Verhoff v. Verhoff

[Cite as Verhoff v. Verhoff, 2019-Ohio-3836.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
ALLEN COUNTY
DAVID VERHOFF,
PLAINTIFF-APPELLEE, CASE NO. 1-18-66
v.
PHILIP G. VERHOFF,
DEFENDANT-APPELLANT,
-and- OPINION
SANDRA VERHOFF,
DEFENDANT-APPELLEE.
Appeal from Allen County Common Pleas Court
Trial Court No. CV 2016 0592
Judgment Affirmed
Date of Decision: September 23, 2019
APPEARANCES:
William E. Clark for Appellant
Jared J. Lefevre and Charles E. Sulek for Appellee, David Verhoff
Case No. 1-18-66
WILLAMOWSKI, J.
{¶1} Defendant-appellant Philip G. Verhoff (“Philip”) appeals the judgment
of the Allen County Court of Common Pleas, alleging that the trial court erred by
denying his motion for a directed verdict and that the jury entered a verdict against
the manifest weight of the evidence. For the reasons set forth below, the judgment
of the trial court is affirmed.
Facts and Procedural History
{¶2} Martha M. Verhoff (“Martha”) owned a farm on Schooler Road (“the
Schooler Farm”) but died in 2006. Tr. 78, 165. Martha, who was predeceased by
her husband, had five children who survived her: David G. Verhoff (“David”);
Philip; Barbara Verhoff (“Barbara”); Susan Morris (“Susan”); and Mary Ann
Nickles (“Mary Ann”). Tr. 80. In her will, Martha named David as the executor of
her estate. Tr. 79. At some point, David began to discuss the future of the Schooler
Farm with his sisters and his brother, Philip. Tr. 80.
{¶3} The siblings eventually came to an agreement regarding the disposition
of the Schooler Farm. The parties to this action agree that the siblings approved a
private sale of the Schooler Farm for a purchase price of $135,000.00. Tr. 87-88,
Ex. 8. The five siblings also agreed that each of them would then receive an equal
share of roughly $27,000.00 from the proceeds of this sale. Tr. 87-88. Ex. 8, 10.
Aside from these general details, however, David and Philip present different
accounts of the terms of the sale of the Schooler Farm.
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{¶4} According to David, the siblings agreed that Philip and David would
purchase the Schooler Farm in order to keep this property in the family. Tr. 80.
However, the estate’s attorney advised David that he, as the executor of Martha’s
estate, should not purchase assets directly from the estate. Tr. 80. At trial, David
testified that his attorney suggested that Philip purchase the Schooler Farm; that
David, as executor, transfer the deed to the Schooler Farm under Philip’s name; and
that Philip, at a later date, transfer a deed to a one-half interest in this property to
David . Tr. 80, 87, 93, 105-106.
{¶5} Pursuant to his attorney’s advice, David sent a $67,500.00 check to
Philip for one-half the purchase price of the Schooler Farm with the intention of
purchasing a one-half interest in the Schooler Farm. Tr. 82-83. Ex. 1. The memo
line on this check read: “1/2 For moms Farm.” Tr. 83. Ex. 1. On May 9, 2007,
Philip sent an email to David that read: “David - your check arrived today 5/9/07,
will hold it until further direction.” Tr. 85. Ex. 4. David then told Philip to send a
check for $135,000.00 to the estate’s attorney in order to purchase the Schooler
Farm from the estate. Tr. 86. David, as executor of Martha’s estate, signed over
the deed to the Schooler Farm to Philip with the understanding that Philip, at a later
date, would transfer a deed to a one-half interest in this property to him. Tr. 86-87.
Ex. 7.
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{¶6} According to Philip, however, he never entered into an agreement with
his brother under which David would receive a one-half interest in the Schooler
Farm and that he was to be the sole purchaser of the Schooler Farm. Tr. 170-171,
177, 184. Philip testified that he had access to sufficient funds to pay the entire
$135,000.00 but that some of the funds were in stocks that would have taken a “few
days” to liquidate. Tr. 249. Philip stated that David wanted the purchase money as
soon as possible and that David stated he would loan Philip one-half of the purchase
price to speed up this process. Tr. 180-181, 249.
{¶7} Philip testified that he did receive a $67,500.00 check as a loan from
David but noticed that David had written “1/2 For moms Farm” on the memo line.
Tr. 182. Ex. 1. Philip stated that he called his brother to inquire about the message
on the memo line and that David reaffirmed that this sum was intended as a loan.
Tr. 173, 182, 228. Thus, according to Philip, the deed to the Schooler Farm is in his
name alone because he was the sole purchaser and is the sole owner of this property.
{¶8} After the purchase of this property, the Schooler Farm was leased to a
farmer. Tr. 94. Ex. 9. In January of 2007, David and Philip had opened a joint
bank account. Tr. 95. Ex. 9. Philip testified that David opened the joint account
with him in case anything happened to David prior to completing the process of
probating Martha’s estate. Tr.168-169. Philip testified that he deposited rental
income into the joint account as payments on the $67,500.00 loan from David. Tr.
243. Philip acknowledged that David paid the property taxes and utilities for the
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Schooler Farm but stated that he did not like that David was paying these bills.
Deposition Tr. 46.
{¶9} David, on the other hand, testified that this account was opened to
facilitate the joint operation of the Schooler Farm. Tr. 95. David further testified
that Philip deposited all of the rental income from the Schooler Farm into this
account. Tr. 95. Ex. 21. David also stated that he (David) used the funds in this
account to pay for the utility bills and property taxes for the Schooler Farm. Tr. 96,
189, 246. David stated that Philip would pay the income taxes on the rental income
on this property. Tr. 107. David stated that this working arrangement continued for
roughly eight years. Tr. 94.
{¶10} In 2015, David began to engage in some estate planning. Tr. 76-77.
During this process, his attorney recommended that David obtain a deed that
represented ownership of a one-half interest in the Schooler Farm. Tr. 97. David
then requested a deed from Philip. Tr. 97. On December 7, 2015, Philip deposited
roughly $61,000.00 into the joint account. Tr. 98, 207. At trial, Philip claimed that
he deposited this sum in the joint account to finish repaying the $67,500.00 that
David had allegedly loaned him in 2007. Tr. 206. From this point forward, Philip
withheld the rental income from the Schooler Farm and refused to deposit these
funds into the joint bank account. Tr. 97, 103, 211.
{¶11} On October 12, 2016, David filed a complaint against Philip, alleging
that David entered into an oral contract with Philip for the purchase of the Schooler
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Farm; that David, under this agreement, obtained a one-half interest in the Schooler
Farm; that Philip asserts full ownership of the Schooler Farm in breach of this
agreement; and that Philip withheld this property’s rental income from David. Doc.
1. This complaint raised claims of breach of contract and conversion. Doc. 1. On
October 16, 2018, this matter came to trial. Tr. 1.
{¶12} At the trial, David presented a copy of the $67,500.00 check that he
wrote to his brother in 2007. Tr. 82. Ex. 1. The memo line of this check said “1/2
For moms Farm.” Tr. 83. Ex. 1. David also presented a copy of his bank statement
from May of 2007. Ex. 2. This statement showed a withdrawal of $67,500.00 on
May 15, 2007. Ex. 2. The check number next to this withdrawal matched the
number on the check that he tendered to his brother. Tr. 85. Ex. 1, 2. He also
testified that he, like Philip, has keys to the house on the Schooler Farm but that
none of their other siblings do. Tr. 100.
{¶13} However, Philip claimed that he was the sole purchaser and owner of
the Schooler Farm as he and David had never made an agreement to purchase this
property together. Tr. 170. In support of his claim, Philip testified that he was listed
as the sole owner on the deed to the property; that the insurance on the property was
in his name; and that he claimed the income from the farm on his taxes. Tr. 208,
210. He also testified that he and his wife maintained the farm while David did not
contribute to the upkeep of the property. Tr. 216-217.
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{¶14} Philip also stated that David had told him that the $67,500.00 check
was a loan for the purchase of the property. Tr. 225, 228. He testified that he
deposited the rental income from the farm as payments on this loan and that he
completed the payments to his brother in December of 2015 when he deposited
$61,000.00 into the joint account. Tr. 206-207, 243. Since the alleged loan was
paid off, Philip withheld the rental income from the joint account. Tr. 211. Philip
stated that David asked if he could purchase the Schooler Farm in 2015 and that he
(Philip) had denied this request. Tr. 261. Philip also testified that David never asked
for a deed before 2015. Tr. 261.
{¶15} On October 18, 2018, the jurors found that David and Philip had a
contract under which each owned a one-half interest in the Schooler Farm; that
Philip breached this contract; and that Philip converted rental income from this
property. Doc. 47. In 2018, the Schooler Farm was valued at $311,377.00. Ex. 17.
Tr. 144. Further, Philip had withheld $32,000.00 of rental income from David. Tr.
103. On October 30, 2018, the trial court awarded David $171,688.50 in damages.
Doc. 52. This figure represented one-half the value of the Schooler Farm added to
one-half the value of the withheld rental income. Doc. 52.
