## Facts

- Harold J. Kanavos and his brother borrowed from Hancock Bank and Trust Company on at least twenty occasions over about ten years, at times owing up to $800,000 in aggregate loans.
- Throughout that relationship, Kanavos dealt primarily with James M. Brown, who became the bank’s executive vice-president and chief loan officer.
- During a 1974 real estate downturn, the bank (through Brown) pursued a “workout” to reduce or liquidate roughly $300,000 in unsecured loans, involving an interest in a real estate enterprise tied to an apartment building at 1025 Hancock Street (Executive House).
- The workout included arrangements concerning stock or an equivalent interest held by the bank and rights for Kanavos to repurchase or otherwise participate if the bank disposed of the asset.
- On July 16, 1976, Brown signed a letter on bank letterhead as executive vice-president stating, in substance, that if Kanavos did not exercise his option, the bank would (a) pay Kanavos $40,000 upon the bank’s sale of the property and (b) give Kanavos the right to match the sale price within 60 days after notice of an offer.
- Kanavos sued on the July 16 modification; at trial, the judge excluded the letter until Kanavos showed Brown’s authority to bind the bank.
- At the close of Kanavos’s evidence, the trial court directed a verdict for the bank for insufficient proof of Brown’s authority; Kanavos appealed.

## Issues

1. Whether the evidence, viewed most favorably to Kanavos, was sufficient to allow a jury to find Brown had actual authority to bind the bank to the July 16, 1976 modification.
2. Whether the evidence was sufficient to allow a jury to find Brown had apparent authority to bind the bank to the modification based on the bank’s manifestations and course of dealing.
3. Whether the directed verdict was improper under the standard requiring submission to the jury when evidence permits a rational inference of liability.

## Decision

- The Appeals Court of Massachusetts reversed the directed verdict and remanded for further proceedings.
- The court held that Kanavos presented sufficient evidence for a jury to find either actual authority or apparent authority in Brown to make the modification.
- The court concluded that excluding the July 16 letter on the ground of lack of authority was premature given the evidentiary record.

## Legal Principles

- On review of a directed verdict, the question is whether the evidence, taken in the light most favorable to the plaintiff, supports a reasonable inference of facts imposing liability on the defendant.
- Corporate titles alone generally do not establish apparent authority.
- Apparent authority depends on how a reasonable third party would interpret an agent’s authority in light of the principal’s manifestations.
- Apparent authority may be inferred from the totality of circumstances, including prior dealings, the scope of responsibilities entrusted, the principal’s encouragement to deal with the agent, and the agent’s prior handling or amendment of related transactions without repudiation.
- Evidence that an executive officer had broad responsibility over loan/workout matters can support a finding of actual authority to make non-fundamental modifications to an existing workout arrangement.

## Conclusion

Because the evidence permitted a jury to find that the bank’s executive vice-president and chief loan officer had actual or apparent authority to issue the July 16, 1976 modification letter, the directed verdict for the bank was reversed and the case was remanded for trial proceedings where the modification could be considered on the merits.


Kanavos v. Hancock Bank & Tr. Co., 439 N.E.2d 311 (Mass. App. Ct. 1982)