Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-03060/USCOURTS-ca10-90-03060-0/pdf.json

Parties Involved:
First National Bank of Kingman, Kansas
Appellant
Mercantile Bank of Kansas City
Appellee

Document Text:

I, 

FILED 

UNITED STATES COURT OF APPEALS United States Court of Appeals 

Tenth Circuit 

TENTH CIRCUIT 

FIRST NATIONAL BANK OF KINGMAN, 

KANSAS, 

Plaintiff-Appellant, 

v. 

MERCANTILE BANK OF KANSAS CITY, 

Defendant-Appellee. 

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ORDER AND JUDGMENT* 

MAR 19 1 91 

&OBERT L. HOECKER 

Clerk 

No. 90-3060 

(D.C. No. 88-1370-C) 

(D. Kansas) 

Before LOGAN, SETH, and TACHA, Circuit Judges. 

In this diversity case plaintiff First National Bank of 

Kingman, Kansas, appealed the district court's grant of summary 

judgment in favor of defendant Mercantile Bank of Kansas City on 

claims arising out of First National's participation in a loan 

Mercantile Bank made to Kroh Brothers Development Company that 

became uncollectible. The only issue on appeal is whether there 

were material questions of fact preventing summary judgment on 

First National's claim that Mercantile Bank had a duty to inform 

it of problems or concerns Mercantile had concerning 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: 90-3060 Document: 010110031217 Date Filed: 03/19/1991 Page: 1 
underlying promissory note, or conditions it placed upon the borrower, before the last renewal of the participation certificate. 

The course of events are set forth in the district court's order 

of December 28, 1989, although First National claims that there 

were certain important facts overlooked and omitted in the order. 

This case, involving Kansas law, we hold is controlled by 

First Bank of WaKeeney v. Peoples State Bank, 12 Kan. App. 2d 788, 

758 P.2d 236 (1988) (Supreme Court review denied). That decision 

treated loan participation agreements in a context not importantly 

different from the one before us. The decision declared that 

participation creates an agency between the lending bank and 

participant bank but that the duties between the parties are 

controlled by the terms of the participation agreement. It also 

decided that there is no fiduciary duty owing between the two 

banks independent of what may be set forth in the participation 

agreement. 

The participation agreement in the instant case was a 

standard one that did not require Mercantile to take any action 

which in its opinion was unwarranted, gave Mercantile unlimited 

authority to renew the loan or extend the time for payment without 

notice to the participating bank, and declared that Mercantile was 

not responsible for the performance of the borrower's obligation 

or for its failure to repay. The evidence was that Mercantile 

Bank itself renewed the unsecured loan and suffered loss along 

with the participating banks. There is nothing in the record to 

take this case out of the rule of First Bank of WaKeeney. 

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Appellate Case: 90-3060 Document: 010110031217 Date Filed: 03/19/1991 Page: 2 
I 

t AFFIRMED. 

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Entered for the Court 

James K. Logan 

Circuit Judge 

Appellate Case: 90-3060 Document: 010110031217 Date Filed: 03/19/1991 Page: 3