Walters v. First Nat. Bank of Newark

• Decision Date: 09 March 1982
• Docket Number: No. 81-502,81-502
• Parties: , 23 O.O.3d 547 WALTERS, Admx., et al., Appellants, v. FIRST NATIONAL BANK OF NEWARK et al., Appellees.
• Court: Ohio Supreme Court

Page 677

69 Ohio St.2d 677

433 N.E.2d 608, 23 O.O.3d 547

WALTERS, Admx., et al., Appellants, v. FIRST NATIONAL BANK OF NEWARK et al., Appellees.

No. 81-502.

Supreme Court of Ohio.

March 9, 1982.

Robert C. Paxton, II, Columbus, for appellants.

McDonald, Robison, Noecker & Koehler, Frank A. Robison and C. Herbert Koehler, Jr., Newark, for appellees.

PER CURIAM.

The trial court's award to appellees of a judgment on the pleadings can only be upheld if, viewing all material allegations in the pleadings and all reasonable inferences therefrom in the light most favorable to appellant, appellees are entitled to judgment as a matter of law. Peterson v. Teodosio (1973), 34 Ohio St.2d 161, 297 N.E.2d 113. The rendering of a judgment on the pleadings in defendant's favor is only appropriate where the plaintiff has failed in his complaint to allege a set of facts which, if true, would establish defendant's liability. The Court of Appeals, in the case at bar, held that, as a bank owes its customers no duty to advise them on structuring a loan to ensure the immediate effectiveness of credit life insurance, appellant's complaint stated no cause of action. We disagree.

Only last term, this court held that a lending institution must counsel a loan applicant as to how to secure mortgage insurance. Stone v. Davis (1981), 66 Ohio St.2d 74, 419 N.E.2d 1094. In Stone, at page 78, 419 N.E.2d 1094, we stated:

"The facts surrounding and the setting in which a bank gives advice to a loan customer on the subject of mortgage insurance warrant a conclusion that, in this aspect of the mortgage loan process, the bank acts as its customer's fiduciary and is under a duty to fairly disclose to the customer the mechanics of procuring such insurance."

The fiduciary nature, at least in this respect, of the bank-customer relationship is predicated upon the bank's superior conversance with the area of loan processing, of which mortgage insurance is a component.

In her amended complaint, appellant specifically alleged that the bank's agent, in failing to structure the loan to make the decedent's credit life insurance immediately effective and in failing to furnish the insurer with the required data, acted negligently. The bank's agent, it may reasonably be inferred from the amended complaint, breached his duty, as set forth in Stone v. Davis, supra, to advise appellant and decedent as to how to proceed to obtain the result, i.e., immediate insurance coverage, they desired. Thus, the complaint, as amended, in the instant cause, states a legally cognizable cause of action.

Moreover, assuming arguendo, that appellant's amended complaint did not allege negligence, under the petition an action would still lie for misrepresentation. See Park Fed. Sav. & L. Assn. v. Lillie (1970), 24 Ohio Misc. 271, 265 N.E.2d 339. Appellant speaks expressly of misrepresentation in her amended complaint. She asserts explicitly therein that the decedent and she were intentionally led to believe that the credit life insurance they desired had been secured and was in effect as of October 1, 1977, the day the mortgage note was executed. Appellant further alleges that, but for their reliance on the bank's and its agent's representations, decedent and she would have sought insurance elsewhere. Appellant contends finally that the bank's and its agent's actions damaged both decedent's estate and her personally as the mortgage remains unpaid. As the complaint, as amended, alleges that appellees made certain representations; that appellees intended for appellant and decedent to rely on these representations; that appellant and decedent did so rely; and that, as a result of said reliance, they suffered damages, the amended complaint states a cause of action for misrepresentation.

Indeed, the facts in the case at bar are strikingly similar to those in Robichaud v. Athol Credit Union (1967), 352 Mass. 351, 225 N.E.2d 347, cited by the court in Park Fed. Sav. & L. Assn. v. Lillie, supra. The court in Robichaud, supra, ruled that evidence that a bank employee represented to mortgagor that loan was insured, that the bank officers had represented to mortgagor that mortgagor's life was insured and that the mortgagor relied upon representations in making payment for insurance premiums together with loan payments was sufficient to support the trial court's decree cancelling the mortgage and note executed by mortgagor who subsequently died.

In her complaint, appellant alleged that included in the monthly installment payments for the loan was the monthly premium for credit life insurance. Thus, the principle enunciated in Robichaud, supra, and espoused in Park Federal, supra, is most apposite in the instant cause.

As to appellant's allegations that the bank's failure to fulfill its promise to procure credit life insurance for decedent constituted a breach of contract, a cause of action lies notwithstanding the fact that there exists no written memorialization of the promise. Ordinarily, as such a promise would be said to modify the written agreement, i.e., the mortgage note and loan papers, the parol evidence rule would act to preclude admission of any evidence which tended to show that such an oral agreement had been reached. American Guaranty Co. v. American Fidelity Co. (C.A. 6, 1919), 260 F. 897. A party may, however, proffer evidence of a contemporaneous oral agreement when the agreement was made in order to induce a party to enter into a written contract. Sparhawk v. Gorham (1957), 101 Ohio App. 362, 139 N.E.2d 652. In the case at bar, appellant makes just such an allegation.

Appellant also asserts that the trial court erred in overruling her motion for summary judgment. As the appellant's motion was not timely filed, we find the trial court's actions, in this respect, proper. ²

Accordingly, we reverse the judgment of the Court of Appeals to the extent it affirms the trial court's rendition of a judgment on the pleadings in favor of appellees, and the cause is remanded to the trial court for further proceedings.

Judgment accordingly.

FRANK D. CELEBREZZE, C. J., and WILLIAM B. BROWN, SWEENEY, LOCHER, CLIFFORD F. BROWN and KRUPANSKY, JJ., concur.

HOLMES, Justice, ...