Federal Deposit Insurance Corporation v. Vineyard, CA-5-912.

• Decision Date: 02 June 1972
• Docket Number: No. CA-5-912.,CA-5-912.
• Citation: 346 F. Supp. 489
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, v. Johnny VINEYARD, Defendant.
• Court: U.S. District Court — Northern District of Texas

346 F. Supp. 489

FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, v. Johnny VINEYARD, Defendant.

No. CA-5-912.

United States District Court, N. D. Texas, Lubbock Division.

June 2, 1972.

Warlick Carr, Key, Carr, Evans & Fouts, Lubbock, Tex., C. Edward Fowler, Jr., Bailey, Williams, Westfall & Henderson, Dallas, Tex., for plaintiff.

Madison Sowder, Thomas J. Griffith, Griffith, Brister & Benson, Lubbock, Tex., for defendant.

MEMORANDUM OPINION

WOODWARD, District Judge.

The above entitled and numbered cause was called for trial on the 18th day of May, 1972, with plaintiff's representative and defendant both present and represented by counsel. The parties announced ready for trial, and the issues of fact and law were presented to the Court without a jury.

Upon conclusion of the testimony and the arguments of counsel, the Court directed that counsel file additional statements and briefs. After considering the entire record in this case, the Court is of the opinion, as hereinafter stated, that plaintiff should recover of and from defendant, and files this memorandum opinion as its findings of fact and conclusions of law in connection therewith. The stipulations of the parties as shown in the pre-trial order are incorporated by reference as additional findings of fact in this case.

This is a suit by the Federal Deposit Insurance Corporation (FDIC) seeking judgment against Johnny Vineyard on a note given by Vineyard to the Lorenzo State Bank of Lorenzo, Texas, and later acquired by FDIC as part of the transactions surrounding the closing of that bank.

From the testimony and evidence presented at the hearing of this case, it appears to the Court that the following are the facts that surround the transaction in question:

In the first part of 1967, one Jimmy Joiner, a customer of the Lorenzo State Bank, asked its president, Mr. A. W. Lott, for a loan of $80,000.00 which was in excess of the legal loan limit of the bank. As the bank was unable to make the loan, Lott executed a personal note payable to the Citizens National Bank at Lubbock, Texas for $80,000.00 and in turn loaned this money to Joiner.

Later in that year, on or about November 1, 1967, the note to the Citizens National Bank became due and Lott authorized the Citizens National Bank to charge the correspondent account with the Lorenzo bank for $82,676.67, which was the principal amount of the note plus interest. In effect the bank at Lorenzo paid Lott's personal indebtedness by this transaction. Joiner gave a check to cover the advancement, but did not have sufficient funds to cover the check, and the bank carried it illegally as a cash item.

Lott demanded that Joiner pay the note, but he was unable to do so. About thirty to forty-five days later, in the middle of December 1967, Joiner and the defendant in this case, Johnny Vineyard, came together to the Lorenzo State Bank. There, according to Lott's testimony, Vineyard stated that he would loan the necessary money to Joiner to pay off the $82,676.67 indebtedness. Vineyard denies any such conversation. About two days later, Vineyard gave his check on the American State Bank at Lubbock for $51,436.67, and further gave to the Lorenzo State Bank his note dated December 14, 1967 in the amount of $31,240.00. The total of the check and note was then applied to the payment of Joiner's indebtedness to A. W. Lott and to remove the Joiner check from the bank's cash items.

The note was secured by an assignment from Vineyard to the bank of certain hail crop insurance notes that he held from his customers.

On the same date, December 14, 1967, Vineyard wrote a check to the Insurance Company of North America (INA) in the amount of $85,176.67. This was exactly $2,500.00 more than the sum represented by his check and note to the bank, and the evidence shows that Joiner owed this $2,500,000 to Vineyard.

Vineyard then sent his check to INA together with another check for $23,105.15 on a Lubbock bank to clear the amount of money he owed INA for the premiums on policies sold by him.

The $85,176.67 check was presented to the Lorenzo State Bank for payment through the Federal Reserve Bank in early January 1968, but the check was not paid as Vineyard had no funds on deposit to cover it. The check was again submitted through the Federal Reserve Bank for payment on or about January 26, 1968, which was a Friday, and on Monday of that month, January 29, 1968, Vineyard went to the Lorenzo State Bank and at that time gave his note for $85,176.67. This is the note sued upon in this action. When this note was received by the bank, the check to INA from Vineyard was honored.

Even if the Court were to accept Vineyard's explanation of the transactions of mid-December, 1967, to the effect that he knew nothing of the use of his note and check to cover Joiner's indebtedness, there is only one plausible explanation of the transaction on January 29, 1968: that Vineyard gave the note sued upon in order to insure the payment of his check in the same amount to INA. Even if he did not know of it before, he surely must have been aware on January 29, 1968, that his previous note and check had been applied to Joiner's indebtedness. Also, the preponderance of the reasonable evidence in this case leads to the finding that on December 14, 1967, Vineyard knew of Joiner's difficulties with the Lorenzo bank and consented to the transaction above outlined, with the expectation on his part that Joiner would in the meantime liquidate some assets and thereby be in a position to cover Vineyard's check to INA.

This conclusion is further buttressed by the fact that Joiner and Vineyard had had business dealings in the past. Specifically, at one time Joiner and a relative executed two $35,000.00 notes payable to the Wolfforth State Bank, Wolfforth, Texas, for the purpose of relieving certain indebtednesses of Vineyard. The consideration for these notes was supposedly a two-thirds interest in Vineyard's insurance agency, which interest was never transferred. It can reasonably be presumed that Vineyard was repaying this favor to Joiner; in fact, Vineyard had on previous occasions lent money to Joiner without any evidence of the loan's being received except for a cancelled check.

To summarize these transactions it is apparent that the defendant, Johnny Vineyard, gave his check and his note to the Lorenzo State Bank to cover the $82,676.67 indebtedness which Jimmy Joiner owed A. W. Lott and which was paid by the Lorenzo State Bank through the Citizens National Bank on the note above described. Vineyard's check to the Insurance Company of North America was for $85,176.67 (which equals the $82,676.67 he advanced for Joiner on December 14th plus $2,500.00 he had previously lent Joiner). Later, Vineyard gave a note for $85,176.67 which was used to pay his own check to INA.

It is Vineyard's position that the check to INA should have been paid out of the proceeds of the note and check on the American State Bank which he gave on December 14, 1967, being Defendant's Exhibits Nos. 5 and 6. It is the position of the plaintiff that these two items...