Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-02167/USCOURTS-ca10-88-02167-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, 

Plaintiff-Appellee, 

CONTINENTAL ILLINOIS NATIONAL 

BANK & TRUST CO~PANY OF 

CHICAGO, 

Plaintiff, 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, as Receiver of 

First National Bank and Trust 

Company of Oklahoma City, 

Oklahoma, 

Plaintiff-Counterclaim 

Defendant, 

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FIL ED 

Urnrcd .St,iC<?s Court of Ap~ab 

Tem!-: c;-:-·~::: 

DEC J. j 19d9 

KOHERT L i-lOECKER 

Clerk 

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No. 88-2167 

V • 

RAY BELL; ATEX OIL COMPANY; ) 

ATEX OIL COMPANY OF TEXAS; ) 

ATEX STATIONS, INC.; ATEX ) 

REFINING COMPANY; ANDERSON- ) 

PRICHARD PIPE LINE CORPORATION; ) 

ATEX OIL COMPANY OF OKLAHOMA ) 

INC.; ANSON PIPELINE CO.; ANSON) 

REFINING CO.; ATEX PIPELINE CO.;) 

and OKLAHOMA PIPELINE CO., ) 

Defendants-Appellants, 

) 

) 

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Appellate Case: 88-2167 Document: 010110280397 Date Filed: 12/15/1989 Page: 1
OKLAHOMA PIPELINE CO.; ATEX ) 

PIPELINE CO.; and ATEX OIL ) 

.COMPANY OF OKLAHOMA INC., ) 

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Defendants-Third-Party ) 

Plaintiffs-Appellants, ) 

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and ) 

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MERIDITH R. SHEETS, INC., ) 

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Defendant, ) 

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V • ) 

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TRUDY PERRY, ) 

) 

Third-Party Plaintiff. ) 

Appeal from the United States District Court 

Fo~ the Western District of Oklahoma 

D.C. No. CIV-84-2386-P 

Oliver S. Howard (Theodore.Q. Eliot and Pamela S. Anderson with 

him on the brief) of Gable & Gotwals, Tulsa, Oklahoma, for 

Appellee. 

Paul Tobin (Murray Cohen with him on the brief) of Cohen, Pluess & 

Tobin, P.C., Oklahoma City, Oklahoma, for Appellants. 

Before MOORE, BRORBY, and EBEL, Circuit Judges. 

MOORE, Circuit Judge. 

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Appellate Case: 88-2167 Document: 010110280397 Date Filed: 12/15/1989 Page: 2
The question presented by this appeal is whether the rule of 

Langley v. Federal Deposit Ins. Corp., 484 U.S. 86, 108 S. Ct. 396 

(1987), applies to an alleged failure to disclose a material fact. 

We hold that it does, and therefore the Federal Deposit Insurance 

Corporation is entitled to the shield provided by 12 u.s.c. 

§ 1823(e). 

Oklahoma Refining Company (ORC), an Oklahoma general 

partnership, owned and operated two oil refineries and a pipeline 

system. The partners of ORC were An-Son Transportation Company, 

which held a 66% share, and Atex Refining Company, which owned the 

balance. Loans from Continental Illinois National Bank (CINB) and 

First National Bank of Oklahoma City (FNB) fund'ed ORC's operations 

and acquisitions. 

In 1983,· after CINB and FNB loaned An-Son an iggregite of $30 

million, certain officials. within CINB r·ecommended An-Son dispose 

of its interest in ORC because of ORC's questionable financial 

status. 1 Included in CINB's int~rnal documents was a report 

prepared by one of its staff valuing ORC's properties at $22.3 

million. This report substantially belied previous 

representations made to the president. of Atex, defendant, Ray 

Bell, _whom CINB had approached, suggesting the purchase of Anson's interest in ORC. 

In 1983, Mr. Bell made that purchase, and at the same time 

assumed a 100% guaranty of ORC's obligations to Continental 

Illinois National Bank and First National Bank of Oklahoma City. 

1cINB and An-Son had maintained a lending relationship for over 20 

years, and ORC's status was aeen to imperil An-Son's ability to 

repay its existing debt to CINB. 

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Appellate Case: 88-2167 Document: 010110280397 Date Filed: 12/15/1989 Page: 3
ORC continued operations until September 1984, when it filed a 

.petition for bankruptcy relief after it was unable to obtain 

further bank credit. 

Both CINB and FNB filed an action against Mr. Bell to recover 

on the guaranties. Mr. Bell counterclaimed for securities and 

common law fraud, claiming he had been fraudulently induced to buy 

out An-Son's interest by CINB's misrepresentation of the value of 

ORC. Acting in its corporate capacity, the Federal Deposit 

Insurance Corporation subsequently succeeded to the interests of 

both CINB and FNB in the prosecution of the suit and the defense 

of Mr. Bell's counterclaims. 

Relying on Langley, the FDIC moved for summary judgment on 

t~e counterclaims under 12 u~s.c. § 1823(e), which provides: 

No agreement which tends to diminish or defeat the 

right, title or interest of the Corporation [FDIC] 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 commi~tee, 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. · 

FDIC took the position that even though Mr. Bell claimed CINB's 

fraud consisted of failure to make complete disclosure of its 

internal evaluation of ORC's properties rather than overt false. 

representations, Langley provided FDIC with a complete defense to 

the counterclaims. The trial court agreed and entered summary 

judgment for the rDIC on the counterclaims. Mr. Bell appeals that 

decision. 

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Appellate Case: 88-2167 Document: 010110280397 Date Filed: 12/15/1989 Page: 4
Mr. Bell concedes that if his counterclaims were based upon 

overt fraudulent representations, Langley would govern, and he 

would be deprived of his claims. He argues, however, Langley does 

not apply to transactions involving the omission of facts, such as 

CINB's failure to tell him of its internal evaluations because 

those transactions cannot give rise to the essential "agreement" 

which requires application of§ 1823(e). 

We believe Langley allows no room for the distinction Mr. 

Bell would have us draw. One of the keystones in Langley is the 

Court's conclusion that § 1823(e) is not confined to a "secret 

promise" to perform an act in the future. The Court assumed a 

broader meaning for the word "agreement" in the statute, and 

concluded the word must be interpret~d to include any condition 

upon the performance of a contract·, including warranties grounded 

in fraud. ·10s S. Ct. at 401-02. Countering the suggestion that a 

fraudulent misrepresentation known to the FDIC cannot support 

application of§ 1~23(e), the Court stated, 

We conclude, however, that neither· fraud in the 

inducement nor knowledge by the FDIC is relevant to the 

section's application. 

No conceivable reading of the. word "agreement" in 

§ 1823(e) could cause it to cover a representation or 

warranty that is bona fide but to exclude one that is 

fraudulent. Petitioners ~ffectively acknowledge this 

when they concede that the fraudulen-t nature of a 

promise would not cause it to lose its status as an 

"agreement". 

Id. at 402. Since the Court included fraudulent warranties within 

the definition of "agreement"· without circumscribing fraud to 

overt acts, we see no basis for concluding one form of fraud is 

.governed by § 1823(e) while another is not. If fraudulent 

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Appellate Case: 88-2167 Document: 010110280397 Date Filed: 12/15/1989 Page: 5
warranties fall within the reach of the statute, it is irrelevant 

whether the fraud was caused by overt misrepresentation or 

deceitful omission. We therefore conclude Langley compels the 

result reached by the district court. 

AFFIRMED. 

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Appellate Case: 88-2167 Document: 010110280397 Date Filed: 12/15/1989 Page: 6