Solon Chamber of Commerce v. Women's General Hosp.

• Decision Date: 06 July 1992
• Docket Number: Nos. 60523,60621,s. 60523
• Citation: 612 N.E.2d 331,81 Ohio App.3d 687
• Parties: SOLON CHAMBER OF COMMERCE, Appellee, v. WOMEN'S GENERAL HOSPITAL et al., Appellants. *
• Court: Ohio Court of Appeals

Page 687

81 Ohio App.3d 687

612 N.E.2d 331

SOLON CHAMBER OF COMMERCE, Appellee, v. WOMEN'S GENERAL HOSPITAL et al., Appellants. ^*

Nos. 60523, 60621.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Decided July 6, 1992.

Scott D. Maybaum, Solon, for appellee.

Daniel P. McDonnell, Cleveland, for appellant Women's General Hosp.

Thomas P. Gill and Thomas E. Malloy, Cleveland, for appellants George Eaton and Southeast Area Community Hosp.

Charles Riehl, Cleveland, for Solon.

NAHRA, Judge.

Appellants, Women's General Hospital, George Eaton, and Southeast Community Hospital, appeal from the trial court's judgment in favor of the Solon Chamber of Commerce. For the reasons set forth below, we affirm in part and reverse and remand in part for trial.

In the 1960s, the Solon Chamber of Commerce began to actively pursue the establishment of a hospital in Solon. The chamber of commerce formed a hospital feasibility study committee and raised funds for the hospital. Over a period of years, the committee met with existing hospitals, including Polyclinic, Women's General, and St. Luke, about possible relocation or transference of beds to Solon.

In 1965, the chamber of commerce hospital committee expanded into a new Southeast Hospital Study Committee with six subcommittees. In 1967, hospital committee director George Eaton reported at a chamber of commerce board meeting that the Southeast Area Community Hospital ("Southeast") had been incorporated. Southeast never adopted regulations or bylaws, did not elect officers, and did not have a membership book or minute book. Correspondence on behalf of Southeast went out on the chamber of commerce letterhead. Trial testimony indicated that Southeast was the same entity as the chamber of commerce committee, and that it was incorporated in order to take title to land on which the hospital was intended to be built. However, not all of Southeast's original trustees were chamber of commerce members.

In 1972, Southeast took title to approximately twenty-six acres of land in Solon, together with Polyclinic Hospital. At that time, Southeast was working with Polyclinic to establish the hospital in Solon. Southeast paid approximately $147,000 for the land. In 1975, Southeast's efforts to establish the hospital with Polyclinic ended when the city of Solon failed to issue industrial revenue bonds which would have financed the hospital. Polyclinic's articles of incorporation were cancelled in 1982. After 1975, the original Southeast trustees were not involved in efforts to get the hospital. A new chamber of commerce committee was formed to continue the project.

In 1985, representatives of Southeast and Polyclinic signed a deed transferring the twenty-six acres in Solon to Women's General Hospital. The deed was not filed at that time. One of the original trustees of Southeast, George Eaton, signed the deed on behalf of Southeast. Eaton had not been active in the drive to obtain a certificate of need for the proposed Solon hospital since 1975. Eaton testified that he was not authorized to sign the deed by the Southeast trustees, but that he had signed it at the insistence of the Women's General Hospital trustees.

In September 1985, Women's General Hospital commenced dissolution proceedings. A representative indicated at trial that proceeds from the sale of the Solon property would be put into a trust fund with the Cleveland Foundation to be used for the same purposes for which the hospital was founded.

In December 1985, Southeast's articles were cancelled for failure to file a certificate of continued existence. In 1986, Eaton applied for reinstatement of Southeast without consulting the other trustees. The corporation was reinstated in early June 1986.

On June 30, 1986, Eaton obtained the signatures of all of the living trustees of Southeast on a document prepared by Women's General. The document purported to ratify the conveyance by Eaton of Southeast's Solon property to Women's General. Two of Southeast's trustees testified at trial that they did not read the ratification document. One testified that Eaton misrepresented what the document was. The deed conveying the Solon property to Women's General was filed July 30, 1986.

In 1987, the Solon Chamber of Commerce filed a complaint for declaratory judgment against Women's General, the city of Solon, Southeast, and George Eaton. Solon was sued only because of its interest in appropriating the property at issue. The chamber of commerce asserted that it owned the property by virtue of its ownership interest in Southeast, or that Southeast was the successor to the chamber of commerce's hospital committee. It also asserted that the funds used to buy the property were the chamber of commerce's; that Polyclinic did not provide adequate consideration for its interest in the property; and that the deed was unauthorized. The chamber of commerce also requested an accounting of funds, and a jury trial.

