Court Opinion

ID: 3738780
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:03:28.261018+00
Date Added: 2024-06-11T09:13:01.607010
License: Public Domain

I concur in the judgment to the extent that there should be a reversal, but not that the cause should be remanded for a new trial.
The record discloses that the motion to vacate the judgment was submitted in the following form:
"Now comes defendant Columbus Trotting Association, Inc., by its attorneys, and moves the court for an order vacating and setting aside the judgment heretofore entered herein, for the reason that the note upon which said judgment was entered was not supported by any consideration, and for the further reason that the defendant has substantial claims against the plaintiff which are available as either setoff or counterclaim if the said note should be found to be a legal obligation."
In passing upon this motion the only question for the determination of the court was whether there was any valuable consideration for the note upon which the judgment was taken since a setoff or counterclaim is not a defense to such an action. *Page 139 
In Bulkley v. Greene, 98 Ohio St. 55, 120 N.E. 216, it is said in the third paragraph of the syllabus:
"A counterclaim cannot be made available under Section 11635, General Code, as a basis to vacate a judgment by confession. Such is not a defense to the action within the purview of that section."
The term, "valuable consideration," seems to be well defined as follows in 11 Ohio Jurisprudence (2d), 304, Section 67:
"A valuable consideration may consist either in a benefit to the promisor or a detriment to the promisee. More elaborately stated, a valuable consideration may consist either in some right, interest, profit, or benefit accruing to the promisor or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the promisee."
That it may consist of a benefit to the promisor or a detriment to the promisee is clearly set forth in Dalrymple,Admr., v. Wyker, Admr., 60 Ohio St. 108, 53 N.E. 713, the syllabus of which reads as follows:
"1. An answer to a suit on a promissory note, averring that there was no consideration for it, moving to the promisor, is not sufficient as a defense, as it does not preclude the possible fact that there was detriment or loss to the promisee, which constitutes a consideration for a promise as well as a benefit to the promisor.
"2. Where the issue is as to whether there was a consideration for a promissory note, and the evidence offered simply shows that there was no benefit to the promisor, and does not exclude the possibility that there was detriment or loss to the promisee, it is insufficient to support the issue.
"3. The law presumes the existence of a consideration for a promissory note; and this presumption continues until it is shown that there was none; and the burden of showing this is on the party attacking the note for want of consideration."
The record discloses, and it is undenied, that Johndahl advanced the sum of $10,000 for the purchase of stock of the defendant corporation, either for himself or for the corporation, the same being in dispute, in order that Reid might no longer have an interest in the corporation and therefore clear the way for the races to be held as scheduled. Clearly, this action by *Page 140 
Johndahl was a detriment to him and a benefit to the corporation. Therefore, in my opinion, there was a consideration for the first note for $10,000. Then, as a consideration for the second note for $8,000 and upon which the judgment was taken, the first note was surrendered and also 80 shares of stock which certainly had some value, for on the same date the then president, Hill, purchased 420 shares of the same kind of stock from Johndahl for the sum of $21,000. But it is urged that Johndahl, at the time of the foregoing transaction, was indebted to the defendant corporation for secret profits acquired by him at the time the corporation was organized and also for expense money which he had received and to which he was not entitled; and that under Section 2309.19, Revised Code, these demands must be deemed compensated and thus all consideration for the notes is eliminated. The trial court adopted this view and therefore sustained the motion to vacate the judgment. Looking to the cited section of the Code, we find it to be as follows:
"When cross-demands have existed between persons under such circumstances that if one had brought an action against the other a counterclaim could have been set up, neither can be deprived of the benefit thereof by assignment by the other, or by his death. The two demands must be deemed compensated so far as they equal each other."
