Willoughby Supply Co. v. Inghram

• Decision Date: 16 March 2015
• Docket Number: No. 2014–L–055.,2014–L–055.
• Citation: 30 N.E.3d 230
• Parties: WILLOUGHBY SUPPLY COMPANY, INC., Plaintiff–Appellee, v. Robert INGHRAM, et al., Defendant–Appellant.
• Court: Ohio Court of Appeals

30 N.E.3d 230

WILLOUGHBY SUPPLY COMPANY, INC., Plaintiff–Appellee

v.Robert INGHRAM, et al., Defendant–Appellant.

No. 2014–L–055.

Court of Appeals of Ohio, Eleventh District, Lake County.

March 16, 2015.

David S. Brown, Weltman, Weinberg & Reis Co., L.P.A., Cleveland, OH, for plaintiff-appellee.

Thomas R. Houlihan and Jack Morrison, Jr., Amer Cunningham Co., L.P.A., Akron, OH, for defendant-appellant.

OPINION

COLLEEN MARY O'TOOLE

, J.

{¶ 1} Robert Inghram appeals from the judgment entry of the Lake County Court of Common Pleas, finding him liable on an oral personal guarantee for the debts of his defunct business, Assurance Exteriors, Inc., to Willoughby Supply Company, Inc. Fundamentally, Mr. Inghram contends the trial court misapplied the “leading object rule,” an exception to the Statute of Frauds. Finding no error, we affirm.

{¶ 2} May 1, 2013, Willoughby Supply filed a complaint against Assurance Exteriors and Mr. Inghram in the trial court, alleging breach of contract and personal guarantee. Mr. Inghram answered May 30, 2013, denying the complaint. Assurance Exteriors had, evidently, gone out of business in 2012; it filed no answer, and the trial court entered default judgment against it July 1, 2013.

{¶ 3} The matter came on for bench trial on the issue of the personal guarantee February 28, 2014. May 5, 2014, the trial court filed its judgment entry, finding in favor of Willoughby Supply in the amount of $60,098.49, together with interest at 18% per year on the principal balance of $59,366.57 from April 25, 2013, plus costs. This appeal timely ensued.

{¶ 4} Testifying at trial were Mr. Inghram and John Holzhauser. Mr. Inghram was president and sole shareholder in Assurance Exteriors. He employed Tom Cutura to run the office. Mr. Holtzhauser is an accountant, and chief financial officer for Willoughby Supply. June 20, 2011, Assurance Exterior submitted a credit application to Willoughby Supply. Mr. Inghram signed the application in the name of the company. Beneath the signature line for the company representative on the application is a personal guarantee, warning the application would not be accepted unless this was also signed. Mr. Inghram denied the signature beneath the personal guarantee was his. Considerable evidence was introduced indicating this signature was actually that of his office assistant, Mr. Cutura. In its judgment entry, the trial court concluded the signature on the personal guarantee was not that of Mr. Inghram.

{¶ 5} Mr. Holtzhauser testified he received the credit application June 23, 2011, and called Mr. Inghram the next morning. Mr. Holtzhauser testified this is his normal procedure when approving credit applications. The phone number listed on the application was Mr. Inghram's cell phone number. Mr. Inghram's cell phone records indicate he received a call on his cell phone from Willoughby Supply at the time stated by Mr. Holtzhauser. Mr. Holtzhauser testified he asked the person answering the phone whether he was Robert Inghram, and received an affirmative response. He also asked that person Mr. Inghram's Social Security number, which was submitted as part of the application, and received a correct response. He finally asked whether the person answering had signed the personal guarantee, and received an affirmative response. The credit application was approved.

{¶ 6} Mr. Holtzhauser admitted he could not actually recollect the phone call, since he receives hundreds of credit applications each year. He testified on the basis of a form he fills out during each phone call, recording the responses given to his questions. This form was admitted without objection as an exhibit at trial.

{¶ 7} Mr. Inghram denied ever receiving the phone call from Mr. Holtzhauser, and further testified he would never sign a personal guarantee of his company's debts. He admitted other people rarely have access to his cell phone.

{¶ 8} The trial court found Mr. Holtzhauser's testimony credible, but not that of Mr. Inghram's. On this basis, it found an oral contract of personal guarantee by Mr. Inghram of Assurance Exterior's debts to Willoughby Supply. It then applied the “leading object rule” to find the personal guarantee enforceable. The leading object rule provides that oral contracts by third parties guaranteeing another's debt are not within the Statute of Frauds, if the guarantor's principal purpose is to benefit his or her own business or pecuniary interests. Wilson Floors Co. v. Sciota Park, Ltd., 54 Ohio St.2d 451, 377 N.E.2d 514

, syllabus (1978).

{¶ 9} On appeal, Mr. Inghram assigns two errors. The first is, “The trial court erred in determining that Robert Inghram made an oral agreement to answer for the debts of Assurance Exteriors, Inc.” Under this assignment of error, there is one issue for review: “The trial court erred as a matter of law in holding that an oral agreement to guarantee the debt of Assurance Exteriors was formed between Willoughby Supply and Inghram.”

