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Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

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F 1 · 

UNITED STATES COURT OF APPEALS Utdred Stares @j -~t~ Appeals 

'7'~ ... ~h e, .... 1 • 

FOR THE TENTH CIRCUIT 

FEDERAL DEPOSIT INSURANCE CORPORATION, ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

PAT SCUDDER, an individual, ) 

) 

Defendant-Appellant. ) 

ORDER AND JUDGMENT* 

ROBERT Lr HQBCKER 

Clerk 

Nos. 88-2725 

89-5051 

(N.D. Oklahoma) 

(D.C. No. 86-C-1027-E) 

Before MOORE, ANDERSON, and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cause is therefore ordered 

Defendant appeals from an order of the district court 

granting plaintiff FDIC's motion for summary judgment. 

In 1984, defendant obtained a loan of $1,116,000 from the 

First National Bank & Trust in order to purchase one share of 

stock in the Circle Land and Cattle Corporation. One share at the 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 88-2725 Document: 01019975953 Date Filed: 08/17/1989 Page: 1 
time of purchase was valued at $500,000. The remainder of the 

loan was apparently designed as a line of credit to cover interest 

on the loan. By April, 1985, the actual amount of the loan had 

increased to $1,056,293.70. At that time, the bank agreed to loan 

Circle Land and Cattle $5,000,000 to pay off certain loans at the 

bank and to allow it to purchase defendant's share of stock for 

$1,000,000. The $1,000,000 payment was applied to defendant's 

loan. In 1986, the bank was declared insolvent and the FDIC 

commenced this suit for the amount remaining on the loan. 

Defendant raised the defense of accord and satisfaction, 

alleging that the $1,000,000 payment was intended by the parties 

to retire the entire debt. The FDIC moved for summary judgment 

alleging that under the D'Oench Doctrine1 and 12 U.S.C. § 1823(e) 

the defense was not available because nothing in the bank's 

records either supported the defense or met the requirements of 

the D'Oench Doctrine or§ 1823(e). Defendant alleged that the 

D'Oench Doctrine and§ 1823(e) did not apply because there was no 

asset for the FDIC to pursue due to the prior accord and 

satisfaction, and, in the alternative, if they did control, the 

papers before the examiners met the requirements and showed accord 

and satisfaction. 

The case was referred to a magistrate who held a hearing on 

plaintiff's motion for summary judgment and recommended that it be 

granted. Defendant filed objections following consideration of 

which, the district court adopted the recommendation. 

1 D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942). 

2 

Appellate Case: 88-2725 Document: 01019975953 Date Filed: 08/17/1989 Page: 2 
In reviewing the grant of a motion for summary judgment, we 

apply the same standard employed by the trial court under 

Fed. R. Civ. P. 56(c). Osgood v. State Farm Mut. Auto. Ins. Co., 

848 F.2d 141, 143 (10th Cir. 1988). Summary judgment must be 

granted if "there is no genuine issue as to any material fact and 

the moving party is entitled to a judgment as a matter of 

law." Rule 56(c). The moving party "has the burden of showing 

there is no genuine issue of fact." Anderson v. Liberty Lobby, 

I nc., 477 U.S. 242, 256 (1986). To survive the motion, the 

nonmoving party "need only present evidence from which a jury 

might return a verdict in his favor." Id. at 257. 

Contrary to defendant's argument, we must look first to 12 

u.s.c. § 1823(e). 2 

2 

One purpose of §l823(e) is to allow federal and 

state bank examiners to rely on a bank's records in 

evaluating the worth of the bank's assets. Such 

evaluations are necessary when ••. the FDIC is 

deciding whether to liquidate a failed bank •.. or to 

provide financing for purchase of its assets (and 

assumption of its liabilities) by another bank .... 

The last kind of evaluation, in particular, must be made 

"with great speed, usually overnight, in order to 

12 U.S.C. § 1823(e) 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 obliger, 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. 

3 

Appellate Case: 88-2725 Document: 01019975953 Date Filed: 08/17/1989 Page: 3 
preserve the going concern value of the failed bank and 

avoid an interruption in banking services." Gunter v. 

Hutcheson, 674 F.2d (862), 865 [(11th Cir.), cert. 

denied, 459 U.S. 826 (1982)). 

Langley v. FDIC, 484 U.S. 86, , 108 S.Ct. 396, 401 (1987). 

We are guided by this purpose in evaluating the situation 

here. When the FDIC took over the failed bank, several documents 

relating to the loan were in the bank's files. These included the 

loan application; the agreement between Circle, the bank and 

several shareholders; an OCC charge off sheet marked "full;'' and 

the transactional history of the note. We review these seriatum. 

