Tuesday, December 3, 2013

Federal Deposit Insurance Corp. v. Barness case brief

Federal Deposit Insurance Corp. v. Barness case brief summary
484 F. Supp. 1134 (1980)

After the case was removed to the United States District Court, defendant filed a motion to open the judgment entered against him by confession in the Court of Common Pleas of Buck County (Pennsylvania) contending he had a valid defense to plaintiff FDIC's action to enforce a promissory note.

Defendant executed a non-negotiable promissory note to a federally insured bank payable on demand. The state's department of banking took over the bank and plaintiff received the promissory note via an assignment from the state's receiver. The case was removed from state court to federal district court on plaintiff's motion. Defendant then moved to open the judgment alleging several defenses. Plaintiff contended that the grounds asserted by defendant did not constitute defenses, but were counterclaims for which the judgment could not be opened.


  • Using the common law of assignments, the court found plaintiff, as assignee, took the note subject to any defenses that defendant had against the bank. 
  • The court concluded that defendant's claim that the note was made as an accommodation and his contentions that the assignment was invalid due to the illegality of the takeover were both valid defenses to the note and required opening of the judgment.

Judgment opened because defendant's allegations in his verified motion were sufficient to state a valid defense to plaintiff's enforcement of a promissory note.

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