bepress Legal Repository

Title

Current State of the D’Oench Duhme Doctrine: Comparison of the Doctrine with the Federal Holder in Due Course Doctrine and the Section 1823(e) of the Federal Deposit Insurance Act

Authors

Rostyslav I. Shiller, University of Miami School of Law

Abstract

As this article’s analysis has shown the interaction between federal statutes and federal common law is an extremely delicate one.

The common law D’Oech Duhme and federal holder in due course doctrines as well as statutory Section 1823(e) are directed to the same evils and share the same principles.

The comparison of Section 1823(e) and common law D’Oench doctrine brought us to an inevitable conclusion that despite FIRREA's broadening of § 1823(e) in 1989, the common law D'Oench doctrine still provides broader protection to the FDIC than does post-FIRREA § 1823(e).

Over the years the common law D'Oench doctrine has expanded to protect virtually all claims and defenses against the FDIC's interests. Despite all differences, it is evident that both of common law doctrines (D’Oench and federal holder in due course) work together to ensure that the FDIC can rely on the face value of documents received during the course of a purchase and assumption transaction.

In the recent years a growing number of circuits have slithered to the position that common law D’Oench doctrine has been abrogated by the FIRREA’s enactment of comprehensive version of the Section 1823(e).

However, the split among circuits appears to support the view that at least some of the doctrine is distinct from and has survived the enactment of the statute. At this point, the majority view supports a contention that while § 1823 partially codifies the D'Oench doctrine, but it does not preempt it completely.

Finally, answering the core question that this article was purported to answer we constitute that reports on the demise of the D’Oench doctrine have been greatly exaggerated.

In any case, the most important thing is that currently the D’Oench, Duhme doctrine remains live and intact, but for how long? This is an open question left to the Supreme Court of the United States.