Opinion
No. 30029
Decided January 10, 1945.
Appeal — Action for money judgment not converted into chancery case — Incidental and ancillary equitable relief sought — No appeal on law and fact — Judgment sought against maker of promissory note and mortgage — Also against other defendants on subsidiary contracts of extension and indemnification — Prayer for accounting from such defendants.
1. Where a money judgment is the main relief sought, the fact that plaintiff seeks incidental and ancillary equitable relief does not convert the action to one in chancery and such action is not appealable on questions of law and fact.
2. Where the plaintiff seeks a money judgment on a promissory note secured by mortgage, as to which no equitable defenses are made by the maker, and the plaintiff also seeks a money judgment against other defendants on ancillary and subsidiary contracts by which she claims that liability on the note and mortgage was assumed by such defendants and inured to her benefit, the action is one at law and is not appealable on questions of law and fact, even though there is a prayer for an accounting from such defendants, the right to which is dependent upon the establishment of plaintiff's legal right under such contracts.
APPEAL from the Court of Appeals of Lucas county.
Plaintiff's second amended petition sets out three alleged causes of action. The first was predicated upon a promissory note for $29,000, secured by mortgage, both signed by the defendant John D. Earhart, hereinafter called Earhart, under date of April 12, 1922, the note being due in five years. This note represented the balance of the purchase price of a tract of land on that day sold by the plaintiff, as she claims, to the defendants E. Claude Edwards, Edward G. Kirby, The Bell-Teipel Company and Ada M. Bell, since deceased, hereinafter called the four defendants, the title, however, being taken in the name of John D. Earhart upon the instruction of the four defendants.
As a part of her first cause of action, the plaintiff further alleged that the four defendants had, after the Earhart note had been given but before it became due, entered into a written agreement with her for a three-year extension of the maturity of the note and the mortgage, during which extension period the four defendants agreed to pay interest upon the note at the rate of six per cent per annum.
Plaintiff further alleged that she believes and avers that the four defendants either entered into a separate agreement of indemnification with Earhart in return for his execution of the note and mortgage, or for a valuable consideration assumed and agreed to pay the promissory note; that by reason of such extension agreement with her and by reason of such indemnification or assumption agreement with Earhart, such four defendants assumed the liability of Earhart on his obligation to her; and that there was due her from Earhart and the four defendants, on her first cause of action, $38,284.42 with interest.
For her second cause of action plaintiff sets out the Earhart mortgage and alleged that the four defendants assumed the payment of the mortgage debt; and that its conditions have been broken. She demanded foreclosure of the mortgage.
For her third cause of action plaintiff alleged that on May 10, 1922, Earhart conveyed the mortgaged premises to the defendant The Commerce-Guardian Trust Savings Bank, hereinafter called the bank, by a deed of trust for the benefit of the four defendants who then entered into a trust agreement with the bank, by which the bank should manage the mortgaged property and from the revenues collect and pay all obligations, including the debt to the plaintiff; that such agreement provided that if the money collected was insufficient to pay all claims, the four defendants would "pay to the trustee the amount of the deficiency in the proportion of their respective interests"; and that "these covenants were made for the benefit of plaintiff herein." Plaintiff further alleged that large amounts of money were received by the bank of which the defendants E. Claude Edwards and Edward G. Kirby were vice-presidents, but that such money was not applied upon the property obligations, including interest and principal due under the trust agreement.
Plaintiff prayed for an accounting upon the part of such bank. The plaintiff also alleged that the bank is in the hands of the. Superintendent of Banks, undergoing liquidation, and that certain other parties have certain interest in or liens upon the mortgaged real estate.
The four defendants filed separate answers in which it was variously alleged that plaintiff was not a party to the trust agreement with the bank; that the trust agreement was afterwards rescinded and cancelled by all parties thereto; that the plaintiff never assented to the trust agreement or at any time claimed any interest or benefit thereunder; that under their extension of maturity agreement they became liable to pay interest on the note and mortgage, on and after April 12, 1927, up to April 11, 1930, the date last mentioned being the new maturity date of the mortgage note; that there was no other liability on the note and mortgage; and that any claim was barred by the statute of limitation.
