Federal Deposit Insurance Corporation v‪.‬

DONALD B. CLARK, Presiding Judge The Federal Deposit Insurance Corporation as liquidating and receiving officer for Farmers and Merchants Bank of Huntsville brought this suit in the stead of the bank for breach of contract against G. III Investments, G. W. Sparks III and Freida Barbour, insurance brokers, for failure to obtain an insurance policy on property mortgaged to the bank. The issue in the case involves the principles of contract liability to a third party beneficiary of the contract. Shorn of numerous facts not relevant to the questions on appeal, the origin of the case may be summarized as follows. On November 6, 1979, Gillan Trucking, Inc., borrowed $90,000 from the Farmers Bank to construct a night club. The land was owned by John J., Leroy and Jane Gillan. John and Leroy signed the note to the bank and they, together with Jane Gillan, signed a deed of trust on the property to secure repayment. A second loan of $40,000 was later obtained on similar terms. The night club building burned in March, 1981. The fire was attributed to the arson of John J. Gillan. At the time of the fire, the debt owed the bank on the notes amounted to $130,881.60.