Langley v. FDIC

484 U. S. 86

December 1, 1987

The Langleys borrowed a massive amount of cash from a local bank in order to purchase some land. When the loan came due, the Langleys refused to pay, on the grounds that the bank had allegedly lied about the size and quality of the land, though no formal writing contained this information. Eventually, the bank failed, and the FDIC took over. The FDIC tried to collect from the Langleys, arguing that they could not refuse to pay unless the alleged misrepresentations about the land were present in a formal agreement between them and the bank.

The Court backed the FDIC, and it was unanimous. Scalia wrote the opinion. Federal law said that any agreements used as a defense against loan collection had to be in writing. The Langleys claimed that the misrepresentations were not part of any ‘agreement,’ but Scalia thought otherwise. Statements about a land’s quality could be considered express warranties, and thus a component of an agreement. He stressed that the FDIC needs to be able to have certainty about their right and ability to collect when they take over a bank. He also said that agreements involving fraud could not be exempted from the general rule of requiring writing. I feel a little bit sorry for the Langleys, but must admit that the Court ruled correctly.

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