Marion Production Credit Association v. Paul W. Cochran, 87-LW-2998
| Decision Date | 10 August 1987 |
| Docket Number | 87-LW-2998,CA-666 |
| Parties | MARION PRODUCTION CREDIT ASSOCIATION Plaintiff-Appellee, v. Paul W. COCHRAN, et al. Defendants-Appellants. |
| Court | Ohio Court of Appeals |
Civil Appeal from Common Pleas Court, Case No. 17311.
John J Kulewicz, Vorys, Sater, Seymour and Pease, Columbus, for plaintiff-appellee.
Larry L. Inscore, Inscore, Rinehardt, Whitney and Enderle Mansfield, for defendants-appellants.
Before PUTMAN, P.J., and MILLIGAN and HOFFMAN, JJ.
In this appeal, Paul W. Cochran, et al. are defendants-appellants and Marion Production Credit Association is plaintiff-appellee. As the Court of Common Pleas of Marion County observed in the instant judgment entry and decision "this case, began in 1982, has had a long and convoluted history." Following is a statement of the case pertinent herein.
Paul and Barbara Cochran mortgaged land to Marion PCA, and Paul's parents (Wayne and Edna Cochran) also mortgaged land to appellee as guarantors of Paul's loan. The debt was not paid and appellee commenced a lengthy foreclosure action. The Cochrans filed an answer and counterclaim to said foreclosure action with the counterclaim containing two counts. Upon appellee's motion for summary judgment, the foreclosure action was sustained in favor of appellee by the Common Pleas Court of Morrow County with foreclosure ordered and a money judgment of $640,000 entered.
Prior to the course rendering of summary judgment in favor of appellee it (PCA) had moved the court (motion filed June 28, 1982) to strike as legally insufficient various defenses and Count Two of appellants' counterclaim. PCA's motion to strike did not address Count One.
Said Count One of appellants' counterclaim reads in pertinent part as follows:
COUNT ONE
24.Plaintiff induced defendants Wayne Cochran and Edna Cochran to execute and deliver Exhibits A and B as guarantors of the debt of defendants Paul W. Cochran and Barbara M. Cochran and to execute and deliver Exhibit E by falsely representing to defendants that plaintiff had the intent, as soon as the proceeds from the sale or other liquidation of 50,000 bushels of corn by defendant Paul W. Cochran was applied to such debt, to release defendants Wayne Cochran and Edna Cochran from the obligations of Exhibits A, B, and E.
25.In further reliance upon those false representations, defendant Paul W. Cochran did liquidate 50,000 bushels of corn and apply the proceeds against that debt.
26.In making those false representations plaintiff maliciously intended to deceive and mislead defendants.
27.As the direct result
On September 29, 1982, the trial court granted the motion to strike, thus placing Count One in "limbo." We say this because PCA failed to reply or respond in any way to Count One nor did appellant file for default upon it. Said Count One was revived when at an August 7, 1986 pretrial it was assigned for jury trial beginning February 23, 1987. Awakened to the fact that Count One was alive, appellee filed a motion (on August 19, 1986), for leave to file a tendered reply to said Count One, citing excusable neglect. The reply denied the allegation contained in paragraph 25, supra, viz. that young Cochran performed as stated. Appellants, the next day, opposed said motion and also filed for default judgment against PCA as to liability pursuant to Civ.R. 55.
On August 22, 1986, PCA moved to dismiss the instant count based upon the Statute of Frauds. PCA stated:
Under the Statute of Frauds the lack of any writing or memorandum of the alleged release agreement is fatal to Count One of the counterclaim. As the court ruled in Douglas Co. v. Gatts (1982), 8 Ohio App.3d 186, "[a]n oral agreement to release or discharge a mortgage is within the Statute of Frauds.' (Motion at p. 2).'
The three motions cited supra, came on for hearing together on September 2, 1986. On January 29, 1987, the trial court entered and filed a judgment entry/decision disposing of the three motions as follows:
1.Appellee's motion to dismiss Count One sustained.
2.Appellee's motion to file a reply granted.
3.Appellant's motion for default judgment denied.
Appellant now raises the following three assignments of error:
ASSIGNMENT OF ERROR NO. I.
THE TRIAL COURT ERRED IN GRANTING PLAINTIFF'S MOTION TO DISMISS COUNT ONE OF DEFENDANT'S COUNTERCLAIM.
ASSIGNMENT OF ERROR NO. II.
THE TRIAL COURT ERRED IN GRANTING PLAINTIFF LEAVE TO FILE A REPLY OUT OF RULE.
ASSIGNMENT OF ERROR NO. III.
THE TRIAL COURT ERRED IN OVERRULING DEFENDANT'S MOTION FOR DEFAULT JUDGMENT UPON COUNT ONE OF THE COUNTERCLAIM.
II.
We address appellant's second assigned error first. This court has carefully reviewed the the transcript of proceedings of the September 2, 1986 hearing (filed 4/1/87) wherein the question of excusable neglect was argued relating to PCA's tendered reply to Count One. This record show that even appellants were unaware that PCA had failed to file a timely reply and so frankly admitted to the trial court. (T. at 16). We find no abuse of discretion in the trial court's determination on these peculiar facts (entry at 6), and this assignment of error is overruled.
I.
Under this assigned error, we move to the merits of the instant case, i.e., whether or not appellants' Count One stated a meritorious claim for relief. We find that Count One set forth a bona fide cause of action, sounding in fraud in the inducement, and this assigned error is well taken. It is settled that the Statute of Frauds defense does not extinguish a tort claim for relief sounding in deceit.
Equity will not permit the statute of frauds to be used as an instrument of fraud to prevent relief for one who has been induced to enter into and perform an oral agreement concerning an interest in land by fraudulent misrepresentations.
51 Ohio Jur.3d Sec. 184, Nature of Fraud, Pg. 41, citing Watson v. Erb (1874), 33 Ohio St. 35.
In Watson, the Ohio Supreme Court stated:
The fraud against...
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