{¶ 10} “The elements of a contract include the following: an offer, an acceptance, contractual capacity, consideration (the bargained-for legal benefit or detriment), a manifestation of mutual assent, and legality of object and of consideration. Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, * * *, ¶ 16

. See also Helle v. Landmark, Inc. (1984), 15 Ohio App.3d 1, * * *. A party asserting a contract must prove by a preponderance of the evidence the existence of the elements of the contract. Cooper & Pachell v. Haslage (2001), 142 Ohio App.3d 704, 707, * * *.” (Parallel citations omitted.) Willey v. Blackstone, 180 Ohio App.3d 303, 2008-Ohio-7035, 905 N.E.2d 250, ¶ 55 (5th Dist.)

{¶ 11} “The case at bar involves an oral contract. The terms of an oral contract must be established by oral testimony and their determination is a question for the trier of fact. Boone Coleman Constr. v. Spencer (June 23, 1993), Scioto App. No. 92–CA–2076 [1993 WL 235571], 1993 Ohio App. LEXIS 3273

, unreported. See, also, Murray v. Brown–Graves Co. (App.1922), 1 Ohio Law Abs. 167. In a bench trial, the trial court, as the trier of fact, must resolve any evidentiary conflict surrounding disputed provisions of an oral contract. See Geriatric Nursing Care v. Eastgate Health Care Center, Inc. (July 12, 1993), Clermont App. No. CA93–03–022 [1993 WL 257230], 1993 Ohio App. LEXIS 3487, unreported. The trial court's judgment regarding such will not be disturbed on appeal when supported by competent, credible evidence. Id. ” Zink v. Harp, 12th Dist. Warren No. CA93–02–009, 1993 WL 390511, *1 (Oct. 4, 1993).

{¶ 12} Mr. Inghram argues the record in this case is devoid of evidence supporting several elements necessary to establish a contract. He notes his own denial he ever received the phone call from Mr. Holtzhauser, and the fact Mr. Holtzhauser did not recollect making the call. Consequently, he denies there was either offer, or acceptance, of the personal guarantee, or any evidence of mutual assent.

{¶ 13} We respectfully disagree. The doctrine of ratification applies. “To prove ratification of a contract, the proponent must show that the principal engaged in conduct, with full knowledge of the facts, which manifests his intention to ratify the unauthorized transaction.” Park View Fed. Savings Bank v. Willo Tree Dev., Inc., 11th Dist. Geauga No. 2000–G–2309, 2001 WL 1560930, *4

. The trial court, sitting as finder of fact, found Mr. Inghram's denial of receiving the phone call, not credible. The trial court found credible Mr. Holtzhauser's testimony, supported by Mr. Inghram's own phone records, that the call was placed, and that Mr. Inghram assured Mr. Holtzhauser he had signed the personal guarantee. Thus, even if the actual signature was Mr. Cutura's, Mr. Inghram ratified the personal guarantee. The trial court's determination that Mr. Inghram and Willoughby Supply entered an oral contract, including offer, acceptance, and mutual assent, is supported by a preponderance of competent, credible evidence.

{¶ 14} The first assignment of error lacks merit.

{¶ 15} Mr. Inghram's second assignment of error is, “The trial court erred in applying the ‘leading object rule’ as an exception to the statute of frauds in holding appellant Robert Inghram liable for the debts of Assurance Exteriors.” Mr. Inghram argues his promise to guarantee the debts of his company is unenforceable under that portion of the Statute of Frauds embodied at R.C. 1335.05

, which provides, in pertinent part:

{¶ 16} “No action shall be brought whereby to charge the defendant, upon a special promise, to answer for the debt, default, or miscarriage of another person; * * * or upon a contract or sale of lands, tenements, or hereditaments, or interest in or concerning them, or upon an agreement that is not to be performed within one year from the making thereof; unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith or some other person thereunto by him or her lawfully authorized.”

{¶ 17} In Builder Appliance Supply, Inc. v. Hughes, 13 Ohio App.3d 207, 209, 468 N.E.2d 758 (10th Dist.1983)

, the court noted:

{¶ 18} “The statute's commendable purpose is:

{¶ 19} “ ‘(* * *) to secure the highest and most satisfactory species of evidence (i.e., a writing,) in cases where parties, without apparent benefit to themselves, enter into stipulations of suretyship; and where there would be great temptation, on the part of creditors, in danger of losing their debts by the insolvency of their debtors, to support suits by means of false evidence, by coloring conversations and exaggerating words of commendation or expressions of encouragement into positive contracts. (* * *)’ Crawford v. Edison (1887), 45 Ohio St. 239, 245

.”

{¶ 20} However, as the court noted in America's Floor Source, LLC v. Joshua Homes, 191 Ohio App.3d 493, 2010-Ohio-6296, 946 N.E.2d 799, ¶ 20 (10th Dist.)

:

{¶ 21} “Ohio case law has recognized situations in...