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Greycas, Inc. v. Proud
United States Court of Appeals for the Seventh Circuit
826 F.2d 1560 (1987)
Wayne Crawford, a non-practicing attorney, managed a large, multi-million dollar farm that had fallen into dire financial troubles. In an effort to save the farm from bankruptcy, Crawford sought a loan from Greycas, Inc. (Greycas) (plaintiff), an Arizona financial company. Greycas agreed to loan Crawford over $1.3 million to be secured by the farm’s machinery, but was unaware that Crawford had previously pledged the machinery to other lenders. Greycas required Crawford to submit a letter from an attorney assuring Greycas that there were no prior liens on the machinery that was to be used to secure the loan. Crawford engaged his brother-in-law Theodore S. Proud, Jr., (defendant), an attorney in private practice in a Chicago, Illinois suburb, to write the letter. In the letter, Proud wrote that he had conducted a Uniform Commercial Code (U.C.C.) tax, and judgment search to ensure that the machinery was free of other liens. Proud never conducted the search. The following year, Crawford defaulted on the Greycas loan and subsequently committed suicide. Greycas learned that the machinery had been pledged to other lenders and filed suit in federal district court against Proud for negligent misrepresentation. After a bench trial, a jury awarded Greycas damages over $800,000. Proud appealed.
Rule of Law
Holding and Reasoning (Posner, J.)
Concurrence (Bauer, C.J.)
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