{¶16} On October 31, 2018, Philip filed a motion for a judgment
notwithstanding the verdict. Doc. 53. He alleged that this agreement did not comply
with the statute of frauds; that this action was barred by the statute of limitations;
and that the agreement between him and David was an illegal contract. Doc. 53.
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On November 19, 2018, the trial court denied Philip’s motion for a judgment
notwithstanding the verdict. Doc. 60. The appellant filed his notice of appeal on
November 28, 2018. Doc. 62. On appeal, he raises the following five assignments
of error:
First Assignment of Error
The trial court erred in denying Defendants’ motion for a directed
verdict based upon the affirmative defense of the statute of frauds.
Second Assignment of Error
The trial court erred in denying Defendants’ motion for a directed
verdict based upon the affirmative defense of the statute of
limitations.
Third Assignment of Error
The trial court erred in denying Defendants’ motion for a directed
verdict based on the affirmative defense of illegality of contract.
Fourth Assignment of Error
The trial court erred in denying the Motion JNOV and/or for a
new trial.
Fifth Assignment of Error
The verdict of the jury is against the manifest weight of the
evidence.
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First Assignment of Error
{¶17} The appellant asserts that the alleged agreement between Philip and
David did not comply with the statute of frauds.
Legal Standard
{¶18} R.C. 1335.05 contains Ohio’s statute of frauds, which reads, in its
relevant part, as follows:
No action shall be brought whereby to charge the defendant * * *
upon a contract or sale of lands, tenements, or hereditaments, or
interest in or concerning them * * * 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.
R.C. 1335.05. Generally, “[a]greements that do not comply with the statute of
frauds are unenforceable.” First Merit Bank, N.A. v. Inks, 138 Ohio St.3d 384, 2014-
Ohio-789, 7 N.E.3d 1150, ¶ 20, quoting Olympic Holding Co., L.L.C. v. ACE Ltd.,
122 Ohio St.3d 89, 2009-Ohio-2057, 909 N.E.2d 93, ¶ 32.
{¶19} However, under certain conditions, an oral contract regarding the sale
or lease of real estate may be removed from the statute of frauds pursuant to the
doctrine of partial performance. Hodges v. Ettinger, 127 Ohio St. 460, 466-467,
189 N.E. 113 (1934).
Partial performance sufficient to remove a contract from the
operation of the statute of frauds [1] ‘must consist of unequivocal
acts by the party relying upon the agreement, [2] which are
exclusively referable to the agreement and [3] which have
changed his position to his detriment [4] and make it impossible
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or impractical to place the parties in statu [sic] quo.’ U.S. Bank
v. Stewart, 7th Dist. Columbiana No. 12 CO 56, 2015-Ohio-5469,
¶ 27, quoting Delfino v. Paul Davies Chevrolet, Inc., 2 Ohio St.2d
282, 287[, 209 N.E.2d 194] (1965).
JP Morgan Chase Bank, N.A. v. Spears, 3d Dist. Shelby No. 17-17-10, 2018-Ohio-
917, ¶ 14. “The doctrine of part performance should only operate as an exception
to the Statute of Frauds when the acts relied upon as part performance are ‘such as
change the plaintiff’s position and would result in a fraud, injustice, or hardship
upon him if the contract were not executed or enforced.’” Hall v. Light, 4th Dist.
Lawrence No. 1445, 1980 WL 351104, *2 (Oct. 21, 1980), quoting Delfino, supra,
at 199, quoting 49 Am. Jur. 732, Sec. 427.
{¶20} “What constitutes part performance, however, depends ultimately on
the particular facts of each case.” Osborne Bros. Welding Supply, Inc. v. Akron
Truck Rental, Inc., 9th Dist. Summit No. 10587, 1982 WL 5094, *1 (July 14, 1982),
quoting 25 Ohio Jurisprudence 2d 286-287, Frauds, Statute of, Section 193.
There are generally three criteria for establishing part
performance: ‘(1) evidence of a change in who possesses the land,
(2) payment of all or part of the consideration for the land, and
(3) improvements, alterations or repairs upon the land.’ Accord
51 Ohio Jurisprudence 3d (1984) 320, Frauds, Statute of, Section
171. Generally, the performance of only one of the three acts is
insufficient to establish part performance.
Areawide Home Builders, Inc. v. Hershberger Const., Inc., 9th Dist. Summit No.
18514, 1998 WL 65476, *3 (Feb. 4, 1998), quoting Geiger v. Geiger, 2d Dist.
Montgomery No. 13841, 1993 WL 476247, *4 (Nov. 16, 1993). See Kaiser v.
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Caskey, 6th Dist. Lucas No. L-01-1487, 2002-Ohio-4082, ¶ 16; Ribovich v. Miele
Bros, Enterprises, Inc., 8th Dist. Cuyahoga Nos. 76137 and 76182, 1999 WL
1087481, *4 (Dec. 2, 1999); DeAscentisi v. Margello, 10th Dist. Franklin No. 08AP-
522, 2008-Ohio-6821, ¶ 26.
{¶21} “A party seeking to enforce an oral land contract must establish both
the contract and the applicability of the doctrine of part performance by clear and
convincing evidence.” Watts v. Fledderman, 1st Dist. Hamilton No. C-170255,
2018-Ohio-2732, ¶ 24; Geiger at *2; Bumgarner v. Bumgarner, 4th Dist. Highland
No. 09CA22, 2010-Ohio-1894, ¶ 27; “Determining whether the trial court correctly
applied the statute of frauds and the doctrine of partial performance is a matter of
law.” Crilow v. Wright, 5th Dist. Holmes No. 10 CA 10, 2011-Ohio-159, ¶ 27.
Accordingly, appellate courts will apply a de novo standard of review to these
matters. Ruhe v. Hemmelgarn, 2d Dist. Darke No. 96-CA-1423, 1997 WL 476687,
*3 (Aug. 22, 1997); LHPT, L.L.C. v. Capitol City Cardiology, Inc., 2014-Ohio-
5247, 24 N.E.2d 712, ¶ 21 (10th Dist.).
Legal Analysis
{¶22} At trial, David alleged that he entered into an oral contract with Philip
that had four main components: (1) David would pay Philip $67,500.00 for one-half
of the Schooler Farm; (2) Philip would purchase this property from Martha’s estate;
(3) Philip, at a later date, would deliver David a deed for a one-half interest in the
Schooler Farm; and (4) David and Philip would contribute to the costs of
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maintaining the property and share the rental income. Doc. 1. We will first examine
the record to determine if David carried the burden of proving that this oral contract
existed. We will then examine whether the doctrine of partial performance removes
this oral contract from the operation of the statute of frauds.
{¶23} To establish the existence of an oral contract, David introduced his
various correspondences, with his siblings, relative to the farm. In an email to David
on March 12, 2007, Philip wrote:
David – What you have is fine, here is a different approach/other
thought that perhaps you can use when talking to the girls.
***
I came up with about 135k for an offer price resulting in a
payment of 27k to each party * * *. The thing to stress here is
that more than likely the sale price will be even less than the
asking price given the current state of the economy * * *. SO
your bottom line is very similar to what I had perceived to be a
fair offer (but even at that we are suckers unless we discover gold
or oil).
Barb – she would have some sentimental interest in keeping it in
the family…but she would probably prefer to sell it to Mary Ann
& Jimmy. Furthermore, she has no idea what its really worth * *
*. I can hear the stories already how David and Philip “stole” the
farm. * * *
Susan – I would suspect that she would be more inclined to just
have you put it on the market as well and get the highest
bid…thinking that there is a bigger sucker than you and I out
there. * * * Plus I think she would like the idea of getting the cash
fast from you and I instead of waiting for a year for a sale that
might end up being for even less.
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Mary Ann * * * - Mike would like to get his hands on it and sell it
in parcels to make a quick buck, with no regard for our parents
or what they would like. * * * So who do you think dad and mom
would sell it to, me/you or Mike. * * *
SO THREE OUT OF FIVE IS A SALE…YOU WILL NEVER
BE ABLE TO MAKE EVERYONE HAPPY. IF my math is right
we would need to pull about 10k out of our back pockets to close
the deal…in addition to the 30k inheritance/cash * * *. You might
want to remind the girls that some of those repairs are mandatory
in order to prevent YOU from getting sued if there is a direct sale
to someone outside of the family.
***
David and Philip will offer to buy for 10% Less than appraisal. As
buyer they will pay closing cost. 1/5 each person would get
26777.10
(Emphasis added.) Ex. 18. At trial, the first and final fiduciary’s account of
Martha’s estate was entered into evidence. Ex. 10. The record of receipts and
disbursements that showed the Schooler Farm sold for $135,000.00 on June 1, 2007
and that each of Martha’s five children received a $27,000.00 distribution on June
13, 2007. Ex. 10. Thus, Philip, in this email, outlined the terms of the eventual sale
of the Schooler Farm and expressly characterized this offer as being from him and
David. Ex. 18.
