Glimcher v. Reinhorn

• Decision Date: 06 August 1991
• Docket Number: No. 91AP-288,91AP-288
• Citation: 68 Ohio App.3d 131,587 N.E.2d 462
• Parties: , 18 UCC Rep.Serv.2d 511 GLIMCHER, Appellee, v. REINHORN, Appellant. *
• Court: Ohio Court of Appeals

Page 131

68 Ohio App.3d 131

587 N.E.2d 462, 18 UCC Rep.Serv.2d 511

GLIMCHER, Appellee, v. REINHORN, Appellant. ^*

No. 91AP-288.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided Aug. 6, 1991.

Schottenstein, Zox & Dunn, James E. Davidson and Robert M. Robenalt, Columbus, for appellee.

E. Bruce Hadden Co., L.P.A., and E. Bruce Hadden, Worthington, for appellant.

STRAUSBAUGH, Judge.

Defendant, Richard A. Reinhorn, appeals a judgment of the Franklin County Court of Common Pleas granting partial summary judgment in favor of plaintiff, David A. Glimcher, on the issue of defendant's liability on a promissory note. Following referral to a referee, the trial court overruled the objections to the report of the referee and entered judgment in favor of plaintiff in the amount of $100,641.12 plus interest at the statutory rate from August 2, 1990.

In 1984, plaintiff and defendant formed an Ohio corporation known as Coin-A-Ticket International, Inc. This company was organized for the purpose of developing a ticket dispenser that would refit existing video games as well as games to be manufactured. Plaintiff and defendant each owned an equal share of the company with plaintiff serving as vice president and defendant serving as president. On April 4, 1984, plaintiff and defendant executed and delivered to Ameritrust Company National Association ("Ameritrust") a promissory note in the amount of $150,000. On the same date, the parties also executed a guarantee of payment of debt which provided that both plaintiff and defendant would be individually, and jointly and severally liable for this debt. Subsequently, Coin-A-Ticket defaulted on the original note with Ameritrust and a replacement note and guarantee were again cosigned by the parties on February 19, 1988. On September 30, 1988, the parties executed a second replacement note with a due date of January 31, 1989, which was again signed by both plaintiff and defendant in their individual capacities.

Ultimately, the parties defaulted on their obligation, and Ameritrust instituted an action to recover all amounts owed on the second replacement note. Thereafter, plaintiff satisfied Ameritrust's demand on the second replacement note by paying almost the entirety of the debt including principal and interest due to Ameritrust.

On August 14, 1989, plaintiff filed the present action against defendant seeking to recover contribution for sums paid by plaintiff to satisfy the obligation to Ameritrust. On August 1, 1990, the trial court granted partial summary judgment in favor of plaintiff on the issue of liability, finding that plaintiff was entitled to contribution. However, the trial court referred the specific amount owed to plaintiff to be determined by a referee. After a full hearing on the issue of damages, the referee issued a report recommending that the trial court enter judgment in favor of plaintiff in the amount of $100,641.12 plus interest. On February 8, 1991, the trial court overruled defendant's objection to the referee's report and adopted the report as its own. In the same entry, the trial court overruled defendant's motion to continue for hearing plaintiff's motion for summary judgment as well as plaintiff's motion to quash a subpoena duces tecum.

On appeal, defendant sets forth the following four assignments of error for this court's review:

"I. The Trial Court erred in granting summary judgment in favor of Plaintiff against the Defendant.

"II. The Trial Court erred in refusing to continue the non-oral hearing on Plaintiff's motion for summary judgment until after Defendant had complied with outstanding discovery requests.

"III. The Trial Court erred in its award of prejudgment interest on Plaintiff's claim for equitable contribution.

"IV. The Trial Court erred in overruling Defendant's objections to the Referee's Findings."

As defendant's first assignment of error argues that the trial court erred in granting summary judgment regarding defendant's liability on the promissory note, this court recognizes at the outset that summary judgment is a procedural device designed for the prompt disposition of an action where the evidence indicates "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Civ.R. 56(C). Since the practical result of granting summary judgment is to deprive a party of a formal trial, summary judgment is to be granted cautiously, resolving doubts and construing the evidence most favorably in behalf of the opposing party. Summary judgment should then be granted only when reasonable minds can come to but one conclusion which is adverse to the opposing party. Id.

