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Davis v. First National Bank of Westville
United States Court of Appeals for the Seventh Circuit
868 F.2d 206 (1989)
Robert, Virginia, and William Davis (plaintiffs) owned a business and had a relationship with First National Bank of Westville and First National Bank of Danville (the banks) (defendants). The Davises borrowed substantial sums of money from the banks in exchange for executed notes payable to the banks. In either 1984 or 1985, the Davises needed an additional $200,000 to sustain their business. The banks refused to lend the money to the Davises unless the Davises agreed to liquidate their business and pay off their existing debts to the banks. On June 28, 1985, the Davises entered into a contract with the banks that provided in the twelfth paragraph that the Davises must enter into a contract to sell their business by September 1, 1985. The Davises did not sell their business by the deadline, and the banks insisted that the Davises cease operations and start liquidating. The Davises sold the business in February 1986. The Davises brought suit in district court and claimed that the twelfth paragraph of the 1985 contract violated an anti-tying provision of the 1970 amendments to the Bank Holding Company Act (BHCA) because by requiring the Davises to liquidate their business, it required the Davises to provide the banks with a service not usually related to or provided in connection with a loan. The banks filed a motion for summary judgment. The district court granted the banks’ motion and held that the liquidation requirement of the twelfth paragraph was a traditional banking practice designed to protect the banks’ investment with the Davises.
Rule of Law
Holding and Reasoning (Bauer, C.J.)
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