Opinion ID: 657176
Heading Depth: 2
Heading Rank: 4

Heading: Requirements of Federal Law

Text: 29 In order to determine the meaning of agreement ... in writing under federal law, we look to the purposes of Sec. 1823(e). In Langley, the Court indicated that the purpose of Sec. 1823(e) is to enable the FDIC to evaluate bank assets and to do so quickly. See Langley, 484 U.S. at 91, 108 S.Ct. at 401. Judge Goldberg, writing for the Fifth Circuit, has aptly explained this goal: 30 Fundamentally, D'Oench attempts to ensure that FDIC examiners can accurately assess the condition of a bank based on its books. The doctrine means that government has no duty to compile oral histories of the bank's customers and loan officers. Nor must the FDIC retain linguists and cryptologists to tease out the meaning of facially-unencumbered notes. Spreadsheet experts need not be joined by historians, soothsayers, and spiritualists in a Lewis Carroll-like search for a bank's unrecorded liabilities. 31 Bowen v. Federal Deposit Ins. Corp., 915 F.2d 1013, 1016 (5th Cir.1990). 32 In order to ensure that RTC spreadsheet experts have no need to perform a Lewis Carroll-like search, we hold that under federal law, an agreement is only in writing if the basic structure of the agreement is apparent on the face of writings. In reaching this holding, we only slightly extend our conclusion in Adams, 937 F.2d at 852, where we explained that [t]he rule emerging from D'Oench, Duhme is that no agreement between a borrower and a bank which does not plainly appear on the face of an obligation or in the bank's official records is enforceable against the FDIC. Here we add that, not only does the existence of the agreement have to appear plainly on the face of an obligation, but the basic structure of that agreement--its essential terms--must also appear plainly on the face of that obligation. 33 Other courts of appeals to consider the issue have come to a similar conclusion. In Federal Sav. & Loan Ins. Corp. v. Two Rivers Assocs., Inc., 880 F.2d 1267 (11th Cir.1989), Two Rivers' defense relied on a promise by Sunrise Savings and Loan Association to loan additional funds beyond the initial $2.5 million. The Eleventh Circuit held that an express written agreement to provide an additional Construction Loan might have been a sufficient defense in an ordinary contract suit but was an insufficient defense when D'Oench, Duhme applied. The alleged loan agreement was insufficient because it did not enumerate the terms of the loan. See id. at 1275-76. 34 Similarly, in Federal Deposit Ins. Corp. v. O'Neil, 809 F.2d 350 (7th Cir.1987), the Seventh Circuit required the terms of an agreement to be evident on the face of a writing in order to meet the requirements of Sec. 1823(e). In O'Neil, defendant's loan agreement with the Continental Illinois National Bank conditioned defendant's obligations on the bank's compliance with that certain agreement. The Seventh Circuit, however, refused to allow the defendant to rely on the bank's alleged breach of that certain agreement to avoid repayment of the loan. It explained: 35 The statute contemplates, however, that the FDIC's appraisers can confine their scrutiny to documents found in the bank's official records. The certain agreement was not among them. If we accepted Joyce's argument this would imply that when the appraiser came across the promissory note he would have had to conduct an inquiry into the whereabouts, status, and terms of the 'certain agreement,' mentioned in (but not a part of) the note.... The FDIC is not required to go so far. 36 Id. at 353. Thus, even though the FDIC knew of the existence of a side agreement from the face of a writing, this side agreement could not serve as a defense because its terms were not set out in that writing. 37 The Fifth Circuit summarized this general conclusion of the courts of appeals in Federal Deposit Ins. Corp. v. Hamilton, 939 F.2d 1225, 1226 (5th Cir.1991). In ruling that D'Oench, Duhme and Sec. 1823(e) barred defendants' reliance on local customs to flesh out the terms of their agreement with a bank as well as their attempt to imply terms from the bank's records, the court explained: 38 [W]e believe that section 1823(e)'s use of the term 'in writing' cannot include the writing's implied terms.... [T]he term 'in writing' for section 1823 purposes, has been narrowly construed so as to incorporate only those obligations expressed on the face of the subject writing. 39 Id. at 1231. Here, the writings presented by defendants provide no terms of an additional agreement between Bell Savings Bank and CUL-DADD, much less terms sufficient to constitute the basic structure of the agreement. Thus, defendants' reliance on this supposed agreement is barred by D'Oench, Duhme and Sec. 1823(e). 5