## Facts

- Gary Culver, a Missouri farmer, entered a business arrangement with Nasib Ed Kalliel under which Kalliel handled financial matters and Culver managed farm operations.
- Culver urgently needed funds to avoid foreclosure; $30,000 was wire-transferred from Rexford State Bank in Rexford, Kansas to Culver’s Missouri bank.
- Culver knew the funds came from the Kansas bank but believed Kalliel would be responsible for repayment of any related borrowing.
- About a week later, Jerry Gilbert (whom Culver believed worked for Kalliel) presented Culver a document to sign, representing it as a receipt needed for the bank’s records showing where the $30,000 went.
- Culver signed a preprinted promissory note form that identified Rexford State Bank as payee, but the key blanks (including date, maturity, principal, and interest) were not completed when he signed.
- After Culver signed, the blanks were filled in to state terms including a $50,000 principal amount, not $30,000.
- Rexford State Bank later became insolvent; the FDIC became receiver and, in its corporate capacity, purchased assets including the note.
- The FDIC sued Culver in federal court in Kansas to collect on the note; Culver challenged personal jurisdiction and asserted fraud in the factum.

## Issues

1. Whether a Kansas federal court could exercise personal jurisdiction over a Missouri resident based on the transaction and execution of an instrument payable to a Kansas bank.
2. Whether the FDIC was entitled to summary judgment on the promissory note despite Culver’s fraud-in-the-factum defense and allegations that the instrument was incomplete and later filled in beyond what he contemplated.
3. Whether Culver should be permitted to file an untimely jury demand.

## Decision

- The court denied Culver’s motion to dismiss for lack of personal jurisdiction.
- The court denied the FDIC’s motion for summary judgment, finding genuine disputes of material fact regarding fraud in the factum and whether Culver’s conduct in signing without reading was negligent.
- The court granted Culver leave to file a late demand for jury trial.

## Legal Principles

- Personal jurisdiction may be exercised over a nonresident who purposefully creates an obligation payable to a forum-state entity and engages in a transaction involving funds transmitted from that forum state, consistent with due process.
- Fraud in the factum—deception as to the character or essential terms of an instrument—can render an obligation unenforceable even against a subsequent holder, but the defense may be unavailable if the signer’s failure to learn the instrument’s nature or terms was negligent.
- Where an allegedly incomplete instrument is signed and later completed with disputed terms (including a principal amount exceeding what was received), fact questions about deception, reasonable reliance, and negligence commonly preclude summary judgment.
- A court may allow an untimely jury demand where material factual disputes remain and permitting a jury trial would not unduly prejudice the opposing party.

## Conclusion

The court held that Culver’s execution of an instrument payable to a Kansas bank and his receipt of bank-originated funds supported personal jurisdiction in Kansas, but it refused to enter judgment for the FDIC because a jury could find fraud in the factum and lack of negligence based on the circumstances surrounding the signing and later completion of the note; it also permitted a late jury demand so disputed facts could be tried.


Federal Deposit Ins. Corp. v. Culver, 640 F. Supp. 725 (D. Kan. 1986)