{¶24} David also introduced a hand-written message from Mary Ann that
read, in its relevant part, as follows: “David, I agree to the offer you and Philip made
at $147,825.00 plus closing costs.” (Emphasis added.) Ex. 3D. At trial, David was
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asked why Mary Ann mentioned a $147,825.00 sale figure when the farm sold for
$135,000.00. David testified that these numbers did not match
[b]ecause we agreed to buy the farm for ten percent less than the
market value. When you take the real estate costs and everything
off of it it comes to one thirty-five. That was the agreement
everybody made. Mary Ann did agree to that, too. She was fine
with the twenty-seven thousand she got.
Tr. 91. Further, in an email to David and Philip on April 10, 2007, Barbara wrote:
“I am going to sign the paper [a sale of farm form] for you two to buy the farm—it
will be coming in the mail.” (Emphasis added.) Ex. 3B. David also submitted a
copy of the sale of farm form that was signed by Barbara and dated April 10, 2007.
Ex. 3A. On this document, Barbara wrote that she agreed to the sale of “the farm
to David and Philip.” Ex. 3A.
{¶25} David testified that, of the $67,500.00 that he sent to Philip,
$50,000.00 of this amount was from a trust account. Tr. 99. After withdrawing this
sum of money, the trust sent David a letter that stated “a return envelope has been
provided for your convenience in sending us back a copy of the purchase agreement
for the acreage as soon as it is available.” Tr. 115. Ex. 13. David admitted that he
had not yet tendered proof of his part ownership of the Schooler Farm. Tr. 115-116.
However, this is a further indication that he had notified the trust that he was using
these withdrawn funds for the purchase of real estate. Tr. 115.
{¶26} On April 7, 2007, David sent a check to Philip for $67,500.00 that had
written on its memo line: “1/2 For moms Farm.” Tr. 82. Ex. 1. This sum of money
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constituted one-half of the $135,000.00 purchase price of the Schooler Farm. Tr.
119. On May 9, 2007, Philip sent an email to David that read: “David – your check
arrived today 5/9/07, will hold it until further direction.” Ex. 4. David then
produced a bank statement that indicated that this check was cashed on May 15,
2007. Ex. 2. Philip admitted that his wife, Sandra Verhoff (“Sandra”), cashed this
check and that he used these funds to purchase the Schooler Farm from the estate.
Tr. 228.
{¶27} Based on this evidence, the jury found that David and Philip entered
into a contract to purchase the Schooler Farm. Doc. 47. Prior to the sale of the
Schooler Farm, Philip’s email detailed the terms of the offer that was accepted for
the purchase of this disputed property. In this email, Philip expressly characterized
this as an offer from “David and Philip.” Ex. 18. Further, the correspondence from
Barbara and Mary Ann clearly indicates that the entire family was operating under
the assumption that David and Philip were purchasing the Schooler Farm together.
The check indicates that David paid consideration for his one-half share of the
Schooler Farm and that Philip accepted this consideration by having this check
cashed. Ex. 1. See Rolland v. Biro, 8th Dist. Cuyahoga No. 44632, 1982 WL 2547,
*2, 6 (Nov. 18, 1982). David also produced evidence that he had paid all of the
consideration that was due from him under the oral contract. The check that he sent
to Philip for $67,500.00 represented half of the value of Schooler Farm’s purchase
price. Ex. 1.
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{¶28} In this case the jury found that David carried the burden of establishing
that an oral contract existed between David and Philip for the purchase of the
Schooler Farm. Based on the evidence produced at trial, the jury could have
reasonably found that David had carried the burden of establishing that a contract
existed. Since this was an agreement for the purchase of real estate, we turn now to
examining whether the doctrine of partial performance removes this oral contract
from the statute of frauds. See R.C. 1335.05; Spears, supra, at ¶ 14.
{¶29} First, at trial, David identified a number of unequivocal acts that were
performed in reliance on this oral agreement. Spears, supra, at ¶ 14. David
produced evidence that he had paid all of the consideration that was due from him
under the oral contract. At trial, David presented a copy of a check for $67,500.00
that was written to Philip. Ex. 1. Further, the memo line of this check read “1/2 For
moms Farm,” indicating that this payment was consideration for a one-half interest
in the Schooler Farm. Further, this sum of $67,500.00 represented half the value of
the $135,000.00 purchase price of the Schooler Farm. Ex. 1.
{¶30} As to possession, David testified that neither he nor Philip needed to
ask permission from the other in order to enter onto the Schooler Farm property and
that both of them freely visited the property at their convenience. Tr. 99. Further,
David testified that, while he and Philip had keys to the property, none of his other
siblings had keys to the Schooler Farm. Tr. 100. One of Philip and David’s sisters
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lived next to the Schooler Farm and was not given a key because Philip did not want
her to have access to this property. Tr. 100.
{¶31} Further, the record indicates that David and Philip each performed
tasks with the object of maintaining the property. David added Philip to a joint bank
account on January 7, 2007. Ex. 9. At trial, David testified that the rental income
from the Schooler Farm went into this joint account every month. Tr. 95. David
would use the funds in this account to pay for the utilities on the property. Tr. 96.
He testified that he paid for the property taxes on the Schooler Farm while Philip
paid income taxes on the farm’s revenues. Tr. 96. David stated that Philip was
aware of these activities because he was a joint owner of his account and had full
access to the account statements. Tr. 96. On cross-examination, Philip admitted
that he has a mortgage on his house and that the bank, as the lender, has never paid
his utility bills. Tr. 246.
{¶32} To substantiate these claims, David introduced a record of his
transactions between 2009 and 2011 in which he paid the utilities and property taxes
for the Schooler Farm. Ex. 21. See Gleason v. Gleason, 64 Ohio App.3d 667, 676,
582 N.E.2d 657, 663 (4th Dist. 1991) (holding that paying taxes and insurance on a
farm property was some evidence of part performance.). This document also
records deposits of rental income into this joint account. Ex. 21. The record further
contains checks that Philip issued from the joint account that he had with David for
various expenses, including insurance on the house at the Schooler Farm, annual
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taxes on the property, and a mower used on the farm. Ex. 5. These checks had
David and Philip’s names on them. Ex. 5.
{¶33} Second, David presented evidence that demonstrated that these
unequivocal acts were “exclusively referable to the agreement.” Spears, supra, at ¶
14. At trial, Philip and David each asserted a different theory regarding the
significance of the $67,500.00 check that David mailed to Philip. At trial, Philip
claimed that the $67,500.00 check was a loan from David that carried an interest
rate of 1.4%. Tr. 207. David testified that he withdrew $50,000.00 of this amount
from a trust account that was, at that time, producing returns of eight percent
annually. Tr. 99. Thus, Philip asserts that David gave up an eight percent annual
return to make a loan that carried an interest rate of 1.4%. See Tr. 99, 247.
{¶34} Further, Philip testified that he did not need this loan from David and
had access to sufficient funds in 2007 to pay for the full purchase price of the
Schooler Farm. Tr. 249. Philip said that David advanced him this loan because the
attorney on the estate wanted the money immediately, and there was not time for
Philip to sell these stocks. Tr. 249. According to Philip, however, these stocks
would have only taken a “few days” to liquidate. Tr. 249. Since David mailed the
check, Philip did not receive these funds until two days after David had issued the
check. Ex. 1, 4. The bank records indicate that Philip did not have this check cashed
until six days after he received this check. Ex. 7.
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{¶35} This alleged loan also had no repayment schedule; no agreed upon
method of receiving payments; and had a low interest rate that Philip seemed to
have calculated without David’s input. Tr. 242, 247. Philip testified that he
repeatedly approached David with a check and offered to repay this alleged loan in
full but claimed that David repeatedly refused to be paid. Tr. 248. However, after
David requested a deed, Philip simply paid the balance of the alleged loan by
depositing $61,000.00 into the joint account. Tr. 248.
{¶36} David, on the other hand, asserted that, prior to December 2015, this
$67,500.00 had not been characterized as a loan and that he issued this check with
the intention of purchasing a one-half interest in the Schooler Farm. Tr. 97-98.
David also testified that he would not have paid for utilities and the property taxes
if he did not have an agreement with his brother and did not believe that he had a
one-half interest in the property. Tr. 96. David’s actions are explained by the oral
contract that was made for the joint purchase of the Schooler Farm. Philip’s
assertion—that the $67,500.00 check was a loan—does not make sense of David’s
or Philip’s actions in between 2007 and 2015. Thus, these “unequivocal acts” are
“exclusively referable to the agreement.” Spears, supra, at ¶ 14.
{¶37} Third, David introduced evidence that he changed his position to his
detriment in undertaking these actions. David testified that he withdrew $50,000.00
from a trust account in order to pay for the one-half of the Schooler Farm. Tr. 99.
David stated that, at the time of this withdrawal, this trust account was producing
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annual returns of eight percent. Tr. 99. At trial, Philip claimed that the $67,500.00
check was a loan from David that carried an interest rate of 1.4%. Tr. 207. Further,
David paid for expenses associated with the Schooler Farm from in between 2007
and 2015. Through these actions, David “changed his position to his detriment” in
reliance on the oral contract that he had with Philip. Spears, supra, at ¶ 14.