This section appears to be remedial and to have been enacted in order that one party may not be benefited by the assignment of his claim to the detriment of the other party, when cross-demands exist between the parties. It certainly does not provide that an obligation can not be created merely because an unliquidated or uncertain or contingent claim might exist against one party. It also should be noted that the statute requires that before a cross-demand may be asserted it must exist under such circumstances that a counterclaim could be set up if one party had brought an action against the other. The alleged secret profits or unauthorized payment for expenditures to Johndahl would not constitute a valid counterclaim to an action on the note or for the money advanced prior to the execution of the same. A counterclaim is defined in Section 2309.16, Revised Code, as follows:
"A counterclaim is a cause of action existing in favor of *Page 141 
one or more defendants against one or more plaintiffs or one or more defendants, or both, between whom a several judgment might be had in the action, and arising out of the contract or transaction set forth in the petition as the foundation of the plaintiff's claim, or connected with the subject of the action or arising out of contract or ascertained by the decision of a court.
"Such counterclaim shall not be limited to the amount claimed by the plaintiff or defendant against whom such counterclaim is asserted."
To be proper, a counterclaim must meet one of the following conditions, to wit:
1. Arise out of the contract or transaction set forth in the petition as the foundation of the plaintiff's claim.
2. Be connected with the subject of the action.
3. Arise out of contract.
4. Be ascertained by the decision of the court.
The causes of action set forth in the cross-petition did not arise out of the contract or transaction set forth in the petition; they did not arise out of contract; they have not been ascertained by the decision of a court; and they are not connected with the subject of the action.
In Price v. Kobacker Furniture Co., 20 Ohio App. 464,152 N.E. 301, the court held in the syllabus:
"1. The language employed in Section 11317, General Code, has purposely been made comprehensive in its terms and general in its expression, and should be given a liberal construction to avoid a multiplicity of suits.
"2. The question whether a counterclaim comes within the section above referred to should be determined from the facts and circumstances of each particular case, and the invention of a rule to fit all cases that may arise in the future is inadvisable."
It appears in that case that a debtor was sued on an account for goods sold and delivered. A cross-petition was filed setting up by way of counterclaim a cause of action for damages which the defendant claimed to have sustained through being blacklisted as to his credit by the plaintiff. The court held such cause of action by way of counterclaim was demurrable for the reason that it did not show a cause of action arising *Page 142 
out of the contract or transaction set forth in the petition or connected with the subject of the action.
A similar question was before the Supreme Court inMcMurray v. Vaughn's Seed Store, 117 Ohio St. 236,157 N.E. 567, in which Judge Matthias, at page 238, said:
"The questions here presented arise out of the claim made by the defendant against the plaintiff by way of cross-petition, denominated therein a `setoff.' The averments thereof clearly constitute it an action for damages for alleged negligence upon the part of the plaintiff. Two specifications of negligence are made, the first being that plaintiff shipped to the defendant a ton of shredded cattle manure in soda ash bags which had not been completely cleaned, and the second, that the plaintiff failed to inform the defendant of the presence of soda ash in such cattle manure. It was asserted that `because of such negligent and careless acts of the plaintiff' the defendant was injured, etc. This is clearly an action ex delicto. Not only was it so pleaded, but it was tried and submitted to the jury as an actionex delicto and nothing else. It had no relation whatever to the claim sued upon by the plaintiff, which was for merchandise furnished and delivered to the defendant in November, 1922, while the wrongful and negligent acts of the plaintiff complained of by the defendant, and because of which damages are sought, occurred two years prior thereto. The defendant's cause of action, therefore, did not arise out of the contract or transaction set forth in the petition, nor was it `connected with the subject of the action.' Hence it cannot properly be set up as a `counterclaim.' It was so denominated in the original answer of the defendant, and the Court of Common Pleas properly sustained a demurrer thereto, but the court granted leave to amend by simply striking out the word `counterclaim' and substituting the word `setoff,' without any change whatever in the averments of the answer. Regard should be had for the substance, rather than the form. The name given the pleading should not be decisive of its virtue or validity.
"It is provided by Section 11315, General Code, that:
"`The defendant may set forth in his answer as many grounds of defense, counterclaim and setoff as he may have, whether such as heretofore have been denominated legal or equitable, or both.' *Page 143 
"Section 11371, General Code, defines a `counterclaim.' For the reasons above indicated, the defendant's cause of action does not come within that definition.
