920 F.3d 552
8th Cir.2019Background
- Concannon, a physician, entrusted financial advisor José Lindner to manage business/tax matters and investments in a project called Providence Farms; Concannon signed documents and guaranties at Lindner’s direction and invested $600,000.
- Concannon signed a general guaranty on Jan. 24, 2008, guaranteeing all present and future debts of Providence; Providence defaulted and was a sham project; Lindner died in 2010.
- Premier Bank (the original lender) failed in 2010; the FDIC as receiver transferred Premier’s assets to CADC (a joint FDIC/private entity), which obtained a Missouri consent judgment against Providence and later assigned the judgment to Radiance.
- Radiance sued Concannon to enforce the guaranty and collect under the consent judgment; the district court found (after summary judgment and a bench trial) that Lindner had implied actual authority to deliver the guaranty, Concannon was not entitled to a fraud-in-factum defense, and Radiance had a valid chain of title.
- Concannon appealed, arguing (1) the FDIC exceeded statutory authority in creating/using CADC so the assignment was invalid, (2) Lindner lacked authority to deliver the guaranty, and (3) he was fraudulently induced (fraud in the factum).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of FDIC's transfer to CADC / chain of title | FDIC exceeded FIRREA authority by creating/co-owning CADC and using structured transactions, so transfer was void | FDIC had broad receiver powers under FIRREA, including incidental powers to transfer assets and use private entities | Held: Transfer valid; FDIC acted within FIRREA authority and Radiance can enforce the judgment |
| Agency / Authority to deliver guaranty | Lindner delivered guaranty without Concannon's authority; delivery was outside agency scope | Lindner had implied actual authority from Concannon to execute and deliver Providence-related documents | Held: Lindner acted with implied actual authority; district court’s finding not clearly erroneous |
| Bank's duty to inquire about agent's authority | Bank should have ensured Lindner had authority; failure absolves Concannon | Because Lindner had implied actual authority, any reasonable inquiry would have confirmed it; bank’s failure doesn’t negate liability | Held: Premier’s failure to inquire does not relieve Concannon; implied actual authority sufficed |
| Fraud in the factum (voiding guaranty) | Concannon claims he was deceived as to the nature/extent of the guaranty and thus signed in ignorance | Court found Concannon knew he was signing a guaranty (document labeled, he attended bank meetings, consulted re: related docs); any negligence by Concannon forecloses fraud-in-factum | Held: Fraud-in-factum defense fails; factual finding that Concannon understood the guaranty is supported by substantial evidence |
Key Cases Cited
- CACH, LLC v. Askew, 358 S.W.3d 58 (Mo. 2012) (plaintiff collecting a debt must prove validity of each assignment in the chain of title)
- Hanson v. FDIC, 113 F.3d 866 (8th Cir. 1997) (de novo review of FDIC asset-transfer determinations and recognition of FDIC’s broad powers as receiver)
- Saxton v. Fed. Hous. Fin. Agency, 901 F.3d 954 (8th Cir. 2018) (agency may only exercise powers granted by Congress; context on agency power limits)
- Sunshine Dev., Inc. v. FDIC, 33 F.3d 106 (1st Cir. 1994) (FIRREA grants the FDIC broad powers to function as receiver)
- ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371 (Mo. 1993) (unconditional delivery is an element of guaranty-enforcement)
- Bach v. Winfield-Foley Fire Prot. Dist., 257 S.W.3d 605 (Mo. 2008) (definition of agency and actual vs. implied authority)
- Rau v. Robertson, 260 S.W. 751 (Mo. 1924) (fraud-in-factum requires ignorance of the instrument’s true character and absence of plaintiff’s negligence)
- Wolf v. St. Louis Pub. Serv. Co., 357 S.W.2d 950 (Mo. Ct. App. 1962) (distinguishing fraud in the inducement from fraud in the factum)