Marine Bank v. Weaver

455 U.S. 551, 102 S. Ct. 1220, 71 L. Ed. 2d 409 (1982)

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Marine Bank v. Weaver

United States Supreme Court
455 U.S. 551, 102 S. Ct. 1220, 71 L. Ed. 2d 409 (1982)

  • Written by Robert Cane, JD
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Facts

Sam and Alice Weaver (plaintiffs) purchased a $50,000 certificate of deposit from Marine Bank (defendant). Marine Bank was insured by the Federal Deposit Insurance Corporation. The Weavers entered into an agreement with the owners of Columbus Packing Company to guarantee a loan from Marine Bank to Columbus Packing with the certificate of deposit. The Weavers believed that the loan from Marine Bank to Columbus Packing would be used as working capital to keep the business running, but nearly all of the loan proceeds were immediately applied to pay prior loan obligations of Columbus Packing. After four months, Columbus Packing went bankrupt. The Weavers sued Marine Bank, claiming that the bank had violated § 10(b) of the Securities Exchange Act of 1934. The district court entered summary judgment for Marina Bank. The court of appeals reversed, finding that the certificate of deposit might be a security because it was similar to other long-term debt obligations that were considered securities. Marine Bank appealed.

Rule of Law

Issue

Holding and Reasoning (Burger, C.J.)

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Securities Regulation

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