Assignment:
REGER DEVELOPMENT, LLC v. NATIONAL CITY BANK UNITED STATES COURT OF APPEALS, SEVENTH CIRCUIT
FACTS: Reger Development borrowed money from National City Bank, using a revolving line of credit supported by a promissory note. At the point that National City discussed the possibility of calling the note, Reger Development sued the bank for breach of contract and fraud. The district court granted National City's motion to dismiss Reger's complaint. Reger had met with the bank prior to using the line of credit to discuss the loan. Reger asked about changing the terms of the credit agreement. The bank representative, Duncan, responded that the National City documents were non-negotiable. Reger then executed the contract. The main question here is whether the promissory instrument entitles National City to demand payment from Reger at will. National City moved to dismiss Reger's complaint. The district court granted this motion, and Reger appealed.
ISSUE: Did National City breach its contract with Reger Development?
REASONING: The fi rst clause in the note in question reads:
The court reasoned that the language of the note gave National City the right to collect scheduled monthly interest payments, and these demands did not deviate from the structure of a demand note. Specifi cally, the court relied on the note's statement that National City could demand payment at any time. Further, the language of the note reinforces National City's right to collect scheduled monthly interest payments and does not deviate from the structure of a demand note. The court also addressed Reger's argument that National City had breached its contract by demanding payment despite Reger's being in good economic standing, and that the bank had inappropriately changed the terms of the contract without Reger's full consent. As revealed in the following direct quote, the court found Reger's argument to be vacuous:
DECISION AND REMEDY: The court affi rmed the district court's decision to grant National City's motion to dismiss. SIGNIFICANCE OF THE
CASE: This case provides an illustration of how the court determines whether a note constitutes a demand instrument. Specifi cally, one can see the vigorous attention the court gives to the specifi c language of a note.
CRITICAL THINKING
What is the ambiguity in the agreement with National City that Reger believes provides him with a proper basis for his cause of action against National City?
ETHICAL DECISION MAKING
Which stakeholders are affected by this decision? The law is concerned with much more than the interests of the two parties in the dispute. What other parties are affected by whether Reger wins this case?