{¶38} Fourth, David presented evidence at trial that it would be “impractical
to place the parties in statu [sic] quo” in the absence of enforcing this oral contract.
Spears, supra, at ¶ 14. David had to forgo high returns in the trust account in order
to invest this money in the purchase of the Schooler Farm. This investment came
with certain expenses, such as utilities and property taxes. David shouldered these
risks and responsibilities with the expectation that he would receive rental income
from the operation of the farm and would own a one-half interest in the property.
In the absence of enforcing this contract, David cannot return to the status quo ante.
{¶39} Further, not enforcing this oral contract would also result in an
injustice as Philip would receive a windfall at David’s expense. In arguing that this
contract should not be enforced, Philip essentially asserts that the $75,000.001 sum
in the joint bank account is sufficient compensation for the $67,500.00 that David
sent to Philip. We find this argument to be unpersuasive for two reasons.
1
On December 7, 2015, Philip deposited $61,000.00 into the joint bank account. Tr. 98, 207. Prior to this
deposit, there was roughly $14,000.00 in rental income deposited into the joint account. Tr. 207. Thus, the
total amount in the joint account was roughly $75,000.00. Tr. 207. Philip claimed that these funds were
sufficient to repay the principal on the alleged loan from David in addition to a 1.4% interest rate over eight
years. Tr. 207.
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{¶40} First, the Schooler Farm appreciated in value significantly from
$164,000.00 in 20072 to $311,377.00 in 2018. Tr. 144. In 2007, a one-half interest
in the Schooler Farm was worth $67,500.00. In 2015, a one half-interest in the
Schooler Farm was worth $155,688.50. Tr. 144. Doc. 50, 52. If this contract is not
enforced, David paid $67,500.00 for a one-half interest in the Schooler Farm and
would receive $75,000.00, a return of $7,500.00. Tr. 207, 224. Since Philip
tendered $67,500.00 of his own money to the estate for a one-half interest in the
Schooler Farm in 2007 and deposited $61,000.00 into the joint bank account to
“repay” David’s “loan” in 2015, Philip paid a total of $128,500.00 for the Schooler
Farm. Since the Schooler Farm is worth $311,377.00, Philip would receive a return
of roughly $182,877.00.3
{¶41} Second, Philip withheld roughly $32,000.00 from David in rental
income from the property. Tr. 103. The $75,000.00 sum does not compensate
David for his share of this withheld rental income. Instead, this withheld rental
income increases the windfall Philip would receive if he were not held to the terms
of the oral agreement that he entered into with his brother.
{¶42} Under the trial court’s judgment entry, however, David received
$171,688.50. This accounts for half of the withheld rental income and the value of
2
While David and Philip paid $135,000.00 to the estate for the Schooler Farm, the property was appraised
at $164,000.00. Tr. 119. The price of the Schooler Farm was discounted to account for the savings of having
a private sale. The savings include not having to pay for a realtor. Tr. 91, 119.
3
These calculations are limited to the value of a one-half interest in the Schooler Farm. The rental income
is considered separately and is not factored into these calculations.
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a one-half share of the Schooler Farm. Doc. 52. This is a far more equitable
resolution of this dispute than what would result if this oral contract were not
enforced. Under the trial court’s judgment entry, each receives the value of one-
half of the Schooler Farm at its appraised value of $311,377.00, and each receives
one-half of the $32,000.00 of withheld rental income.
{¶43} After examining the evidence in the record, we conclude that the trial
court, in these circumstances, did not err in finding that the doctrine of part
performance applied and operated to remove this oral contract from the statute of
frauds. Thus, the statute of frauds does not prevent this oral contract from being
enforced. For this reason, the appellant’s first assignment of error is overruled.
Second Assignment of Error
{¶44} In the event that this Court determines that an oral contract existed
between David and Philip, the appellant argues that this action was commenced after
the statute of limitations had run for oral contracts.
Legal Standard
{¶45} Under R.C. 2305.07, “an action upon a contract not in writing, express
or implied, or upon a liability created by statute other than a forfeiture or penalty,
shall be brought within six years after the cause thereof accrued.” R.C. 2305.07.
Generally, “a cause of action does not accrue until such time as the infringement of
a right arises. It is at this point that the time within which a cause of action is to be
commenced begins to run.” Oker v. Ameritech Corp., 89 Ohio St.3d 223, 224, 729
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N.E.2d 1177, 1179 (2000), quoting State ex rel. Teamsters Local Union 377 v. City
of Youngstown, 50 Ohio St.2d 200, 203-204, 364 N.E.2d 18, 20 (1977). For this
reason, “[a] cause of action for breach of contract does not accrue until the
complaining party suffers actual damages as a result of the alleged breach.” Kincaid
v. Erie Ins. Co., 128 Ohio St.3d 322, 2010-Ohio-6036, 944 N.E.2d 207, ¶ 13,
modified on reconsideration on other grounds, quoting Midwest Specialties, Inc. v.
Firestone Tire & Rubber Co., 42 Ohio App.3d 6, 536 N.E.2d 411 (9th Dist. 1988),
paragraph one of the syllabus.
Legal Analysis
{¶46} Under the first assignment of error, we determined that the jury did
not err in finding that an oral contract existed between Philip and David under which
(1) Philip was obligated to deliver—at a later, unspecified date—a deed for a one-
half interest in the Schooler Farm and (2) the parties were obligated to share the
rental income. Tr. 92-93. On October 12, 2016, David filed a cause of action for
breach of contract, alleging that Philip refused to deliver a deed to him and was
withholding the rental income from the Schooler Farm. Doc. 1.
{¶47} The appellant argues that the statute of limitations began to accrue in
2007 because this is when David tendered the $67,500.00 check to pay for half of
the Schooler Farm. Thus, the appellant argues that the applicable six-year statute
of limitations for oral contracts had run by the time David raised this breach of
contract claim. However, the fact that David, by entering into a contract and paying
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consideration, obtained the right to ask Philip for a deed in 2007 does not mean that
the statute of limitations began to run in 2007. The statute of limitations begins to
accrue when the rights of a party to a contract are violated by a breach of the
agreement, not when the rights of a party to a contract arise under an agreement.
Oker, supra, at 224. Thus, the statute of limitations did not begin to run when David
issued the $67,500.00 check to Philip in 2007.
{¶48} The appellant next argues that David’s testimony at trial suggests that
he may have asked for a deed earlier than 2015. Philip points to two statements that
David made on cross-examination. First, David stated that he did not remember the
first time that he asked Philip for a deed to half of the Schooler Farm. Tr. 130-131.
Second, when asked whether he could possibly have been asked for a deed from
Philip in 2007, David said, “It could have been. I don’t recall.” Tr. 130-131.
{¶49} While David stated that he could not recall whether he had asked for
a deed prior to 2015, Philip testified that David had never asked him for a deed prior
to 2015. Tr. 261. Thus, Philip’s testimony undermines the argument that David
may have requested a deed to a one-half interest in the Schooler Farm prior to 2015.
Tr. 261. Further, Philip also stated that he began to withhold rental income from
David in 2015.4 Tr. 261. At trial, David testified that there were no disputes
between him and Philip in between 2007 and 2015. Tr. 99. However, David
4
Philip testified that he deposited all of the rental income into the joint account through 2014. Tr. 206. Thus,
he stopped depositing rental income into the joint account in 2015. Tr. 261.
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testified that, in 2015, he asked Philip for a deed that represented ownership of half
of the Schooler Farm and that Philip refused this request. Tr. 97-98. David also
testified that Philip began withholding the farm’s rental income in 2015. Tr. 103.
{¶50} The testimony at trial established that, in 2015, Philip violated two of
the obligations that he had under the agreement with his brother. Thus, the trial
court did not err in determining that a cause of action for breach of contract arose in
2015 when Philip “refused to provide a deed for David’s one-half interest and/or
took other actions inconsistent with David’s ownership of the property in 2015.”
Doc. 60. Further, since David filed a complaint against Philip in 2016, the trial court
did not err in finding that the six-year statute of limitations had not yet expired at
the time this action was commenced. Doc. 60. This cause of action is not barred
by the applicable statute of limitations. For this reason, the appellant’s second
assignment of error is overruled.
Third Assignment of Error
{¶51} The appellant argues that David’s testimony at trial establishes that
this alleged agreement was an illegal contract because David, as the executor of
Martha’s estate, was not permitted to buy property from Martha’s estate.
Legal Standard
{¶52} “An illegal contract is ‘[a] promise that is prohibited because the
performance, formation, or object of the agreement is against the law.’” Snyder v.
