Court rules Franklin County couple liable for $3.45 million

Franklin County District Court ruled that Roger and Kaye Peters, owners of now-closed-Hampton-business Franklin County Lumber (F. C. Lumber) are responsible for payment of $3,455,626. 67 to the Exchange Bank of Missouri (Exchange Bank), as well as the bank’s attorney and legal fees — part of a law binding account agreement signed by both Peters with the bank, according to court documents.
    On Feb. 26, 2016, the Exchange Bank filed a suit, outlining the counts of allegations against the business and its owners. The Exchange Bank alleged that both Peters opened a commercial business checking account for F.C. Lumber, signing on to the account services agreement, which bound them to “liable to us [Exchange Bank] for debit balances… overdrafts and account charges… and promise to pay, on demand, any and all debit balances, all fees and charges, and our reasonable attorney’s fees and costs and expenses…”
    On June 10, 2013, the couple delivered a commercial guarantee to the Exchange Bank, securing the payment of F.C. Lumber’s debt. Through a process commonly known as “check kiting,” the account with Exchange Bank totaled $2,882,904.20 plus accrued interest and fees, costs and expenses, in the negative. Check kiting is the process by which the owner of several bank accounts transfers money that they don’t have by taking advantage of the three-day grace period of cashing checks between all banks. For instance: Jon Doe opens a bank account at Bank A with $0 and opens an account with Bank B with $500. He then writes a check from Bank A for $500 and cashes it in Bank B. Now, Bank A has no money in it, but because of the grace period, he can write a check from Bank B for $1,000 and deposit it in Bank A to cover the overdraft fee. The process continues on and on and on, while banks have to catch up to figure out where the real money is.
    In addition to racking up overdraft fees, the couple signed a master promissory note (an agreement on a loan) for $950,000, on July 22, 2014. To secure the repayment of the note, the couple signed a Commercial Security Agreement, which put all their inventory, chattel paper, accounts and general intangibles up as collateral. According to the Exchange Bank, signing of the bank note included waiving the right to a jury trial in these circumstances.
    The note matured on Dec. 1, 2015, at which point the money owed plus interest was due in full. As of Feb. 8, 2016, the amount owed on the note was $781,748.58, plus daily interest, fees, costs and expenses. The total amount owed to the Exchange Bank was $3,664,652.78. The bank claimed it took all available and legal measures to get the couple to pay the debt owed, but the couple did not comply.
    In October 2016, the Exchange Bank filed a summary judgment containing the banks claims and the defendants’ counter claims. While the couple filed for a resistance, the period for the filing had passed and one was not granted. The court also dismissed the couples’ counter complaints.
    As the Exchange Bank filed from Missouri, the case was evaluated in the scope of Missouri law. When it comes to contract law, Missouri courts evaluate the plain language of the agreement. The court ruled “the plaintiff has supported its argument that it acted in accordance with the agreement between the parties with applicable account agreements and affidavits, and this court has determined that the Defendant’s counterclaims were without merit.
     The court also said that the defendants “have not established” that there is a genuine issue of material fact that excuses the failure to pay on demand the note and the overdraft balances.”
    As to the date that payment is due, the court has not decided as of press time, though a telephonic conference on fees will take place this afternoon.