[Cite as Cadlerock Joint Venture, L.P. v. Freeway Circle Properties, L.L.C., 2011-Ohio-3986.]

Court of Appeals of Ohio

EIGHTH APPELLATE DISTRICT 

COUNTY OF CUYAHOGA 

JOURNAL ENTRY AND OPINION 

No. 96003

CADLEROCK JOINT VENTURE, L.P.

PLAINTIFF-APPELLEE 

vs. 

FREEWAY CIRCLE PROPERTIES, LLC, ET AL.

DEFENDANTS-APPELLANTS 

JUDGMENT: 

AFFIRMED 

Civil Appeal from the 

 Cuyahoga County Common Pleas Court 

Case No. CV-679111 

BEFORE: Boyle, P.J., S. Gallagher, J., and Keough, J. 

 

RELEASED AND JOURNALIZED: August 11, 2011 
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ATTORNEY FOR APPELLANT

Robert G. Miller 

1940 Huntington Building 

925 Euclid Avenue 

Cleveland, Ohio 44115 

ATTORNEYS FOR APPELLEES

Joseph D. Datchuk 

100 North Street Center 

Newton Falls, Ohio 44444 

Brian J. Green 

Shapero & Green LLC 

Signature Square II 

25101 Chagrin Boulevard, Suite 220 

Beachwood, Ohio 44122 

MARY J. BOYLE, P.J.: 

{¶ 1} Defendants-appellants, Freeway Circle Properties, LLC (“Freeway 

Properties”), and Sally and Abraham Schwartz (collectively the “Schwartzes”), appeal 

from a judgment in favor of plaintiff-appellee, Cadlerock Joint Venture, L.P. 

(“Cadlerock”), in the amount of $502,192.95 ($345,269.94 principal balance, plus 

accrued interest as of September 2, 2010). Appellants raise one assignment of error for 
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our review, namely, that the trial court erred in finding in favor of Cadlerock. We find 

no merit to the appeal and affirm. 

Procedural History

{¶ 2} In March 2006, Sally Schwartz, as manager of and on behalf of Freeway 

Properties, executed an open-end mortgage note (“Note”), in which Freeway Properties 

promised to pay $1,560,000, plus interest, to Fifth Third Bank. That same day, Sally 

and Abraham Schwartz also signed a contract personally guaranteeing payment of the 

note. The loan was for the purchase of property with an office building located at 7850 

Freeway Circle, in Middleburg Heights, Ohio. 

{¶ 3} In December 2008, Cadlerock filed a complaint upon a cognovit note and 

cognovit guaranty against appellants, alleging that the Schwartzes had executed and 

delivered the Note to Fifth Third Bank, owing a balance due of $449,428.50, and that the 

Schwartzes had personally guaranteed payment of the Note. Cadlerock further alleged 

that it was the “owner and holder of the note by virtue of an allonge” attached to the 

Note. 

{¶ 4} Cadlerock attached the Note and personal guaranties to the complaint, as 

well as the allonge. The allonge, executed on August 29, 2008, stated: 

{¶ 5} “Reference is made to the $1,560,000.00 open-end mortgage note, dated 

March 14, 2006, from Freeway Circle Properties, LLC, as borrower and Sally Schwartz 
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as manager, payable to the order of Fifth Third Bank. (‘Note’). It is intended that this 

allonge be attached to and made a permanent part of the note. 

{¶ 6} “Pay to order of Cadlerock Joint Venture, L.P., (“assignee”), without 

recourse, representations or warranties of any kind.” 

{¶ 7} The trial court immediately granted a cognovit judgment against appellants 

in the amount of $449,428.50, plus 8.5 percent interest continuing to accrue. Six 

months later, appellants moved for relief from judgment pursuant to Civ.R. 60(B), which 

the trial court granted. 

{¶ 8} The trial court held a bench trial on the matter in September 2010, after 

which it found in favor of Cadlerock. It is from this judgment that appellants appeal. 

{¶ 9} In their sole assignment of error, appellants raise three issues. They claim 

that Cadlerock: (1) failed to prove that it was an assignee of the promissory note; (2) 

failed to prove that it was an assignee of the Schwartzes’ personal guaranties; and (3) 

failed to prove its damages. 

Standard of Review

{¶ 10} Appellants argue that the trial court erred in granting judgment to 

Cadlerock because Cadlerock failed to prove its case. Thus, appellants essentially raise 

a challenge to the manifest weight of the evidence. In a civil case, “[j]udgments 

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 
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the evidence.” C.E. Morris Co. v. Foley Constr. Co. (1978), 54 Ohio St.2d 279, 376 

N.E.2d 578, syllabus. “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. A finding of an error in law is a legitimate ground for 

reversal, but a difference of opinion on credibility of witnesses and evidence is not.” 

Seasons Coal Co., Inc. v. Cleveland (1984), 10 Ohio St.3d 77, 81, 461 N.E.2d 1273. 