Snyder, 170 Ohio App.3d 26, 865 N.E.2d 944, ¶ 32 (11th Dist.), quoting Black’s
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Law Dictionary (8th Ed.Rev.2004) 345. “Where the performance of a contract
violates a statute or act, public policy may prevent the enforcement of its
obligations.” Countrymark Cooperative, Inc. v. Smith, 124 Ohio App.3d 159, 164,
705 N.E.2d 738, 741 (3d Dist. 1997).
[I]llegality of contract is an affirmative defense. McCabe/Marra
Co. v. Dover * * *, 100 Ohio App.3d 139, [147,] 652 N.E.2d 236[(8th Dist. 1995)]; Arthur Young & Co. v. Kelly * * *, 88 Ohio
App.3d 343, 623 N.E.2d 1303 [(10th Dist. 1993)]. When
challenging a contract’s enforceability based on illegality, one
does not challenge the terms to the agreement; ‘[i]n short,
asserting that defense does not contest the existence of an offer,
acceptance, consideration, and/or a material breach of the terms
of the contract.’ McCabe/Marra Co., 100 Ohio App.3d at 148, 652
N.E.2d at 241.
Countrymark at 164. “The burden of proving the contract’s illegality is upon the
party seeking to avoid the obligation.” Cantleberry v. Holbrook, 5th Dist. Richland
No. 12CA75, 2013-Ohio-2675, ¶ 21, quoting Charles Melbourne & Sons, Inc. v.
Jesset, 110 Ohio App. 502, 505, 163 N.E.2d 773, 775 (8th Dist. 1960).
{¶53} In this case, the alleged illegality is a violation of R.C. 2109.44. This
statute reads, in its relevant part, as follows:
(A) Fiduciaries shall not buy from or sell to themselves and shall
not have in their individual capacities any dealings with the estate,
except as expressly authorized by the instrument creating the
trust and then only with the approval of the probate court in each
instance. * * *
(B) The fiduciary may petition the court for authority to purchase
property of the estate if all of the following requirements are met:
(1) Written consent to the purchase is signed by the following:
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(a) Each known heir whose interest in the estate would be affected
by the proposed purchase;
(b) Each known devisee whose interest in the estate would be
affected by the proposed purchase.
(2) The written consents are filed with the court.
(3) The purchase is shown to be to the advantage of the estate.
R.C. 2109.44(A, B). “The prohibition of the quoted statute is expressive of the
common law, and any sale made contrary to the statutory exception is at least
voidable.” Walters v. Wannemacher, 6 Ohio App.2d 226, 230, 217 N.E.2d 695, 699
(3d Dist. 1964).
Although not all authorities explicitly condemn purchases of trust
property by a spouse or relative of the trustee, at least where it is
apparent that no loss or prejudice results to the trust estate or
where there are other circumstances, such as good faith and
adequate consideration, justifying the court in upholding the
transaction, the majority rule is that a purchase of trust property
by a spouse or close relative of a trustee is improper and voidable
by the beneficiary where and to the extent that such a purchase
by the trustee himself would be improper and voidable by the
cestui que trust, even though the transaction is free from actual
fraud and supported by fair consideration. One reason for this
rule is to prevent any conflict of interest in the mind of the trustee
in a sale of the trust property, and to prevent any opportunity or
temptation to him to take a profit or benefit from such a
transaction.
(Emphasis added.) Magee v. Troutwine, 166 Ohio St. 466, 470, 143 N.E.2d 581,
583 (1957), quoting 54 American Jurisprudence, 370, Section 466.5
5
In Magee, the Supreme Court applied the majority rule as stated by 54 American Jurisprudence, 370, Section
466 in the context of spousal relationships. Magee, supra, at 584. While the Supreme Court has not applied
this rule in a case where there was a private sale of estate assets to a close relative of the executor, the authority
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{¶54} Under Ohio law, “a sale by a fiduciary to himself [or herself] is
prohibited and void.” Magee, at 583. However, the sale of estate assets by a
fiduciary to a spouse or close relative is not void ab initio.6 Id. at 582, citing 54
American Jurisprudence, 370, Section 466. See Christman v. Christman, 171 Ohio
St. 152, 154, 168 N.E.2d 153, 155 (1960) (holding that the sale of estate assets to
an executor’s spouse is “not void.”). Rather, the sale of estate assets to the
executor’s spouse or close relative at a private sale can potentially be “voidable at
the election of the heirs.”7 Id., at 154, quoting Magee at 582. However, if the heirs
that it cited as the basis of its Magee decision held that private sales of estate assets to an executor’s close
relative and private sales of estate assets to an executor’s spouse were both potentially voidable. Id. In this
case, we rely on the majority rule quoted by Magee. See Montgomery v. Mosley, 4th Dist. Pike No. 448,
1990 WL 127047, *1 (Aug. 24, 1990) (interpreting Magee as standing for the proposition that a transfer of
estate property by a fiduciary to a close relative is potentially voidable) In Matter Nye, 4th Dist. Pike No.
324, 1981 WL 6039 (Oct. 9, 1981). See also Trust U/W of Woltering, 1st Dist. Hamilton No. C-970913,
1999 WL 163759, *4 (March 26, 1999) (holding a “fiduciary may engage in self-dealing not only by directly
purchasing such property, but also by facilitating the purchase of such property by another person or entity
closely aligned with the fiduciary.”) Estate of Karder, 5th Dist. Stark No. 2010CA00297, 2011-Ohio-3229,
¶ 25. Compare In re Estate of Hughes, 94 Ohio App.3d 551, 555, 641 N.E.2d 248, 250 (9th Dist. 1994)
(holding the rule in “Magee is limited to situations in which a fiduciary sells estate property to a spouse and
that the rule in Magee does not apply to transactions involving a fiduciary’s close relative). Further, we do
not find a reason to hold that the sale of estate property to a sibling of the executor is void while the Supreme
Court has determined that a sale of estate property to the spouse of the executor is only voidable. Magee,
supra, at the syllabus; Christman, supra, at paragraph one of the syllabus. The relationship between spouses
is far closer than the relationship between siblings. Spouses are also much more likely to have more closely
aligned interests than siblings. A sale of real property from the estate to the executor’s spouse generally
confers upon the executor, at the very least, a dower interest in that property. See R.C. 2103.02. The sale of
estate property to the sibling of the executor does not necessarily transfer any interest in that property to the
executor.
6
In Magee, the Supreme Court did not expressly state that sales of estate assets to an executor’s close relative
were not void. Magee, supra, at syllabus. Rather, the Supreme Court held that sales in which the executor
purchases assets directly from the estate were void and also held that private sales of estate assets to the
executor’s spouse or close relative were voidable. Id. at 583. Since private sales of estate assets to the
executor’s spouse or close relative were held to be voidable, we conclude, by inference, that these sales are
not void ab initio. In Christman, the Supreme Court applied this logic in the context of spousal relationships,
holding that Magee stood for the proposition that a private sale of estate property to the executor’s spouse
“was voidable, not void,” even though Magee did not expressly state that sales to the executor’s spouse were
not void. Christman, supra, at 154.
7
This rule has been applied by some courts in the context of a public sale. Hartzler Mortgage Company v.
Moyer, 2d Dist. Champaign No. 78 CA 17, 1979 WL 208591, *4 (Mar. 19, 1979); In re Estate of Kellhofer,
4th Dist. Ross No. 943, 1983 WL 3125, *7 (Feb. 18, 1983); Gahanna Bank Co. v. Miesse, 41 Ohio App. 316,
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unreasonably delay in bringing an action to challenge the sale of estate assets to the
executor’s close relative or spouse, the doctrine of laches may prevent the heirs from
avoiding the contested contract of sale. Christman at paragraph two of the syllabus.
Legal Analysis
{¶55} Two agreements are at issue in this case: the agreement between Philip
and the estate (“the sale contract”) and the agreement between David and Philip
(“the side-agreement”). Under the sale contract, Philip purchased the Schooler
Farm from his mother’s estate for $135,000.00. Subsequently, each of Martha’s
five children received roughly $27,000.00 from the proceeds of this sale. Under the
side-agreement, David sent a $67,500.00 check to Philip for one-half the purchase
price of the Schooler Farm. In exchange, Philip promised to purchase the Schooler
Farm and deliver a deed for a one-half interest in that property to David at a later
date. On appeal, the appellant only challenges the side-agreement, arguing it
violates R.C. 2109.44 and is, therefore, an illegal contract that is void. The appellant
does not challenge the sale contract.
{¶56} Two cases decided by the Supreme Court of Ohio govern our analysis
of the issues raised herein. In Magee v. Troutwine, the Supreme Court applied R.C.
2109.44 to a situation in which an executor sold property from the estate to her
181 N.E. 31 (10th Dist. 1931). See also Armstrong v. Hustoh’s Heirs, 8 Ohio 552 (1838). However, in the
case before us, as in both Magee and Christman, the estate property was sold at a private sale. Magee, supra,
at syllabus; Christman, supra, at 153. For this reason, we simply state this rule as applying to private sales
and decline to enunciate a broader rule that covers both private and public sales.
