Motor Discount Corp. v. John J. Kulig, Guardian
| Decision Date | 24 December 1981 |
| Docket Number | 81-LW-0741,43551 |
| Parties | MOTOR DISCOUNT CORP. APPELLEE, v. JOHN J. KULIG, GUARDIAN APPELLANT. |
| Court | Ohio Court of Appeals |
For plaintiff-appellee: Stanley Morganstern.
For defendant-appellant: Thomas E. O'Toole and Zellmer & Gruber.
JOURNAL ENTRY AND OPINION
This cause came on to be heard upon the pleading and the transcript of the evidence and record in the Cleveland Municipal Court, and was argued by counsel; on consideration whereof, the court certifies that in its opinion substantial justice has not been done the party complaining, as shown by the record of the proceedings and judgment under review, and judgment of said Cleveland Municipal Court is reversed. Each assignment of error was reviewed by the court and upon review the following disposition made:
James R. Schiller was found to be incompetent by reason of mental disability on January 25, 1968 in the Probate Court of Cuyahoga County. John J. Kulig was appointed guardian of Schiller's person and estate. On October 10, 1978 and while still under the guardianship, Schiller executed and delivered a promissory note to National City Bank in the amount of $6,816.24 in Parma, Ohio, for the financing of a 1978 Ford he purchased from Bob Gillingham Ford, Inc. Schiller gave no indication to National City Bank he was under a guardianship. In addition, the credit report issued to National City Bank prior to the execution of the note did not disclose Schiller was under a mental disability or that he had been adjudged incompetent. The report simply disclosed that Schiller was receiving disability payments. Kulig never gave his consent to the purchase of the car and neither did the Probate Court.
National City Bank transferred its interest in the note to plaintiff-appellee Motor Discount Corp. Motor Discount Corp. Maintained that Schiller defaulted on his payments and initiated this action claiming $2,082.41 plus interest remaining due on the note. Kulig counterclaimed against Motor Discount Corp. and filed a third party complaint against Bob Gillingham Ford, Inc., seeking to disaffirm the contract. The trial court found for Motor Discount Corp. on its complaint and for Bob Gillingham Ford, Inc. on Kulig's third party complaint. Kulig appeals and assigns three errors.
THE TRIAL COURT ERRED IN HOLDING THAT THE APPELLANT-GUARDIAN WAS ESTOPPED TO ASSERT THE DEFENSE OF INCOMPETENCY.
In his first assignment of error, Kulig maintains the trial court erred in holding that he was estopped to assert the defense of incompetency. The trial court found Kulig estopped to assert the defense of incompetency because he knew Schiller had purchased cars before and that he was intrigued with the purchase of automobiles. We do not find this fact resulted in an estoppel.
It is widely recognized that the appointment of a guardian to control and manage the property of a person following an adjudication that he is incompetent because of insanity operates to render contracts entered into during the existence of the guardianship void. The Restatement (Second) of Contracts ]] 12(2)(a) and 13 (1981) provide:
In Fiorini v. Goss (1921), 23 N.P. (N.S.) 303, aff'd (1923), 108 Ohio St. 115, the court held that when a guardian is appointed, he thereupon becomes vested with the control of the property of his ward and he alone is capable of transferring it.®*¯
Footnote * Other jurisdictions have followed this view and have held that one under a guardianship cannot enter into a valid contract. See Stockmeyer v. Tobin (1891), 139 U.S. 176; Bank of America v. Saville (7th Cir. 1969), 416 F. 2d 265, cert. denied (1970), 396 U.S. 1038; American Trust & Banking Co. v. Boone (1897) 102 Ga. 202, 29 S. 182; Cash v. Bank of Lowes (1922), 196 Ky. 570, 245 S.W. 137; Hughes v. Jones (1889), 116 N.Y. 67, 22 N.E. 446; Pennsylvania Co. for Banking & Trusts v. Philadelphia Title Ins. Co. (1953), 372 Pa. 259, 93 A. 2d 687; Moore v. Coleman (1946), 128 W. Va. 223, 36S. E. 2d 593; Re Hayes Guardianship (1959), 8 Wis. 2d 32, 98 N.W. 2d 430.
We note that the court in Charles Melbourne & Sons, Inc. v. Jesset (1960), 110 Ohio App. 502, appeared to have reached the opposite conclusion. Melbourne is distinguishable on its facts because the ward in that case, although adjudged incompete, had never been appointed a guardian and had led a normal life for 11 years prior to contracting with the plaintiff.
An exception to this rule is where the contract at issue involves purchases for necessaries. Markland v. Harley (1958), 107 Ohio App. 245; Re Hayes Guardianship (1959), 8 Wis. 2d 32, 98 N.W. 2d 430; cf. Hosler v. Beard (1896), 54 Ohio St. 398 (). The Restatement (Second) of Contracts ] 12(f)(1981) provides that persons having no capacity to contract are often liable for necessaries furnished to them under either a contractual or quasi-contractual basis.
In the instant case, Schiller was under a guardianship at the time he purchased the auto. Hence, unless the auto was a necessary, the contract he entered into was void. We do not find the auto to be a necessary. Although it may have been necessary for Schiller to have an auto, there is every indication that Schiller already had several autos. Motor Discount Corp. failed to show that this particular 1978 Ford was a necessary. Accordingly, the contract entered into between Schiller and National City Bank was void.
Kulig's first assignment of error is sustained.
THE REPOSSESSION OF APPELLAN'S AUTOMOBILE PRIOR TO HIS DEFAULT WAS UNLAWFUL AND PRECLUDES THE PLAINTIFF-APPELLEE FROM RECOVERING A DEFICIENCY JUDGMENT.
In his second assignment of error, Kulig argues that Motor Discount Corp. repossessed the car prior to any default of payment by Schiller. The record is devoid of evidence concerning this point. However, assuming such were the case, we would find this assignment to be well taken. According to Kulig, Schiller purchased the car on October 18, 1978. Four days later, on October 22, 1978. Schiller was reinstitutionalized in the Veteran's Administration Hospital. The first installment on the note was paid. Schiller's brother then informed National City Bank that Schiller was incompetent and had been recommitted to the Veteran's Administration Hospital. The auto was repossessed thereafter and sold prior to the date upon which the second installment was due. Subsequent to the repossession, Schiller ceased making payments on the loan.
Under this set of facts, repossession was clearly unlawful. Schiller had made all payments that had been due. His being recommitted did not constitute a default of his agreement with National City Bank. Insofar as these facts, if true, indicate that the repossession was unlawful, Motor Discount Corp. would not have been entitled to a deficiency judgment.
THE FAILURE OF PLAINTIFF-APPELLEE TO COMPLY WITH THE NOTICE REQUIREMENTS OF OHIO REVISED CODE, SECTION 1309.47, PRECLUDES ITS RECOVERY OF A DEFICIENCY JUDGMENT AGAINST APPELLANT.
In his third assignment, Kulig argues that Motor...
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