619 N.E.2d 10 | Ohio Ct. App. | 1992
This is an appeal from a summary judgment entered by the Scioto County Common Pleas Court in favor of Bank One, Portsmouth, N.A., defendant below and appellee herein.
Appellant Reaca Schwartz assigns the following error:
"The Trial Court Should Not Have Sustained The Defendant's Motion For Summary Judgment."
On December 4, 1968, Pauline Schwartz, Eugene Schwartz, and David Schwartz executed a promissory note in the principal amount of $18,500 in favor of Security Central National Bank (now Bank One, Portsmouth, N.A.). The Schwartzes pledged two hundred fifty-two shares of common stock in General Motors Corporation as collateral for the note.
Pauline and David Schwartz died in 1976 and 1977, respectively. The Adams County Court of Common Pleas, Probate Division, appointed Reaca Schwartz, plaintiff below and appellant herein, executor of the estates. Appellant paid $5,605.61 on the principal and $8,978.14 in interest to Bank One's predecessor, Security Central National Bank. *808
In March 1982, the loan was in default and the president of Bank One notified appellant that if the balance due on the note ($7,894.39) was not paid, the General Motors stock would be sold. Appellant failed to pay the balance due and on April 1, 1982, appellee sold the stock. Appellee deducted from the sale proceeds the outstanding principal, expenses of $221.93, and interest of $1,423.33. Appellee remitted the balance to appellant.
On September 28, 1989, appellant filed a complaint alleging appellee had made unauthorized changes in the interest rate throughout the life of the loan. Appellant contends appellee had overcharged on the note in the amount of $6,451.46. Paragraph ten of the complaint provides as follows:
"The defendant intentionally, willfully and fraudulently made unauthorized changes in the interest rate on the demand note the consequence of which was the sale of stock."
On January 22, 1991, appellee filed a motion for summary judgment based on the expiration of the statute of limitations. Appellee maintained the complaint is based on fraud and the R.C.
Appellant filed a timely notice of appeal.
Appellee argues the complaint sounds in fraud, not breach of contract, and that appellant filed her complaint after the expiration of the applicable statute of limitations. See R.C.
Summary judgment is appropriate when the movant demonstrates: (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, said party being entitled to have the evidence construed most strongly in his favor. Bostic v. Connor
(1988),
When reviewing a summary judgment, an appellate court must independently review the record to determine if summary judgment was appropriate. An appellate court need not defer to the trial court's decision in summary judgment cases. See Morehead v.Conley (1991),
The sole issue presented in this appeal is whether the instant action sounds in tort or in contract. In Meeker v.Shafranek (1960),
"In many cases the dividing lines between actions in contract and actions in tort are extremely uncertain. Courts, however, must look to the nature of the grievance rather than the form of the pleading. If a petition states a cause of action in contract, the nature of the action is not changed by the mere fact that there is also contained therein a charge of tortious conduct."
Thus, a cause of action cannot be classified a tort action simply because the appellant used the term "fraudulently" in her pleading. Moreover, the Ohio Supreme Court has held that the addition of the adverbs "intentionally" and "willfully" do not change the nature of the cause of action; they only tend to emphasize that the action was done "in utter disregard of the rights of the defendants in error and with an evil and wicked purpose." Ketcham v. Miller (1922),
In the case sub judice, once we remove the three adverbs, "intentionally, willfully and fraudulently," from the allegation, we are left with the charge that "[t]he defendant * * * made unauthorized changes in the interest rate on the demand note the consequence of which was the sale of stock." In order to apply the proper statute of limitations, we must determine if this wording sounds in tort or in contract.
