Appeal from a judgment entered February 7, 1979, by the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, against appellant in the amount of $20,000 on a claim of breach of contract. Reversed.
Before Lumbard, Friendly and Gurfein, Circuit Judges.
The United States Small Business Administrator appeals from a judgment against him*fn1 on a claim of breach of contract arising out of an alleged agreement to repay National Bank of North America ("NBNA"), the plaintiff below, for a loan NBNA made to Cinco Investors, Inc. ("Cinco"). After a nonjury trial before Judge Griesa in the Southern District of New York, defendant was held liable in the sum of $20,000. We reverse the judgment because the evidence does not support, as a matter of law, the conclusion that a contract existed between plaintiff and defendant.
NBNA brought suit on January 31, 1978, in state court against Cinco, Aladino Ramos, Monserrate Ramos and Angelo Andello; and against the SBA. The SBA secured removal of the suit to federal court under 28 U.S.C. § 1441. NBNA's suit involved three claims against Cinco and the individuals named above, its principals, all based on the bank's loan to Cinco. On October 18, 1978, a partial default judgment was entered against Cinco and against Aladino Ramos. At trial Andello was dismissed as a defendant, with NBNA's consent. Following trial on January 25 and 26, 1979, judgment was entered on February 7, 1979 against Monserrate Ramos and the SBA. This appeal concerns only NBNA's claim against the SBA.
In late 1975 Cinco was in need of funds for its restaurant business in Bay Shore, Long Island, and applied to the SBA for a loan. On October 14, 1975, the SBA conditionally authorized a loan to Cinco in the amount of $50,000. Because of the SBA's internal procedures, the money could not be made immediately available. Cinco met with a loan officer of NBNA, George Seher, late in October, 1975. Kenneth Senhouse, the SBA loan officer handling the Cinco matter, was also present. NBNA agreed to loan Cinco $20,000 on an interim basis.
On November 3, 1975, Seher wrote a letter to the SBA as follows:
This is to advise that, at your request, we have today loaned the subject (Cinco) the sum of $20,000.00 as interim aid pending your closing of the captioned Authorization.
It is our understanding that our loan is to be paid out of the proceeds of your loan to the subject at the time of closing.
We would appreciate written concurrence in regard to the above.
On the same day, November 3, 1975, NBNA disbursed the ...