Maryott v. First National Bank

Facts

Plaintiff owned and operated a cattle-dealing business. Plaintiff had a reputation for honesty and integrity and was considered one of the best dealers in the business. Plaintiff had been doing business with Defendant for over 15 years. Defendant loaned Plaintiff $276,171 secured by mortgages and security interests on his real estate and personal property. One of Plaintiff’s major customers, Oconto Cattle Company, defaulted on payments and Plaintiff ceased shipping to that it. Plaintiff received two sight drafts from Oconto Cattle Company drawn on its line of credit. However, the drafts were returned because Oconto Cattle Company’s lender had revoked the line of credit. Defendant became aware of this situation when the drafts were returned. Defendant noticed three large checks had passed through Plaintiff’s account payable to Tri-County Livestock and to Schaffer Cattle Company. Defendant then concluded that Plaintiff was involved in or the victim of “suspicious activity.” Defendant dishonored the checks and froze Plaintiff’s accounts. Defendant then deemed itself insecure and used the proceeds of the dishonored checks to pay down the balance of Plaintiff’s loans. Meanwhile Plaintiff had issued a check to Central Livestock Company informing them that the funds in his account were insufficient and they agreed to work together and hold the check. When Plaintiff informed Central Livestock Company about this situation, it contacted Defendant who refused to honor the check. Both Central Livestock Company and Schaffer Cattle Company filed claims against Plaintiff’s bond. Because the claims exceeded the amount of the bond, Plaintiff was required to forfeit his dealer’s license and effectively shut down his business.