Case Name: Huntington National Bank, Appellee, v. Watters et al., Appellants
Court: Ohio Court of Appeals
Jurisdiction: Ohio
Decision Date: 1976-03-18
Citations: 50 Ohio App. 2d 325
Docket Number: No. 75AP-558
Parties: Huntington National Bank, Appellee, v. Watters et al., Appellants.
Judges: Whiteside and McCormao, JJ., concur.
Reporter: Ohio Appellate Reports, Second Series
Volume: 50
Pages: 325–330

Head Matter:
Huntington National Bank, Appellee, v. Watters et al., Appellants.
[Cite as Huntington National Bank v. Watters (1976), 50 Ohio App. 2d 325.]
(No. 75AP-558
Decided March 18, 1976.)
Messrs. Wright Harlor, Morris & Arnold, Mr. Jack R. Pigman and Mr. Ralph Dill, for appellee.
' Messrs. Segreti é Tousey, for appellants.

Opinion:
Holmes, J.
This matter involves the appeal of a . sum mary judgment previously granted the plaintiff-appellee Huntington National Bank, in an action brought by the appellee against the defendant Robert Watters on a promissory note executed by the defendant to the plaintiff for money advanced by the plaintiff to partially finance an automobile bought by the defendant from an automobile dealer in Franklin County, known as the Rutherford Brothers, Inc.
The record would show that the defendant Robert Watters filed an answer to the complaint of the plaintiff Huntington National Bank, admitting the execution of a note and that such was unpaid, but specifically denying that the said note was due and payable to the plaintiff.
In the second defense, the defendant alleged that he had purchased a 1966 Lotus Elan automobile from Rutherford Brothers, Inc., and, that upon determination that the automobile was defective, defendant had notified the plaintiff of the defects in the car, and notified the plaintiff of his desire to cancel the note, and demanded that the money not be disbursed, but that the plaintiff had proceeded to disburse the funds to the automobile dealer.
The defendant, in his answer, alleged that he was not obligated to pay the purchase price of the automobile due to the breach of warranties and the fraudulent representations involved in the sale, and that the plaintiff was aware of the defects in the automobile, and plaintiff had acted in bad faith in disbursing the money to Rutherford Brothers after notice of the claimed breach of warranties and fraudulent representations made by such car dealer.
The defendant moved the trial court to stay the action on the note, in that he had brought an action as against Rutherford Brothers on the claimed breach of warranty and fraudulent representations made concerning the automobile. Prior to any ruling on such motion for stay of proceedings, the plaintiff filed a motion for summary judgment. Upon the pleadings and affidavit of Mr. Glenn E. Hardbarger, assistant vice president of Huntington National Bank, as to the existence of the aforestated note, the statement of the amounts due and owing on such note, and upon the affidavit of the defendant relative to the sequence of events concerning the note and the specific contacts with the plaintiff bank, the trial court entered a summary judgment for the plaintiff Huntington National Bank.
Pursuant to Civ. R. 56, summary judgment, may not be properly granted by the trial court unless 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. In determining whether a summary judgment may be granted under the facts as presented in a given matter, the trial court must construe the evidence most strongly in favor of the party against whom the motion for summary judgment is made. Williams v. First United Church of Christ (1974), 37 Ohio St. 2d 150.
Further, a summary judgment cannot appropriately be awarded upon motion unless one cannot reasonably draw any inference from the evidence that there may be a valid defense. Specifically in this regard, we find in the affidavit of the defendant Robert M. Watters, at section 6 thereof, the following:
"Defendant executed a note to Plaintiff for said balance of the purchase price, and took possession of the automobile. However, before moneys were disbursed by Plaintiff to Rutherford Bros. Inc., Defendant discovered the defective nature of the automobile and contacted Plaintiff, and told Plaintiff not to disburse the funds to Rutherford Bros. Inc., because the car was defective."
Further within the defendant Robert Watters' affidavit, we find the following:
"7. Plaintiff's agent told Defendant that although .the funds had not been disbursed that they would not stop the pending disbursement based upon Defendant's claims."
Also, at section 8 of the defendant's affidavit, we find:
"Thereafter, Plaintiff disbursed the funds to Rutherford Bros. .Inc., directly contrary to Defendant's instructions and demands. "
We feel that such evidence submitted by this defendant by way of his affidavit does in fact present reasonable inferences that there may be .presented by this defendant a valid defense to the claim on this note. It is onr view that the plaintiff, a holder of the note, with knowledge of the failure of consideration of the maker's contract of purchase with Rutherford Brothers, and having received a request to stop payment, holds this instrument subject to the defense of failure of consideration in the same manner as such a defense would be available against Rutherford Brothers. Here the defendant raises the issues not only that the plaintiff was aware of the claim that there had been a failure of consideration because of the imperfections noted within the- automobile, but also that the plaintiff had been told prior to disbursement of the funds that they were not to disburse the funds because of the failure of consideration. These presented issues of fact which should have been determined by the trial court upon evidence adduced.
The plaintiff conversely argues that even assuming that the issues raised by the defendant, are genuine, there would be serious question about the materiality of such issues in that disbursement of funds against the appellant's order and with knowledge of the defects of the automobile would not be a defense to an action on the note. In support of such proposition, the plaintiff argues that Ohio has long recognized the existence of third-party beneficiary contracts upon which the outside party for whose benefit the contract was executed could maintain an; independent action. Citing Emmitt v. Brophy (1884), 42 Ohio St. 82; Society of Friends v. Haines (1890), 47 Ohio St. 423; and Visintine & Co. v. New York, Chicago & St. Louis Rd. Co. (1959), 169 Ohio St. 505.
We recognize that Ohio has generally adopted the third-party beneficiary contract theory. We also are aware that there is case law in Ohio which holds that a legal obligation owing from the promisee to the third person is not essential to the maintenance of an action by a third person. See Royal Indemnity Co. v. Northern Ohio Granite & Stone Co. (1919), 100 Ohio St. 373. This latter principle of law has :been applied in allowing recovery by third-party donees as 'against a second party promisor.
However, we are not disposed to extend such theory to the facts of the instant case to defeat the defense of the maker of an instrument where, in an action by the holder bank, the maker had alleged that prior to the distribution of the monies to the third-party automobile dealer, he had in-informed the bank of the failure of consideration and had ordered the bank to stop payment upon such note.
In any event, we hereby hold that the evidence before the trial court upon this motion for summary judgment did in fact raise genuine issues of material facts so that the moving party was not entitled upon motion to a summary judgment as a matter of law.
Based upon all of the foregoing, the judgment of the Franklin County Municipal Court is hereby reversed and this matter is remanded for further proceedings according to this decision and in accordance with law.
Judgment reversed.
Whiteside and McCormao, JJ., concur.