Susany v. Susany

[Cite as Susany v. Susany, 2017-Ohio-132.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
DAVID SUSANY )
PLAINTIFF )
) CASE NO. 15 MA 0002
VS. )
)
DOUGLAS SUSANY, et al. ) OPINION
DEFENDANTS-APPELLEES )
)
AND )
)
THERESA SUSANY )
DEFENDANT- APPELLANT/CROSS )
APPELLEE )
)
AND )
)
S.E.T., INC. )
DEFENDANT- APPELLEE/CROSS )
APPELLANT )
DAVID SUSANY )
PLAINTIFF-APPELLANT )
) CASE NO. 15 MA 0089
VS. )
)
DOUGLAS SUSANY, et al. ) OPINION
DEFENDANTS )
)
AND )
)
THERESA SUSANY )
DEFENDANT-APPELLEE )
)
AND )
)
S.E.T., INC. )
DEFENDANT-APPELLANT )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 09 CV 371
JUDGMENT: Affirmed.
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APPEARANCES:
For David Susany Attorney Glenn Osborne
Attorney Leonard Schiavone
3801 Starrs Centre Drive
Canfield, Ohio 44406
For S.E.T., Inc. Attorney Stuart Strasfeld
100 East Federal Street, Suite 600
Youngstown, Ohio 44503
For Theresa Susany Attorney Marshall Buck
100 Federal Plaza East, Suite 926
Youngstown, Ohio 44503
For Douglas Susany Attorney Charles Dunlap
7330 Market Street
Youngstown, Ohio 44512
For Jeffrey Susany and Gregory Susany Attorney Scott Essad
721 Boardman-Poland Road, Suite 201
Youngstown, Ohio 44512
JUDGES:
Hon. Mary DeGenaro
Hon. Gene Donofrio
Hon. Carol Ann Robb
Dated: January 13, 2017
[Cite as Susany v. Susany, 2017-Ohio-132.]
DeGENARO, J.
{¶1} This is a consolidated appeal. Theresa Susany appeals the December
12, 2014 judgment entry of the trial court in this shareholder derivative action, finding
that her former husband, Douglas Susany owns 15% of the capital stock of the
family-owned closely-held corporation, S.E.T., Inc. ("S.E.T." or "corporation"). David
Susany, Douglas' brother, and S.E.T. appeal the May 28, 2015 judgment entry of the
trial court finding that Theresa and Douglas own the property designated as 5500
Center Street, Lowellville, Ohio ("the shop property"), which was titled only in
Douglas' name, and that the corporation has a month-to-month tenancy. Because
the parties have not shown that the trial court abused its discretion, both appeals are
meritless and the judgments of the trial court are affirmed.
Facts and Procedural History
{¶2} This case involves two protracted actions; the civil case underlying this
appeal and a parallel domestic relations case involving Douglas and Theresa. In
2009, David, who owned 45% of the capital stock of S.E.T., filed the instant action to
determine the corporation's ownership rights in several pieces of property, including
the shop property. The verified complaint named as defendants: Douglas, as owner
of 55% of the voting shares and 15% of the capital stock in the corporation; Jeffrey
Susany and Gregory D. Susany, sons of Douglas and Theresa, each as owners of
50% of the non-voting stock, and 20% of the capital stock of the corporation; S.E.T.;
and Theresa, Joseph Zdrilich, and Donna Zdrilich, as titled owners of the properties
at issue.
{¶3} The verified complaint requested that legal title to the properties be
changed to S.E.T., or, in the alternative, that a constructive trust be imposed on the
properties and that the titled owners be deemed trustees on behalf of the corporation;
or that legal title be changed to reflect David's 45% ownership interest in the
properties.
{¶4} Theresa filed an answer which included counterclaims and crossclaims
for abuse of process against David (apparently based upon the filing of the above-
captioned shareholder derivative action); breach of fiduciary duty against David and
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Douglas; and to pierce the corporate veil, which was stated as a cause of action
rather than a remedy. Theresa sought $25,000.00 in compensatory damages, and
$50,000.00 in punitive damages. At the time, a divorce action initiated by Theresa
was pending in the domestic relations court. Theresa filed a motion to consolidate
the shareholder derivative action with the divorce action, however, the trial court
never ruled on the motion to consolidate.
