Rigby Corp. v. Boatmen's Bank and Trust Co.

Citation713 S.W.2d 517
Decision Date24 June 1986
Docket NumberNo. WD,WD
Parties4 UCC Rep.Serv.2d 19 RIGBY CORPORATION and Ingram Enterprises, Inc., Appellants, v. BOATMEN'S BANK AND TRUST CO. and Boatmen's Bancshares, Inc., Respondents. 36048.
CourtCourt of Appeal of Missouri (US)

Thomas J. Conway, Popham, Conway, Sweeney, Fremont & Bundschu, Kansas City, for appellants.

Allan L. Bioff, Paul R. Lamoree, Watson, Ess, Marshall & Enggas, Kansas City, for respondents.



This suit arose out of a commercial loan transaction between Rigby Corporation and Boatmen's Bank and Trust Company of Kansas City and, incidentally, Boatmen's Bancshares, Inc. Rigby brought a petition in eight counts which asserted tort claims against Bank and Bancshares for nonextension of the Rigby promissory note and for the exercise of collection remedies. Bank and Bancshares counterclaimed that the loan was fraudulently and otherwise unlawfully induced, and sought damages and equitable relief. The trial court thereafter, on the basis of voluminous deposition testimony, affidavits and formal exhibits, determined that there was no genuine issue of any material fact and granted summary judgment under Rule 74.04 on the motion of the defendants. The judgment was designated an appealable order. The counterclaims as well as a crossclaim remain unadjudicated. 1 On review of a summary judgment, the party against whom the order was entered is accorded every favorable intendment of the record. Thompson v. Parker, 608 S.W.2d 415, 416 (Mo. banc 1980). We recite the evidence relevant to opinion conformably to that rule of review.

Rigby was a printer and lithographer of quality with a national market. It was wholly owned by Ingram Enterprises, Inc. which, in turn, was wholly owned by Robert P. Ingram. Ingram, the person, was the president and active manager of Rigby. The company had banked with the First National Bank of St. Louis, but in late 1975 Ingram became dissatisfied with those services and transferred the Rigby business to the [then] Baltimore Bank & Trust Company of Kansas City, now Boatmen's Bank of Kansas City. Ingram became a member of the board of directors of the Boatmen's Bank and served on the discount committee of the Bank. In February of 1976, Ingram sought a $1,500,000 line of credit for Rigby. The loan was confirmed by letter from Regnier, vice-president of Boatmen's Bank on condition of the personal guaranty of Robert P. Ingram. 2 Another condition of the credit line, moreover, was the Rigby agreement that all receivables [pledged to secure the loan] be deposited in a lock box for collection by Boatmen's Bank and then for ascription that same day to the Rigby account. The loan was pledged by successive 30-day promissory notes and a security agreement which assigned the Rigby inventory and accounts receivable. 3 The security agreement was executed on February 23, 1976 by Regnier for the Bank and by Ingram for Rigby, and was additionally assured by the guaranty of the person Ingram. Rigby then executed a 30-day promissory note for $500,000 on February 27, 1976.

In accordance with the conditions of the line of credit, Rigby furnished financial reports. They showed minor losses during the first four months of 1976. The labor agreement between Rigby and the Graphic Arts International Union expired at the end of April, 1976, negotiations for a new agreement failed, and the union employees went on strike. Rigby hired replacement personnel, but they lacked skill so that the work as well as the quality suffered. Customers complained, accounts were cancelled The unabated labor strife and the continued loss of earnings became a matter of concern at Boatmen's. 5 On September 8, 1976, Regnier, bank vice-president, talked with Menze, Rigby vice president-finance, who informed him that August would show a substantial loss. At that time the margin between the loan and the value of the collateral [computed on the value of 85% eligible receivables and 75% of the factory inventory formula] was down to $242,000. Later that month, Regnier requested Ingram to pledge an additional $200,000 in securities as collateral for the loan. Ingram did not respond. McCarter, Boatmen's president, made a like request--specifically that Ingram pledge Rubbermaid stock in that value. [The Ingram financial statement on file with the Bank represented he owned Rubbermaid shares with a market value in excess of $5,000,000.] Ingram did not comply. Ingram instead, as suggested by McCarter, met with Brennan, senior vice president of Bancshares and chairman of the executive committee of Boatmen's [St. Louis].

and the losses mounted. The strike continued so that the operating losses by the end of September, 1976 accumulated to $1,132,859. Thus, instead of the $550,000 Rigby profit projected for 1976 by President Ingram and Vice President-Finance Menze to Regnier and Brennan of the two Boatmen's Banks, by the end of September the losses already exceeded $1,000,000. The successive 30-day notes continued the debt over from the previous month, as well as any accrual. The 30-day note executed by Rigby in September of 1976 continued over an accrued debt of $1,450,000 and was due on October 25, 1976. The terms of the note empowered Boatmen's certain rights against the collateral, granted the lender Bank the right of offset against the matured debt of all funds held by the Bank--without notice. 4

