A Winnsboro bank is suing a supplier of agricultural products in federal court, claiming the supplier received more than $1.4 million in crop proceeds from an area farmer who should have settled his bank loans first.
Franklin State Bank & Trust Company, a Winnsboro banking corporation, filed its lawsuit Aug. 5 in U.S. District Court for the Western District. The bank is seeking a judgment against Crop Production Services Inc., which has a local office in Rayville, for some $1.4 million plus interest.
That's the sum of 11 crop proceed checks provided to the bank by Thomas A. Dickerson, a Delhi farmer. Though Dickerson rendered the checks to the bank, a bank loan officer signed them over to Crop Production Services, believing the payments were for loans that had already been paid.
According to Franklin State Bank's account of the mix-up, the bank first entered into agreements with four farms involving Dickerson. The four farms received a loan for a certain amount that covered farm operation costs such as paying for chemicals, seed, fertilizer and other services provided by Crop Production Services.
Among the farms which obtained loans from the bank in 2014 and 2015 were Dickerson Agricultural Partnership, B&T Farms LLC, W&T Farms LLC and Kelley Ag Services Inc. According to state records, Dickerson owned interest in or represented each of the four farming operations.
Under the agreement, Franklin State Bank was given a "first priority lien on any sale proceeds, crop insurance proceeds and certain government program payments," according to the lawsuit.
That meant each of the four farms' crop proceeds were to pay back the bank's loan first, before settling any remaining debt to Crop Production Services.
Franklin State Bank claims Crop Production Services ultimately received some $1.4 million, which the bank should have collected first.
In its lawsuit, Franklin State Bank contends the mix-up resulted from a "misrepresentation" of the 11 checks by Dickerson when he brought the crop proceed checks to the bank.
"Based on this misrepresentation by Dickerson, these proceeds were incorrectly sent to CPS," the bank's lawsuit stated.
When Dickerson brought checks based on proceeds from 2015 crops, he told Franklin State Bank the crop proceeds were from 2014 crops instead, the bank claims.
"As a matter of practice, Dickerson would visit FSB's loan officer, Clark McCain, and present checks to him for crop proceeds," the bank's lawsuit stated. "These proceeds were either applied to loans at FSB, or if FSB had no balance on the loan in the check payee's name, the checks were endorsed over to CPS..."
"However, in the case of the crop proceed checks (totaling some $1.4 million), the proceeds were represented by Dickerson to McCain as proceeds originating from the 2014 crop."
The farms for which Dickerson provided the 11 crop proceed checks totaling some $1.4 million were B&T Farms LLC, Dickerson Ag Partnership, and Tibb Co Farms LLC.
Since Franklin State Bank's records showed the 2014 loans to the four farms were paid in full, the bank's loan officer, McCain, endorsed the checks over to CPS.
Franklin State Bank realized the error earlier this year.
"In early February of 2016 it was discovered that Dickerson had misrepresented the crop year for which some of the crop sales proceeds were received by the (four farms), and the sale proceeds were actually for the sale of 2015 crops loans for which FSB had a priority lien and had not been paid totaling $1,436,312.78," the bank's lawsuit stated.
Franklin State Bank is represented by Robert Baldwin and Johnny Huckabay II of Hudson, Potts & Bernstein, a Monroe law firm.