by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
BANKING; FEDERAL RECEIVERS; ASSETS: When it is necessary for a bank assignee of the FSLIC to prove that it is the holder/owner of a note acquired by FSLIC from a failed bank, the bank must either show that the note was endorsed over to it or provide evidence specific to the transaction of that note to demonstrate the transfer. An affidavit of a bank officer that the bank is the holder/owner of the note is insufficient absent the officer's demonstration of a basis for personal knowledge that the note was transferred to the bank.
Priesmeyer v. Pacific Southwest Bank, 917 S.W.2d 937 (Tex. App.--Austin 1996).
The defendant's predecessors executed a note to a bank which failed. That bank passed into FSLIC receivership and substantially all of its assets sold to a new bank. The had been a "blanket" assignment of assets without a detailed inventory. When the defendant defaulted on the note, the new bank, foreclosed in a non-judicial sale and sued for the deficiency. The trial court granted a motion for summary judgment. The defendant appealed, contending that the new bank had a duty to demonstrate that it was indeed the owner of the note. The new bank did not have the original note and its copy of the note did not show an endorsement to the new bank.
Held: reversed. Although the court acknowledged that testimony of bank officers might be sufficient to demonstrate ownership of a note that had not been endorsed to the bank, the court scorned the affidavit regarding ownership tendered in this case because the affiant had no actual personal knowledge that the note had been transferred to the new bank.
The court distinguished other authority upholding the rights of federal assignees. In Christian v. University Fed. Sav. Ass'n, 792 S.W.2d 533 (Tex. App. 1990), the court had relied upon the testimony of a bank officer to show the bank's rights to the note, but that officer had been responsible for the note both at the old institution and the new institution and had personal knowledge of it. In Resolution Trust Corp. v. Camp, 965 F.2d 25 (5th Cir. 1992), a federal court had admitted evidence of transfer from persons lacking personal knowledge of the note, but the Texas court concluded that Texas summary judgment was different from federal procedure (but quare whether the court here isn't just flat disagreeing with the federal decision.)
Comment: How big a problem this decision represents depends in part upon what happends upon remand for trial. It may be that, lacking possession of the actual note and any clear inventory indicating that it ever really owned the note, the bank will have difficulty proving ownership by the standards set by the court here. If that is the case, and we have another appellate decision, this case may set difficult precedent for other similar situations. Note that we had a deficiency judgment here, but in many states the original case might be the judicial foreclosure of the mortgage.
The court acknowledges that the bank had produced a spreadsheet showing that the bank had treated the note in question as part of the assets transferred by the FSLIC. It had been servicing the note until the default. The court did not take the spreadsheet into account here because it had been produced too late (at defendant's motion for a new trial). But perhaps the court is discussing the spreadsheet here to suggest that introduction of the spreadsheet might be enough to satisfy the bank's burden of proof at trial.
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