C & H Construction & Paving Co. V. Citizens Bank

On December 20, 1972, appellant C & H Construction & Paving Co., Inc. (hereinafter referred to as C & H Construction), requested a $125,000 line of credit from appellee, Citizens Bank. The granting of the loan was conditioned upon C & H Construction's giving the bank a security interest in its accounts receivable. C & H Construction refused to give such an interest and, consequently, Citizens Bank denied the loan application. On December 28, 1972, C. R. Davis, acting on behalf of C & H Construction, executed a $50,000 promissory note to the bank. In order to secure this loan, Davis, again acting on behalf of C & H Construction, entered into a security agreement giving Citizens Bank a security interest in the accounts receivable of C & H Construction. The loan was paid on January 10, 1973. Appellees, E. M. Wilson and James Arrott (hereinafter referred to as Wilson and Arrott respectively), allegedly represented to Davis that the agreement would apply only to the December 28 loan and not to any previous loans given to C & H Construction by the bank. They also allegedly represented that the agreement would not be filed.