise on the point would fail. As developed in Parts III and IV hereof, I believe that such is indeed the case.

I conclude that the posture of the case is such as to make defendant's summary judgment motion an appropriate vehicle for resolution of the matters actually in dispute.



There are two regulatory subsections involved in defendant's notification argument. The first, set forth at 12 C.F.R. § 330.1(b)(1), reads as follows:

The deposit account records of the insured bank shall be conclusive as to the existence of any relationship pursuant to which the funds in the account are deposited and on which a claim for insurance coverage is founded. Examples would be trustee, agent, custodian or executor. No claim for insurance based on such a relationship will be recognized in the absence of such disclosure.

The second, found in the immediately following subsection, 12 C.F.R. § 330.1(b)(2), provides:

If the deposit account records of an insured bank disclose the existence of a relationship which may provide a basis for additional insurance, the details of the relationship and the interests of other parties in the account must be ascertainable either from the records of the bank or the records of the depositor maintained in good faith and in the regular course of business.

As mentioned, plaintiffs' response to subsection (b)(1) is that if the relationship between a credit union and its members is, as a matter of controlling local law, 4 such that multiple coverage under the other regulatory sections would necessarily exist, 5 then the mere description of a depositor as a "credit union" would be adequate notice of that relationship. I find the argument acceptable, at least as a theoretical matter. Subsection (b)(1) does not call for any specific form of descriptive wording or language (although several "examples" are...

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