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spouse at a private sale. Magee, supra, at 582. The heirs contested this sale, arguing
that this was a violation of R.C. 2109.44 and that the contract of sale was, therefore,
void. Id. at 582. Even after noting that spouses share an extremely close
relationship and generally have interests that are aligned, the Supreme Court found
that this contract of sale was not void because the executor did not personally
purchase the assets directly from the estate. Id. at 583.
{¶57} Instead, the Supreme Court held that the contract of sale under which
estate assets were sold to the executor’s spouse were “voidable at the election of the
heirs.” Id. at the syllabus. Thus, the Supreme Court drew a line between sales in
which the executor personally purchases assets directly from the estate and sales in
which the executor’s spouse purchases assets from the estate. Id. at 583, 584. Since
the heirs, in Magee, elected to avoid the sale of assets to the executor’s spouse, these
real estate purchases were set aside. Id. at 584.
{¶58} In Christman v. Christman, the Supreme Court considered the
application of R.C. 2109.44 in a situation where the fiduciary was the executor of
his father’s estate and sold the family farm to his wife at a private sale. Christman,
supra, at 153, 155. The executor and his wife subsequently moved onto the family
farm. Id. at 155. The Supreme Court reaffirmed the rule in Magee and held that a
contract of sale under which estate property is sold to the executor’s spouse is not
void but “voidable at the election of the heirs.” (Emphasis sic.) Id. at 155, quoting
Magee, supra, at the syllabus. Thus, the Supreme Court determined that the contract
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of sale under which the family farm was sold to the executor’s spouse was not void.
Id. at 154.
{¶59} However, in Christman, the heirs of the estate waited over seventeen
years to object to the sale of the family farm, even though they had been aware that
the executor’s spouse was purchasing this asset at the time of the sale. Id. at 153.
The heirs had also observed improvements that the executor had made on the
property and knew that he lived on the premises. Id. at 154-155. For this reason,
the Supreme Court determined that the doctrine of laches prevented the heirs from
electing to set aside the contract of sale under which the family farm was sold the
executor’s spouse. Id.
{¶60} The analyses in Christman and Magee contain two requirements that
are relevant to the facts of the case before us. First, these analyses applied R.C.
2109.44 to the contract of sale in which property was sold directly from the estate.
Magee, supra, at 584; Christman, supra, at 153. Second, the determination as to
whether this contract of sale was void or voidable depended on the identity of the
purchaser. Under these cases, if the executor is the direct purchaser of assets from
the estate, the contract of sale between the executor and the estate is void. Magee,
supra, at 583. If, on the other hand, the purchaser is the spouse or close relative of
the executor, then the sale may be “voidable at the election of the heirs.” Magee,
supra, at syllabus; Christman, supra, at 154.
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{¶61} In the case before us, the appellant challenge the side-agreement as
being an illegal contract that is void. However, the Supreme Court has only applied
the R.C. 2109.44 analysis to contracts of sale that are made with the estate. Magee,
supra, at 584 (setting aside the sale of the real estate to the executor’s spouse);
Christman, supra, at 154. In this case, the side-agreement is not a contract of sale
to which the estate is a party. No assets were sold directly from or transferred out
of the estate pursuant to this side-agreement. Further, Philip purchased the Schooler
Farm directly from the estate. Thus, in this case, the agreement that is relevant to
the R.C. 2109.44 analysis was the sale contract between Philip and the estate, not
the side-agreement between David and Philip. David, as the executor, was not a
purchasing party under the sale contract through which the Schooler Farm was
purchased directly from the estate.
{¶62} Contrary to the appellant’s assertion, the side-agreement is not void
because the Supreme Court has held only that a contract of sale between the executor
and the estate is void under R.C. 2109.44. Thus, since David did not personally
purchase the Schooler Farm directly from the estate, the trial court was correct in its
determination that this side-agreement was not void. Doc. 60. However, the trial
court then proceeded to determine whether the sale contract was voidable under
Christman. Doc. 60. In its judgment entry, the trial court found that the doctrine of
laches applied because Philip knew about the side-agreement at the time of the sale
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of the Schooler Farm and “did not file to set aside the sale in a timely fashion.”
(Emphasis sic.) Doc. 60.
{¶63} However, the appellant’s argument does not require us to examine
whether the sale contract was voidable. Under Christman and Magee, when the
executor’s spouse purchased assets directly from the estate, the heirs could
challenge the contract of sale in which the executor’s spouse purchased assets
directly from the estate. Magee, supra, at the syllabus; Christman, supra, at 154. If
the heirs filed a timely objection to such a purchase, then the challenged contract of
sale with the estate was voidable at the election of the heirs.8 Magee, supra, at the
syllabus; Christman, supra, at 154.
{¶64} On appeal and in his motion for a judgment notwithstanding the
verdict, the appellant exclusively challenges the side-agreement. By arguing that
only the side-agreement was void, the appellant was challenging the side-agreement
by itself—on its own terms. However, in the absence of the sale contract, the side-
agreement, on its face, is merely a contract between two brothers for the joint
purchase of real estate. For this reason, the side-agreement, considered by itself, is
not illegal and, as we have already determined, is not void.
8
The requirement that the heirs timely file an exception to the contract of sale between the executor’s spouse
and the estate comes from Christman wherein the Supreme Court held that the doctrine of laches applied and
prevented the heirs from challenging the contract of sale after seventeen years had passed. Christman, supra,
at paragraph two of the syllabus. While no specific time requirement has been established, the heirs cannot
unreasonably delay challenging potentially objectionable sales of estate assets. Id.
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{¶65} The legality of the side-agreement is only questionable when it is
considered together with the sale contract as one component of a larger arrangement.
The appellant affirms this proposition when he argues, in his brief, that David used
the side-agreement to establish a “strawman” purchase of the Schooler Farm.
Appellant’s Brief, 13. The side-agreement can only be a part of a “strawman”
purchase if another agreement exists—in this case, the sale contract. On appeal,
however, the appellant, in essence, argues that the “strawman” purchase violates
R.C. 2109.44 but that only the side-agreement should be set aside. In other words,
the appellant asserts that the entire arrangement is illegal but that only one-half of
the illegal arrangement should be voided. We find this argument to be unpersuasive.
{¶66} In order to challenge this allegedly illegal arrangement, the appellant
had to challenge the sale contract that made the side-agreement a component of a
“strawman” purchase. Since both agreements are necessary to the “strawman”
purchase, the appellant can only argue that the side-agreement is improper if he
challenges the sale contract between Philip and the estate as voidable. Under the
analysis in Magee and Christman, the sale contract is the agreement that falls within
the purview of R.C. 2109.44. Magee, supra, at 582; Christman, supra, at 153.
However, the appellant never challenged the sale contract as voidable.
{¶67} Further, as of this date, no heir has challenged the sale contract under
which Philip purchased the Schooler Farm from the estate. Thus, the question as to
whether this sale contract is voidable at the election of the heirs was not asked and
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need not be answered. Philip only challenged the side-agreement, and that
challenge failed. He testified at trial that he paid a fair price for the Schooler Farm;
that he did not object to the sale of this property during the probate proceedings; and
that he did not appeal any matter from the probate proceeding. Tr. 253. In this case,
the trial court did not need to apply the doctrine of laches to prevent Philip from
challenging the sale contract because Philip never challenged the sale contract.
{¶68} We also note that, if this arrangement was improper, Philip’s actions
are what enabled David to commit what the appellant allege to be a violation of R.C.
2109.44. This would be akin to the executor’s husband in Magee challenging his
wife’s interests in the assets that he purchased from the estate as illegal and void,
arguing that the executor—his wife—used him to work around the requirements of
R.C. 2109.44 while simultaneously arguing that this sale to him should not be set
aside. However, in Magee, the contract of sale between the spouse and the estate
was voidable with any agreements between the executor and her husband
notwithstanding.
{¶69} The fact that Philip does not challenge the sale contract indicates that
he believes that the estate did not suffer any prejudice. If Philip paid a fair price for
the Schooler Farm, then David, as executor, did not act in a manner that was
detrimental to the estate or its heirs. In asserting that the side-agreement alone
should be set aside, the appellant suggest that David’s activities as fiduciary did not
ultimately prejudice the heirs.
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{¶70} Further, not only did Philip know about the side-agreement in 2007,
but he testified that the other heirs were aware that he (Philip) was purchasing the
Schooler Farm directly from the estate. Philip Deposition Tr. 15. David also
presented evidence, in the form of letters and emails that his three sisters were aware
that he was seeking to obtain an interest in the Schooler Farm property through a
side-agreement. Ex. 3A, 3B, 3C, 3D, 3E, 18. The record does not contain any
evidence that any of the heirs objected to the sale contract even though each of them
had knowledge of its terms. Tr. 253. There is also some evidence in the record that
four of the five siblings wanted to keep the Schooler Farm in the family and that
this was in line with the wishes of the decedent. Tr. 80. Ex. 3C.9
{¶71} In this case, the appellant asserted that David engaged in a “strawman”
purchase of the Schooler Farm. Appellant’s Brief, 13. This purchase was composed
of two parts: the side-agreement and the sale contract. The appellant only
challenged one of these two agreements as illegal, arguing that the side-agreement
was void. This argument failed as David did not personally purchase assets directly
from the estate through this side-agreement. In order to challenge the “strawman”
purchase, the appellant had to challenge the sale contract as voidable. However, the
appellant chose not to do this and, in so doing, chose not to challenge the
9
In Montgomery v. Mosley, the Fourth District found that the case In Re Minch’s Will, 71 N.E.2d 144 (8th
Dist. 1932) stood for the proposition that “a close family conveyance is not self dealing per se but depends
on the circumstances * * *.” Montgomery, supra, at *1. However, since we have determined that Philip did
not challenge the sale contract as voidable, we do not need to determine the impact of the sibling relationship
and the family context of this transaction on this case.
