Federal Deposit Insurance Corp. v. Braemoor Associates
United States Court of Appeals for the Seventh Circuit
686 F.2d 550 (1982)
- Written by Rich Walter, JD
Facts
Paul Bere, a partner in Braemoor Associates (Braemoor) (defendant) and president of the local bank, had extensive business dealings with a man named Ringbloom. Twice when Braemoor ran short of cash, Bere arranged for the bank to make loans totaling $300,000 to Ringbloom, who promptly turned the money over to Braemoor. Such large loans required the approval of the bank’s board of directors. By acting without the board’s approval, Bere breached his fiduciary duty to the bank. After Bere’s death, the bank went out of business. As the bank’s successor in interest, the Federal Deposit Insurance Corporation (FDIC) (plaintiff) sued Braemoor to recover the bank’s $300,000. The federal district court ruled that the FDIC failed to prove that Bere’s Braemoor partners had either actual or constructive knowledge of Bere’s fraud. The FDIC appealed the district court’s judgment for Braemoor to the Seventh Circuit.
Rule of Law
Issue
Holding and Reasoning (Posner, J.)
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