Opinion ID: 659417
Heading Depth: 2
Heading Rank: 1

Heading: Does the alleged fraud constitute an agreement within the meaning of Sec. 1823(e)?

Text: 18 The limited partners advance two specious arguments. First, they contend that in order for Sec. 1823(e) to apply, the agreement in question must be one made between the debtor and the bank itself. Any agreement, however, is subject to Sec. 1823(e) if it tends to defeat or diminish RTC's rights in an asset purchased under authority of Sec. 1823. See Fed. Deposit Ins. Corp. v. Hoover-Morris Enter., 642 F.2d 785, 787 (5th Cir. Apr. 15, 1981) (holding that Sec. 1823(e) applies to all side agreements, including those between an obligor and a third party). 4 Second, the limited partners assert that there was simply no agreement. We conclude there was an agreement. 19 In Langley v. Fed. Deposit Ins. Corp., 484 U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (1987), the Langleys alleged that they had been fraudulently induced to execute certain promissory notes and the notes were, therefore, unenforceable. The Supreme Court held that one who signs a facially unqualified note subject to an unwritten and unrecorded condition upon its repayment has lent himself to a scheme or arrangement that is likely to mislead the banking authorities ... and has therefore entered an agreement within the meaning of Sec. 1823(e). at 92, 108 S.Ct. at 402. The instant case falls squarely within that rule. The limited partners executed facially unqualified notes. Now, they argue that payment on the notes was conditioned upon the truthfulness of representations in the PPM and loan documents--subject to the asserted defense of fraud in the inducement. Such a position runs afoul of Langley. Accordingly, we find an agreement under Sec. 1823(e) such that the limited partners' fraud defense is barred by operation of that section. 20