Opinion ID: 391087
Heading Depth: 1
Heading Rank: 3

Heading: Ratification, Estoppel and Laches

Text: 26 Before turning to the affirmative defense of laches, we quickly dismiss the argument that Mrs. Thropp ratified the actions of Mr. Thropp and Bache. To establish ratification under Ohio law, one must show action by the principal, taken with full knowledge of the facts, which manifests his intention to adopt the unauthorized transaction. Meyer v. Klensch, 114 Ohio App. 4, 175 N.E.2d 870 (1961). See also Shearson Hayden Stone, Inc. v. Leach, 583 F.2d 367 (7th Cir. 1978). 27 We see no reason to disturb the finding that Mrs. Thropp did not learn of Gregory's involvement until 1975. Thus, it cannot be said that she ratified Bache's actions. Nor can it be said that she ratified her husband's forgeries. The fact that she remained his wife is not the sort of action ratification requires. 28 Bache's argument that Mrs. Thropp's suit is barred by estoppel must also fail, due to her ignorance of essential facts. Furthermore, she never misled Gregory or caused Bache to change its position in reliance on her conduct. Civilian Defense, Inc. v. Ross, 152 N.E.2d 160 (Ohio C. of A., 1958). See also TWM Mfg. Co. v. Dura Co., 592 F.2d 346 (6th Cir. 1979); First Reg. Baptist Church v. Insurance Co. of North America, 444 F.2d 279 (6th Cir.), cert. denied, 404 U.S. 992, 92 S.Ct. 537, 30 L.Ed.2d 543 (1971). 29 We now turn to the issue of laches. Laches is an equitable doctrine which has been described as a quasi-statute of limitations. Its essence is unreasonable delay in asserting a claim that prejudices the defendant. Laches is unavailable to Bache for two reasons. First, Mrs. Thropp seeks the legal remedy of damages. She charges Bache with breach of fiduciary duty, a cause of action ex delicto which is governed by the statute of limitations. Ohio Rev.Code § 2305.09. See also Hart v. Guardian Trust Co., 52 O.L.A. 225, 75 N.E.2d 570 (1945). The other two counts, breach of contract and conversion, present legal claims as well, and are controlled by the applicable statutes of limitation. Ohio Rev.Code §§ 2305.07, .09. 30 Second, assuming laches is an available defense to an action at law, Bache has not established a proper case for laches on these facts. In order to prevail, Bache must prove: 1) that Mrs. Thropp had prior knowledge of the act complained of; 2) that she did not assert her legal claim diligently; and 3) that Bache suffered prejudice as a result. Assoc. of Data Proc. Serv. Org., Inc. v. Fed. Home Loan Bank Bd. of Cincinnati, 568 F.2d 478 (6th Cir. 1976). See also Costello v. United States, 365 U.S. 265, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961); United States v. Weintraub, 613 F.2d 612 (6th Cir. 1979). 31 A determination of laches is normally left to the discretion of the trial court. Burnett v. New York Cent. R. Co., 380 U.S. 424, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1965); Assoc. of Data Proc. Serv. Org., Inc. v. Fed. Home Loan Bank Bd., supra. It is clear that the District Court did not abuse its discretion in resolving the question of laches in Mrs. Thropp's favor. 32 Bache claims, however, that Mrs. Thropp was remiss in failing to discover Gregory's negligence until she deposed him several years after the challenged transactions. Bache also insists that its monthly statements put her on notice that something was amiss. Although there was conflicting testimony on this issue, the District Court found that she did not receive them because Mr. Thropp concealed the statements from her. Furthermore, in light of evidence that these statements would not necessarily indicate the total value of her holdings, we cannot say that this finding is clearly erroneous. 33 The District Court found that Mrs. Thropp questioned Gregory about her account on several occasions. He always avoided any specific discussion, spoke in vague terms of general market conditions, pleaded ignorance when confronted with Mrs. Thropp's suspicions, and told her to talk to her husband. Thropp, in turn, protected Gregory. The record clearly shows that Gregory helped to perpetuate Mrs. Thropp's ignorance. Bache cannot claim that her delay was unreasonable in light of its own evasion. See United States v. Weintraub, supra. 34 Finally, Bache asserts that it has been prejudiced because it had a right under Ohio law to require its bank to recredit to its account the amounts paid out over Thropp's forged endorsements. Ohio Rev. Code Ann. § 1304.29 Baldwin). Bache has irretriveably lost this recourse, since such a claim is barred after three years. Ohio Rev. Code § 1304.24(D). 35 This argument overlooks the fact that, as a condition precedent to its recourse against the bank, Section 1304.24(D) imposes on Bache a duty to discover and report to the bank within one year any unauthorized alteration of the instrument. Although we do not decide the merits of Bache's putative claim, we do hold that Bache had notice of the forgeries at the time that Mrs. Thropp called Gregory and that he told her to talk to her husband. Since Bache is chargeable with knowledge that Thropp's withdrawals were unauthorized as early as December, 1972, it cannot claim prejudice from a timely suit filed within three years of this date. Any prejudice Bache has suffered must be attributed to its own failure to investigate the matter. 36 We also affirm the District Court's award of prejudgment interest from the date of each check. Such an award is proper under Ohio law. Ohio Rev. Code § 1343.03. 37 Accordingly, the judgment of the District Court is affirmed in all respects. Costs on appeal are taxable to appellant.