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United States District Court, Northern District of Illinois, E.D

December 23, 1983


The opinion of the court was delivered by: Shadur, District Judge.


On May 27, 1983 Judge Joel Flaum issued a memorandum opinion that entitled Federal Deposit Insurance Corporation ("FDIC") to entry of a (1) Decree of Foreclosure and Sale on Count I of its Complaint and (2) a Judgment Order on Complaint Count III. On September 9, 1983 this Court (to whom this action had been assigned on Judge Flaum's appointment to our Court of Appeals):

    1. dismissed Complaint Count II without prejudice
  pursuant to the parties' stipulation;

    2. signed the Decree and Judgment Order in favor of
  FDIC; and

    3. expressly directed judgment to be entered on
  Counts I and III under Fed.R.Civ.P. ("Rule") 54(b),
  finding those counts severable from the counterclaim
  filed by George C. Meyer ("Meyer") against FDIC.*fn1

FDIC now moves to dismiss Meyer's counterclaim under Fed.R.Civ.P. ("Rule") 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons stated in this memorandum opinion and order, FDIC's motion is denied.


In 1973 and 1974 Meyer advanced sums and performed services at the request of several representatives of Drovers in connection with Chicago real estate known as the Arthington Warehouse. Those representatives "assured" Meyer he would be compensated for his services and reimbursed for the sums advanced by him. Though Meyer demanded payment from Drovers and its representative Ken Olson, he has not yet been paid.

In 1978 the Comptroller of the Currency determined Drovers was insolvent, ordered it closed and appointed FDIC as receiver. FDIC in its corporate capacity then purchased certain assets of Drovers and assumed Drovers' obligation to Meyer. FDIC brought the Complaint in its corporate capacity to enforce the ownership interest in Drovers' assets.

FDIC's Theory

FDIC seeks a legal haven in the dual capacity in which it acts. It says it cannot be liable for Drovers' obligations when wearing its corporate hat.

When a bank is closed due to insolvency, the closing authority can ask that FDIC act as the bank's receiver (Section 1821(e)).*fn3 Despite such appointment, FDIC in its corporate capacity can also buy the bank's assets to fulfill its function as an insurer of depositors' funds. When FDIC acts both as receiver and as insurer, its purchase of bank assets must be court-approved (Section 1823(d)).

FDIC correctly contends courts have upheld the distinction between actions of FDIC as receiver and actions in its corporate capacity as insurer. FDIC v. Citizens Bank & Trust Co. of Park Ridge, Illinois, 592 F.2d 364, 367 (7th Cir. 1979). Because FDIC sued Meyer solely in its corporate capacity, Meyer's counterclaim can run against FDIC only in that same capacity, not as receiver.

Congress enacted Section 1823(e) to protect depositors' funds, shielding FDIC against enforcement of "secret" agreements that would defeat FDIC's interest in the purchased assets. Howell v. Continental Credit Corp., 655 F.2d 743, 747 (7th Cir. 1981). Section 1823(e) reads:

  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.

That provision clearly allows for FDIC liability if the requisite four conditions are met. Because the pleading posture of this case does not allow the presence or absence of those conditions to be resolved as a matter of fact,*fn4 FDIC's argument against liability as a matter of law is premature.

Cases cited by FDIC in support of its motion are inapposite at this stage of the proceedings. Those cases involve:

    1. summary judgment motions where the established
  facts did not support an assumption of contract
  liability by FDIC: Citizens Bank & Trust, 592 F.2d at
  368; FDIC v. Smith, 466 F. Supp. 843 (N.D. Ga. 1979);
  FDIC v. Vogel, 437 F. Supp. 660, 663 (E.D.Wis. 1977);
  cf. Dasco, Inc. v. American City Bank & Trust Co.,
  429 F. Supp. 767 (D.Nev. 1977) (preliminary injunction
  denied when facts established oral agreement, negating
  substantial likelihood plaintiff would prevail on the

    2. motions to dismiss actions sounding in tort, not
  contract, as to which courts have held Congress did
  not waive sovereign immunity to such claims: FDIC v.
  Rockelman, 460 F. Supp. 999 (E.D.Wis. 1978); FDIC v.
  James T. Barry Co., 453 F. Supp. 81 (E.D.Wis. 1978);*fn5

    3. cases that did not reach the issue here: EDIC v.
  Ashley, 585 F.2d 157 (6th Cir. 1978); FDIC v.
  Godshall, 558 F.2d 220 (4th Cir. 1977); FDIC v.
  Glickman, 450 F.2d 416 (9th Cir. 1971); Freeling v.
  Sebring, 296 F.2d 244 (10th Cir. 1961); FDIC v. Design
  & Development, Inc., 73 F.R.D. 442 (E.D.Wis. 1977).


FDIC cannot show on its present Rule 12(b)(6) motion*fn6 that Meyer could not prevail under Section 1823(e) as a matter of law. FDIC's motion is denied.

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