Where the duty allegedly breached by the defendant is one that arises out of a contract, independent of any duty imposed by law, the cause of action is one of contract. Ketcham, supra;Tibbs, supra. In Ketcham, the Supreme Court held that an action for forcible dispossession of tenants in breach of the lease is an action in contract. Similarly in Tibbs, the court held the duty to build a house according to a contract grows out of the bargain. There is no duty imposed by law to build a house without defects and in a workmanlike manner. Tibbs,
Generally, the setting of interest rates and the duty to notify the debtor of changes in interest rates are governed solely by the written contract. There is no duty concerning interest rates imposed by law, either common-law or statutory law. See Murello Constr. Co. v. Citizens Home Savings Co. (1985),
By contrast, where the duty allegedly breached by the defendant is one that is imposed by law, whether or not it arises out of a contract, the cause of action is not based on contract, but rather on tort. Velotta v. Leo PetronzioLandscaping, Inc., supra, paragraph one of the syllabus. InVelotta, the court considered whether the tort or contract statute of limitations applied to an action by a vendee against the builder-vendor of a completed residence for failure to construct in a workmanlike manner. The court held that "[a]n action by a vendee against the builder-vendor of a completedresidence for damages proximately caused by failure to construct in a workmanlike manner using ordinary care — a duty imposed bylaw — is an action in tort to which the four-year statute of limitations set forth in R.C.
Similarly, courts have held that an insurance company has a duty to act in good faith in the handling and payment of the claims of its insured. A breach of this duty will give rise to a cause of action in tort against the insurer. Motorists Mut. Ins.Co. v. Said (1992),
Applying the above cases to the instant case, we must determine if "mak[ing] unauthorized changes in the interest rate on the demand note" is an allegation of a breach of a duty imposed by law independent of the contract. As the above cases indicate, duties of lenders pertaining to interest rates arise solely out of the written contract, and are not imposed by law independent of the contract. We find, therefore, appellant's allegation as to unauthorized changes in interest rates arises out of the written loan agreement between the parties and that R.C.
Accordingly, based upon the foregoing reasons, we sustain appellant's assignment of error.
Judgment reversedand cause remanded.
STEPHENSON, P.J., and GREY, J., concur.
"Except as provided in section
"An action for any of the following causes shall be brought within four years after the cause thereof accrued:
"* * *
"(B) For recovery of personal property, or for taking or detaining it;
"(C) For relief on the ground of fraud;
"(D) For an injury to the rights of the plaintiff not arising on contract nor enumerated in sections
"If the action is for * * * the wrongful taking of personal property, the causes thereof shall not accrue until the wrongdoer is discovered; nor, if it is for fraud, until the fraud is discovered."
"(D) Copy Must Be Attached. When any claim or defense is founded on an account or other written instrument, a copy thereof must be attached to the pleading. If not so attached, the reason for the omission must be stated in the pleading."
In Point Rental Co. v. Posani (1976),
"The proper procedure in attacking the failure of a plaintiff to attach a copy of a written instrument or to state a valid reason for his failure to attach same is to serve a motion for a definite statement, pursuant to Civ.R. 12(E). Had that motion been granted, as would have proper in this case, plaintiff could properly have been required to amend his complaint within 14 days after notice of the order sustaining the motion for a definite statement, and ordered to attach a copy of the written instrument or state a valid reason for the failure to attach same."
In Phillips v. Fishel (Jan. 28, 1983), Lake App. No. 9-041, unreported, 1983 WL 6273, the court was faced with a situation similar to the case at bar. The Phillips court stated: "In the instant case, appellant filed his answer without previously filing a Civ.R. 12(E) motion. Appellant is, therefore, now precluded from raising this issue." Id. at 4. See, also,Bomanite Designs, Inc. v. LeBail (Oct. 26, 1990), Lake App. No. 89-L-14-139, unreported, 1990 WL 162583.
In the case sub judice, appellee did not file a Civ.R. 12(E) motion before filing its answer.
"We express no opinion as to whether a different result would be reached were the contract herein one to build a residence in the future or one to complete a partially constructed residence. See, e.g., Lloyd v. William Fannin Bldrs. (1973),