Assignment of the Note

{¶ 11} Appellants first argue that Cadlerock did not prove that it was the assignee 

of the Note, or the real party in interest, and therefore, was not entitled to enforce the 

Note. Cadlerock counters that it proved that it was the assignee of the Note based on 

the allonge that was attached to the Note. We agree with Cadlerock. 

{¶ 12} “The use of an allonge to add [endorsements] to an instrument when there 

is no room for them on the instrument itself dates from early common law.” 

Southwestern Resolution Corp. v. Watson (1997), 964 S.W.2d 262, 263. Historically, 

allonges were only permitted when no room existed on the note for further 

endorsements. Id. But the current version of the UCC, codified as R.C. 

1303.24(A)(2), allows allonges even where room exists on the Note for further 

endorsements. The paper, however, must be affixed to the instrument in order for the 

signature to be considered part of the instrument. Id. 
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{¶ 13} Appellants agree that the allonge and an Asset Sale Agreement, which was 

the agreement between Fifth Third Bank and Cadlerock where Fifth Third Bank sold the 

Note to Cadlerock, establish that Cadlerock was the assignee of the Note. But 

appellants argue that the trial court erred in admitting the allonge and the Asset Sale 

Agreement into evidence. They claim that the allonge was signed by an employee of 

Cadlerock pursuant to a limited power of attorney set forth in the Asset Sale Agreement. 

 Appellants argue that because Cadlerock failed to identify the Fifth Third Bank 

representative who signed the Asset Sale Agreement, the trial court erred in admitting 

these two exhibits, and without these two exhibits, there is no evidence that Cadlerock 

was the assignee of the Note. 

{¶ 14} The trial court’s discretion to admit or exclude evidence is broad “so long 

as such discretion is exercised in line with the rules of procedure and evidence.” Rigby 

v. Lake Cty. (1991), 58 Ohio St.3d 269, 271, 569 N.E.2d 1056. After a review of the 

transcript, we find no fault on the part of the trial court. Robert Ellcessor, an account 

officer and custodian of records for Cadlerock, testified that he had responsibility over 

the Note and documents relating to it. He identified the Note and the allonge, as well as 

the Asset Sale Agreement as being documents that he had control and custody of in the 

ordinary course of business. 

{¶ 15} Robert Rutt testified that he was the officer assigned to the Note when the 

Schwartzes stopped paying it. Rutt said that he obtained approval from senior 
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management at the bank for the Schwartzes to sell the Freeway Circle property for 

$1,100,000, which was less than the amount still owed on the loan. Rutt explained that 

the bank never released the Freeway Circle Properties or the Schwartzes from the 

deficiency balance still owed under the loan. 

{¶ 16} Accordingly, the trial court did not err in admitting them, and Cadlerock 

proved that it was the assignee of the Note. 

Assignment of Personal Guaranties

{¶ 17} Appellants next argue that Cadlerock failed to prove that it was the 

assignee of the personal guaranties. We disagree. 

{¶ 18} In Audiovox Corp. v. Schindler, 2d Dist. No. 20209, 2005-Ohio-2231, the 

court explained: 

{¶ 19} “A guaranty is a promise by one person to pay the debts of another. 52 

Ohio Jurisprudence 3d (1997) 238, Guaranty and Suretyship, Section 2. Further 

defined, a contract of guaranty is: 

{¶ 20} “‘[a] collateral engagement for the performance of the undertaking of 

another, and it imports the existence of two different and distinct obligations — one 

being that of the principal debtor and the other that of the guarantor. The obligation of 

a guarantor is collateral and secondary to the obligation of the principal debtor.’ 

{¶ 21} “‘The principal debtor is not a party to the guaranty, and the guarantor is 

not a party to the principal obligation. The undertaking of the former is independent of 
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the promise of the latter; and the responsibilities which are imposed by the contract of 

guaranty differ from those which are created by the contract to which the guaranty is 

collateral.’ 52 Ohio Jurisprudence 3d (1997) 239-240, Guaranty and Suretyship, 

Section 3. See, also, Madison Natl. Bank v. Weber (1927), 117 Ohio St. 290, 293, 158 

N.E. 543.” Audiovox at ¶37-39. 

{¶ 22} In Audiovox, a case relied upon by appellants in support of their argument, 

the Second Appellate District explained: 

{¶ 23} “[O]n March 20, 1985, Schindler executed an unconditional guaranty in 

which he agreed to be personally responsible for the ‘prompt full payment when due of 

every claim of Audiovox which now exists and which may hereafter arise in favor of 

Audiovox as against customer [Factory Direct].’ Additionally, the guaranty included a 

provision that specifically stated that ‘it shall bind the undersigned [Schindler], his legal 

representatives and assigns and inure to Audiovox, its successors and assigns. 

{¶ 24} “On February 25, 1992, Audiovox Midwest Corporation merged ‘with and 

into’ Audiovox Corporation, as evidenced by the ‘Joint Plan and Agreement of Merger.’ 

