Schwartz v. Capital Sav. & Loan Co.

• Decision Date: 28 February 1978
• Citation: Schwartz v. Capital Sav. & Loan Co., 381 N.E.2d 957, 56 Ohio App.2d 83, 10 O.O.3d 117 (Ohio App. 1978)
• Parties: , 10 O.O.3d 117, 25 UCC Rep.Serv. 618 SCHWARTZ, Appellant, v. CAPITAL SAVINGS & LOAN COMPANY, Appellee.
• Court: Ohio Court of Appeals

Page 83

56 Ohio App.2d 83

381 N.E.2d 957, 10 O.O.3d 117, 25 UCC Rep.Serv. 618

SCHWARTZ, Appellant, v.CAPITAL SAVINGS & LOAN COMPANY, Appellee.

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

Feb. 28, 1978.

Syllabus by the Court

A person responding to a public notice that an auction will be held has a right to rely upon such publication and assume it is made in good faith.

Milligan & Milligan, Westerville, and Myron Schwartz, for appellant.

Topper, Alloway, Goodman, DeLeone & Duffey, and Joel H. Mirman, Columbus, for appellee.

WHITESIDE, Judge.

Plaintiff appeals from a judgment of the Franklin County Court of Common Pleas dismissing his amended complaint for failure to state a claim for relief.

Plaintiff's amended complaint alleges that on four occasions (July 2, 1974, April 1, 1975, April 1, 1975, and March 1, 1976), defendant"falsely and fraudulently represented in a public notice published in the Daily Reporter" that four different mobile homes would be offered for sale at public auction to the highest bidder on a specified date and with a stipulated minimum price.The amended complaint further alleges that:

"5.In reliance upon said representations, Plaintiff attended each of the above sales at the time and place stated in the published notice and offered to purchase the goods at the minimum price.Each time Plaintiff was informed that there was no public auction to be held and that the goods would not be sold to Plaintiff.

"6.Notwithstanding that Defendant held no auction Defendant fraudulently stated in its records that there was a public sale of such collateral on the date indicated in the published notice and that Defendant purchased said collateral at the minimum bid price set forth in the published notice.Defendant subsequently resold the collateral at a price much higher than the minimum bid price.

"7.Defendant had no intention of holding a public auction of the goods described in said public notices and said notices were part of a fraudulent scheme perpetrated by Defendant on the owners of said collateral and the public, in violation of Section 1309.47, Revised Code, andSection 1317.16, Revised Code.

"8.In reliance upon the misrepresentations of Defendant, Plaintiff incurred traveling expenses and loss of time in attending said falsely advertised auctions.In addition, Plaintiff was damaged in the amount of the difference between the minimum price advertised and the market value of the goods, or the price at which such goods were resold by Defendant, all to his damage in the amount of $25,000.00."

In its answer, defendant admitted the publication of the public notices of the respective auctions and that: " * * * its records show that it purchased the collateral on the date set forth in the published notice for sale, that in each case, Defendant purchased the collateral for the minimum bid price, in each case, Defendant subsequently resold the collateral for a higher price than the minimum bid price, and in each such case, the debtor was given credit on his account for the additional funds derived by said subsequent sale. * * * "Defendant denied the remaining allegations of the complaint and set forth some seven additional defenses.

Thereafter, defendant filed a motion for summary judgment, submitted only on the pleadings, which was overruled by the trial court.The case was then apparently set for trial and transferred to a different judge of the trial court.The second defense of the answer asserted that the complaint failed to state a claim upon which relief could be granted.The trial court, inconsistently with the prior ruling upon the motion for summary judgment, sustained this motion upon the bases that the complaint failed to state a claim upon which relief could be granted against the defendant and that plaintiff was not a real party in interest.

Defendant has relied primarily upon cases which state the rule set forth in R.C. 1302.41(C), with respect to auctions, that:

"Such a sale is with reserve unless the goods are in explicit terms put up without reserve.In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. * * * "

However, R.C. 1301.09 provides that:

"Every contract or duty within Chapters 1301., 1302., 1303., 1304., 1305., 1306., 1307., 1308., and 1309. of the Revised Code, imposes an obligation of good faith in its performance or enforcement."

"Good faith" is defined by R.C. 1301.01(S), as follows: " 'Good faith' means honesty in fact in the conduct or transaction concerned."

The issue herein is not whether or not one acting in good faith may withdraw from sale an article publicly advertised to be sold at auction.Such a right clearly exists, and no liability attaches...