Resolution Trust Corp. v. Thompson

• Decision Date: 31 March 1993
• Docket Number: No. 92-2252,92-2252
• Parties: RESOLUTION TRUST CORPORATION, Plaintiff-Appellee, v. Douglas B. THOMPSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 942

989 F.2d 942

RESOLUTION TRUST CORPORATION, Plaintiff-Appellee, v. Douglas B. THOMPSON, Defendant-Appellant.

No. 92-2252.

United States Court of Appeals Seventh Circuit.

Argued Jan. 22, 1993.

Decided March 31, 1993.

Mitchell L. Marinello, Timothy J. Miller (argued), Novack & Macey, Chicago, IL, for plaintiff-appellee.

Cristofer E. Lord (argued), John L. Huff, Huff & Gaines, Chicago, IL, for defendant-appellant.

Before CUDAHY, POSNER, and RIPPLE, Circuit Judges.

POSNER, Circuit Judge.

Peoples Bank for Savings brought this diversity suit against Douglas Thompson to recover the unpaid balance of a business loan that it had made to Thompson. After the bank became insolvent, the Resolution Trust Corporation was appointed receiver and substituted as the plaintiff. In response to the RTC's motion for summary judgment, Thompson alleged that the RTC had orally agreed to forgive the unpaid balance of the loan in exchange for his contributing his time and money to a real estate project with which the bank had been involved, and that he had done so. The RTC replied that the agreement, not being in writing, was unenforceable. The district judge agreed, granted summary judgment for the RTC, and later entered a final judgment in its favor from which Thompson appeals.

The judge based his decision on 12 U.S.C. § 1823(e), which provides, so far as pertinent here, that "no agreement which tends to diminish or defeat the interest of the Corporation in any asset acquired by it ... as receiver of any insured depository institution, shall be valid against the Corporation unless such agreement--(1) is in writing, [and] (2) was executed by the depository institution." (The "Corporation" referred to is the Federal Deposit Insurance Corporation, but the provision is made applicable to the Resolution Trust Corporation as well by 12 U.S.C. § 1441a(b)(4)(A).) The RTC has declined to defend the decision on the district judge's ground, apparently persuaded by Thompson's argument that the statute is inapplicable to an oral agreement with the RTC itself, as distinct from an oral agreement with the financial institution that the RTC has taken over. Thompson's argument is supported not only by the statute's language--the RTC is not an "insured depository institution"--but by its purposes, which are to "prevent fraudulent insertion of new terms [in loan agreements], with the collusion of bank employees, when a bank appears headed for failure," Langley v. FDIC, 484 U.S. 86, 92, 108 S.Ct. 396, 401, 98 L.Ed.2d 340 (1987), and to enable the governmental authority, the FDIC or the RTC, to determine the value of the assets of a troubled financial institution from the institution's books, without the uncertainty that would be injected if the value were cut down by oral agreements. FDIC v. O'Neil, 809 F.2d 350, 353 (7th Cir.1987). Neither purpose is engaged when the oral agreement is made by the authority itself, rather than the bank, with the borrower.

Instead the RTC defends the decision on the basis of the Illinois Credit Agreement Act, Ill.Rev.Stat. ch. 17, pp 7100-7103. It is entitled to defend on this ground, though not addressed by the district judge, because the ground was asserted in the district court and never waived. United States v. Rockford Memorial Corp., 898 F.2d 1278, 1281 (7th Cir.1990). Thompson had a full opportunity, which he took, to contest the ground in his reply brief.

The Act requires a "credit agreement," defined as "an agreement or commitment by a creditor to lend money or extend credit or delay or forbear repayment of money not primarily for personal, family or household...