D'Oench, Duhme & Co. v. Federal Deposit Insurance Corp.
United States Supreme Court
315 U.S. 447, 62 S. Ct. 676, 86 L. Ed. 956 (1942)
- Written by Mary Phelan D'Isa, JD
Facts
The Federal Deposit Insurance Corp. (FDIC) (plaintiff) sued D’Oench, Duhme & Co. (D’Oench) (defendant) in federal court in Missouri to demand payment on a note executed by D’Oench and later acquired by the FDIC in a purchase and assumption transaction. The note, which was originally signed in Missouri, was payable to an Illinois bank and was made to conceal past-due bonds. The Illinois bank allegedly made a secret side agreement with D’Oench that the note would not be called for payment, and D’Oench relied on that agreement to defend the FDIC’s claim for payment on the note. There was a dispute about whether Illinois or Missouri law applied. The district court held that Illinois law applied and that D’Oench was liable on the note. The court of appeals applied general law and held that under Illinois law, the FDIC was the equivalent of a holder in due course and entitled to recover. D’Oench appealed and argued that the federal district court was required to apply Missouri choice-of-law rules because that is the state where the federal court was sitting, and that is what the Court required in Klaxon Company v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941).
Rule of Law
Issue
Holding and Reasoning (Douglas, J.)
Concurrence (Jackson, J.)
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