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“strawman” purchase. For these reasons, we conclude that the appellant has not
carried the burden of establishing the affirmative defense of illegality of contract.
Thus, the appellant’s third assignment of error is overruled.
Fourth Assignment of Error
{¶72} In this assignment of error, the appellant argues that the trial court
erred by denying his motion for a judgment notwithstanding the verdict.
Legal Standard
{¶73} “The test to be applied by a trial court in ruling on a motion for
judgment notwithstanding the verdict is the same test to be applied on a motion for
a directed verdict.” Posin v. A.B.C. Motor Court Hotel, Inc., 45 Ohio St.2d 271,
275, 344 N.E.2d 334, 338 (1976). The standard for granting a motion for a directed
verdict—and, therefore, a motion for a judgment notwithstanding the verdict—is set
forth in Civ.R. 50(A)(4), which reads as follows:
When a motion for a directed verdict has been properly made,
and the trial court, after construing the evidence most strongly in
favor of the party against whom the motion is directed, finds that
upon any determinative issue reasonable minds could come to but
one conclusion upon the evidence submitted and that conclusion
is adverse to such party, the court shall sustain the motion and
direct a verdict for the moving party as to that issue.
Civ.R. 50(A)(4). However, “if reasonable minds might reach different conclusions
based on some competent evidence favoring the nonmoving side, the motion must
be denied.” Kubiak v. Wal-Mart Stores, Inc., 132 Ohio App.3d 436, 440, 725
N.E.2d 334, 336 (3d Dist.). “The ‘reasonable minds’ test mandated by Civ.R.
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50(A)(4) requires the court to discern only whether there exists any evidence of
substantive probative value that favors the position of the nonmoving party.”
Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512, 2002-
Ohio-2842, 769 N.E.2d 835, ¶ 3.
{¶74} While the same standard applies on appeal to a motion for a directed
verdict and a motion for a judgment notwithstanding the verdict, these two kinds of
motions “are not evaluated identically.” Ley v. Procter & Gamble Co., 3d Dist.
Allen No. 1-09-41, 2010-Ohio-834, ¶ 23.
When a court rules on a motion for JNOV, all of the evidence
introduced at trial is available for the trial court’s consideration.
Osler v. Lorain (1986), 28 Ohio St.3d 345, 347, 504 N.E.2d 19. With
a motion for a directed verdict, only the evidence presented
during the plaintiff’s case-in-chief is evaluated by the reviewing
court. Chemical Bank of New York v. Neman (1990), 52 Ohio St.3d
204, 206-07, 556 N.E.2d 490. The appellate court reviews the trial
court's decision on both motions de novo. See Grau v.
Kleinschmidt (1987), 31 Ohio St.3d 84, 90, 509 N.E.2d 399.
Ley at ¶ 23.
{¶75} “A motion for directed verdict or a motion for judgment
notwithstanding the verdict does not present factual issues, but a question of law,
even though in deciding such a motion, it is necessary to review and consider the
evidence.” O’Day v. Webb, 29 Ohio St.2d 215, 280 N.E.2d 896 (1972), paragraph
three of the syllabus. In considering a motion for judgment notwithstanding the
verdict, a court does not weigh the evidence or test the credibility of the witnesses.
Osler v. City of Lorain, 28 Ohio St.3d 345, 504 N.E.2d 19 (1986), at syllabus.
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“Since we are presented with a question of law, we apply a de novo standard of
review.” Groob v. KeyBank, 108 Ohio St.3d 348, 2006-Ohio-1189, 843 N.E.2d
1170, ¶ 14.
Legal Analysis
{¶76} In this assignment of error, the appellant advances four arguments
against the trial court’s decision to deny his motion for a judgment notwithstanding
the verdict. We will consider each of these arguments in turn. First, the appellant
argues that the trial court erred in finding that the doctrine of laches prevented Philip
from contesting the sale of the Schooler Farm but did not apply to David, who did
not request a deed from Philip for eight years after the oral contract was formed.
However,
[i]n order to invoke the doctrine of laches, the following * * * must
be established: ‘Delay in asserting a right does not of itself
constitute laches, and in order to successfully invoke the equitable
doctrine of laches it must be shown that the person for whose
benefit the doctrine will operate has been materially prejudiced
by the delay of the person asserting his claim.’
Connin v. Bailey, 15 Ohio St.3d 34, 35-36, 472 N.E.2d 328 (1984), Smith v. Smith,
168 Ohio St. 447, 156 N.E.2d 113 (1959), at paragraph three of the syllabus. In this
case, the trial court determined that the doctrine of laches prevented Martha’s heirs
from electing to avoid the sale of the Schooler Farm.
{¶77} However, our prior analysis renders the issue of whether the doctrine
of laches prevents Philip from seeking to avoid the side-agreement moot. In the
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third assignment of error, we determined that Philip never challenged the sale
contract under which he purchased the Schooler Farm from the estate. Thus, the
issue of whether the sale contract was voidable was not raised and did not, therefore,
need to be addressed. In this case, the trial court’s application of the doctrine of
laches is tied to the issue of whether the sale contract is voidable. Since none of
Martha’s heirs challenged the sale contract as voidable, the trial court did not need
to apply the doctrine of laches to prevent Martha’s heirs from avoiding the sale
contract.
{¶78} We turn now to whether the doctrine of laches should operate to
prevent David from asserting his right to a one-half interest in the Schooler Farm.
The fact that David delayed in requesting a deed from Philip does not, by itself,
mean that the doctrine of laches is herein applicable because David’s delay does not
appear, from the evidence in the record, to have caused Philip any material
prejudice. See Connin, supra, at 35-36. In 2007, Philip owed David a deed for a
one-half interest in the Schooler Far. In 2015, Philip owed David a deed for a one-
half interest in the Schooler Farm. Thus, his obligation under the side-agreement
remained the same. Further, in between 2007 and 2015, David paid for the property
taxes and utilities for the Schooler Farm, giving Philip the benefit of reducing the
costs of operating the Schooler Farm for eight years. Since Philip has not shown
how this delay has caused him material prejudice, we conclude that the doctrine of
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laches does not prevent David from asserting his rights rights under the side-
agreement that he had with his brother.
{¶79} Second, the appellant argues that the trial court “refused to recognize
the applicability of R.C. 2109.44,” which prohibits an executor, as fiduciary, from
purchasing property directly from the estate. Appellant’s Brief, 14. The trial court,
in its judgment entry, stated the following about the applicability of R.C. 2109.44:
The defendants correctly assert that R.C. 2109.44 prohibits self-
dealing by a fiduciary, such as David was in his capacity as an
executor. All parties agree that Philip purchased the estate solely
in his name. Thus, David did not buy the farm directly.
Doc. 60. The trial court found that the side-agreement between David and Philip
did not violate the express language of R.C. 2109.44.
{¶80} We conclude that the trial court did not err in making this decision.
As our prior analysis has already determined, contracts of sale with the estate fall
within the purview of R.C. 2109.44 under Magee and Christman. Thus, R.C.
2109.44 applies to the sale contract between Philip and the estate but does not apply
directly to the side-agreement. However, the appellant chose not to challenge the
sale contract between Philip and the estate, which is the contract that comes within
the purview of R.C. 2109.44. Thus, this argument is without merit.
{¶81} Third, the appellant argues that the trial court erroneously relied upon
the Supreme Court of Ohio’s decision in Christman, supra. Doc. 60. The appellant
asserts that Christman is not applicable because he was not seeking to set aside a
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completed sale. Instead, the appellant was challenging a sale that was barred by
statute and that should be seen as having “not taken place.” Appellant’s Brief, 14.
On appeal, the appellant essentially argues that Christman does not apply because
the contract between David and Philip was void, or, in the words of his brief, this
“sale” had “not taken place.” Appellant’s Brief, 14.
{¶82} However, the rule in Christman determines whether the sale of an
estate asset is void or voidable under R.C. 2109.44. Christman at 153. Thus, in the
context of the case before us, the appellant cannot claim that the sale of an estate
asset is void under R.C. 2109.44 without reference to Christman because Christman
is the case that defines which sales of estate assets are void under that statutory
provision. After reviewing the relevant case law, we conclude that the trial court
did not err in relying upon the holding in Christman.
