Stark v. Testo

148 N.E.2d 109, 106 Ohio App. 386, 78 Ohio Law. Abs. 21, 7 Ohio Op. 2d 136, 1958 Ohio App. LEXIS 814
CourtOhio Court of Appeals
DecidedFebruary 20, 1958
Docket24271
StatusPublished

This text of 148 N.E.2d 109 (Stark v. Testo) 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
Stark v. Testo, 148 N.E.2d 109, 106 Ohio App. 386, 78 Ohio Law. Abs. 21, 7 Ohio Op. 2d 136, 1958 Ohio App. LEXIS 814 (Ohio Ct. App. 1958).

Opinion

OPINION

Per CURIAM:

This appeal comes to this court on questions of law and fact from a judgment entered by the court without the intervention of a jury in the Common Pleas Court of Cuyahoga County. The court found and entered judgment for the defendant on plaintiff’s amended petition and for the plaintiff and against the defendant on his eross-petition.

*22 The plaintiff filed his amended petition in which he alleges that the defendant sold plaintiff a one-half interest in his machine tool business for $35,000, $16,000 in cash and the balance of $19,000 by note payable in one year with interest at four per cent. The plaintiff alleges that to induce him to purchase said one-half interest, the defendant knowingly and fraudulently made certain untrue representations as to the volume of business, the inventory, and some of the customers to whom the defendant was selling “large amounts of merchandise.” It is further alleged that defendant represented and agreed that if at any time after the transaction was consummated, the plaintiff should become “dissatisfied with the investment, defendant would repurchase” the plaintiff’s interest in the business for the same price paid therefor. (There is no mention of this allegation in the partnership agreement introduced into evidence during trial.) Plaintiff alleges that he entered into the business January 2, 1954, and during the month of January discovered defendant’s statements about the business made to induce the plaintiff to became a partner (an undivided forty per cent owner of the business) were untrue and on many occasions he offered to return his interest in the business and demanded the return of the purchase price. That on June 1, 1954, the plaintiff renewed his demands, that such demands were refused, the defendant stating that there had been a loss of from $14,000 to $16,000 during the first five months of 1954, of which plaintiff should stand his share. Plaintiff alleges that, relying on such representations, he agreed to and did sell his interest in the business to the defendant for $10,000 cash and the return of the $19,000 note. The plaintiff also alleges that the representations made upon which he relied in reselling the business to the defendant were false and untrue to defendant’s knowledge and were made for the purpose of deceiving him and pursuant to a preconceived plan to defraud and cheat him whereby he was defrauded of $6,000, for which amount he asks judgment.

The answer of the defendant admits the sale of an interest in the business for the price alleged by the plaintiff; alleges that before the plaintiff became a partner, he spent about three weeks working therein to determine for himself the amount of the inventory, the volume of business and the like and that it was only after his personal investigation that the plaintiff entered into the partnership agreement of January 2, 1954. The defendant further alleges that the said articles of partnership contain all of the terms of their agreement and the allegation that defendant would repurchase plaintiff’s interest in the partnership if plaintiff was not satisfied is not true and that plaintiff entered into such agreement “with full knowledge and disclosure of all the facts of the said business.”

It is also alleged that plaintiff, acting as a partner between January 2, 1954 and June 4, 1954, had full opportunity to examine the books, inventory, assets, liabilities, profits and losses, and was fully advised of his own knowledge of its economic value. That on June 4, 1954, the plaintiff entered into a written agreement to resell his interest in the business for $29,000, $10,000 in cash and the balance by the return of *23 his note for $19,000, given to the defendant by the plaintiff when he purchased an interest in the business January 2, 1954.

As a part of the written agreement of dissolution of partnership of June 4, 1954, it was provided:

“Each of the parties hereto does hereby release and forever discharge the other from all claims and demands whatsoever, in any manner arising under the Articles of Co-Partnership hereinbefore referred to (Agreement of January 2, 1954), or in any manner growing out of the business of said firm.
“And the said Alfred A. Stark hereby covenants and agrees that the consideration of Ten Thousand Dollars ($10,000.00) is hereby accepted in full satisfaction of the purchase price and hereby agrees to cancel and release any and all debts and obligations between the parties hereto, including the sum of Six Thousand Dollars ($6,000.00) paid over and above Ten Thousand Dollars ($10,000.00) by said Alfred A. Stark to Edward D. Testo at the time of entering into the partnership agreement.”

The defendant then alleges that by reason of such release provision of the dissolution agreement of June 4, 1954, the plaintiff released all claims alleged in his petition.

The defendant then set forth four causes of action in his counter claim. Upon trial the court found for the plaintiff on each of these causes of action and no appeal has been taken from such judgment so that that part of the case is concluded.

The plaintiff’s reply to defendant’s answer admits that the articles of dissolution contained the release provisions as set out in the answer, the paragraph of the reply being as follows:

“Plaintiff admits that between January 2, 1954 and June 4, 1954, he was a partner with defendant; admits that on June 4, 1954 plaintiff and defendant entered into a written agreement for the dissolution of said partnership, which agreement contained among other things the two paragraphs quoted in defendant’s answer; admits that he received the sum of $10,000 cash and return of his note upon the dissolution.”

Plaintiff denies his knowledge of the condition of the business or the opportunity to examine the records, either prior to the articles of partnership of January 2, 1954 or at the time of the dissolution thereof on June 4, 1954.

It is undisputed from the allegations of the pleadings, as quoted, that a full release from all obligations under the contract of dissolution was agreed to by the parties. We are, therefore, met at the outset with the obligation of the plaintiff to seek rescission of the release before attempting to seek relief on claims coming within the terms of the release. There is no claim by the plaintiff, nor does he plead facts to support a claim, that the release as set out in the answer was void ab initio. No claim of fraud in the factum is here even suggested.

“In 35 O. Jur., paragraph 52, page 292, it is said:

“* * * While a different rule has been adopted in some jurisdictions,' it seems to be thoroughly established in Ohio that, in the case of a release which is merely voidable, the plaintiff is obliged to procure its rescission before proceeding with his action on his original claim, since *24 it is considered that such release, until it is set aside, constitutes an effective bar to such action and that it is not permissible, when the release is brought into the case for the first time by the defendant in his answer, for the plaintiff to seek its rescission by setting up in his reply the facts which would render it voidable.

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Bluebook (online)
148 N.E.2d 109, 106 Ohio App. 386, 78 Ohio Law. Abs. 21, 7 Ohio Op. 2d 136, 1958 Ohio App. LEXIS 814, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stark-v-testo-ohioctapp-1958.