American Nat. Bank of Jacksonville v. Federal Deposit Ins. Corp., 82-3069

Citation710 F.2d 1528
Decision Date04 August 1983
Docket NumberNo. 82-3069,82-3069
PartiesAMERICAN NATIONAL BANK OF JACKSONVILLE, a national banking association, Plaintiff-Appellee, v. FEDERAL DEPOSIT INSURANCE CORPORATION, etc., Defendant, Sumner Financial Corporation, a Florida corporation, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

C. Harris Dittmar, Charles P. Pillans, III, Timothy J. Corrigan, Jacksonville, Fla., for defendant-appellant.

Michael J. Dewberry, Jacksonville, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before RONEY and KRAVITCH, Circuit Judges, and TUTTLE, Senior Circuit Judge.

TUTTLE, Senior Circuit Judge:

This case is an appeal from an interpleader action in the United States District Court for the Middle District of Florida. The defendant-appellant, Sumner Financial Corporation, appeals from the district court's ruling that the Federal Deposit Insurance Corporation, as receiver for the Peoples State Savings Bank, is entitled to recover $326,200 placed in escrow with the plaintiff-appellee, the American National Bank of Jacksonville. Because we find that the trial court correctly rejected Sumner Financial Corporation's challenges to the FDIC's entitlement to lay claim to the disputed funds and properly awarded the funds to the FDIC, we affirm.

I. STATEMENT OF FACTS

In 1968, the Peoples State Savings Bank ("PSSB" or "the Bank") of Auburn, Michigan, became the subject of an examination by the Federal Deposit Insurance Corporation ("FDIC") and Michigan banking examiners due to the extremely high ratio of loans issued by the Bank to the Bank's deposits. 1 Of particular concern to the examiners and the PSSB board of directors were loans of approximately $90,000 to Graham Alvey and his wife. These loans exceeded both the line of credit approved for Alvey by the Bank's board of directors and the maximum loan the Bank was authorized to make to an individual under Michigan law. Donald Pickelman, the president of PSSB, was placed under considerable pressure to sever the Bank's relationship with Alvey or to raise the Bank's assets to a point which would support the excessive loans.

Alvey and some other PSSB customers who desired to borrow substantial additional amounts from the PSSB were placed in touch with John Sumner, president of Sumner Financial Corporation ("SFC") of Jacksonville, Florida. Since 1965, SFC had operated a "link financing" program whereby it placed time deposits in various banks in order to provide additional resources from which those banks could issue loans. At a series of subsequent meetings among PSSB officers, SFC representatives (including Sumner) and Alvey and other interested borrowers, a plan was formulated which operated as follows. 2

SFC agreed to organize a group of investors who would purchase letters of credit from the PSSB in the aggregate amount of three million dollars. 3 The letters of credit provided for quarterly interest payments of seven percent per annum during the term of the letters and a final repayment of the amount invested. To encourage its investors to purchase these letters, SFC paid each investor an "incentive fee" which, when coupled with the interest payments, provided an attractive rate of return. The funds deposited by these letter of credit purchasers were to be immediately lent out to Alvey and the other borrowers. The amount invested by each investor was limited to $20,000, the maximum deposit insured by the FDIC, and the PSSB agreed that the investors' deposits would not be hypothecated, set off against or otherwise encumbered by the loans the Bank might make to a borrower.

SFC benefitted from the arrangement in two ways. First, the various PSSB borrowers who participated in the scheme (including the Alveys) agreed that twenty percent of the amount of the loans funded would be paid to SFC and SFC officials for their services. Second, the parties agreed that SFC would retain fourteen percent of the funded amounts to insure the quarterly interest payments due the investors; in the meantime, SFC benefitted from any earnings on these funds in excess of the amount it paid over to PSSB each quarter to cover the interest payments.

Checks received by the Bank from investors were not deposited to the account of the individual investors, but were endorsed "For deposit only to the account of Sumner Financial Corporation" and delivered to SFC in Jacksonville where they were deposited with the Florida National Bank. From there, SFC made the actual disbursements of money to the borrowers. After the Florida bank refused to accept further checks endorsed in that manner, SFC opened an account with the PSSB and ordered that the checks be deposited directly into that account. By April 13, 1970, SFC investors had placed $2,710,000 in the Bank, of which $2,330,000 had been loaned out to the borrowers. Fourteen percent of the latter amount, $326,200, had been retained by SFC for the funding of the PSSB's interest payments to investors; this amount, hereafter referred to as the "escrow fund," is the subject of this litigation.

On April 13, 1970, an FDIC examiner arrived at the Bank and commenced an examination of its records. Two days later, after discovering that the Bank was obligated to the letter of credit purchasers for $2,330,000 of disbursed funds for which it possessed no offsetting notes or securities from the borrowers, the FDIC ordered the Bank closed. On April 18, the FDIC was appointed as receiver of PSSB by a Michigan state court. The FDIC thus assumed its dual roles in the present action, as corporate insurer of the amounts on deposit at the PSSB at the time of its closing and as the receiver for the PSSB.

On or around April 18, Myers Fisher, assistant general counsel of the FDIC and head of the FDIC's closed bank liquidation section, received a telephone call at the PSSB receiver's office from Leon Holbrook, an attorney representing SFC and Sumner. During that conversation, Fisher requested that SFC return to the Bank the $326,200 that SFC was holding on behalf of its investors. Holbrook called Fisher back the next day and offered to return the money in exchange for a "release" from potential liability for SFC and Sumner. Fisher refused this offer.

