FDIC v. Providence College
United States Court of Appeals for the Second Circuit
115 F.3d 136 (1997)
- Written by Jennifer Flinn, JD
Facts
Providence College (defendant) was a private college in Rhode Island. The college began a major construction project to remove asbestos from its buildings. The college selected two construction companies (defendants) with the lowest bids to perform the work. The construction companies sought several loans from Crossland Savings Bank (plaintiff) to finance the asbestos project. Before issuing the loans, Crossland required a written loan guaranty from the college. Joseph Byron, Vice President for Business Affairs for the college, signed the loan guaranty on behalf of the college. Crossland and the college had little contact, but Crossland was aware of Byron’s title as vice president for business affairs. Crossland made no other attempt to determine whether Byron had the appropriate authority to guarantee the loans on behalf of the college. A loan guaranty of this nature was not a typical transaction for private colleges such as Providence College, and no evidence that Providence College had ever guaranteed a loan for a construction company before this transaction existed. Crossland filed a lawsuit against the college, the construction companies, and others, seeking to recover on the loan and the college’s guaranty of the loan. The college argued that Byron had no actual or apparent authority to bind the college. The district court ruled that Byron had apparent authority to guaranty the loan on behalf of the college and entered a judgment against the college. The college appealed.
Rule of Law
Issue
Holding and Reasoning (Jacobs, J.)
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