{¶83} Fourth, the appellant notes that the trial court stated that the statute of
limitations for written contracts was eight years. However, the statute of limitations
for written contracts was not eight years until after 2012. R.C. 2305.06. Prior to
2012, the statute of limitations for written contracts was fifteen years. See R.C.
2305.06. Since this contract was formed in 2007, the appellant argues that the trial
court’s analysis listed an incorrect statute of limitations for written contracts. In its
judgment entry, the trial court stated:
The Revised Code provides an eight-year statute of limitations for
filing a cause of action based upon a written contract, R.C.
2305.06, and a six-year statute of limitations period for oral
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contracts, R.C. 2305.07. Construing the evidence in favor of the
plaintiff, the cause of action for breach of the contract would not
have occurred until Philip refused to provide a deed for David’s
one-half interest and/or took other actions inconsistent with
David’s ownership of the property in 2015. This action was
commenced on October 12, 2016, well within either the eight-year
or six-years [sic] limitations period.
Doc. 60.
{¶84} Since David filed a cause of action within the shorter timeframe of six
years that is required for oral contracts, the length of the statute of limitations for
written contracts is immaterial to the disposition of this case. Thus, if the trial court
erred by listing the statute of limitations for written contracts as eight years instead
of fifteen years, this was clearly harmless error. See Knapp v. Defiance Therapeutic
Massage & Wellness Center, LLC, 2018-Ohio-1890, 112 N.E.3d 361 (3d Dist.),
citing Civ.R. 61. Further, the appellant has not demonstrated any prejudice by this
alleged misstatement of the law. Id.{¶85} After reviewing the evidence in the record, we conclude that the
arguments that the appellant has raised in this assignment of error are without merit.
Further, we find that the verdict is supported by sufficient evidence. Thus, the trial
court did not err in denying the appellant’s motion for a judgment notwithstanding
the verdict. For these reasons, the appellant’s fourth assignment of error is
overruled.
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Fifth Assignment of Error
{¶86} The appellant argues that the jury verdict was against the manifest
weight of the evidence because there was no evidence presented to establish that an
enforceable contract existed.
Legal Standard
{¶87} “Judgments supported by some competent, credible evidence going to
all the essential elements of the case will not be reversed by a reviewing court as
being against the manifest weight of the evidence.” C.E. Morris Co. v. Foley Const.
Co., 54 Ohio St.2d 279, 376 N.E.2d 578 (1978).
‘[W]hen reviewing a judgment under a manifest-weight-of-the-
evidence standard, a court has an obligation to presume that the
findings of the trier of fact are correct.’ State v. Wilson, 113 Ohio
St.3d 382, 2007-Ohio-2202, 865 N.E.2d 1264, ¶ 24, citing Seasons
Coal Co. v. Cleveland (1984), 10 Ohio St.3d 77, 80, 10 OBR 408,
461 N.E.2d 1273. The rationale for this presumption is that the
trial court is in the best position to evaluate the evidence by
viewing witnesses and observing their demeanor, voice inflection,
and gestures. Seasons Coal Co. at 80, 10 OBR 408, 461 N.E.2d
1273. ‘A reviewing court should not reverse a decision simply
because it holds a different opinion concerning the credibility of
the witnesses and evidence submitted before the trial court.[’]
Warnecke v. Chaney, 194 Ohio App.3d 459, 2011-Ohio-3007, 956 N.E.2d 908 (3d
Dist.).
Legal Analysis
{¶88} We reincorporate the evidence presented in previous assignments of
error and turn now to examining the evidence presented by the Defense at trial.
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During his testimony, Philip denied entering into the side-agreement with David for
the joint purchase of the Schooler Farm. Tr. 170-171, 177. He claimed that he did
not want to buy this property with David and was surprised when he received a
$67,500.00 check in the mail from David. Tr. 177.
{¶89} At trial, Philip testified that the $67,500.00 check from David was a
loan. Tr. 74. He claimed that he called David to inquire about the check. Tr. 225.
David told him that he was loaning this money to Philip because David needed the
purchase of the Schooler Farm to go through as soon as possible in order to probate
the estate. Deposition Tr. 15. Philip testified that he put the phone on speaker so
that his wife, Sandra, could hear David state that the check was, in fact, a loan. Tr.
225, 228. At trial, Sandra testified that she heard David say over the speakerphone
that the $67,500.00 check was a loan. Tr. 266-267. However, Philip admitted that
he had no other evidence of this conversation and that this arrangement was never
referred to as a loan in his email correspondence with David. Tr. 226. He further
admitted that he does not have any other written records that refer to this $67,500.00
check as a loan. Tr. 244.
{¶90} During cross-examination, David’s attorney referenced Philip’s
deposition wherein he stated that there was no agreed upon interest rate or
repayment schedule for this loan. Tr. 247. Deposition Tr. 24. Philip also did not
present any loan statements sent to or from his brother and did not have any evidence
at trial that the $75,000.00 figure was the product of an actual amortization
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calculation at a 1.4% interest rate. Tr. 259. He also stated that David refused his
repeated attempts to repay the loan, though Philip has no documentation of these
offers. Tr. 248-249. Deposition Tr. 24-25.
{¶91} However, in 2015, Philip stated that he simply deposited $61,000.00
into the joint bank account to repay the principal on the loan from David. Tr. 206.
Philip also testified that he deposited all of the rental income into the joint account
in between 2008 and 2014 as payments on that loan because this is what David
requested as the method of repayment. Tr. 206, 243. He said that he stopped
depositing rental income into the account in December of 2015 because the loan had
been paid off by that time. Tr. 211.
{¶92} To support his argument that he was the sole owner of the Schooler
Farm, Philip pointed to the fact that he was listed as the owner of the Schooler Farm
on the deed; signed the farm lease as the landlord; was listed as the insured on the
relevant policies; and claimed the income from the property on his taxes. Tr. 184,
204, 208, 210. He stated that David did not sign the lease or request a copy of the
lease for his records. Tr. 204.
{¶93} At trial, Philip acknowledged that he was aware that David was paying
the property taxes on the Schooler Farm but claimed that he did not like that David
was making these payments. Deposition Tr. 46. He admitted that the property tax
bill was sent to David and was in David’s name. Tr. 241-242. Philip said that had
the name on the property tax bill changed to his name in 2013. Tr. 242. In 2011,
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David filed a current agricultural use valuation renewal application at the Allen
County Auditor’s office. Tr. 238-240. At trial, Philip claimed that David was not
authorized to sign this document and forged his (Philip’s) signature. Tr. 237, 240,
241. Ex. 24. At trial, Philip claimed that David’s actions with regard to the property
tax bill amounted to identity theft, though Philip had never raised a claim against
David for identity theft or forgery. Tr. 237, 242.
{¶94} Further, he testified that he took care of the maintenance of the
Schooler Farm and that David did not contribute to the upkeep of the property. Tr.
217. During his deposition, Philip stated that he the cost of maintaining the property
was $32,811. Deposition Tr. 47. He further insisted that the value of the labor he
put into this property was $97,389.00. Id. These maintenance costs included
purchases, such as a go-cart and a gas grill. Id. at 50. He stated that this go-cart
was for his children for “fun.” Id.
{¶95} However, family members, including Philip and his wife, were the
only people who performed the labor on the property that was alleged to have been
worth $97,389.00. Id. In reaching this figure, Philip estimated the total hours of
work that were performed and assigned each hour a value of $55.00. Id. When
asked where he obtained the hourly figure, he claimed that this was a standard rate
for businesses to charge for this type of work, though he could not list the names of
any businesses he contacted to obtain this number. Id. He also could not state the
number of businesses he had contacted to gather this information. Id. at 51. Further,
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there were no time cards or receipts submitted to substantiate these claims. Id. at
47, 49. Philip stated that he never billed his brother for all of this work because he
believed that he was the sole owner of the property. Tr. 218.
{¶96} In his deposition and at trial, Philip denied seeing the email from
Barbara to David and the message from Mary Ann to David. Deposition Tr. 19. Tr.
230. However, his email address was listed as one of the recipients of this message.
Tr. 230. During cross-examination, Philip confirmed that his email address was
correct on the copy of the email between David, himself, and Barbara, but he again
denied receiving the email. Tr. 231.
{¶97} At trial, David testified the $67,500.00 check was to purchase a one-
half interest in the Schooler Farm. Philip, on the other hand, testified that this
$67,500.00 check was a loan. The jurors, as the finders of fact, apparently
determined that the evidence presented by David was more credible. See Seasons
Coal Co., Inc., supra, at 81. After considering the evidence in the record on the
basis of its weight and credibility, we conclude that the jury’s verdict in this case
was based upon some competent, credible evidence. Further, we do not find any
indication in the record that the jurors lost their way and returned a verdict against
the manifest weight of the evidence. For these reasons, the appellant’s fifth
assignment of error is overruled.
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Conclusion
{¶98} Having found no error prejudicial to the appellant in the particulars
assigned and argued, the judgment of the Allen County Court of Common Pleas is
affirmed.
Judgment Affirmed
ZIMMERMAN, P.J. and SHAW, J., concur.
/hls
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