On October 12, 1976, Ingram met with Brennan in St. Louis. They discussed the Rigby state of affairs and the bank request for more collateral. Ingram expressed optimism about Rigby because a new president, Parker, had recently assumed management. Ingram made known to Brennan that Rigby needed an immediate infusion of $500,000 for that October. Brennan, instead, requested that Ingram provide full collateral for the promissory note debt of $1,450,000 then outstanding. Ingram tendered some Rigby acreage at the plant site, some coin lockers and two radio stations. Brennan considered the radio stations to lack liquidity as security because of the Federal Communications Commission license requirements; the coin locker service also lacked liquidity, and the mortgage on the Rigby acreage would be subject to avoidance as a preference in case of bankruptcy. Brennan expressed interest only in marketable securities as additional collateral--preferably securities traded on the New York Stock Exchange. In the course of conversation, the sale of Rigby was mentioned, and the meeting ended with the expression by Ingram that he would explore that possibility. Ingram commented, however, that thirty or sixty days would be required to find a purchaser at an acceptable sales price. At the time of that meeting with Brennan--on October 12, 1976--Ingram already knew [through Rigby On October 14, 1976, upon return to Kansas City, Ingram delivered to McCarter, president of Boatmen's [Kansas City] a $500,000 mortgage executed by Rigby in favor of the Bank on the owned acreage. Ingram then told McCarter that the mortgage was additional collateral for the outstanding indebtedness along with stocks he intended to obtain and deliver. McCarter told Ingram--if not on that precise occasion, then a few days later--that the mortgage was not satisfactory as collateral for two reasons: Boatmen's did not know the actual value of the land and the mortgage would constitute a preference in the event of the Rigby bankruptcy.

financial officer Menze] that the company projected losses for October, for November, and for December, so that $500,000 was needed immediately in order to continue operations, but Ingram did not disclose that information to Brennan.

On October 17, 1976, at the request of Ingram, a group of interested bankers attended at his home: Ilus W. Davis, chairman of the board of Boatmen's [Kansas City], McCarter, president of Boatmen's [Kansas City] and Maurice D.S. Johnson, president of the Citizen's Fidelity Bank & Trust Co. of Louisville, Kentucky--the latter a quondam member of the Rigby and of the Ingram Enterprises boards of directors, business associate and confidant of Ingram. Ingram knew at outset that in view of the continued financial Rigby losses, there was serious doubt Boatmen's would renew the note due on October 25, 1976. They spoke of the Rigby financial straits. Ingram and Johnson described it in terms of "a serious situation." Ingram advised them that Rigby was in arrears to its suppliers and needed, immediately, $500,000 in new money and an additional $400,000 to $500,000 next month--in November, otherwise there was possibility the suppliers would force Rigby into bankruptcy. [That was one of the very reasons Ingram convened the bankers at his home]. There was no response to the overture for new money, and nothing Davis or McCarter said induced Ingram to such a belief. Davis and McCarter, rather, requested additional collateral for the $1,450,000 indebtedness already outstanding. Ingram once again tendered the radio stations, coin lockers, and mortgage on the eleven Rigby acres to satisfy that demand for additional collateral. McCarter informed Ingram--as had Brennan earlier--that the license requirements rendered the radio stations undesirable as collateral and that the coin lockers were no more liquid. McCarter reiterated to Ingram that any mortgage on Rigby property would be considered a preference in the event of bankruptcy, and, in any event, the Bank simply did not know how to value the property. Ingram understood that the assets acceptable to Boatmen's as the additional collateral on his personal guaranty of the Rigby loan were marketable securities--stocks and bonds listed on the New York Stock Exchange--and particularly the owned Rubbermaid shares. Ingram agreed to "bring in all available stock," and three days later on October 20, 1976, he delivered owned shares of Rubbermaid and Bancshares, Inc. with a market value of $140,000.


To continue reading

Request your trial
41 cases
  • Government Street Lumber Co., Inc. v. AmSouth Bank, N.A.
    • United States
    • Supreme Court of Alabama
    • September 8, 1989
    ...of good faith, a party cannot be required to forego or surrender a right that he otherwise possesses." Rigby Corp. v. Boatmen's Bank & Trust Co., 713 S.W.2d 517, 535 (Mo.App.1986). There is not a scintilla of evidence (this action was filed prior to June 11, 1987; see Code 1975, § 12-21-12)......
  • Union State Bank v. Woell, 880096
    • United States
    • United States State Supreme Court of North Dakota
    • January 9, 1989
    ...of good faith imposed by § 1-203 of the Uniform Commercial Code applies to each party to the contract. Rigby Corp. v. Boatmen's Bank and Trust Co., 713 S.W.2d 517, 528 (Mo.Ct.App.1986). Under these circumstances, if an obligation imposed by the good faith requirements of the Code is to be i......
  • U.S. Nat. Bank of Oregon v. Boge
    • United States
    • Supreme Court of Oregon
    • July 25, 1991
    ...... Maine Bonding v. Centennial Ins. Co., 298 Or. 514, 523, 693 P.2d 1296 (1985). Boge is a dairy ...142, 434 N.E.2d 295, 297 (1982); Rigby Corp. v. Boatmen's Bank and Trust Co., 713 S.W.2d 517, 527 ......
  • Lawrence v. Farm Credit System Capital Corp., s. 87-167
    • United States
    • United States State Supreme Court of Wyoming
    • August 24, 1988
    ...leave the factual determinations of the nature of the agreement to the jury). Also to be compared is Rigby Corp. v. Boatmen's Bank and Trust Co., Mo.App., 713 S.W.2d 517, 527 (1986) (in discussion of good faith from reasonable commercial standards of the trade involved to characterization a......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT