Federal Deposit Insurance Corporation, as Receiver for Penn Square Bank, N.A. v. Bank of San Francisco
Opinion
Opinion
Noonan, J.
Bank of San Francisco (the Bank) appeals from summary judgment in favor of the Federal Deposit Insurance Corporation (FDIC) on a letter of credit. Jurisdiction exists under 12 U.S.C. § 1819 . We affirm.
FACTS
On December 12, 1980 the Bank issued a standby letter of credit in the amount of $50,000. The letter was issued at the request of Arthur J. Shartsis and Mary Jo Shartsis (the Customers). It was issued in favor of Penn Square Bank (Penn Square) and was intended to be security for an investment made by the Customers in Longhorn Developmental Program, Ltd., a partnership in oil and gas managed by Longhorn Oil and Gas Company (Longhorn).
The letter in its entirety read as follows:
On March 5, 1981 at the request of Longhorn the Bank deleted paragraph 2.
The FDIC became the receiver of Penn Square on July 5, 1982. On August 17, 1982 the FDIC requested the Bank to pay the letter of credit. On August 19, 1982 the Customers advised the Bank in writing that Penn Square “was directly involved in a fraudulent scheme” to procure the letter of credit “in connection with the Longhorn Oil and Gas Drilling Program, of which at least one officer and one director of the Penn Square Bank…