State Bank of the Lakes v. Kansas Bankers Surety Co., Cross-Appellee

EASTERBROOK, Circuit Judge.

For more than a decade, State Bank of the Lakes loaned money to Pistakee Marina, Inc., to finance its inventory. The Bank took custody of each Manufacturer’s Statement of Origin (MSO), a document that Pistakee needed before it could deliver good title to a customer. Release of the MSO was linked to repayment of the advance. The Bank also checked Pistakee’s premises to see whether the boats identified by the certificates were there; they always were, and Pistakee always repaid the loans — until 1997. That year Pistakee went under, and the Bank discovered that it had…