Schaefer v. First National Bank

18 N.E.2d 263, 134 Ohio St. 511, 134 Ohio St. (N.S.) 511, 13 Ohio Op. 129, 1938 Ohio LEXIS 226
Ohio Supreme Court·Decided December 21, 1938·No. 27093·Published·Cited by 77 cases

Opinion

Williams, J.

Many questions were rais'ed on the pleadings, and rulings thereon were assigned as error. *515 When a decision is made by the trial court on the evidence, and judgment entered accordingly, errors previously committed in passing upon demurrers' to pleadings are unavailing unless prejudicial. Putnam v. Board of Commrs. of Paulding County, 102 Ohio St., 45, 130 N. E., 165; Yocum, Admr., v. Allen, 58 Ohio St., 280, 50 N. E., 909; Dayton Ins. Co. v. Kelley, 24 Ohio St., 345, 15 Am. Rep., 612.

In the instant case the rulings on the sufficiency of the pleadings were not prejudicial to the defendant, The First National Bank of Findlay.

This is a proceeding under the Uniform Declaratory Judgments Act, Section 12102-1 et seq., General Code.

Plaintiff, Joseph N. Schaefer, claims the note for $10,000 given by him to the defendant bank is invalid for want of consideration. Since the trial court found that there was no consideration for the note, the finding must stand if there is evidence to support it. It is therefore necessary to consider only the evidence favorable to the plaintiff.

It appears from such evidence that, when plaintiff was about to renew his indebtedness for $39,600 and $6,200 and receive an extension of time for the payment thereof, the renewal and extension were given and there was an express understanding and agreement that plaintiff would assume the indebtedness of $10,000 owing by The Phoenix Hotel Company, Isadore L. Horn and Florence Stokes Horn to the bank. There is also evidence that the plaintiff gave the $10,000 note for the assumption of such indebtedness and for no other purpose and thereupon three separate notes for $39,600, $6,200 and $10,000 were given with an extension of time on the first two and all three were secured by mortgage.

It is a general rule that an extension, of time is1 a sufficient consideration to support a promissory note, *516 but the application of this rule must depend upon the facts of the particular case. If A owes B $2,000 and the payment of indebtedness is extended upon A’s giving to B a note for an additional $1,000 as a bonus or compensation for the extended loan, the promissory note for the additional amount is valid but usurious and the whole indebtedness can be collected only to the extent that the laws of usury permit. On the other hand if A owes B $2,000 on a promissory note and B agrees to extend the time of payment only if A will give to B an additional note for $1,000 in assumption of indebtedness owed to B by a third party, then the additional note is invalid for want of consideration. The reason is1 that B may still maintain an action against the third party on the original indebtedness between them according to the terms thereof, and the additional note of $1,000 is not given as a bonus or compensation for the extended indebtedness. The extension of time must be given upon the indebtedness, which is assumed by the giving of the note, in order to constitute a consideration therefor. If as a part of the agreement between A and B an extension of time is granted to the third party on his indebtedness, or as a part of such agreement the indebtedness owing by the third party is cancelled or if in consideration of the additional note B’s rights against the third party are assigned to A, either absolutely or as collateral security, then there is consideration for the additional note.

In the instant case there was, according to plaintiff’s evidence, a bare assumption of the Horn note by the plaintiff. Plaintiff’s evidence shows there was' no extension of time to the makers of the Horn note, no transfer or assignment of the note by the bank to the plaintiff as collateral or otherwise and no agreement between the plaintiff and defendant that the Horn note should be cancelled or paid upon the giving of the *517 $10,000 note by the plaintiff. In this state of facts the bank conld still maintain an action on the Horn note against the Horns and was entitled to dividends in the administration of the affairs of the bankrupt hotel company, the claim having been filed.

The finding that there was want of consideration was supported by evidence.

There remains to be considered whether plaintiff was entitled to a declaratory judgment finding that his $10,000 promissory note was invalid for want of consideration.

The action for declaratory judgment is a recognized and accepted remedy in those states in which the Uniform Declaratory Judgments Act is in force as will appear from an examination of the cases cited in the annotation in 114 A. L. R., 1361, and earlier annotations therein referred to.

There is no question as to the power of the Legislature to adopt any form of remedial procedure within constitutional limitations and it has been held repeatedly that acts permitting declaratory judgments are constitutional. On this subject the cases are collected in 16 American Jurisprudence, 278, Section 5.

It might be urged that the constitutional right of trial by jury (Section 5, Article I, Ohio' Constitution) is interfered with in granting a declaratory judgment on findings of fact by the trial court when an issue is presented that is triable by jury.

The Federal Declaratory Judgments Act expressly provides for the impaneling of a jury and the determination of issues of fact triable by a jury. 48 Stats, at L., 955, c. 512; 49 Stats, at L., 1027, c. 829, Section 405; Title 28, Section 400, U. S. Code.

Section 12102-9, General Code of Ohio, provides:

“When a proceeding under this act involves the determination -of an issue of fact, such issue may be tried and determined in the same manner as is'sues of *518 fact are tried and determined in other civil actions in the court in which the proceeding is pending.”

Clearly this provision preserves the right of trial by jury in an action for a declaratory judgment in all cases in which the right exists.

In the instant case there was no demand for a jury and consequently, if there was a constitutional right to have issues of fact submitted to a jury, the right was waived. Herrlein v. Tocchini, 128 Cal. App., 612, 18 P. (2d), 73; Holly Sugar Corp. v. Fritzler, 42 Wyo., 446, 296 P., 206; Faulkner v. City of Keene, 85 N. H., 147, 155 A., 195.

The query has been raised as to whether the Uniform Declaratory Judgments Act is an alternative remedy. Surely it is not alternative in the sense that the action always lies even though there may he ground for full relief in equity or a suit at law may be maintained. But it is certainly alternative in the sense that it lies notwithstanding another remedy is available, in all those cases in which there is a real controversy between adverse parties in a matter that is justiciable and the court, in the exercise of a sound discretion, finds that speedy relief is necessary to the preservation of rights which might otherwise be impaired or lost.

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Schaefer v. First National Bank, 18 N.E.2d 263, 134 Ohio St. 511, 134 Ohio St. (N.S.) 511, 13 Ohio Op. 129, 1938 Ohio LEXIS 226 (Ohio 1938).

18 N.E.2d 263 (Schaefer v. First National Bank) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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