Kavanos v. Hancock Bank and Trust Co.

James M. Brown was the executive vice president of Hancock Bank and Trust Co. (Hancock Bank) (defendant). Brown managed Hancock Bank’s commercial and consumer loan division by, among other things, continuously reviewing Hancock Bank’s loan portfolio and overseeing the resolution of significant delinquent and workout loans. Harold Kavanos was a customer of Hancock Bank who had entered into a contract with Hancock Bank regarding the purchase of stock in a company called 1025, Inc. Brown signed a modification agreement on Hancock Bank’s behalf to amend the repurchase option to include a right of refusal and a cash payment if the stock was sold to someone else. Overall, the modification gave Hancock Bank a chance to make more money from the stock and did not commit Hancock Bank to a loan exceeding its lending authority nor to the sale or purchase of Hancock Bank’s property. Kavanos sued Hancock Bank and sought to enforce the modifications to the contract. Hancock Bank argued that the modifications were ineffective because Brown lacked the authority to bind Hancock Bank to the modification agreement absent approval by the board of directors. At trial, the evidence showed that Brown’s office was across from Hancock Bank’s president’s office, that Brown communicated with the president frequently, and that the president encouraged Kavanos to deal with Brown. Moreover, Kavanos had dealt with Hancock Bank often, and Brown had previously amended material points of the contract on Hancock Bank’s behalf. At the close of Kavanos’s evidence, Hancock Bank moved for a directed verdict. The trial court granted the motion. Kavanos appealed.