Federal Deposit Ins. Corp. v. Gardner

• Citation: 606 F. Supp. 1484
• Decision Date: 19 April 1985
• Docket Number: Civ. A. No. J82-0666(B).
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff, v. Jackie GARDNER and Gardner Land Company, Inc., Defendants, v. Lawrence E. STATON and Joe Siebenmorgen (Third Party Defendants).
• Court: U.S. District Court — Southern District of Mississippi

606 F. Supp. 1484

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff, v. Jackie GARDNER and Gardner Land Company, Inc., Defendants, v. Lawrence E. STATON and Joe Siebenmorgen (Third Party Defendants).

Civ. A. No. J82-0666(B).

United States District Court, S.D. Mississippi, Jackson Division.

April 19, 1985.

Paul J. Stephens, Jamie G. Houston, III, Watkins & Eager, Jackson, Miss., for plaintiff.

Roy D. Powell; Michael S. Allred, Edwin Y. Hannan, Thomas L. Kirkland, Jr., Satterfield & Allred, Jackson, Miss., for defendants.

Robert McHenry, Little Rock, Ark., for Joe Siebenmorgan.

MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter came before this Court on three Motions for Summary Judgment.¹ Federal Deposit Insurance Corporation ("FDIC") was substituted as party plaintiff in place of the Bank of Quitman, Quitman, Arkansas, an Arkansas State Bank ("Bank").² The Bank had originally filed a "Declaration" (hereinafter "Complaint") against two Mississippi Defendants, Jackie Gardner and Gardner Land Company, Inc. ("Defendants"), seeking recovery of $80,000 plus interest and other costs as provided in the certain promissory note executed by Defendants in favor of Bank.

The subject note is one of several documents evidencing a three-way lending transaction. Apparently Lawrence Staton (a non-pleading, third-party Defendant) was over the credit limit which Bank could properly maintain. In addressing this situation, the Bank agreed to and did loan to Defendants the sum of $80,000.00 on a secured basis. Defendants, in turn, accepted an unsecured note in the sum of $80,000.00 from Staton. Defendants also agreed to apply most of the proceeds received from Bank to the credit of Staton at the Bank. Joe Siebenmorgen (a third-party Defendant), then President and Chairman of the Board of Bank, apparently with full authority of Bank and on its behalf, executed a written agreement whereby Bank would release Defendants' pledged realty (Bank did, in fact, abide by the agreement to the extent that it released the pledged property) and would never seek collection of the subject promissory note from Defendants but would look solely to Staton for its repayment.

Defendants admit that the note exists and that they executed the note. Defendants fail to adequately deny the occurrence of all conditions precedent to the FDIC's recovery of the note.³ Defendants do, however, deny that the note is due and payable and further deny that they are liable for the amounts evidenced by the note on the basis of Defendants' affirmative allegation that the Bank had agreed in writing to look solely to Staton and never to Defendants for repayment of such note. Defendants attach to their answer a document which purports to be a copy of this alleged side agreement.

The FDIC seeks summary judgment against Defendants on the promissory note. Defendants seek summary judgment against the FDIC based on the affirmatively alleged side agreement.

Defendants filed a third-party complaint for fraud or fraudulent inducement against Joe Siebenmorgen, the President and Chairman of the Board of Directors of Bank at the time the referenced transactions took place. Siebenmorgen, evidently in his capacity as an officer of and with the authority of Bank, signed the side agreement which allegedly negates Defendants' obligations to Bank under the subject note. Defendants also claim that they are entitled to indemnification for any such judgment from Staton, and that they are entitled to recover on the promissory note executed by Staton to Defendants which contains terms identical to the terms of the note Defendants executed to Bank (except that Staton's note to Defendants is unsecured). Defendants attach a copy of this identical note to their Third-Party Complaint. Staton has failed to answer or otherwise defend the Third-Party Complaint exhibited against him.

Defendants only seek summary judgment against Siebenmorgen for fraud and seek damages therefor in the amount of any judgment which this Court may enter against Defendants in favor of the FDIC on the subject note. Defendants also seek leave to amend their answer to the Complaint to assert the defenses of lack or failure of consideration.

