Federal Deposit Insurance Corp. v. Culver

Facts

In 1984, Defendant entered into a business arrangement with a man named Kalliel to manage the financial aspects of Defendant’s farm while Defendant focused on maintaining operations. In July or August of that year, Defendant informed Kalliel he needed money immediately to avoid foreclosure. Kalliel procured a loan for Defendant from Rexford State Bank and $30,000 was wired to his bank account. Defendant alleged he was subsequently approached by a man claiming to be a representative of Rexford State Bank asking him to sign a receipt that he had received the loan funds, but turned out to be a promissory note. Defendant signed the note, claiming he believed the promissory note was only just a receipt acknowledging that the $30,000 had reached his account. Defendant claimed he believed Kalliel would be responsible for repayment of the loan despite the fact that Defendant signed the note himself. Later, Rexford State Bank would become insolvent and go into receivership with the FDIC. The FDIC’s corporate division purchased some of the bank’s assets, including the note signed by Defendant. The FDIC sued Defendant to enforce the note. Defendant refused to pay, raising the defense of “fraud in the factum” and claiming he was induced by misrepresentations into signing the promissory note.