 The magistrate had this document before her when she held that Audiovox, as it 

presently exists, was entitled to enforce Schindler’s guaranty. This document provides in 

pertinent part: 

{¶ 25} “‘1. Upon the effectiveness of the merger the separate existence of 

MIDWEST shall cease and be extinguished and AUDIOVOX (hereinafter) sometimes 
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referred to as the ‘Surviving Corporation’ shall survive such merger and continue to exist 

under and be governed by the laws of Delaware and shall have the name AUDIOVOX 

CORPORATION. 

{¶ 26} “‘2. All of the property of MIDWEST, real, personal and mixed, tangible 

and intangible, including real estate, plants and equipment, furniture and fixtures, cash, 

accounts receivable, notes receivable, choses in action, going concern value, corporate 

name and good will, and any other assets of any character or description of which it may 

be possessed shall be taken and deemed to be transferred to and vested int he (sic) 

Surviving Corporation upon the merger becoming effective without further deed or act, 

and the Surviving Corporation shall assume and from and after the effective time of the 

merger shall be responsible for all of the liabilities and obligations whatsoever nature. If 

at any time the Surviving Corporation shall deem or be advised that any further 

assignments, desirable to vest or confirm in the Surviving Corporation the title to any 

property or assets of MIDWEST, the officers and directors of MIDWEST (or the persons 

holding such positions immediately prior to the merger) shall and will do all acts and 

things to confirm such property and assets in the Surviving Corporation and otherwise to 

carry out the purposes of this Plan and Agreement.’ (Emphasis added).” Audiovox at 

¶40-43. 

{¶ 27} The Second Appellate District concluded: “It is clear from the language 

contained in the Individual Guaranty executed by Schindler, as well as the language in 
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the merger agreement, that Audiovox is the designated successor and/or assign of 

Audiovox Midwest. The language in both documents is specific and leaves no room 

for the interpretation Hemsath suggests. Thus, Audiovox is entitled to enforce 

Schindler’s guaranty as a matter of law. We conclude that no genuine issue of material 

fact exists with respect to whether Schindler’s personal liability to Audiovox was 

terminated or modified in any way when Audiovox Midwest Corporation merged ‘with 

and into’ Audiovox Corporation.” Audiovox at ¶44. 

{¶ 28} In another case cited by appellants, Hurst v. Stith Equip. Co. (1974), 133 

Ga.App. 374, 210, 210 S.E.2d 851, the court disagreed that “the assignment of the 

principal obligation automatically passes the guaranty.” But it explained that in certain 

circumstances, “the transfer of the principal obligation may operate as an assignment of 

the guaranty (38 Am.Jur.2d 1034, Guaranty s 36 (1968).” Id. at 377. The court 

further explained that “this rule *** appl[ies] only where the assignor of the principal 

obligation is also the obligee of the guaranty.” Id. In Hurst, “the assignor of the 

principal obligation, Leasing Service, [was] not shown to be the obligee of the guaranty.” 

 Id. 

{¶ 29} In the present case, unlike Hurst, the assignor — Fifth Third Bank — 

was the obligee of the Schwartzes’ personal guaranties. 

{¶ 30} Further, the Note here states that it is secured by, inter alia, “a separate 

Guaranty of even date herewith executed by each Guarantor in favor of Bank 
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(collectively the ‘Guaranties’) ***.” Sally and Abraham Schwartz were identified as 

the individual Guarantors in the Note. The Note also identifies the personal guaranties, 

as well as other instruments securing the Note, as “Security Instruments.” The Note 

further explains that “[a]ll of the terms, agreements, conditions, covenants, warranties, 

representations, provisions, and stipulations made by or imposed upon Borrower in the 

Security Instruments are hereby made part of this Note to the same extent, and with the 

same force and effect, as if they were fully recited herein.” 

{¶ 31} Each Guaranty likewise states that “[t]his Guaranty shall bind Guarantor 

and Guarantor’s heirs, executors, administrators, personal representatives, successors and 

assigns, and shall inure to the benefit of the Bank and its successors and assigns.” 

{¶ 32} It is therefore clear from the language of the two instruments that the 

original parties to the agreement intended to keep the personal guaranties and the Note 

together. Accordingly, we conclude that Cadlerock proved that it was the assignee of 

the personal guaranties. 

Damages

{¶ 33} Finally, appellants argue that Cadlerock failed to prove its damages. We 

disagree. 

{¶ 34} Ellcessor testified that the total balance due as of September 2, 2010, was 

$502,192.95. This was sufficient evidence to prove damages. Appellants arguments 
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that Cadlerock may have incorrectly calculated the amount of interest or late fees are 

merely speculative. 

{¶ 35} Accordingly, we conclude that Cadlerock proved its damages. 

{¶ 36} As such, appellants’ sole assignment of error is overruled. 

Judgment affirmed. 

It is ordered that appellee recover from appellants costs herein taxed. 

The court finds there were reasonable grounds for this appeal. 

It is ordered that a special mandate be sent to said court to carry this judgment 

into execution. 

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of 

the Rules of Appellate Procedure. 

 

MARY J. BOYLE, PRESIDING JUDGE 

SEAN C. GALLAGHER, J., and 

KATHLEEN ANN KEOUGH, J., CONCUR