A jury trial commenced on January 8, 1990. At the close of the evidence, the court determined that there were no factual issues for the jury to decide, and removed the case from the jury. The court subsequently issued an opinion which stated that the chamber of commerce's hospital committee was incorporated into Southeast. The court also concluded that Eaton had no authority to sign the deed, and voided it. The court found that the ratification was ineffective due to Eaton's misrepresentations and omissions of facts, and because the trustees had effectively resigned. The court also appointed the President of the Solon Chamber of Commerce as master of Southeast regarding the appropriation proceedings, and retained continuing jurisdiction of the case.

The court subsequently amended its judgment to state that there was no just cause for delay. Women's General timely appealed, and assigned eight errors. Eaton and Southeast filed a separate timely appeal, assigning four errors. The Solon Chamber of Commerce, as appellee, assigned five errors. Only the first two assignments can be considered pursuant to Parton v. Weilnau (1959), 169 Ohio St. 145, 8 O.O.2d 134, 158 N.E.2d 719, paragraph seven of the syllabus: "[a]ssignments of error of an appellee who has not appealed from the judgment may be considered by a reviewing court only when necessary to prevent a reversal of the judgment under review. (Section 2505.22, Revised Code, construed and applied.)." Many of these assignments are interrelated and will be addressed together.

I

Appellants claim that the chamber of commerce lacked standing to bring a declaratory judgment action. ¹

The entertainment of a declaratory judgment action rests within the sound discretion of the trial court, and will not be reversed absent abuse of discretion. Arbor Health Care Co. v. Jackson (1987), 39 Ohio App.3d 183, 530 N.E.2d 928, paragraph one of the syllabus; Schaefer v. First Natl. Bank (1938), 134 Ohio St. 511, 13 O.O. 129, 18 N.E.2d 263. R.C. 2721.03 provides in pertinent part that "[a]ny person interested under a deed * * * may have determined any question of construction or validity arising under such instrument * * * and obtain a declaration of rights, status, or other legal relations thereunder." "Person" is defined in R.C. 2721.01 and includes nonprofit corporations. See, also, N. Woods Civil Assn. v. Columbus Graphics Comm. (1986), 31 Ohio App.3d 46, 31 OBR 62, 508 N.E.2d 676, syllabus.

The chamber of commerce alleged that it had an interest in the real property at issue by virtue of its alleged ownership interest in Southeast. The chamber of commerce also alleged it is a member of Southeast. As a member and/or owner of Southeast, the chamber of commerce alleged a sufficient interest in Southeast to bring suit contesting the validity of the conveyance of Southeast's sole asset. Accordingly, the trial court did not abuse its discretion in finding that the chamber of commerce had standing to bring this declaratory judgment action.

II

Women's General's fourth assignment of error reads as follows:

"The Ohio Statute of Fraud[s] bars the plaintiff's cause of action."

Ohio's Statute of Frauds is found in R.C. Chapter 1335. Women's General cites R.C. 1335.05, which provides in general that oral promises for the sale of lands, inter alia, are unenforceable. Women's General argues that this statute precludes this lawsuit, because the chamber of commerce was not named on the deeds, and was a distinct entity from the party named on the deeds.

R.C. 1335.05 is inapposite to this case, which is not a case to enforce an oral promise regarding the sale of land. Furthermore, the fact that a party is not named on a deed does not preclude an interested party's attempt to invalidate a deed. See, e.g., Schueler v. Lynam (1947), 80 Ohio App. 325, 36 O.O. 32, 75 N.E.2d 464. Women's General's fourth assignment of error is overruled.

III

Women's General's fifth assignment of error reads as follows:

"Ohio Revised Code Section 1702.12(I) prohibits the plaintiff from being a party to this action."

R.C. 1702.12(I) provides as follows:

"No lack of, or limitation upon, the authority of a corporation shall be asserted in any action except (1) by the state in an action by it against the corporation, (2) by or on behalf of the corporation against a trustee, an officer, or a member as such, or (3) by a member as such or by or on behalf of the members against the corporation, a trustee, an officer, or a member as such. The division shall apply to any action brought in this state upon any contract made in this state by a foreign corporation." (Emphasis added.)

This subsection addresses the authority of a corporation. There is no question that Southeast, as a corporation, had the authority to sell its property pursuant to R.C. 1702.12(F). The question in this case is whether George Eaton had the authority to act on behalf of the corporation. Accordingly, R.C. 1702.12(I) is inapplicable.

IV

Appellants claim that the...