Federal Deposit Ins. Corp. v. Kucera Builders, Civ. A. No. C79-1497A.

• Decision Date: 07 November 1980
• Docket Number: Civ. A. No. C79-1497A.
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, Liquidator of Hamilton National Bank of Chattanooga, Plaintiff, v. KUCERA BUILDERS, INC. et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

503 F. Supp. 967

FEDERAL DEPOSIT INSURANCE CORPORATION, Liquidator of Hamilton National Bank of Chattanooga, Plaintiff, v. KUCERA BUILDERS, INC. et al., Defendants.

Civ. A. No. C79-1497A.

United States District Court, N. D. Georgia, Atlanta Division.

November 7, 1980.

Hansell, Post, Brandon & Dorsey, Atlanta, Ga., for plaintiff.

Charles B. Withers Law Offices, Atlanta, Ga., for defendants.

ORDER

MOYE, Chief Judge.

This action was filed by the Federal Deposit Insurance Corporation (FDIC) in its corporate capacity as liquidator of the Hamilton National Bank of Chattanooga (Bank) seeking to recover on a note executed by defendant Kucera Builders, Inc., and guaranteed by defendant Gerald Kucera. Jurisdiction is invoked pursuant to section 9 of the Federal Deposit Insurance Act, 12 U.S.C. § 1819 and 28 U.S.C. § 1348. Presently pending before the Court is plaintiff's motion for summary judgment.

On March 8, 1974, defendant Kucera Builders executed and delivered a real estate note to the Hamilton Mortgage Corporation (HMC) in the principal amount of $133,500.00. It is undisputed that said note was guaranteed by Gerald Kucera, individually. Said note was secured by a particular piece of real estate located in Gwinnett County, Georgia. By its own terms the note matured on March 8, 1975. While the defendant denies the note went into default for nonpayment, defendants admit receipt of plaintiff's ten-day letter¹ and admit their failure to pay within the ten-day period.

On October 28, 1975, HMC conveyed an undivided 99 and 90/100 percent interest in the security deed and note to the Bank and on December 5, 1977, Kyle R. Weems, Trustee in Possession of HMC under Chapter XI of the Bankruptcy Act, conveyed the remaining interest in said note to the FDIC, which was acting as liquidator of the Bank and which had acquired the Bank's interest in said note due to the Bank's insolvency. Thus, the FDIC in its corporate capacity became the sole owner and holder of said note.

The power of sale in the security deed was exercised on the first Tuesday in July 1978, and the property securing the note was sold for $92,800.00. The foreclosure sale was reported to and confirmed by Judge William C. O'Kelley of this Court by order dated May 3, 1979.

Alleging that the defendants defaulted on the note, the plaintiff seeks recovery as follows:

                         Principal                         $69,342.62
                         Interest from July 5, 1978
                         at the rate of 15% per annum
                         pursuant to the terms of the
                         note, through July 9, 1979        $10,543.88
                         Accrued interest from July 10
                         1979, through April 1, 1980* $ 7,580.20
                         Attorneys fees as of April 1
                         1980**                       $27,040.00
                

In addition to denying any indebtedness on the note, the defendants asserted the following defenses: (1) plaintiff acquired the note described in the complaint subsequent to dishonor and with notice of default and not for new value; (2) plaintiff is estopped from asserting the claim against defendants; (3) plaintiff has waived any claims it may have against defendants; (4) the note was not enforceable against defendants at the time plaintiff obtained an interest therein, as plaintiff's assignor of said note was in breach of its obligations under the note, security deed, and commitments; (5) plaintiff is subject to the obligations and defenses defendants have against plaintiff's assignor; (6) the assignor's failure to tender consideration renders the note and security deed unenforceable against these defendants due to failure of consideration; (7) the actions of plaintiff's assignor materially increased the risk of defendant Kucera as guarantor, thereby discharging him as guarantor; (8) defendants executed the note, guaranty agreement, and security deed on the representation that HMC would provide defendants with construction loans; this misrepresentation was wilfully fraudulent, and due to defendants' reliance on it defendants were injured by it; and (9) plaintiff is subject to the obligations and defenses defendants have against HMC. Further, the defendants asserted a counterclaim based on the allegation of fraudulent misrepresentation.

