Russell J. Ellacott v. David R. Ellacott
| Decision Date | 10 November 1994 |
| Docket Number | 94-LW-0053,66148 |
| Parties | RUSSELL J. ELLACOTT, Plaintiff-appellee v. DAVID R. ELLACOTT, Defendant-appellant |
| Court | Ohio Court of Appeals |
Civil appeal from Court of Common Pleas Case No. CV-207809.
For plaintiff-appellee: RICHARD A. OVIATT, ESQ., 950 Standard Building, 1370 Ontario Street, Cleveland, OH 44113-1701.
For defendant-appellant: JAMES B. DAVIS, ESQ., 67 East Washington Street, P.O. Box 625, Chagrin Falls, OH 44022.
This is an appeal, cross-appeal and third party appeal from a trial court judgment rendered on a family dispute concerning money, real property and a greenhouse business in the city of Warrensville Heights. Defendant-appellant David Ellacott( "son") appeals that part of the court's judgment that found him personally liable on certain business loans made to the greenhouse business. Plaintiff/ cross-appellant Russell Ellacott("father") appeals that part of the judgment that validated the transfer by deed of real property to the son. Third party defendants/cross-appellants Kathryn and Gary Szitas("daughter") appeal from the denial of their motion for attorney fees, sanctions and costs.
The Ellacott family has owned and operated W.G. Ellacott Sons greenhouse since 1904. The property in dispute consists of a greenhouse building and pole building, with adjacent space for parking. A house inhabited by the father, the daughter and her family is appurtenant to the greenhouse property. In 1956, the son joined the father in the business on a full-time basis. In 1968, the son took over full-time operations of the greenhouse after the father incorporated the business and gave the son seventy-five percent of the corporate stock. About that same time, the son took over the father's finances due to the father's advanced age.
During 1986 and 1987, the greenhouse suffered financially. The son discussed the situation with the father and they agreed that the father would give the son access to a jointly held money market bank account with a balance of $100,000. The money in that account represented $206,000 in proceeds from the sale of adjacent property that the father and son split. The son stressed to his father that he might not be able to repay the money, if at all, during the father's lifetime.
Over the next year and a half, the son withdrew $102,008.04 from the account and applied it to the business. The son signed the checks, but testified that he informed the father of each withdrawal. During that same period, the son deposited $55,000 in the account. The net amount outstanding totalled $68,008.04.
In 1988, the father's then-existing will left the greenhouse property to the son. It also forgave any debts his children owed to the estate. After the son and daughter had a falling out, the father contemplated changing his will. He proposed dividing the greenhouse property equally between the son and daughter, with the son maintaining control of the business. He also contemplated that his children's pre-existing debts to the estate would not be forgiven.
When the son found out about the proposed will change, he spoke to his father and informed him that he would leave the business rather than share the greenhouse which he believed belonged to him. Were the son to leave the business, none of the father's and daughter's living expenses, which up to that point had been paid by the greenhouse, would be paid. The father assured the son that he wanted him to keep the business. They set up a meeting with the son's attorney who drafted a quit-claim deed for the greenhouse property. That same attorney had, at the son's direction, drafted the father's 1988 will. The attorney realized the possibility of a conflict between his representation of the son and the father, so he videotaped the meeting. The father signed the deed in June 1990, but the son did not record it.
By this time, the daughter had taken control over the father's finances. The father signed a new will in October 1990 requiring payment of all debts owed by either the son or the daughter. When the son tried to persuade his father to drop that provision, the daughter interceded.
The father filed this action against the son seeking a declaratory judgment as to the monies used by the son. The suit also sought a declaration that the father executed the deed while under undue influence. Finally, It sought a declaration that the son had converted the funds in the money market account.
The son filed a third-party complaint against the daughter alleging that she had tortiously interfered with contractual relations between him and the father, and that she had committed acts of vandalism against the greenhouse. Prior to trial, all of the son's claims against the sister were dismissed.
After a bench trial, the judge concluded that the checks written off the money market account were loans without interest. He ordered the son to pay $67,008.04 to the father. The judge refused to set aside the deed. He did order that the father be granted a perpetual easement for parking spaces along the son's property. Finally, the judge granted the father prejudgment interest of ten percent from April 15, 1992, the date of the first complaint for declaratory relief.
Several of the assigned errors are interrelated and will be addressed concurrently. The son's first assignment and the father's fifth assignment relate to the court's finding that the checks written off the money market account constituted loans. The father maintains the court erred by not finding the son had converted the money market funds to his own use. The son argues the monies were investments in the greenhouse, not personal loans to the son.
A.
In order to establish conversion, the father must demonstrate an exercise of dominion or control wrongfully exerted over his personal property in denial of or under a claim inconsistent with his rights. Ohio Tel. Equip. & Sales, Inc. v. Hadler Realty Co. (1985), 24 Ohio App.3d 91, 93; Wolf v. Lakewood Hosp. (1991), 73 Ohio App.3d 709.
The testimony showed the son had exercised almost complete control over the father's finances since about 1968. The greenhouse business paid for the father's supplemental health insurance, the utilities on the house where the father, daughter and her family lived, the real estate taxes and the father's automobile expenses.
When it appeared the greenhouse might be forced to close, the father told the son to use funds in a money market account held in both their names to help the business. The son signed his name to the checks. All the checks signed by the son were made playable to either W.G. Ellacott Sons, Inc. or creditors of the greenhouse.
The greenhouse bookkeeper testified the son first approached the father for help in September 1986. The son explained the consequences of the greenhouse closing, including the cessation of any paid expenses for the father and daughter. When told of the need for the money, the father replied, The bookkeeper also testified the son received permission from the father before writing every check.
The son's failure to repay the monies from his own savings is immaterial to the conversion claim. A demand and a refusal in a conversion action are usually required to prove the conversion of property wrongfully held. Ohio Tel. Equip. & Sales, Inc., supra, at 94. The father did not make a demand on the son until he initiated this action. Accordingly, the son did not convert the money.
C.
The son next challenges the trial judge's conclusion that the loans were made to the son as an individual and not to the corporation.(fn1)
The same testimony which supports the trial court's conclusion that the son did not convert the funds in the money market account also supports the conclusion that the loans were made to the son and not the greenhouse business. Competent, credible evidence showed that the son borrowed the money for his own benefit. The son signed all the checks written on the money market account. Although he stated that the funds were applied to the greenhouse business, at least $20,000 of the money went to purchase stock that personally benefitted the son. The son testified that the company issuing the stock supplied soil to the greenhouse. Although he asserted that he had bought the stock for his father, other evidence belied that assertion. The father introduced into evidence a letter of intent between the son and the corporation. That letter memorialized the son's intention to purchase a five percent interest in the corporation. The son signed the letter of intent in his capacity as an individual; neither the greenhouse nor the father were mentioned in the letter of intent. The stock certificate bore the son's name.
The son could not adequately explain why his name appeared on the certificate, nor could he explain why he had not told his father about the stock. He testified that his father's name should have appeared on the certificate, and that the issuing corporation must have mistaken his name for that of his father. The trial judge rejected that testimony, stating:
Other testimony showed that the father believed he loaned the money to the son, not the corporation. The company bookkeeper testified that the father often referred to the son, rather than the corporation, when discussing the loaned money. The bookkeeper stated, "Russell's response that I heard at times was the money was put there for you to use for this. Take care of...
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