Federal Sav. and Loan Ins. Corp. v. Murray

• Decision Date: 06 September 1988
• Docket Number: No. 88-3021,88-3021
• Citation: 853 F.2d 1251
• Parties: 8 UCC Rep.Serv.2d 56 FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, Plaintiff-Appellee, v. Mary Anne MURRAY, et al., Defendants, Alice Jayne Glasser, wife of/and Gerry E. Hinton, Marliene Revon Salvaggio, wife of/and Philip M. Salvaggio, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1251

853 F.2d 1251

8 UCC Rep.Serv.2d 56

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, Plaintiff-Appellee, v. Mary Anne MURRAY, et al., Defendants, Alice Jayne Glasser, wife of/and Gerry E. Hinton, Marliene

Revon Salvaggio, wife of/and Philip M. Salvaggio,

Defendants-Appellants.

No. 88-3021.

United States Court of Appeals, Fifth Circuit.

Sept. 6, 1988.

Rehearing Denied Oct. 5, 1988.

Daniel A. Smith, New Orleans, La., for Glasser.

G. Brice Jones, Slidell, La., for Salvaggio.

Nathan T. Gisclair, Jr., and Stephen P. Schott, New Orleans, La., for plaintiff-appellee.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before GEE, DAVIS and SMITH, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

The makers of promissory and collateral mortgage notes appeal the district court's ruling on summary judgment that Federal Savings and Loan Insurance Corp. (FSLIC) could recover on the notes despite a number of defenses, including one based on evidence that Alliance Federal Savings and Loan Association (Alliance), the savings and loan holding the notes, had altered them fraudulently. We affirm.

I.

Four married couples formed a general partnership called the Eastway Group to acquire real estate in Louisiana for commercial development. To finance this purchase, they borrowed $3.6 million in August 1984 from Alliance. All borrowers signed a $3.6 million promissory note in their individual capacities; this note was secured by a $5 million collateral mortgage on the purchased property. The borrowers admit receiving the proceeds from the $3.6 million loan. The Hintons eventually sold their interest in the partnership to the remaining partners, who agreed to indemnify them from liability on this loan.

In January 1985, the Federal Home Loan Bank Board (FHLBB) appointed the FSLIC receiver of Alliance, and through a purchase and assumption transaction FSLIC became the holder of this note. When FSLIC filed suit against the makers, two of the four couples who signed the note filed individual bankruptcies. The two remaining couples, the Hintons and the Salvaggios, defended on several grounds: (1) they thought the Eastway Group would be liable for the note rather than them personally; (2) Alliance misrepresented the property's value and violated several oral side agreements; (3) they had signed several blank signatory pages that Alliance later misused; and (4) Alliance fraudulently and materially altered the notes after the makers signed them. Alliance did alter the notes. The defendants made the following pretrial stipulation:

The hand note was ... altered after the closing. Mary Anne Murray Lepore and John Lepore were made restrictively liable in the amount of $1,225,937.37, Alice Jayne Glaser Hinton and Gerry E. Hinton were made restrictively liable in the amount of $984,189.00, Marliene Salvaggio and Philip M. Salvaggio were made restrictively liable in the amount of $256,500.00, and Doris Schwartz Smart and Donald R. Smart were made restrictively liable in the amount of $1,175,592.00. Again, each wife was made restrictively liable "in conjunction with" her husband for the quoted amounts.

The parties agree that Alliance altered the notes without the makers' knowledge or permission, apparently in an attempt to deceive the federal regulatory authorities. Alliance may have sought to bolster the appearance of the note to bank examiners by limiting each debtor to his net worth. In addition, the alteration may have permitted Alliance to claim compliance with FHLBB restrictions on the dollar amount Alliance could loan to any one borrower. The parties suggest that Alliance altered the notes because the single $3.6 million loan to the Eastway Group exceeded that limit, and that Alliance's alterations changed the note in FHLBB's eyes from one loan for over three million dollars to four separate loans well within the FHLBB restrictions.

The defendants argued that the fraudulent and material alterations to the notes rendered them unenforceable under Louisiana law. See La.Rev.Stat.Ann. Sec. 10:3-407. The district court nonetheless granted FSLIC's motion for summary judgment on grounds that federal common law precluded the defendants from asserting this defense against FSLIC. The court found the Hintons and Salvaggios solidarily liable to FSLIC for the note's entire amount. Finally, the court found that the Salvaggios were bound to indemnify the Hintons for their share of the judgment under their contract of sale of the Hintons' partnership interest.

The Salvaggios and the Hintons appeal the summary judgment in favor of FSLIC and the imposition of solidary liability. The Salvaggios appeal the indemnification order. We address each argument in turn.

