Evanston Bank v. ContiCommodity Services

623 F. Supp. 1014 (1985)

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Evanston Bank v. ContiCommodity Services

United States District Court for the Northern District of Illinois
623 F. Supp. 1014 (1985)

Facts

Evanston Bank (the bank) (plaintiff) sought to hedge against rising interest rates by trading in commodities futures. The bank engaged ContiCommodity Services, Inc. (Conti) and one of Conti’s brokers, Ted Thomas (defendant), to execute the trading. The board of directors also authorized Richard Christiansen, the bank’s chairman and chief executive officer (CEO), to execute commodities-futures trades on the bank’s behalf. Christiansen further granted Thomas power of attorney to trade on the bank’s behalf. Christiansen and Thomas did not limit their trades to the bank’s desired hedging strategy. Rather, they engaged in futures speculation, which resulted in large losses and large fees to the bank. The bank sued Conti and Thomas for commodities fraud, alleging that they executed trades on behalf of the bank outside of the authority the bank had delegated to them. Thomas moved for summary judgment on the theory that the bank, through Christiansen, had authorized him to make the trades.

Rule of Law

Issue

Holding and Reasoning (Moran, J.)

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