In a motion for summary judgment, the moving party has the burden of demonstrating that no genuine issue exists as to any material fact. Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 8 O.O.3d 73, 375 N.E.2d 46. Therefore, the moving party must present evidence on all the material determinative issues presented in an action in order to have a motion for summary judgment granted in his favor. Rayburn v. J.C. Penney Outlet Store (1982), 3 Ohio App.3d 463, 3 OBR 544, 445 N.E.2d 1167.

Defendant insists that the trial court erred in granting summary judgment in favor of plaintiff on the basis that there exists a question of fact as to whether defendant was an accommodation party. As a result, defendant maintains that the trial court erred in finding as a matter of law defendant was liable on the promissory note.

It is clear that a party is not liable on an instrument unless his signature appears upon that instrument. R.C. 1303.37(A). In the present case, both plaintiff and defendant signed each of the promissory notes as well as guarantees of payment. Our review of the notes at issue indicates that they fall within the requirements imposed for the existence of a negotiable instrument. See R.C. 1303.01; 1303.03; 1303.02 through 1303.09. Defendant does not dispute the fact that he is the comaker on the note. R.C. 1303.49(A) provides that a maker engages that he will pay the instrument according to its tenor, unlike an endorser, set forth in R.C. 1303.50(A), who engages that he will pay the instrument according to its tenor only upon dishonor and any required notice of dishonor and protest. Although R.C. 1303.38 provides that there ordinarily exists a presumption that a signature on a instrument constitutes an endorsement, see Alves v. Baldaia (1984), 14 Ohio App.3d 187, 14 OBR 205, 470 N.E.2d 459, it has been recognized that when a party signs a promissory note in the lower right-hand corner of an instrument, that party, absent a clear indication otherwise, is regarded as a maker. Huron Cty. Banking Co. v. Knallay (1984), 22 Ohio App.3d 110, 22 OBR 311, 489 N.E.2d 1049. In the present case, defendant's signature appeared in the lower right-hand corner of the subject promissory notes. Thus, given the presumption which accompanies the location of defendant's signature, as well as defendant's own statements, this court concludes that defendant was indeed a comaker of the promissory notes at issue.

Defendant insists that although he is a maker on the notes, plaintiff cannot seek contribution from him since defendant was an accommodation party. R.C. 1303.51(A) provides that "[a]n accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it." Although a party is a maker to a promissory note, such status does not necessarily preclude his status as an accommodation party to that note. Rather, the first paragraph of the Official Comment to R.C. 1303.51 provides:

"Division (A) recognizes that an accommodation party is always a surety (which includes a guarantor), and it is his only distinguishing feature. He differs from other sureties only in that his liability is on the instrument and he is a surety for another party to it. His obligation is therefore determined by the capacity in which he signs. An accommodation maker * * * is bound on the instrument without any resort to his principal, while an accommodation indorser may be liable only after presentment, notice of dishonor and protest. * * * " See, also, Huron Cty., supra.

Accordingly, this court recognizes that a maker on an instrument may at the same time be an accommodation party. This court has previously addressed efforts to support an argument that a party whose signature appears on an instrument does so as an accommodation party. In Fidelity Title Service v. Ball Homes, Inc. (1985), 25 Ohio App.3d 52, 25 OBR 219, 495 N.E.2d 964, paragraph one of the syllabus, this court held:

"Usually, proof of the status of an accommodation maker is established by the specific language he adds to his signature, or the position of his signature on the instrument. However, in certain circumstances, oral proof is admissible to prove the accommodation character of a party where no such indication appears in the instrument. (R.C. 1303.51[C] [UCC 3-415(3) ], applied.)"

See, also, Huron Cty., supra. Accordingly, while oral, or parol, evidence is admissible to demonstrate the accommodation status of a party, unless such proof is to be admitted against a holder in due course who took the instrument without notice of the accommodation, a maker who claims such preferred status has the burden of proving that he was indeed an accommodation party. Id.; R.C. 1303.51.

In order to determine whether a party is indeed signing in order to accommodate another party, there are several factors which courts may review to determine whether such status has been demonstrated. First, the position of the maker's signature on the instrument. R.C. 1303.51(D) provides "[a]n endorsement which shows that it is not in the chain of title is notice of its accommodation character." This is one desirable way to indicate the accommodation status of a party since an endorsement outside the chain of...