The original note provides that repayment shall be made 

"[u]ltimately, from sale of Circle Land stock." This note does 

not indicate that the repayment would be made only from the sale 

of the stock or that such repayment was made. 

The agreement provides that: 

It is understood and agreed that the foregoing purchase 

prices will be paid by Circle to the Sellers at Closing 

••• in cash, and such payments will be made 

directly to the Bank for the benefit of Eddie Harper, 

Pat Scudder and Gerald W. Gigot (the "Remaining 

Sellers") to be applied to certain indebtedness owing by 

such Remaining Sellers to the Bank. In connection 

therewith, the Bank agrees to consent to such sales and 

to release the Bank's lien covering the stock in Circle 

owned by the Remaining Shareholders at Closing. 

The agreement thus provides that the $1,000,000 payment was 

"to be applied to" the loan. Contrary to defendant's argument, 

this does not indicate that the payment was an accord and 

satisfaction for the entire debt. Although the bank agreed to 

release its lien on the stock, there is no indication the release 

was made because full payment had been received. It appears that 

the bank decided to carry the remaining debt as an unsecured loan. 

4 

Appellate Case: 88-2725 Document: 01019975953 Date Filed: 08/17/1989 Page: 4 
This decision does not appear unreasonable considering defendant's 

declared net worth of "$3.965M." 

An OCC directed charge off is dated the same date as the date 

the payment was received and indicates no action was contemplated 

by the legal department. However, the FDIC submitted an affidavit 

by an FDIC administrator who was the account officer in charge of 

collection of this note. He averred that the 

language "OCC directed charge off" ••• is a term of 

art in the banking industry. The phrase "charge off" 

reflects that a debt, or portion of a debt, has been 

removed as an asset from the books of the Bank at the 

instruction of the Office of the Comptroller of the 

Currency. The OCC typically directs a "charge off" when 

it has determined that the likelihood of collection is 

low. The OCC requires the "charge off" in order to 

insure that the Bank's assets are not overstated. It is 

purely an accounting measure. It does not, in any way, 

indicate that the Bank has abandoned attempts to collect 

the debt, or that it has forgiven the debt. FDIC, in 

its corporate capacity, frequently acquires and enforces 

debts which have been "charged off" for regulatory 

purposes. 

Although defendant argues that the word "full" indicates that 

the debt was paid in full, he submitted no testimony or affidavits 

supporting his assertion. Defendant argues that further discovery 

would have permitted him to obtain this. However, he could have 

moved to continue the hearing in order to allow time for full 

discovery. Fed. R. Civ. P. 56(f); Celotex Corp. v. Catrett, 477 

U.S. 317, 326 and n.6 (1986). 

Finally, the transactional history of the note shows that on 

the day the $1,000,000 payment was received, the charge off 

reduced the balance of the note to zero. However, the same day a 

general accounting adjustment was made resulting in an unpaid 

balance of $56,293.70. 

5 

Appellate Case: 88-2725 Document: 01019975953 Date Filed: 08/17/1989 Page: 5 
On the basis of the documents before it, the FDIC correctly 

determined that the $56,293.70 was a valid debt still owed the 

bank. Nothing in writing indicates that an accord and 

satisfaction had been reached. 3 

We agree with defendant that his appeal was timely, and we 

have jurisdiction over appeal No. 89-5051. See Amoco Production 

Co. v. United States, 852 F.2d 1574, 1578 n.6 (10th Cir. 1988) 

citing Freeling v. FDIC, 221 F. Supp. 955, 956 (W.D. Okla. 1962), 

aff'd, 326 F.2d 971 (10th Cir. 1963)(control of the corporation by 

Congress leads to the conclusion that the FDIC is a federal agency 

of the United States); see also Fed. R. App. P. 4(a)(4). 

Defendant also argues that the district court's award of 

attorney's fees was "unreasonable in amount." We review the 

court's award of attorney's fees under an abuse of discretion 

standard. Supre v. Ricketts, 792 F.2d 958, 961 (10th Cir. 1986). 

We fail to find any such abuse, nor does defendant identify any. 

The judgment of the United States District Court for the 

Northern District of Oklahoma is AFFIRMED. 

ENTERED FOR THE COURT 

Stephen H. Anderson 

Circuit Judge 

3 We do not address the remaining requirements of§ 1823(e) nor 

whether these documents satisfy those requirements. 

6 

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