Case ID: ohio-app_42/html/0041-01.html
Source: Caselaw Access Project
Author: {"author": "Hamilton, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bainum v. Midland Acceptance Corp.
    (Decided January 18, 1932.)
    
      Mr. S. Rotter, for plaintiff in error.
    
      Mr. Alvin H. Rowe, for defendant in error.
   Hamilton, J.

The Midland Acceptance Corporation sued Howard E. Bainum in the municipal court of Cincinnati to recover for the balance due on a note given as part payment of the purchase price of an automobile.

Bainum defended on the proposition that he had by contract delivered the car to the acceptance corporation in consideration of the return to him of the note and mortgage in question.

At the trial of the case, the municipal court decided in favor of Bainum and found there was nothing due the corporation. The corporation thereupon prosecuted error to the court of common pleas, which court reversed the action of the municipal court, presumably on the theory that there was no consideration for the new agreement under which the car was delivered up.

The corporation upon receipt of the automobile from Bainum did deliver to him the mortgage, but did not deliver up the note, for which the mortgage was security, but proceeded to bring suit for the balance due on the note.

The contention of the corporation here is that the mortgage provided for the taking possession by the corporation of the property npon default in payment; that upon demand Bainum refused to reveal the whereabouts of the car; that under the law he was bound to deliver up the car, and, therefore, there was no consideration for the new contract, the basis of the defense.

The facts in substance are: Bainum had bought the automobile for $316.20, and had paid $75 in cash, the balance of $241.20 to be paid in installments of $20.10 per month; that he had paid all except a balance of approximately $123 when he defaulted in his payments. The corporation thereupon called Bainum to know where the car was, the company seeking to take possession of the car under the terms of the mortgage. Bainum refused to state where the car was, but made the proposition to turn over the car on the return to him of the note and mortgage, in effect canceling the balance due. The corporation agreed to do this, but, as heretofore stated, returned the mortgage only, retained the note, and brought suit for the balance due on the note.

It is argued for the corporation that Bainum did no more than he was required to do under the terms of the mortgage in delivering up the car, and, that, therefore, there was no consideration for the new contract under the terms of which the car was turned over to the corporation.

While it is the law that a new agreement does not afford a consideration for the performance of a contract which the party is bound to perform, we do not have that situation here. The mortgage gave the mortgagee the right to take possession of the automobile on default. It must either get possession by voluntary surrender or court action. Bainum had an equity in the car at the time. While the later sale of the car may have developed that such equity was valueless, that could not have been known at the time the new contract was made. Had the car on resale brought more than the balance due on the note, it would hardly be contended that Bainum could not have recovered the difference.

The effect of the corporation’s contention is that Bainum having refused to tell the corporation where the car was justified the corporation in mailing a new contract, which it had no intention of carrying out, in order to get possession of the car without legal process, and then to defend itself on the ground of no legal obligation. The courts do not approve of such procedure.

Moreover, at the time the contract for delivery was made, as heretofore stated, Bainum had an equity in the automobile. Agreeing to voluntarily deliver up the car for the return of the note and mortgage saved the corporation from any action in court, and canceled any equity that he may have had in the car. This, we hold, was sufficient consideration to support the new contract.

It being admitted that such contract was made, our conclusion is that the judgment of the court of common pleas should be reversed, and the judgment of the municipal court affirmed.

Judgment of common pleas court reversed and that of the municipal court affirmed.

Boss, P. J., and Cushing, J., concur.