Court Opinion

ID: 8921241
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:17:24.800337+00
Date Added: 2024-06-11T17:09:18.313475
License: Public Domain

LOGAN, Circuit Judge,
concurring in part and dissenting in part:
I agree with the majority’s conclusion that Hibernia National Bank may not enjoin the Federal Deposit Insurance Corporation receiver from permitting a depositor in the Penn Square Bank to offset account balances against outstanding loan balances he or she has with the bank, including loans in which Hibernia bought participations. I also agree that the FDIC receiver may continue to collect on loans in which Penn Square has an ownership interest. However, I disagree with the majority’s *1410characterization of Hibernia’s rights in the participations.
In purchasing participations in Penn Square loans Hibernia assumed the risk of insolvency of the borrower to the extent of the percentage of the loan Hibernia acquired. Penn Square acted, as to the portion assigned to Hibernia, as Hibernia’s agent with the responsibility to collect and remit Hibernia’s portion of the payments made by the borrower. To be sure, Penn Square retained rights to release collateral and permit substitutions of new collateral and to repurchase the loans. But these rights do not make Hibernia a mere creditor of Penn Square. I am satisfied that the participations constitute assignments of ownership of the loans to Hibernia to the extent of the percentages it acquired. SBA v. McClellan, 364 U.S. 446, 81 S.Ct. 191, 5 L.Ed.2d 200 (1960); FDIC v. Mademoiselle of California, 379 F.2d 660, 665 (9th Cir.1967).
As the majority recognizes, the borrower-depositor in Penn Square may offset the balance in his bank account with the insolvent bank against any debt the depositor owes to the bank. If the depositor chooses to offset against a loan in which Hibernia has participated, the offset should first apply to that portion of the loan retained by Penn Square. If the amount of the offset exceeds the portion of the loan retained by the insolvent bank, Hibernia does not become a preferred claimant as to the excess. Id. at 665. However, because of Hibernia’s ownership interest in the loan to the extent of its participation, Hibernia does become a general creditor of Penn Square as to that amount.1 For the same reason, any future payments on the loan in excess of Penn Square’s interest should pass directly to Hibernia. Hibernia simply is not a general creditor as to these amounts. See Estes v. E.B. Estes & Sons, 24 F.2d 756 (D.Mass.1927).
Thus, the injunction should issue to prevent Hibernia’s interference with the FDIC receiver and the depositor-borrower’s right to make payments to the receiver. However, I would treat the participation as an assignment to Hibernia conveying ownership of a portion of the loan, and I would give Hibernia the right to offset amounts and to future payments in accordance with the analysis set forth above.

. Hibernia suggests that the FDIC receiver is encouraging the depositors’ use of setoff to decrease the amounts the FDIC must pay on insured deposits. In this preliminary injunction action we do not have before us whether the FDIC must make payments for the benefit of bank creditors on insured accounts that have been setoff against debts owed by the depositors, nor whether, if such payments must be made, Hibernia would have priority status as to FDIC payments representing amounts applied to Hibernia’s share of the loans. We only need decide whether the FDIC receiver can be prevented from encouraging use of the setoffs. I agree with the majority that he cannot.