CCF, Inc. v. First National Bank (In re Slamans)
United States District Court for the Northern District of Oklahoma
175 B.R. 762 (N.D. Okla. 1994)
Thomas Slamans, a gas-station operator, entered into a distribution agreement with Sun Company (Sun) (plaintiff). Under the agreement, Slamans was to purchase oil products from Sun on credit and then resell the products to customers. The agreement also required Slamans to secure a letter of credit. Slamans obtained a standby letter of credit from First National Bank (FNB) (defendant) in Sun’s favor, which provided for payment of up to $200,000 by FNB if Slamans failed to meet his distribution obligations. Slamans eventually filed for bankruptcy, and Sun requested payment from FNB on the letter of credit. FNB paid the sum, but demanded that Sun turn over the sales proceeds owed to Slamans under the agreement. Sun refused to provide the money, and filed an interpleader complaint in Slamans’s bankruptcy proceeding. The bankruptcy court found in FNB’s favor, subrogating FNB to Slamans’s rights and directing Sun to pay FNB the sale proceeds under § 509 of the United States Bankruptcy Code (Code). CCF, Inc. (plaintiff), another creditor involved in Slamans’s bankruptcy proceeding, appealed.
Rule of Law
Holding and Reasoning (Ellison, C.J.)
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