Bank Did Not Intentionally Interfere With Farmer’s Business Operations

February 3, 2006 | Roger McEowen

In most states, the common law bars one person from maliciously interfering with another person’s business. That’s the rule in Iowa. A person cannot act with the sole purpose to injure or financially destroy another person’s business relations. Since 1991, several states have gone further and enacted legislation designed to protect perishable food products from false and malicious statements. This case did not involve food disparagement, but it did involve a farmer’s claim that a bank intentionally interfered with his business relations. 

In this case, a farming operation financed their operation through a bank. A bank employee embezzled funds from their line of credit.The bank eventually restored the embezzled funds along with interest, but until that time the farming operation required additional funds to pay their farm leases and suppliers.  As a result, the bank offered to restructure the farming operation’s loan at a lower interest rate and an enhanced line of credit.  In return, the bank sought a release of liability for all claims relating to prior financing (except for any undiscovered embezzlements). The farming operation declined the offer, and the bank declared the loan in default.  As a result, the farming operation could not pay amounts owed under its leases and to suppliers. The farming operation sued for intentional interference with business relations. The court disagreed, noting that the bank had made full restitution for the embezzlement, had no continuing obligation to provide financing, and that the release was intended to protect the bank’s financial interest - not to harm the farming operation’s business. That was the case, the court opined, regardless of whether the leases were characterized as contracts or business relationships. Stanley and Elwood Farms v. First National Bank, No. 5-738/04-1381, 2006 Iowa App. LEXIS 95 (Iowa Ct. App. Feb. 1, 2006).