{¶5} Douglas filed an amended answer which included a counterclaim and a
crossclaim against Theresa, seeking a determination of his percentage of ownership
of capital stock in S.E.T. In her answer to the crossclaim, Teresa requested that the
crossclaim be dismissed. However, in the divorce proceeding, Theresa and Douglas
stipulated that the trial court should resolve the corporate issues. The domestic
relations court, by way of a judgment entry, deferred the determination of both
Douglas' stock ownership and the ownership of the shop property to the trial court.
{¶6} The pertinent facts are as follows. Douglas and Theresa were married
in 1982. In 1988, Douglas and David founded S.E.T., which engages in the business
of excavating and general contracting and undertakes projects that include
streetscapes, road widening, sewer, water and site work. Douglas is responsible for
running the office, handling insurance and bonding and all of the business aspects of
the corporation, and David is in charge of the equipment and the shop. At the time it
was founded, S.E.T. issued 100 shares of capital stock: 55 shares to Douglas and
45 shares to David. Although the brothers shared the equity in the corporation
equally, Douglas held 10 additional shares of capital stock in order to maintain
decision-making authority.
{¶7} In April of 2006, Douglas discovered that Theresa was engaged in an
extramarital affair. She left the marital home for a short time but returned in an effort
to reconcile with Douglas.
{¶8} Two months later, on June 27, 2006, shortly after Jeffrey graduated
from college and returned home to work for the corporation, at a special shareholders
meeting, Douglas and David voted to split the corporation's stock and issue 300
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Class B nonvoting shares. The original 100 voting shares were designated as Class
A stock. Of the new 300 Class B shares, 135 went to David and 165 went to Douglas.
Douglas immediately divested himself of 160 of his newly acquired, nonvoting Class
B shares by giving 80 shares to Jeffrey and eighty shares to Gregory (who was still in
college). Douglas retained only 5 shares of the Class B stock. The result was that
Douglas decreased his total ownership in S.E.T. stock from 55% to 15%, even
though he retained 55% of the Class A voting shares.
{¶9} In addition to issuing the nonvoting Class B shares of stock, S.E.T. filed
amended articles of incorporation. The first amendment allowed the shareholders to
inter-deal with S.E.T. without being responsible or accountable to the corporation.
The second amendment provided for a waiver of pre-emptive rights to establish that
no holder of shares of stock in the corporation would have any pre-emptive right to
purchase, subscribe, or otherwise acquire any shares of stock of the corporation. The
third amendment provided that the corporation could repurchase any shares
transferred to others at any time. The amended Articles of Incorporation were filed
with the Ohio Secretary of State on June 7, 2006.
{¶10} Theresa left the marital home permanently in August of 2006. Several
months later, she returned some of her property to the marital residence, but she
never actually physically returned. Roughly two years later, in 2008, Theresa filed for
divorce.
{¶11} Douglas testified that the timing of his stock dilution and changes to
S.E.T.'s articles of incorporation, just two months after he learned of Theresa's
infidelity, had nothing to do with a desire to reduce the assets available to Theresa in
the divorce. Both parents testified that sometime during the summer of 2005, they
and their son Jeffrey discussed the option of Jeffrey joining the family business.
However Douglas testified that no action was taken until June of 2006. At the same
time, the insurance company that provided bonding to the corporation wanted
Douglas and David to formulate a succession plan to assure a smooth transition in
the event something happened to Douglas. As a consequence, Douglas transferred
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stock in the corporation to Jeffrey and Gregory in June of 2006.
{¶12} Theresa conceded that it was always the parents' intent that Jeffrey and
Gregory would join the family business. At the time of the trial, Gregory and Jeffrey
were twenty-eight and twenty-six years of age, respectively, both had graduated from
The Ohio State University in construction management, and both were working at the
corporation. Theresa testified that she had no objections to them having an
ownership interest in the corporation, but that the capital stock was transferred to the
boys without her knowledge in June of 2006.
{¶13} When asked at trial whether she wanted her sons to be divested of their
capital stock, Theresa initially replied, "No." However, once she understood that the
remedy she requested required that her sons be divested of their capital stock, she
testified that she wanted ownership of the boys' capital stock to revert back to
Douglas so that it could be divided evenly by the divorce court.
{¶14} Douglas drew a small annual salary from S.E.T. Because S.E.T. was
an S corporation, a pass-through entity, Douglas incurred annual tax liability on
S.E.T. profits in proportion to his stock ownership. He testified that, although he paid
taxes on his annual share of the company's profits, S.E.T. more often than not
retained the earnings.
{¶15} Douglas commonly used S.E.T. funds for his personal use – having
referred to the retained earnings as, "for lack of a better term, a savings account
issue," at his deposition. In fact, the construction of Douglas' post-divorce home on
Kennedy Road, as well as the insurance and taxes on that property, were paid by the
corporation. He admitted that maintenance of the marital residence was paid for in
part by S.E.T. funds as well. Douglas conceded that virtually all of the personal
vehicles driven by Douglas, Theresa, and their children when they were in high
school and college were owned by S.E.T. Likewise, Douglas commonly charged
personal expenses to his S.E.T. corporate credit card. The children collected monthly
allowances from S.E.T., for which they received a W-2 form, although no work had
been performed.
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{¶16} Douglas testified that he regularly deposited S.E.T. revenue in his
children's savings accounts. Douglas reasoned that he was protecting the
corporation by hiding assets. He provided the same explanation for titling the various
properties at issue in this case, including the shop property, in his name only, or in
the names of others, over the years.
{¶17} According to David's testimony, the shop property was purchased with
two checks, one in the amount of $6,500.00 and another in the amount of
$20,000.00, written on the S.E.T. account. David further testified that the property
taxes on the shop property since its acquisition are paid by S.E.T.
{¶18} The shop property was titled in Douglas' name only. However, minutes
from a shareholders' meeting held on June 12, 2007, after Douglas and Theresa had
separated but prior to the filing of the divorce petition, established that the
shareholders discussed the need for additional space for equipment storage, and
agreed to construct a 7,500 square-foot pre-engineered steel building "on land
owned by [Douglas and Theresa]." The land referred to in the minutes is the shop
property.
{¶19} The minutes further read, "The corporation is hereby authorized to
enter into a land lease with [Douglas and Theresa] for an initial term of 25 years with
five five-year renewal options at a rental rate of $100 per month." Douglas conceded
at trial that he, David, and the boys signed the minutes as shareholders.1
{¶20} The April 27, 2011 Magistrate's Decision found that Douglas owned
15% of the stock and ownership of S.E.T., S.E.T. was the equitable owner of the
shop property, and title to the shop property should vest in S.E.T. Theresa filed
objections to the Magistrate's Decision and amended objections challenging the
Magistrate's conclusions with respect to, among other matters not germane to this
1The Ohio Supreme Court in N. Royalton City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of
Revision, 129 Ohio St.3d 172, 2011-Ohio-3092, 950 N.E.2d 955 (2011) defined a "ground lease" as a
"lease that grants the right to use and occupy land." Id. at n.1, quoting American Institute of Real
Estate Appraisers, The Dictionary of Real Estate Appraisal (1984) 146. Black's Law Dictionary defines
the term "ground lease" as "a long-term (usually 99-year) lease of land only. Such a lease typically
involves commercial property, and any improvements built by the lessee usually revert to the lessor.
— Also termed ground-rent lease; land lease."
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appeal, Douglas' stock ownership and the equitable ownership of the shop property.
{¶21} In an August 24, 2011 judgment entry the trial court overruled all of
Theresa's objections, but for the objection related to the ownership of the shop
property. The trial court remanded the issue to the Magistrate, with instructions that
the Magistrate reconsider the existence of the lease mentioned in the corporate
minutes. The entry specifically overruled Theresa's objection to the Magistrate's
determination that Douglas owned 15% of the stock in S.E.T., Inc.
{¶22} Two years later, on July 26, 2013, Theresa filed a pleading styled:
"Memorandum in Support of Findings Consistent with the Judgment Entry (of August
24, 2011)" which stated as follows:
Based on the explicit instructions from Judge Sweeney to determine the
ownership of the Shop Property consistent with the Lease Agreement,
Defendant, Theresa Susany, respectfully request that this court make a
finding that the property located on Quarry Road/55 (sic) Center Road,
be deemed the marital property of Douglas Susany and Theresa
Susany subject to division pursuant to the Domestic Relations Property
Settlement Agreement.
{¶23} The Magistrate issued a Decision on October 21, 2013 regarding the
shop property, which reads as follows:
a. The Shop Property is the property of Douglas J. Susany and
Theresa Susany;
b. That a Lease Agreement between Douglas J. Susany and
Theresa Susany for the Shop Property does exist and said Lease
Agreement is a month to month tenancy.
{¶24} S.E.T. filed its objections to the Magistrate's Decision which Theresa
opposed, arguing that the court was correct in determining that the shop property
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was owned by Douglas and Theresa and that a lease agreement exists for the shop
property. In a January 31, 2014 judgment entry the trial court overruled S.E.T.'s
objections and adopted the Magistrate's Decision dated October 21, 2013.
{¶25} Theresa filed a notice of appeal challenging the interim August 24, 2011
judgment entry wherein the trial court determined that Douglas made valid gifts of
S.E.T. stock and is only a 15% shareholder as well as the January 31, 2014 final
judgment entry. S.E.T. also appealed, challenging the trial court's determination
regarding the equitable ownership of the shop property.
{¶26} On March 14, 2014, this Court dismissed both appeals sua sponte and
remanded the case to the trial court to enter a final judgment, because the Judgment
Entry dated January 14, 2014 failed to comply with the requirements of Harkai v.
Scherba Industries, 136 Ohio App.3d 211, 736 N.E.2d 101, (9th Dist. 2000). Harkai
holds that a trial court judge must separately enter a judgment setting forth the
outcome of the dispute and the remedy provided, rather than simply adopt the
findings of a Magistrate's decision. Civ.R. 53(D)(4)(d) requires the trial court to make
an independent review of the magistrate's decision, which has been called "the
equivalent of a de novo determination". Shihab & Assoc. Co., L.P.A. v. Ohio Dept. of
Transp., 168 Ohio App.3d 405, 2006-Ohio-4456, 860 N.E.2d 155, ¶ 13 (10th Dist.).
{¶27} In a May 28, 2014 judgment entry the trial court stated that the October
21, 2013 Magistrate's Decision was well supported and adopted the decision and
entered it as a permanent order of the trial court. However, the findings of fact and
conclusions of law related solely to the determination of the ownership of the shop
property.
{¶28} No further action was taken by the parties until Theresa filed a pleading
styled "Motion for Independent Review of Objections to Magistrate's Decision from
April 27, 2011." This appears to be a third attempt by Theresa to challenge that
particular magistrate's decision which the trial court initially resolved in its August 24,
2011 judgment entry.2 In a December 12, 2014 judgment entry the trial court stated
2The first being her original objections, ¶20, supra, and the second being the pleading she filed in
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that Douglas owned 15% of the stock and ownership of S.E.T., Inc., reasoning: "the
transfer of stock by [Douglas] to his sons does not by itself demonstrate that
[Douglas] intended to divest his interest in the corporation because of a pending
divorce action, with the purpose of defrauding [Theresa] of any marital assets." It is
important to note that, although the stock transfer occurred within a few months of
Douglas' discovery of Theresa's infidelity, no divorce action was pending when the
stock transfer was made.
{¶29} Theresa and S.E.T. both filed notices of appeal from this judgment
entry. On April 21, 2015, this Court held them in abeyance, in order for the trial court
to enter a final order addressing ownership of the shop property.
{¶30} On May 28, 2015, the trial court issued a judgment entry virtually
identical to the May 28, 2014 judgment entry regarding ownership of the shop
property. The trial court relied upon the corporate minutes to conclude that the shop
property was owned by Douglas and Theresa and that title should be placed in both
of their names. Because there was no written lease agreement, only the reference in
the corporate minutes, the trial court found that the oral agreement violated the
statute of frauds. As a consequence, the trial court found that a month-to-month
tenancy existed between Douglas and Theresa and the corporation. Both S.E.T. and
David appealed this judgment entry.
Theresa's Appeal
Value of Douglas S.E.T. Intertest
{¶31} Theresa presents a single assignment of error in her Merit Brief:
ASSIGNMENT OF ERROR: THE TRIAL COURT ABUSED ITS
DISCRETION BY MISAPPLYING THE LAW AND FAILING TO
FASHION THE CORRECT EQUITABLE REMEDY.
{¶32} "A trial court's decision to adopt, reject or modify a magistrate's report
and recommendation, or to hold further hearings, will be reversed on appeal only for
2013, ¶ 22 supra.
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an abuse of discretion." Arrow Fin. Servs. v. Kuzniak, 7th Dist. No. 06 MA 133, 2007-
Ohio-2191, ¶ 21. "An abuse of discretion means the trial court's decision is
unreasonable based upon the record; that the appellate court may have reached a
different result is not enough to warrant reversal." Smith v. Smith, 7th Dist. No. 14 CA
0901, 2016-Ohio-3223, ¶ 13
{¶33} Theresa cites Selanders v. Selanders, 3rd Dist. No. 17-08-28, 2009-
Ohio-2303, for the proposition that the trial court erred in concluding that Douglas has
a 15% ownership interest in the corporation. After a divorce decree, the husband in
Selanders filed for modification of his spousal support obligation to his ex-wife
arguing a change in circumstances because he had sold his business to his sons. He
then accepted employment with his former business at a reduced salary. The
husband did not attempt to sell the business on the open market.
{¶34} The Third District concluded that the sale of the business was
motivated by the husband's desire to reduce his spousal support obligation.
Specifically, the husband voluntarily chose to sell the business to his sons and to
take employment at a significantly reduced income, noting the timing was suspect as
the husband was not close to a traditional retirement age and the sale occurred only
four months after the original spousal support order. Id. ¶36. Thus, the panel held
the husband's decision constituted a voluntary reduction in income taken in an
attempt to avoid the Court's order of spousal support to the plaintiff. Id.
{¶35} While the facts in Selanders share some similarities with the facts here,
the cases are sufficiently distinct that a fact finder could reach different conclusions
regarding Douglas' intent. Here, the trial court concluded that there was insufficient
evidence to show that Douglas intended to divest his interest in the company in order
to reduce his marital assets. Douglas testified that he was facing pressure from the
insurance company to name successors at S.E.T. due to his advancing age. Both
Jeffrey and Gregory received degrees in construction management, and both were
working at the company at the time of the trial. Theresa conceded that she and
Douglas had intended that the boys would join the family business after they
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graduated from college, even though the stock transfer in June of 2007 was made
without her knowledge. Clearly, the trial court credited Douglas' testimony, which was
supported, rather than contradicted, by Theresa's testimony that the boys would
someday inherit a share of the family business. Accordingly, the trial court did not
abuse its discretion in concluding that Douglas owned 15% of the capital stock in
S.E.T.
{¶36} For the first time on appeal3, Theresa advances the theory that her
claim is equitable in nature and this Court should act in equity to fashion any remedy
to do justice under the circumstances. Yoskey v. Eric Petroleum Corp., 7th Dist.
Columbiana No. 13 CO 42, 2014-Ohio-3790, ¶ 48. Decisions in equity "are not bound
by formula or restrained by any limitation that tends to trammel the free and just
exercise of discretion." Keystone Driller Co. v. Gen, Excavator Co. (1933), 290 U.S.
240, 245-246, 54 S. Ct. 146, 78 L. Ed. 293. "Equity may be invoked to prevent
injustice or unfairness. Courts of equity will assist the wronged party on the ground of
fraud, imposition, or unconscionable advantage if there has been great inequality in
the bargain. Allason v. Galley, 189 Ohio App.3d 491, 2010-Ohio-4952, 939 N.E.2d
206, ¶ 50 (7th Dist.).
{¶37} Theresa appears to argue that this court should fashion a remedy that
awards her half of the value of Douglas' former 55% ownership of the company,
without divesting the boys' ownership interest. Theresa argues in her merit brief,
"Douglas still controls 55% of the voting shares of the company stock and has the
ability to manipulate the percentage of ownership of stock in the company as he
desires. Equity demands that this Court correct the trial court's error and order that
Douglas remains the owner of 55% of S.E.T." However, Theresa's argument fails for
two reasons.
{¶38} First, appellate courts will not review an argument raised for the first
time on appeal. Fullum v. Columbiana Cty. Coroner, 7th Dist. No. 12 CO 51, 2014-
3Theresa did not raise this claim in her pleadings; instead she asserted equity for the first time in her
closing argument at trial.
