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Morrison v. First National Bank2/26/2002
APPEAL from the Franklin County Court of Common Pleas.
Plaintiff-appellant, Judith C. Morrison, appeals from a judgment of the Franklin County Court of Common Pleas granting directed verdicts to defendant-appellee, First National Bank of Zanesville ("FNB"), on plaintiff's claims for breach of contract and conversion, and on FNB's counterclaim for a judgment in the amount of the balance owed on a loan on which plaintiff is a personal guarantor.
In January 1994, plaintiff and her twin sister, Pamela M. Gugle, decided to open a consignment store for upscale furniture in Columbus, Ohio. In May 1994, plaintiff and Gugle incorporated under the name "An Elegant Encore." Pursuant to the terms of the articles of incorporation, the sisters were the sole stockholders in the corporation, each sister owning fifty percent of the corporation's stock, and the only members of the corporation's board of directors. The corporate officers were elected at a meeting of An Elegant Encore's board of directors held on May 17, 1995, with Gugle being elected president and plaintiff being elected secretary/treasurer. In addition, the business plan called for plaintiff and Gugle to be salaried employees of An Elegant Encore, and for each to be paid an annual salary of $15,000 during the first year of business.
Plaintiff and Gugle each invested $10,000 of their own money into An Elegant Encore and sought additional start-up capital through a Small Business Administration ("SBA") program administered by FNB. On February 17, 1995, An Elegant Encore obtained an $80,000 SBA guaranteed loan from FNB. In order to obtain the loan, both plaintiff and Gugle were required to personally guarantee the entire amount of the loan. In working to obtain the loan, plaintiff and Gugle met with FNB banking officer, Kim McCourt. From that time until she left FNB in early March 1996, McCourt was the FNB officer assigned to work with An Elegant Encore.
On the same day that An Elegant Encore's loan was approved, plaintiff and Gugle executed a corporate resolution on behalf of An Elegant Encore which authorized FNB to open a checking account in An Elegant Encore's name (hereinafter the "original account"), to pay checks drawn on the account and to open new accounts in the corporation's name on the signature of either plaintiff or Gugle. However, on April 24, 1995, plaintiff and Gugle executed a second corporate resolution in which they altered the signature requirements on the original account such that FNB was required to have both of their signatures to pay checks of $500 or more drawn on the corporation's checking account and to open any new accounts in the corporation's name.
On March 25, 1995, An Elegant Encore opened for business. From the beginning, the business was successful and outperformed the projections made in the business plan.
On Friday, January 26, 1996, much to plaintiff's surprise, Gugle presented plaintiff with a letter, prepared by Gugle's lawyer, Michael Vasko, which demanded that plaintiff convey all of her interest in An Elegant Encore to Gugle and vacate the business premises by the following Monday morning. According to the letter, the basis for the demand was plaintiff's misuse of corporate funds. Plaintiff's denies such misuse and no evidence of the same has ever been presented. Plaintiff did not comply with Gugle's demand.
On January 29, 1996, Vasko, at Gugle's request, called plaintiff at home and informed her that Gugle had terminated plaintiff's employment with An Elegant Encore, that plaintiff would no longer be permitted access to the business premises, and that plaintiff's presence on the business premises would be treated as an act of
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