Opinion ID: 2376224
Heading Depth: 1
Heading Rank: 1

Heading: The University Savings Case

Text: Petrolife, Inc. (Petrolife) contracted to buy blending gasoline from Intercontinental Consolidated Companies, Inc. (ICC). Allegedly as part of an ongoing fraud, ICC promised to deliver the gasoline between November 7 and 10, 1986, if it received a check for $2,008,125, half the total purchase price. Petrolife purchased a check for that amount, payable to ICC, from University Savings Association (University Savings) by borrowing on the revolving line of credit Petrolife maintained at University Savings. University Savings drew the check on one of its accounts with the Federal Home Loan Bank of Little Rock (FHLB). [1] Petrolife delivered the check to ICC, but ICC never delivered the gasoline. On November 12, after investigating ICC's failure to deliver the gasoline and discovering its alleged fraud, Petrolife requested University Savings to stop payment. University Savings, the drawer of the check, contacted FHLB, the drawee, and requested that payment be stopped. FHLB honored the request to stop payment. Subsequently, University Savings credited Petrolife's line of credit for the amount of the check. ICC ultimately brought suit on the check, not against FHLB, but against University Savings. Petrolife filed a plea in intervention which the trial court struck.