Frayer Seed, Inc. v. Century 21 Fertilizer & Farm Chemicals, Inc.

555 N.E.2d 654, 51 Ohio App. 3d 158, 1988 Ohio App. LEXIS 2858
CourtOhio Court of Appeals
DecidedJune 28, 1988
Docket9-85-26
StatusPublished
Cited by19 cases

This text of 555 N.E.2d 654 (Frayer Seed, Inc. v. Century 21 Fertilizer & Farm Chemicals, Inc.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Frayer Seed, Inc. v. Century 21 Fertilizer & Farm Chemicals, Inc., 555 N.E.2d 654, 51 Ohio App. 3d 158, 1988 Ohio App. LEXIS 2858 (Ohio Ct. App. 1988).

Opinion

Miller, J.

This is an appeal by plaintiff, Frayer Seed, Inc. (“Frayer”), from a judgment of the Court of Common Pleas of Marion County granting summary judgment for all defendants and dismissing plaintiff’s complaint.

Frayer filed its original complaint naming as defendants Century 21 Fertilizer and Farm Chemicals, Inc. (“Century 21”), Bank One of Columbus, N.A. (“Bank One”), and Mid-Ohio Chemical Company, Inc. (“Mid-Ohio”). The complaint was later amended to include as defendants Sharrock Elevator, Inc., W. Timothy Sharrock, and his wife, Connie Sharrock.

Century 21 was a wholly owned subsidiary of Sharrock Elevator, Inc., and W. Timothy Sharrock was the sole shareholder of Sharrock Elevator, Inc.

Bank One was the principal secured lender to Sharrock Elevator, Inc., and to Century 21, having been such for some time prior to 1983.

On September 21, 1983, Frayer entered into two contracts with Century 21 for the sale of twenty thousand bushels of seed beans with payment to be made on May 10, 1984.

In December 1983, seed beans of the value of $115,974.20 were delivered by Frayer to Century 21 and, on March 12, 1984, additional seed beans of a value of $2,100 were delivered.

The duly recorded security agree *159 ments held by Bank One provided that the collateral securing its loans to Sharrock Elevator, Inc. consisted of “all goods, equipment, machinery, furnishings, and other personal property, all inventory, merchandise, new materials, work in process and supplies, all accounts, general intangibles, chattel papers, instruments, and other forms of obligations and receivables.”

On March 12, 1984, Bank One demanded payment on its notes and, on March 16, 1984, Sharrock Elevator, Inc. and Century 21 agreed to a voluntary repossession of the assets of Century 21 by Bank One.

Frayer contends that its representative called Richard Seitz at Bank One on September 22, 1983 and again called someone at Bank One during January 1984 to inquire whether there were any problems with Century 21’s credit and was assured on both occasions that “Century 21 is in good standing.”

Immediately after the repossession Bank One sold the assets of Century 21 to Mid-Ohio. The repossession and sale to Mid-Ohio included the seed beans acquired from- Frayer as a part of the inventory of Century 21.

Frayer filed its complaint setting forth several claims for relief, including negligent and/or false representations of Century 21’s financial condition by Bank One, civil conspiracy, anticipatory breach of contract, violation of the Bulk Sales Act, conversion of properly, a right to reclaim, and a claim to pierce the corporate veil of Sharrock Elevators, Inc.

After further pleadings were filed and substantial discovery was had the trial court granted summary judgment for all defendants and dismissed Frayer’s complaint.

Frayer appeals from the trial court’s judgment, setting forth eight assignments of error.

* * * 1

We will consider the assignments of error in a slightly different order than that set forth in appellant’s brief.

Assignment of Error Number Two

“The trial court committed prejudicial error by holding that plaintiff failed to state a claim against Bank One for fraud or negligence in making [an] inaccurate credit report where numerous issues of fact had to be decided in order to make such a holding.”

Frayer contends that two calls were made to Bank One for the purpose of determining the financial soundness of Century 21 — the first on September 22, 1983 and the second in January 1984.

The contract between Frayer and Century 21 was entered into prior to the first call. Construing the evidence most strongly in favor of Frayer, there can be no issue of fact as to Frayer relying on the later representations to enter the contract.

The evidence properly before the trial court on the motions for summary judgment indicates that Bank One first learned of any financial difficulty concerning Century 21 in February 1984, when W. Timothy Sharrock notified Bank One of the problem. An immediate audit was taken and, on March 9, 1984, a copy of that audit revealed the losses.

There was thus no evidence before the trial court on the motion for summary judgment which would indicate an issue of fact as to Bank One having any knowledge of Century 21’s problems either in September 1983, or January 1984, and of any fraud or negligence in making an inaccurate report to Frayer.

The second assignment of error is not well-taken.

*160 Assignment of Error Number Three

“The trial court erred by finding that, upon the evidence before it, plaintiff had failed to state a claim under Chapter 1336 of the Ohio Revised Code’s Fraudulent Conveyance Act.”

As relates to fraudulent conveyance the trial court stated:

“* * * The plaintiff focuses on the voluntary repossession and sale of the assets of Century 21 as being a fraudulent conveyance by prejudicing the unsecured creditors of Century 21. However, plaintiff has presented no evidence whatsoever that there was a scheme or conspiracy that was in violation of the provisions of the Uniform Commercial Code. * * *”

R.C. 1336.06 provides:

“Every conveyance made and every obligation incurred without fair consideration, when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors.”

R.C. 1336.07 provides:

“Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present or future creditors.”

We conclude, as did the trial court, that there is no evidence of actual intent to defraud any of the creditors of Century 21.

The only evidence contained in the record that a transfer was made without fair consideration is contained in the affidavit of Kenneth Frayer. That evidence is as follows:

“In my opinion the $1,547,471.40 which Mid-Ohio paid for the assets of Century 21 was far below the real value of Century 21. I do not believe Bank One obtained fair consideration for the assets of Century 21 from Mid-Ohio.”

Civ. R. 56(E) provides as pertinent:

“Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the af-fiant is competent to testify to the matters stated therein. * * *”

Evid. R. 701 states:

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Cite This Page — Counsel Stack

Bluebook (online)
555 N.E.2d 654, 51 Ohio App. 3d 158, 1988 Ohio App. LEXIS 2858, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frayer-seed-inc-v-century-21-fertilizer-farm-chemicals-inc-ohioctapp-1988.