First National Bank Of Logansport v. Logan Mfg. Co., Inc

577 N.E.2d 949 (1991)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Bank's (P) V.P. made a commitment to finance a business if Logan (D) got involved with Winamac Plastics and moved that business to Logansport. D was told that the V.P.'s lending authority was $100,000 and that loans above that amount would have to be approved by bank committees. P then approved a loan to D for $100,000 of which $80,000 was to be used to acquire 66% of Winamac Plastics. A further loan request was submitted for another $206,000 which included the $80,000 already borrowed, but that request was turned down by P's committee. The V.P. then assured D that the bank would help them to create a new business. A new loan application was prepared under a new name, and it was approved for $346,000 just four days after the prior commitment was denied. That commitment required a guarantee by the state. The V.P. then assured D that the bank did not need the state guarantee and that it would lend the money regardless of whether the loan was guaranteed. P refused to close on any loan and eventually D opened a similar plastics business in Iowa. D sued P for the damages suffered from the failure to make good on its promises. Judgment was given to D for $726,532. On appeal, D challenges both liability and damages. D claims that there was no enforceable oral agreement to make the loan, and that, because P had failed to comply with the pre-closing conditions, one of which required that a state agency would guarantee the loan. D argues that the proper measure of damages was the interest rate differential or, alternatively, that Ps had not adequately proved entitlement to lost profits. The Court of Appeals held that the trial court's determination of liability was not clearly erroneous and affirmed the award of lost profits. The Court of Appeals determined that the loss of equity damages was not reasonably foreseeable and that out of pocket expenses was included within the lost profits damages which had already been awarded. The award was reduced to $583,452. D again challenges the finding of liability for breach of contract and the award of damages for lost profits. Ps appealed urging reinstatement of the original award amounts.