Opinion ID: 1282412
Heading Depth: 1
Heading Rank: 7

Heading: Second Loan

Text: The second loan arose from a transaction commenced on April 26, 1985, when Northern Bank advanced $100,000 on another $200,000 loan Fairfield Bank had arranged for the Co-op. The loan was evidenced by a promissory note payable to Fairfield Bank in the amount of $200,000, bearing an interest rate of 13.75 percent per annum. On the same day, Northern Bank and Fairfield Bank executed the second of the participation agreements referred to in part IV(1)(a), which entitled Northern Bank to a $100,000 participation in the loan, at an interest rate of 12.5 percent. (Another bank participated on the remaining half of the loan.) On May 31, 1985, the Co-op issued a check drawn on and payable to Fairfield Bank in the amount of $100,000. In exchange, Fairfield Bank placed a written notation on the face of the note acknowledging receipt of the $100,000. On the same day, Fairfield Bank charged the $100,000 check against the Co-op's checking account, thereby reducing Fairfield Bank's demand deposit liability to the Co-op by a like amount. Prior to being closed on May 31, Fairfield Bank as remitter issued a cashier's check for $100,000 payable to the order of Northern Bank, which Northern Bank received after Fairfield Bank had been closed. When Northern Bank presented the check for payment, the FDIC refused to honor it. However, on December 15, 1985, the FDIC paid Northern Bank the $100,000. The bank accepted the payment in partial satisfaction of its claim under an agreement whereby the FDIC acknowledged that Northern Bank preserved whatever other rights it might have.