Subsequently, on April 23, 1970, the FDIC, SFC and the American National Bank of Jacksonville ("ANB") executed the escrow agreement which is the subject of the dispute in the present action. The ANB, acting as escrow agent, agreed to hold the disputed $326,200 (with interest) until the FDIC and SFC filed a written agreement as to the proper disposition of the funds or until "a legal determination as to the ownership of the escrowed funds" by a "court of competent jurisdiction."

On June 15, 1970, the FDIC, in both its receiver and corporate capacities, filed a suit (hereafter referred to as the "damages action") against SFC and others in the United States District Court for the Middle District of Florida. In its receiver capacity, the FDIC sought recovery of the $2,330,000 converted from the PSSB as the result of a conspiracy among the defendants. In its corporate insurer capacity, the FDIC claimed entitlement to the escrow fund and also sought recovery of the $2,330,000 as subrogee to the rights of the insured depositors. During the course of the damages action, the FDIC never made any claim to the escrow fund in its receiver capacity.

On January 16, 1973, the trial court granted a partial summary judgment in favor of the defendants as to the FDIC's claim as corporate insurer on the grounds that the FDIC had not yet reimbursed the investors for their losses and thus possessed no subrogation rights to the disputed funds. 4 The damages action thus proceeded with the FDIC as plaintiff only in its receiver capacity.

The trial of the damages action lasted approximately five weeks. However, on March 1, 1973, just subsequent to the completion of the presentation of the evidence, the FDIC informed the court of a prior case, FDIC v. National Surety Corp., 345 F.Supp. 885 (S.D.Iowa 1972) in which the FDIC had successfully argued that there is a failure of subject matter jurisdiction where the FDIC brings suit solely in its receiver capacity. The National Surety case became the basis of a motion to dismiss by the defendants which the trial court deferred for post-trial disposition. The jury returned a verdict for the FDIC, but on July 20, 1976, the district court dismissed the case for want of subject matter jurisdiction. Alternatively, the court entered judgment notwithstanding the verdict in favor of SFC. On appeal by the FDIC, the former Fifth Circuit Court of Appeals affirmed the dismissal on the jurisdictional issue. FDIC v. Sumner Financial Corp., 602 F.2d 670 (5th Cir.1979). 5

In 1972, the FDIC initiated an action in the Michigan receivership court requesting that the ANB be required to show cause why the escrow fund should not be delivered to the FDIC as receiver of the PSSB. The Michigan court entered the show cause order, and on September 19, 1974, the ANB responded to the order by initiating the present interpleader action in the U.S. District Court. On October 2, 1974, the federal district court granted SFC's motion to enjoin all parties to the interpleader action from prosecuting any proceeding in the Michigan receivership court related to the escrow fund. The federal court subsequently relieved the ANB of active participation in the interpleader action, leaving SFC and the FDIC to litigate entitlement to the escrow fund.

On December 26, 1974, the FDIC moved to dismiss the interpleader complaint alleging that the ANB had sued the FDIC in its capacity as insurer and not as receiver of the PSSB, the capacity in which the FDIC had executed the escrow agreement. On September 29, 1978, the district court denied the motion, finding that the ANB had properly sued the FDIC as receiver; the FDIC thereafter filed its answer to...

To continue reading

Request your trial
193 cases
  • In re Steeley, Bankruptcy No. 98-05272-BGC-13.
    • United States
    • United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama
    • January 25, 1999
    ......         Alan Levine, for SouthTrust Bank. .          Order Denying the Debtor's ... was in violation of Rule 9011 of the Federal Rules of Bankruptcy Procedure and Rule 11 of the ...v. Manville Forest Products Corp. (In re Manville Forest Products Corp.), 896 ... of justice by inconsistent pleadings." American Nat'l Bank of Jacksonville v. F.D.I.C., 710 F.2d ...L.P. v. Metropolitan Life Ins. Co. (In re Trident Assocs. L.P.), 52 F.3d 127, ......
  • In re Tippins
    • United States
    • United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama
    • May 1, 1998
    ...1192 (11th Cir.1991) (judicial estoppel applied to calculated assertion of divergent sworn positions); American Nat'l Bank of Jacksonville v. F.D.I.C., 710 F.2d 1528, 1536 (11th Cir.1983) (judicial estoppel is applied to calculated assertion of divergent sworn Applying these cases to the in......
  • Grant Thornton, Llp v. F.D.I.C.
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • March 14, 2007
    ...67 (1994); Resolution Trust Corp. v. Fid. and Deposit Co. of Md., 205 F.3d. 615, 626 (3d Cir.2000); Am. Nat'l Bank of Jacksonville v. FDIC, 710 F.2d 1528, 1534 (11th Cir.1983). Therefore, the court has looked to the substantive law of West Virginia in assessing the rights and liabilities of......
  • United States v. Ward, 83-63-CIV-5.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 9, 1985
    ...of limitations is denied as defendants have waived this defense as to those three claims. American National Bank of Jacksonville v. Federal Deposit Insurance Corp., 710 F.2d 1528, 1537 (11th Cir.1983); Senter v. General Motors Corp., 532 F.2d 511, 530 (6th Cir), cert. denied, 429 U.S. 870, ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT