2022 Ohio 3530
Ohio Ct. App.2022Background
- July 28, 2015: Rainy Day Rentals (Plaintiff) bought a dilapidated property on Bryson Street from Next Gen Properties, Inc.; contract contained a handwritten "as-is, no warranties" clause.
- The property was subject to a City of Youngstown "Notice to Repair or Raze" served to seller Saroj Singh on October 28, 2014; sellers had appealed and sought extensions before sale.
- Youngstown Ord. §546.07 required a seller subject to a compliance order to either cure violations or furnish the buyer’s signed, notarized acknowledgment accepting responsibility before transfer; sellers did not provide that acknowledgment.
- Plaintiff alleged fraud in the inducement (nondisclosure) and sought rescission, arguing the sale violated §546.07 and was therefore void ab initio.
- After a bench trial the trial court ruled for defendants; on appeal the Seventh District affirmed, holding the ordinance’s penalty scheme and public-policy analysis do not render the purchase agreement void.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the purchase contract is void because seller violated Youngstown Ord. §546.07 by transferring property without buyer's notarized acceptance of the compliance order | Violation of §546.07 made the sale illegal and against public policy; contract is void ab initio and rescission is required | The ordinance provides administrative/criminal penalties but does not expressly void contracts; sale of real estate is not malum in se and plaintiff could have discovered the order | Court held contract is not void; ordinance authorizes penalties but does not indicate intent to void transfers, and the contract does not contravene public policy |
Key Cases Cited
- Graham v. Drydock Coal Co., 76 Ohio St.3d 311 (Ohio 1996) (standard of review for contract/statutory construction and declaratory-judgment issues)
- Arnott v. Arnott, 132 Ohio St.3d 401 (Ohio 2012) (de novo review of legal issues)
- Gross v. Campbell, 118 Ohio St. 285 (Ohio 1928) (courts should only void contracts on public-policy grounds in clear cases)
- McCullough Transfer Co. v. Virginia Sur. Co., 213 F.2d 440 (6th Cir. 1954) (statute’s penalty scheme indicates whether legislature intended contracts entered in violation to be void)
- Warren People's Mkt. Co. v. Corbett & Sons, 114 Ohio St. 126 (Ohio 1926) (courts must examine entire statute to determine if violation voids contracts)
- Fischer-Liemann Const. Co. v. Haase, 64 Ohio App. 473 (Ohio 1940) (penalty provision alone does not necessarily make a contract void)