## Facts

- A bank senior loan officer sought to finance relocation of a plastics business to Logansport, Indiana, and worked with Garrett and Moore to acquire and move operations from Michigan.
- The bank initially made a $100,000 loan to Garrett and Moore connected to the acquisition.
- The bank later processed new applications for a term loan and an operating loan for the renamed business (Logan Drinkwear, later Logan Manufacturing).
- The bank issued written loan commitment letters approving the loans and stating the financing was contingent on obtaining a state guarantee; the loan officer represented the condition would not be a problem.
- Garrett and Moore incurred moving and related expenses in reliance on the commitments and proceeded with the relocation.
- The bank ultimately refused to close and fund the committed loans.
- Unable to obtain replacement financing, Garrett and Moore defaulted on a separate loan with another bank that repossessed and sold collateral equipment; they did not secure substitute financing for a similar business until 1987.

## Issues

1. Whether the bank’s commitment letters and related conduct created an enforceable contract to loan money that the bank breached by refusing to close.
2. What damages were recoverable for breach of a loan commitment, including lost profits, moving-related out-of-pocket expenses, and equipment losses arising from default on a separate third-party loan.

## Decision

- The court held an enforceable contract to loan money was formed and the bank breached it by refusing to close.
- The court affirmed recovery of lost profits for the period the business could not operate due to the bank’s refusal to fund, finding the profits sufficiently proven and foreseeable.
- The court allowed recovery of out-of-pocket moving and related reliance expenses to the extent they were not duplicative of the lost-profits award.
- The court disallowed damages for equipment lost through repossession by a different bank, concluding those losses were too remote and not reasonably foreseeable consequences of the breached loan commitment.

## Legal Principles

- A contract to loan money is enforceable when essential terms are agreed and the lender’s commitment manifests intent to be bound, including through written commitment letters.
- Lost profits are recoverable for breach of contract when proximately caused by the breach, within the parties’ contemplation at contracting, and proven with reasonable certainty; performance of a later similar operation may supply a non-speculative basis for calculation.
- Consequential damages are not recoverable when they are too remote or depend on separate third-party transactions not reasonably contemplated as a probable result of breach.
- Reliance expenditures incurred in reasonable reliance on the commitment may be recovered if proximately caused and not already included in an expectation (lost-profits) calculation, to avoid double recovery.

## Conclusion

The court enforced the bank’s loan commitment, awarding lost profits and non-duplicative reliance expenses caused by the refusal to fund, while limiting consequential damages by excluding remote losses tied to borrowers’ default and repossession in an independent third-party lending relationship.


First Nat'l Bank of Logansport v. Logan Mfg. Co., 577 N.E.2d 949 (Ind. 1991)