The opinion of the court was delivered by: RAMBO
The undisputed facts are as follows:
1. In May of 1982, Dauphin Deposit loaned Stafford Laboratories (Stafford) $3,000,000 to purchase Whitmoyer Laboratories. The loan was secured by a mortgage on the plant facilities and the personal guaranty of Frank Lucero, the President of Stafford Laboratories, and his wife.
2. In May of 1982, Dauphin Deposit established a line of credit for Stafford in the amount of $500,000 for the operation of Whitmoyer Laboratories.
3. In addition to the mortgage on the Whitmoyer Laboratories plant facility, Dauphin Deposit perfected security interests in Whitmoyer Laboratories' accounts receivable, inventory and equipment.
4. In May of 1983, Dauphin Deposit renewed Stafford's line of credit to operate Whitmoyer Laboratories and raised the line to 1.1 million dollars.
5. In the spring of 1983, Maryland National Bank solicited business in central Pennsylvania by mailing pamphlets promoting its services to various companies including Whitmoyer Laboratories.
6. As a result of this contact, a meeting was held between two Maryland National Bank employees, Carey Jackson and Frances Manus, and Frank Lucero, President of Stafford, to discuss financing for Stafford's anticipated acquisition of Sterwin, the Animal Health Division of the Sterling Drug Company.
7. In preparation for presenting the Stafford loan for approval to Maryland National Bank's Commercial Loan Committee, Jackson obtained 1980 and 1981 unqualified financial statements on Stafford and a 1982 financial review prepared by Touche Ross.
8. During the fall of 1983, Jackson contacted Bruce Burley, a senior partner in Touche Ross's Philadelphia office, to discuss Stafford's acquisition of Sterwin and Burley's acceptance of a position at Sterwin if Stafford acquired Sterwin.
9. In the fall of 1983, Carey Jackson also received and reviewed documents detailing the loans from Dauphin Deposit to Stafford in preparation for presenting the loan to Stafford.
10. No one at Maryland National Bank contacted Dauphin Deposit for information concerning Stafford during the fall of 1983.
11. On the basis of the financial information received on Stafford and information obtained concerning Sterwin, Maryland National Bank's Commercial Loan Committee approved a loan to Stafford for the acquisition of Sterwin in early October of 1983.
12. Following the approval of the Commercial Loan Committee the loan was approved by Maryland National Bank Executive Committee on October 13, 1983.
13. In late 1983, Stafford was searching for a financial institution to replace Dauphin Deposit or to supplement Dauphin Deposit's line of credit, and Maryland National Bank considered doing so.
14. In January of 1984, Maryland National Bank agreed to loan $500,000 to Stafford under a demand note, with Lucero's and his wife's joint and several guaranty as security.
15. In preparation for a second loan presentation to Maryland National Bank's Commercial Loan Committee involving Stafford, Carey Jackson received an internally prepared financial statement on Stafford from Frank Lucero in January of 1984.
16. The Executive Committee of Maryland National Bank approved a term of loan of 3.2 million dollars to Stafford on or about January 26, 1984 which was to be secured by a mortgage on the Whitmoyer Laboratories' plant facilities.
17. Two of the conditions for approval of the 3.2 million dollar term loan were:
a) a minimum appraisal of 6.4 million dollars on the Stafford Laboratories real estate and facilities; and
b) receipt of a 1983 audited Stafford Laboratories' financial statement.
18. A thorough appraisal of the Whitmoyer Laboratories' facilities was done by Maryland National Bank's real estate department and, as a result, the term loan was reduced from 3.2 million to 3 million dollars.
19. Carey Jackson received a 1983 financial statement on Stafford from Frank Lucero in early April of 1984 which was fully reviewed by Maryland National Bank ...