II.

A.

In reviewing summary judgments, we must determine whether the record discloses no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

B.

The Supreme Court held in D'Oench, Duhme & Co., Inc. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), that secret agreements designed to deceive creditors or the public authority or tending to have that effect could not be asserted as a defense against the FDIC suing in its corporate capacity to collect a note. The case law that has developed since D'Oench has extended the protections afforded FDIC when it acquires a failed bank's assets. See Federal Deposit Ins. Corp. v. Wood, 758 F.2d 156 (6th Cir.), cert. denied, 474 U.S. 944, 106 S.Ct. 308, 88 L.Ed.2d 286 (1985); Gunter v. Hutcheson, 674 F.2d 862 (11th Cir.), cert. denied, 459 U.S. 826, 103 S.Ct. 60, 74 L.Ed.2d 63 (1982). Congress codified the D'Oench holding for FDIC acting in its corporate capacity. 12 U.S.C. Sec. 1823(e).

While neither Congress nor the Supreme Court has extended these protections to FSLIC, we see no reason to treat these regulatory authorities differently. We agree with the Sixth Circuit that D'Oench and its progeny protect FDIC and FSLIC alike against arrangements "likely to deceive a federal regulatory authority." Taylor Trust v. Security Trust Fed. Savings & Loan Ass'n, Inc., 844 F.2d 337, 342 (6th Cir.1988).

In Taylor the Sixth Circuit applied D'Oench to FSLIC, reasoning that "traditional rules of contract law are not applicable to the present case because FSLIC has special status under federal substantive common law...." Id. at 342. Thus, the court rejected a savings and loan president's lack of consideration defense to FSLIC's action to enforce two collateral pledge agreements against his personal account. The court concluded that the president could not rely on lack of consideration because he had participated in a deceptive scheme of backdating the pledge agreements and placing them in the loan files. Id.

We too will analyze the appellants' arguments against FSLIC subject to the limitations of the D'Oench doctrine. We find this appropriate because FSLIC does for savings and loans what FDIC does for banks. Compare 12 U.S.C. Sec. 1823(c)(2)(A) (authorizing FDIC to arrange purchase and assumption transactions for banks) with 12 U.S.C. Sec. 1729(f)(2)(A) (authorizing FSLIC to arrange purchase and assumption transactions for savings and loans). Given this parallel in statutory missions, the Court's reasoning in D'Oench encompasses FSLIC as well:

[I]t is the "evil tendency" of the [deceptive] acts to contravene the policy governing banking transactions which lies at the root of this rule....

Those principles are applicable here because of the federal policy evidenced in this Act to protect [FDIC], a federal corporation, from misrepresentations made to induce or influence the action of [FDIC], including misstatements as to the genuineness or integrity of securities in the portfolios of banks which it insures or to which it makes loans.

D'Oench, 315 U.S. at 459, 62 S.Ct. at 680 (citation omitted).

C.

Appellants defend enforcement of the promissory note on several grounds.

The appellants argue first that they intended the partnership, Eastway Group, to borrow the money from Alliance and own the real estate, not the individual partners. They claim that they first learned that the notes rendered them personally liable when FSLIC filed suit. In short, they contend that they never intended to assume personal obligations.

This argument is frivolous. The promissory and collateral mortgage notes, which appellants admit they signed, make no reference to the Eastway Group. Appellants signed the hand note--the critical instrument--individually as makers. They suggest no reason, and we know of none, that would permit them to introduce parol evidence to vary the note's terms. See Cowley Corp. v. Shreveport Packing Co., Inc., 440 So.2d 1345, 1351 (La.Ct.App.1983), writ denied, 444 So.2d 122 (La.1984); Jefferson Securities Co. v. Benoit, 92 So.2d 487, 488 (La.Ct.App.1957).

Second, appellants assert that they signed certain signature pages in blank and that these signatures were later appended to documents different from the ones the makers intended. Appellants are clearly precluded from asserting this defense against FSLIC under our decision in Federal Deposit Ins. Corp. v. McClanahan, 795 F.2d 512, 516 (5th Cir.1986). In McClanahan, we held that a maker who signed a blank promissory note and delivered it to a bank officer was estopped to assert failure of consideration or fraud in the inducement against FDIC after the bank officer filled in the note for $62,500 but never paid the proceeds to McClanahan. We stated that "... McClanahan, rather than the FDIC or the innocent depositors or creditors of the failed bank, must bear the consequences of his unfortunate involvement.... Even assuming McClanahan was not in complicity with [the swindler,] ... his conduct can only be characterized as reckless." Id. at 516.

The makers here acted just as recklessly by signing blank signature pages. And unlike the hapless Mr. McClanahan, these makers...