I. MOTION FOR SUMMARY JUDGMENT BETWEEN FDIC AND DEFENDANTS

The pleadings, depositions, answers to interrogatories and admissions on file, and stipulations of record together with the affidavits and other materials outside the pleadings submitted to this Court in support of, and in opposition to, the various Rule 56 Motions establish that the FDIC did acquire the subject note under 12 U.S.C. § 1823.⁴ The FDIC is not pursuing this action in its capacity as receiver of Bank, rather, it is pursuing this action as the owner of an asset of a failed bank acquired by it under 12 U.S.C. § 1823.

(a) SECTION 1823(e)

The FDIC counters the Defendants' affirmatively asserted "side agreement" by citation to 12 U.S.C. § 1823(e) which provides as follows:

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 by 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.

Requirements numbered 1 and 2, for purposes of this Rule 56 determination, appear to be established or, at least, their establishment is not disputed. With regard to requirement numbered 4 there appears to be an arguable dispute as to whether the side agreement was "an official record of the bank." On one hand, the FDIC has presented evidence which supports the fact that the agreement between Defendants and Siebenmorgen was not an official record of the Bank: A federal bank examiner who reviewed the official records of the bank, Robert C. Barber, testified that he had never seen the agreement between Defendants and Siebenmorgen during his examinations of the records of the Bank. Deposition of Robert C. Barber, p. 117. The argument of Defendants that there were bank examiners other than Robert C. Barber does not controvert Barber's testimony that the agreement was not presented for his examination of the official records of the Bank and, more importantly does not establish that the agreement was an official record of the Bank. However, Defendants do argue that the side agreement was produced by the FDIC to Defendants during discovery. This argument, if not otherwise explicable, casts a certain doubt as to whether the agreement was "an official record of the Bank." Further inquiry into this question is unnecessary because of the following deficiency.

With regard to requirement numbered 3, it is undisputed that the minutes of the Board of Directors of the Bank dated February 15, 1978, are the applicable minutes with regard to the subject note, and that such minutes reveal only the following:

Board reviewed the Commercial and Installment Loans made by the Officers for the months of December and January.

A motion was made by J.A. Bailey and seconded by Ben F. Clark to approve the loans as presented. Motion carried.

Defendants' Exhibit "F" to their Motion for Summary Judgment against FDIC. This entry on the minutes of the meeting of the Board of Directors of the Bank establishes that the affirmatively asserted side agreement was not specifically "approved by the Board of Directors of the Bank or its loan committee." The entry manifests that specific approval of the subject side agreement is not "reflected in the minutes of said board or committee." The side agreement itself must be referenced or its existence must be affirmatively and directly acknowledged by the Bank's board of directors or loan committee, and such reference to, or acknowledgment of the side agreement must be specifically reflected in the minutes of the board or committee. 12 U.S.C. § 1823(e). Since the written agreement between Siebenmorgen (presumably for the Bank) and the Defendants is not evidenced in the subject promissory note, § 1823(e) is applicable. Federal Deposit Insurance Corporation v. Kucera Builders, Inc., 503 F.Supp. 967, 971 (N.D.Ga. 1980).

Because at least one of the four requirements of § 1823(e) is shown to be unsatisfied, and since Defendants have failed to present any contrary evidence, the agreement between Seibenmorgan (for the Bank) and Defendants is not enforceable against the FDIC in this case. See Federal Deposit Insurance Corporation v. de Jesus Velez, 678 F.2d 371, 375 (1st Cir.1982); Federal Deposit Insurance Corporation v. Hoover-Morris Enterprises, 642 F.2d 785, 787-88 (5th Cir.1981). See also D'Oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed.2d 956 (1942) (an agreement which is designed to or does mislead the FDIC and other creditors is not enforceable against the FDIC even if that agreement is innocently entered into by the maker of the otherwise enforceable note); Chatham Ventures, Inc. v. Federal Deposit Insurance Corporation, 651 F.2d 355, 360-61 (5th Cir.1981).

If Section 1823(e) is applicable to an agreement, it is applied regardless of any knowledge, actual or imputed, which the FDIC may have had regarding the terms of the side agreement. See Federal Deposit Insurance Corporation v. Merchants National Bank of Mobile, 725 F.2d 634, 640 (11th Cir.1984); Federal Deposit Insurance Corporation v. de Jesus Velez, 678 F.2d at 375 (holder in due course provisions of Uniform Commercial Code do not override provisions of § 1823...