"As defined by Section 11319, General Code, a `setoff is a cause of action existing in favor of a defendant against a plaintiff between whom a several judgment might be had in the action, and arising on contract or ascertained by the decision of a court. It can be pleaded only in an action founded on contract.'"
Section 2309.16 of the Revised Code in effect combines the former General Code sections as to counterclaims and setoffs. Defendant's first and second causes of action do not qualify as either counterclaim or setoff, and they do not qualify under the provisions of Section 2309.16, Revised Code.
The record reveals that, at the close of all the evidence admitted upon the motion to vacate the judgment, counsel for the plaintiff entered the following motion:
"We move that the court overrule the motion that the defendant filed herein, that the court remove the suspension of this judgment, and that the court permit the execution and collection of the judgment."
The motion was overruled and counsel for the plaintiff replied, "Well, to that ruling I note the most strenuous objection." It is my conclusion that the court erred in its ruling, as the evidence clearly indicates that a valuable consideration was given for the note upon which the judgment was taken. The manner in which a judgment may be suspended or vacated is well stated in Canal Winchester Bank v. Exline,61 Ohio App. 253, 22 N.E.2d 528, the second paragraph of syllabus of which reads as follows:
"To suspend a judgment during the term in which the judgment is taken, if any of the grounds set forth in Section 11631, General Code, are assigned as a reason for the action sought, it is necessary that the court find that the ground set forth in the motion is well made and further that an answer has been tendered with the motion showing that there is a valid defense to the action in which the judgment was rendered, in compliance with Section 11637, General Code, and until it is adjudged that there is a valid defense to the action, such judgment will not be vacated upon motion or petition." *Page 144 
The procedure to be followed in vacating a judgment is found in Sections 2325.06 and 2325.07, Revised Code (Sections 11636 and 11637, General Code), to wit:
2325.06. "The Court of Common Pleas or the Court of Appeals must try and decide upon the grounds to vacate or modify a judgment or order, before trying or deciding upon the validity of the defense or cause of action."
2325.07. "A judgment shall not be vacated on motion or petition until it is adjudged that there is a valid defense to the action in which the judgment was rendered; or, if the plaintiff seeks its vacation, that there is a valid cause of action. When a judgment is modified, all liens and securities obtained under it shall be preserved to the modified judgment."
We desire to quote further from the Canal Winchester Bankcase, supra, page 256, wherein Judge Hornbeck said:
"We have heretofore referred to Metzger v. Zeissler, 13 N. P. (N.S.), 49, 22 O. D. (N. P.), 63, with approval. The first two propositions of the syllabus of this case determine that with the motion setting forth grounds for vacation of the judgment the defendant should by affidavit or orally or by both methods present his evidence in support of the motion. Section 11636, General Code. The third paragraph of the syllabus is pertinent to the proper procedure here:
"`At the same time the defendant should proffer a verified answer to the petition, setting forth affirmatively facts showing nonliability in whole or in part. If the answer does not state facts which, if established, would constitute a defense to the claim, the proceeding will be treated as at an end and the judgment will not be disturbed * * *.' (Italics ours.)
"It should be borne in mind that the requisites of a valid defense to a cause of action in a proceeding to open up an existing judgment may be different than when filed within rule and before judgment. Before judgment a defendant is well within his rights in setting up in his answer a general denial of the averments of the petition but such pleading should not be permitted in a proceeding to suspend or vacate a judgment. So that what may be a defense before judgment may be entirely inadequate and insufficient to warrant an adjudication, under Section 11637, General Code, that there is a valid defense to *Page 145 
the action upon which judgment has been taken. In the light of this announcement of principle the averments of the amended answer should be considered."
Since the grounds for the vacation of the judgment were not established, in my opinion, the judgment should not have been vacated. On the other hand, the plaintiff's motion should have been sustained and the judgment re-entered. The cause of action set forth in the plaintiff's petition would then have been adjudicated and there would have been no further issues pending in the original action, as the tendered answer and cross-petition should have been stricken.
The judgment of the trial court should be reversed and judgment re-entered for the plaintiff.
DEEDS, J., of the Sixth Appellate District, sitting by designation in the Second Appellate District.