First National Bank of Central City, Kentucky v. Aetna Casualty & Surety Company

In this diversity action by a bank against an insurance company, the appellee, First National, the plaintiff below, extended credit to a third person, one Arnold, a businessman, in the amount of $336,000 secured by the debtor’s business accounts receivable. The promissory note to the Bank executed by Arnold was secured by certain attached duplicate invoices each of which showed on its face the signature of the purchaser with language purporting to acknowledge receipt of merchandise. The invoices and accounts receivable were, in fact, phony; and the signatures of the purported purchasers were…