The plaintiff first asserts that because the defendants have admitted executing the real estate note and the guaranty agreement sued on and failed to plead or establish an affirmative defense, the plaintiff has established a prima facie right to the judgment sought. The Court agrees that a prima facie case exists, but declines to find grounds for granting plaintiff's motion on this point alone. Ga.Code Ann. § 109A-3-307 provides in subsection (2) that "when signatures are admitted or established, production of the instrument entitles the holder to recover on it unless the defendant establishes a defense." In interpreting this statute, a portion of the Uniform Commercial Code (U.C.C.), the Georgia Court of Appeals in Freezamatic Corp. v. Brigadier Industries Corp., 125 Ga.App. 767, 189 S.E.2d 108 (1972), held that with the admission by the defendant of his execution of the note to the plaintiff, the plaintiff had a prima facie right to the judgment sought and the defendant then had the burden of establishing any claimed defense to the action. While the defendants herein have affirmatively pleaded estoppel, failure of consideration, fraud, and discharge, pursuant to Fed.R.Civ.P. 8(c), they did not affirmatively plead payment of the note. The plaintiff has established through the affidavit of Richard H. Gaskill, liquidator of the Bank, that the defendants are in default on the note. Gaskill Affidavit, ¶ 10. Even though this allegation is uncontroverted, the Court is unable to grant plaintiff's motion on this fact alone since defendants have raised the above defenses outside the personal knowledge of said affiant as affirmative defenses.

Despite the remaining defenses of the defendants, the plaintiff urges that it is insulated by 12 U.S.C. § 1823(e) from all defenses founded on actions of HMC as assignor of the note now held by the FDIC. That provision states, in part:

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.

Plaintiff points out that the defendants have directed their defense toward the HMC and not the FDIC in alleging failure of consideration, estoppel and discharge of guarantor, misrepresentation that construction loans would be provided, and wilful misrepresentation. Defendants assert that the FDIC is subject to the defenses defendants have against HMC. It is clear, however, that section 1823(e) immunizes the FDIC from such defenses to payment on a note as collateral agreements (1) to make future loans, FDIC v. Allen, CA No. C78-592A (N.D.Ga. June 21, 1979), FDIC v. Vogel, 437 F.Supp. 660 (E.D.Wis.1977); (2) to cancel a note if the purpose of the loan proves unobtainable, Dasco v. American City Bank & Trust Co., 429 F.Supp. 767 (D.Nev.1977); (3) to fund loans made to a guarantor's business, FDIC v. Smith, 466 F.Supp. 843 (N.D.Ga.1979); and (4) to treat overdrafts as a loan, West v. FDIC, 149 Ga.App. 342, 254 S.E.2d 392 (1979).

Defendants argue, however, that despite the shielding effect of section 1823(e) in the above cases the affidavit filed by Richard Gaskill on behalf of the plaintiffs is insufficient to insure that section 1823(e)'s protective cover for the FDIC as liquidator of a failed bank is applicable here. Defendants contend that the affidavit of the liquidator does not show the existence of certain receiverships, certain situations which will facilitate a merger or consolidation of an insured bank with another insured bank, or certain situations which will facilitate the sale of the assets of an open or closed insured bank to and assumption of its liabilities by another insured bank. Since these facts are absent, defendants argue, the shield of section 1823(e) cannot be used as the "no agreement which tends to diminish ..." language relied on by plaintiff is by its own terms only applicable to assets acquired by the FDIC under section 1823.

The Court points defendants to paragraph 6 and exhibit A-4 to Gaskill's affidavit. That paragraph and the documents to which it refers clearly show that this case is one where the receiver or liquidator of an insured bank, closed on account of inability to meet the demands of its depositors, is entitled to offer the assets of the bank for sale to the FDIC as allowed by section 1823(d), and that such a transaction has herein occurred. The Court therefore finds no merit to defendants' first contention that section 1823(e) is inapplicable.

The defendants argue further under the analysis of Riverside Park Realty Co. v. FDIC, 465 F.Supp. 305 (M.D.Tenn.1978), that the "agreement" referred to in section 1823(e) is unlike the one which the FDIC herein seeks to avoid. The agreement the defendant bases his defenses on is the one between Bo Means of HMC and the defendants in which Means allegedly promised future construction loans to defendants. That alleged agreement is not evidenced in the note sued upon and is therefore a separate collateral or secret agreement which would alter the terms of an asset acquired by the FDIC. Such a collateral oral agreement is the very type of agreement from which section 1823(e) shields the FDIC. FDIC v....