Am. Gen. Finance v. Beemer

• Decision Date: 28 June 1991
• Docket Number: No. 1-90-73,1-90-73
• Citation: 598 N.E.2d 144,73 Ohio App.3d 684
• Parties: AMERICAN GENERAL FINANCE, Appellant, v. BEEMER et al., Appellees.
• Court: Ohio Court of Appeals

Page 684

73 Ohio App.3d 684

598 N.E.2d 144

AMERICAN GENERAL FINANCE, Appellant, v. BEEMER et al., Appellees.

No. 1-90-73.

Court of Appeals of Ohio, Third District, Allen County.

Decided June 28, 1991.

Hunt, Moritz & Chamberlain and F. Stephen Chamberlain, Lima, for appellant.

Matt C. Staley, Lima, for appellees.

EVANS, Judge.

This is an appeal from a judgment of the Lima Municipal Court summarily dismissing a complaint filed by the appellant, American General Finance.

On October 6, 1989, plaintiff-appellant filed this action for collection on an installment contract for the purchase of a water treatment system for a personal residence. Scott and Deborah K. Beemer, appellees, had signed an installment contract, note, and security agreement with Federal Water Treatment, Inc. on July 27, 1988. The total contract price was $3,031.80, to be paid over a five-year period, in installments of $50.53 per month. The note was subsequently assigned to appellant, American General Finance.

After failing to receive payments from the Beemers for several months, American General filed its complaint alleging money due in the amount of $1,953.02 plus interest from January 1, 1989. At a pretrial hearing on July 11, 1990, appellees presented the judge with their copy of the original note, which bore a "paid" stamp per American General Finance. The trial judge ruled that the contract was, on its face, complete and satisfied; he denied the finance company any opportunity to present its evidence on the record.

Upon appellant's request, the court did allow a proffer of evidence, for purposes of appeal. American General thereupon asserted that it was prepared to offer evidence to prove that, on receipt of payment in full on a second account involving the Beemers, appellant's clerical employee mistakenly placed a "paid" stamp on the note for the water treatment system, and mailed it to the Beemers. Soon thereafter, the employee's manager discovered the error, and contacted the Beemers both by telephone and by mail, in an effort to rectify the mistake. Appellees contended that, since they had in their possession the "paid" note, they considered the debt extinguished. They made no further payments on the note, and this action was filed.

The trial court, at the pretrial hearing, applied the parol evidence rule to bar evidence of the appellant's clerical error, and issued the following ruling: "The finding of the Court is that the Defendant has the paid note and the contract and finds no cause of action on behalf of the Plaintiff."

The plaintiff, American General Finance, has appealed the judgment of the Lima Municipal Court, setting forth three assignments of error:

"I. The trial court committed an error prejudicial to the appellant when it granted a judgment to the appellee[s] on the basis of appellees' answer to complaint and upon the court seeing the original note marked 'Paid' with an ink stamp where there was no motion before the court for a judgment on the pleadings, a motion for summary judgment, a motion for directed verdict or a motion to dismiss for failure to state a claim upon which relief may be granted.

"II. The trial court erred when it granted a judgment to the appellees on the date of trial without granting the opportunity to the appellant to present its evidence and give it a full and fair opportunity to be heard by presenting its witnesses and exhibits on the record for the court's consideration, in violation of the appellant's right to due process of law.

"III. The trial court committed an error when it based its judgment for the appellees upon the premise that the appellant planned to introduce 'parol evidence to alter the effect of the original note marked "Paid" ' for the reason that such a premise is contrary to law as applied to the facts of this case."

Appellant's first two assignments of error will be combined for discussion, since they both address the issue of denial of due process, and are well taken. A review of the record convinces us that the appellant was denied its constitutional right to a fair and impartial hearing as a result of the trial court's misapplication of the parol evidence rule and subsequent dismissal of the complaint, sua sponte, absent any presentation on the record of a motion for a judgment on the pleadings.

The Ohio Constitution, Section 16, Article I, undeniably affords the parties in a civil case the right to due process of law, the "basic thrust" of the clause being a requirement for notice and an "opportunity to be heard." See Ohio Valley Radiology Assoc., Inc. v. Ohio Valley Hosp. Assn. (1986), 28 Ohio St.3d 118, 124-125, 502 N.E.2d 599, 604. Additionally, other cases in Ohio have held that unless notice and an opportunity for a fair hearing are given to opposing parties, a trial court has no authority to take action, sua sponte, prejudicial to the opposing party. See, e.g., Rice v. Bethel Assoc., Inc. (1987), 35 Ohio App.3d 133, 520 N.E.2d 26; Connolly v. Natl. Sur. Co. (1929), 35 Ohio App. 76, 171 N.E. 870. In Rice, the trial court vacated its judgment order dismissing the plaintiff's complaint with prejudice, without notice to the defendant, and without plaintiff's having filed a motion pursuant to Civ.R. 60(B). The court of appeals reversed the trial court on grounds that the Ohio Civil Rules and the due process afforded Ohio citizens under the state Constitution do not allow such practice. See Rice, 35 Ohio App.3d at 134, 520 N.E.2d at 27. In Connolly, the appellate court specifically stated that,...