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Ohio-5512, 25 N.E.3d 463, 472, ¶ 39, citing Niskanen v. Giant Eagle, Inc., 122 Ohio
St.3d 486, 2009-Ohio-3626, 912 N.E.2d 595, ¶ 34. Additionally, an appellant cannot
change the theory of his case and present new arguments for the first time on
appeal. State ex rel. Guttierez v. Trumbull Cty. Bd. Of Elections, 65 Ohio St.3d 175,
177, 757 N.E.2d 362 (1992). The only claims that Theresa raised in the trial court
were abuse of process, breach of fiduciary duty, and piecing the corporate veil. In
response to Douglas' cross-claim regarding his stock ownership, Theresa's answer
merely sought dismissal of the cross-claim. Because she failed to advance an
equitable remedy before the trial court, we will not consider it on appeal.
{¶39} Second, Theresa's equitable claim is predicated upon her argument on
appeal that the trial court erred by "ignoring the undisputed facts demonstrating that
[Douglas] created an illusory transfer of stock intended to diminish his ownership in
S.E.T. prior to his divorce." To the contrary, there was a genuine issue of material
fact surrounding Douglas' intention in transferring the stock in June of 2006. Theresa
herself testified that she and Douglas intended that the boys would inherit part of the
company after they graduated from college. Accordingly, there was competent and
credible evidence supporting the trial court's findings of fact. Thus, Theresa has
failed to show that she suffered any injustice or unfairness.
{¶40} The trial court did not abuse its discretion in finding that Douglas owns
15% of the capital stock of S.E.T. Accordingly, Theresa's sole assignment of error is
meritless.
S.E.T. & David's Appeal
Ownership of Shop Property
{¶41} David and S.E.T. advance a single assignment of error:
THE TRIAL COURT ERRED IN DETERMINING THAT THE SHOP
PROPERTY IS OWNED BY DOUGLAS SUSANY AND THERESA
SUSANY.
{¶42} David and S.E.T. contend that a purchase-money resulting trust was
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created in favor of S.E.T. when the shop property was purchased, relying on David's
testimony that the shop property was purchased with two checks for $6,500.00 and
$20,000.00 written on the S.E.T. account. David further testified that the property
taxes on the shop property have been paid by S.E.T. Moreover, a pre-fabricated
building purchased by S.E.T. was constructed on the shop property valued at
$200,000.00.
{¶43} "A purchase-money resulting trust occurs when property is transferred
to one person, but the entire purchase price is paid by another." Rardin v. Estate of
Bain, 7th Dist. No. 08 CA 853, 2009-Ohio-3332, ¶¶ 82-86, citing Restatement of the
Law 2d, Trusts (1959) 393, Section 440, and 5 Scott on Trusts (4th Ed.1967), Section
440. In such a case, a resulting trust arises in favor of the person by whom the
purchase price is paid. Id. Central to the determination of whether a purchase money
resulting trust exists are the issues of (1) who paid for the purchase and (2) who was
intended to beneficially enjoy the property. Id.{¶44} Restatement of the Law 2d, Trusts (1959) 416-417, Section 454, reads:
Where a transfer of property is made to one person and a part of the
purchase price is paid by another, a resulting trust arises in favor of the
person by whom such payment is made in such proportion as the part
paid by him bears to the total purchase price, unless he manifests an
intention that no resulting trust should arise or that a resulting trust to
that extent should not arise.
{¶45} Therefore, "the equitable owner has an interest in such proportion as
the amount he paid bears to the total purchase price." Rardin at ¶¶ 82-86. The
burden of proof to establish a purchase-money resulting trust is clear and convincing
evidence. Id.{¶46} At first blush, it appears that a purchase-money resulting trust should
arise in favor of the corporation, which paid the full purchase price for the property
and for its maintenance, as well as the purchase price for the pre-fabricated building
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that is located on the shop property. However, the Restatement articulates an
exception to the general rule, that is, a purchase-money resulting trust should arise
unless the purchaser of the property "manifests an intention that no resulting trust
should arise or that a resulting trust to that extent should not arise." Restatement at
Section 454. Douglas conceded at trial that he regularly treated S.E.T. funds as his
personal savings account. Conversely, he often titled S.E.T. assets in his own name
and the names of Theresa and their sons to shield the assets from S.E.T. creditors.
As a consequence, the fact that the shop property was titled in Douglas' name only
and financed through the S.E.T. account are not dispositive of ownership.
