Ohio
Assignee of Contract
Auto Loan, Inc. v. Sisler, 11th Dist. Portage No.
2022-Ohio-3282.
In this appeal, the Eleventh Appellate District reversed the
trial court’s decision finding that the plaintiff was not an
assignee under the terms of a retail installment contract.
The Bullet Point: Under R.C. 1925.02(A)(2)(ii), a small
claims court lacks jurisdiction over “any claim brought by an
assignee or agent…” Whether one is an assignee is a question
of fact to be determined by the trier of fact * As the appellate
court noted, Black’s Law Dictionary defines assignee as
“[s]omeone to whom property rights or powers are transferred
by another.” ASSIGNEE, Black’s Law Dictionary (11th ed.
2019). The drafters of R.C. 1925.02 could have limited the
prohibition on assignments to, for example, assignments that
occurred after the cause of action accrued. The statute includes no
such limiting language but wholly excludes claims brought by
assignees. The language of R.C. 1925.02(A)(2) unambiguously
excludes assignees from the small claim court’s jurisdiction.
Courts must apply the plain meaning of statutes without inserting
or deleting words. Here, the statute was plain and unambiguous and
applied to the plaintiff, an assignee of the retail installment
contract it sued under.
Equitable Subrogation
Kemba Fin. Credit Union v. Jackson on High Condo. Assn., 10th
Dist. Franklin No. 2022-Ohio-3247.
In this appeal, the Tenth Appellate District affirmed in part
and reversed in part the trial court’s decision related to the
plaintiff’s claim for an equitable lien on real property.
The Bullet Point: R.C. 5301.23 establishes the general rule
that the first mortgage recorded shall have priority over any
subsequently recorded mortgage. R.C. 5301.28 addresses the
release of a recorded mortgage, providing in part: “[w]hen the
mortgagee of property * * * receives payment of any part of the
money due the holder of the mortgage, and secured by the mortgage,
and enters satisfaction or a receipt for the payment, either on the
mortgage or its record, that satisfaction or receipt, when entered
on the record * * * by the county recorder, will release the
mortgage to the extent of the receipt.” As the court noted, in
cases where a first-priority lien was erroneously released by a
recorder or third party, courts generally apply equitable
principles to reinstate the priority of the first lien recorded.
However, where there has been an intervening interest recorded,
courts had ordered equitable reinstatement of the first lien and
its priority only when the intervening lienholder had actual or
constructive notice of the first lien and either did not
detrimentally rely upon the erroneous release or were not
prejudiced by the revival of the first lien.
Allonge affixed to a note
Yemma v. Leber Real Estate, LTD. 7th Dist. Mahoning,
2022-Ohio-3289.
The Seventh Appellate District affirmed the trial court’s
decision finding that the plaintiff was not the holder of a
promissory note and thus lacked standing to enforce it because no
evidence was presented that an allonge was affixed to the note.
The Bullet Point: “Under Ohio law, the right to
enforce a note cannot be assigned; rather, the note must be
negotiated in conformity with Ohio’s version of the Uniform
Commercial Code.” However, negotiation may transfer a
note under R.C. 1303.21(A). Id. “Negotiation”
is the transfer of possession of the note “to a person who by
the transfer becomes the holder of the instrument.” R.C.
1303.21(A). Except for negotiation by a remitter, if an instrument
is payable to an identified person, negotiation requires the
transfer of possession of the instrument and its indorsement by the
holder. R.C. 1303.21(B). If an instrument is payable to the bearer,
it may be negotiated by transfer of possession alone. The
“transfer” of an instrument occurs when the note is
physically delivered “for the purpose of giving the person
receiving delivery the right to enforce the instrument.” R.C.
1303.22(A). An allonge is a “slip of paper sometimes attached
to a negotiable instrument for the purpose of receiving further
indorsements when the original paper is filled with
indorsements.” The current version of the Uniform Commercial
Code, codified as R.C. 1303.24(A)(2), allows allonges even where
room exists on the note for further indorsements. However, the
paper must be affixed to the instrument for the signature to be
considered part of the instrument.
Modifying a Contract
Dye v. JJ Detweiler Enterprises Inc., 5th Dist. Stark No.
2022-Ohio-3250.
In this case, the Fifth Appellate District affirmed the trial
court’s decision that the parties had orally modified the terms
of a settlement agreement.
The Bullet Point: “A contract can be modified when
there is clear and convincing evidence of the parties’ mutual
intent to modify the contract through their course of
dealing.” In fact, “even contracts that are required
by the statute of frauds to be in writing can be modified orally
‘when the parties to the written agreement act upon the terms
of the oral agreement.” So how can one modify a contract
orally? As the Fifth Appellate District noted, “subsequent
acts and agreements may modify the terms of a contract, and unless
otherwise specified, neither consideration nor a writing is
necessary. Oral agreements to modify a prior written agreement are
binding if based upon new and separate legal consideration or, even
if gratuitous, are so acted upon by the parties that a refusal to
enforce the oral modifications would result in fraud to the
promissee.”
Florida
Buyer in the Ordinary Course of Business
Santana Equestrian Private Fin., LLC v. Richtmyer, No. 4D21-3363
(Fla. Sept. 14, 2022)
The Fourth District reversed a replevin judgment based upon a
determination that the appellant was a good faith buyer in the
ordinary course of business.
The Bullet Point: Under the Uniform Commercial Code (the UCC),
if goods are entrusted to a merchant who deals in goods of that
kind and the goods are ultimately sold to a good faith buyer in the
ordinary course of business, the entruster’s intent, any
intervening sales, and the merchant’s fraudulent actions are
irrelevant. This appeal stems from the trial court’s order
determining the right to immediate possession of a competitive
jumping horse. It is undisputed that the appellee entrusted the
horse to a known merchant, who, in turn, entrusted the horse to
another merchant with directions to sell it. A year and a half
after the initial entrustment, the second merchant sold the horse
to the appellant.
The trial court granted replevin and awarded the horse to the
appellee, concluding that the appellant was not a good-faith buyer
in the ordinary course of business. On appeal, the Fourth District
held that the record did not support the trial court’s
conclusion. Rather, the evidence established that the sale
comported “with the usual or customary practices” in the
business of selling jumping horses and that the appellant was a
good faith purchaser for value under the UCC. Accordingly, the
replevin judgment awarding possession of the horse to the appellee
was reversed.
In-Camera Review
GCTC Holdings, LLC v. Tag QSR, LLC, No. 2D21-3457 (Fla. 2d DCA
Sept. 9, 2022)
The Second District concluded that the trial court departed from
the essential requirements of the law by requiring the production
of asserted trade secret information without conducting an
in-camera review.
The Bullet Point: When parties dispute whether documents are
protected under the trade secret privilege, a trial court must
first determine whether the requested information constitutes or
contains trade secret information. This generally can be determined
only after conducting an in-camera review of the documents. In this
case, the trial court ordered the disclosure of asserted trade
secret information without ever conducting an in-camera review or
ruling on the assertion of the trade secret privilege. The Second
District concluded this was a departure from the essential
requirements of the law resulting in material harm. Accordingly,
the order was quashed.
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