{¶47} Even assuming that S.E.T. funds financed the shop property, the trial
court did not abuse its discretion in concluding that S.E.T. was not the equitable
owner of the shop property. Despite the fact that Theresa had left the marital home,
and efforts at reconciliation had failed, Douglas and the other shareholders
acknowledged on June 12, 2007 that Theresa had an ownership interest in the shop
property. The minutes further memorialized the shareholders' intent to erect the pre-
fabricated building on the shop property. Aware of the value of the shop property
and the pre-fabricated building to be placed there, the shareholders nonetheless
recognized Douglas and Theresa's ownership of the shop property.
{¶48} David and S.E.T. argue Theresa will be unjustly enriched due to the
improvements made on the shop property. However, this argument ignores the fact
that the shareholders contemporaneously recognized Theresa's ownership interest in
the shop property and expressed their intention to erect the pre-fabricated building on
June 12, 2007. Applying the test we articulated in Rardin, supra, the evidence
adduced at trial does not clearly establish who paid the purchase price for the shop
property, but the minutes of the shareholders' meeting clearly demonstrate that
Douglas and Theresa were intended to beneficially enjoy the property.
{¶49} As the trial court did not abuse its discretion when it found that Douglas
and Theresa are the owners of the shop property, David and S.E.T.'s assignment of
error is meritless.
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{¶50} In sum, the trial court did not abuse its discretion in this matter.
Therefore, the judgment entries of December 12, 2014 and May 28, 2015 are
affirmed.
Donofrio, J., concurs
Robb, P. J., dissenting in part; see dissenting in part opinion
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Robb, J., dissenting in part opinion
{¶51} I respectfully dissent in part from the decision reached by my
colleagues. I agree with the resolution of Theresa’s sole assignment of error. As to
David and S.E.T.’s assignment of error, I would affirm the holding as it relates to the
deed of the real estate, but as to the buildings and improvements to the real estate, I
would remand the matter for further consideration.
{¶52} The “shop property” consists of two components. One is the real
estate. I agree the trial court did not abuse its discretion in finding a purchase money
resulting trust did not arise in favor of the corporation as to the real estate. The
evidence did not clearly and convincingly demonstrate a purchase money resulting
trust for the reasons expressed in paragraphs 45 and 46 of the opinion.
{¶53} However, as I see it, there are two portions to the “shop property” – the
real estate and the improvements, i.e., the buildings constructed on the property.
Theresa testified she did not contribute any money towards the construction of the
buildings and she did not know if Doug or the corporation paid any money towards
the construction of the buildings. Doug testified the improvements were paid by the
corporation and provided a print out of the monies expended by S.E.T. for the
construction of the buildings. His testimony also reflected that the buildings were
used solely for the corporation.
{¶54} Although it is clear Doug and Theresa were intended to benefit from the
real estate, it is not clear they were intended to benefit from the improvements to the
property. At the June 12, 2007 meeting of S.E.T. directors and shareholders, a
discussion about the corporation’s need for additional space to store its equipment
occurred. The first corporate resolution indicates the property was owned by Doug
and Theresa. It provided, “That the Corporation is hereby authorized to construct a
7,500 square foot pre-engineered steel building on lands owned by Douglas J.
Susany and Theresa Susany * * *, which was acquired from the Lowellville Rod &
Gun Club, Inc.” The second resolution provided the corporation was authorized to
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enter into a “land-lease” with Doug and Theresa for an initial term of 25 years, with 5
year renewal options for a rental fee of $100 per month. The testimony at trial clearly
indicated the buildings solely benefited the corporation. Neither the second
resolution nor the trial testimony indicate Doug and Theresa were to benefit from the
buildings, which cost approximately $200,000. If Doug and Theresa were intended to
benefit from both the real estate and improvements, then higher lease payments may
have been required and warranted.
{¶55} Admittedly, S.E.T. did not argue the real estate and buildings as
separate assets in their appellate briefs; the argument was raised during oral
argument. Regardless, considering the evidence, the trial court should have
examined each of the assets in that manner. In examining them in that manner,
based on equitable principles, S.E.T. was, at the least, entitled to compensation for
the improvements to the property, which the evidence demonstrates was never
intended to benefit Theresa.
{¶56} Accordingly, based on the above reasoning, I hold there is some merit
with S.E.T.’s assignment of error, and as such, would remand the matter for further
proceedings. For that reason, I dissent in part.