The parties waived a jury and the case was tried by the court. The court made a finding as to the amount due to the plaintiff from the four defendants, determined the liens and priority thereof, and entered judgment in favor of the plaintiff against Earhart on his note in the sum of $48,270.06, and interest. The court specifically found that defendants the Bell-Teipel Company, Edward G. Kirby and E. Claude Edwards were not indebted in any amount to the plaintiff under or by reason of the extension agreement, except for unpaid interest on the promissory note dated April 12, 1922, as accrued during the period from April 12, 1927, to April 11, 1930, in the sum of $1,069.82 with interest from April 11, 1930; and ordered a foreclosure of the mortgage and sale of the property. The court also specifically found against the plaintiff and in favor of the four defendants and the bank on all plaintiff's claims under or by virtue of the trust agreement dated May 10, 1992, and found that such agreement was terminated on May 27, 1937.
The court further found that the estate of Ada M. Bell, as a defendant, was not properly before the court, and found the issues as to all other matters in favor of the four defendants and other defendants. A motion for new trial was overruled.
The plaintiff perfected an appeal to the Court of Appeals, specifying in the notice of appeal, that it was "an appeal on questions of law and on questions of law and fact." The appellee defendants filed a joint motion in the Court of Appeals to dismiss the appeal on questions of law and fact on the ground that the case was not a "chancery case" within the purview of Section 6, Article IV of the Constitution, but an action at law. The Court of Appeals granted the motion to dismiss the appeal on questions of law and fact, and ordered that the case should stand for hearing on questions of law.
Before any hearing in the Court of Appeals on questions of law was had, the plaintiff filed a notice of appeal in this court on questions of law "as a matter of right as involving a constitutional question which is referred to in Rule XXIV of the Rules of the Supreme Court of Ohio."
Messrs. Grossman, Carter, Hamilton Rosenman, for appellant.
Messrs. Boggs, Smith Winchester, Messrs. Ritter Boesel, Messrs. Rowe, Williams Shawaker and Messrs. Marshall, Melhorn, Wall Bloch, for appellees.
The sole question before this court is whether the Court of Appeals erred in dismissing appellant's appeal on questions of law and fact, on the ground that the action is not one in chancery but an action at law.
Whether an action is legal or equitable in character must be determined by the nature of plaintiff's primary demand and the ground of the action as set out in the pleadings. Taylor v. Brown, 92 Ohio St. 287, 110 N.E. 739; Hummer v. Parsons, 111 Ohio St. 595, 146 N.E. 62; Lust v. Farmers' Bank Savings Co., 114 Ohio St. 312, 151 N.E. 189. In the case at bar the plaintiff sought to recover a money judgment on a promissory note and the foreclosure of a mortgage securing the same, about which there was no dispute or denial of claim; sought a money judgment against certain defendants, other than the maker of the note, on an alleged contract of extension of the maturity of the same note and an assumption of liability for its payment; and sought to establish plaintiff's right under the trust agreement for her benefit, with a trustee authorized thereby to operate such property and apply the proceeds arising from such operation to the payment of plaintiff's note, and for an accounting as to such proceeds. The plaintiff was not a party to such trust agreement and it was later cancelled before she asserted any claim under it. All the relief claimed by the plaintiff under her third cause of action depended upon the establishment of her alleged legal rights under the contract set out in that cause of action. Her further right to an accounting was incidental to and wholly dependent upon the establishment of her legal right in and under such contract.
Earhart, the maker of the note and mortgage, filed a separate answer alleging, inter alia, his discharge on the ground that the extension agreement had been substituted for the note. There was no issue as to the validity of the mortgage securing the note or the right of the plaintiff to bring about the sale of the mortgaged property. The main issues are the extent of the liability of the four defendants and the nonliability of Earhart, arising out of the so-called extension and assumption agreements for the payment of money which plaintiff claims she is entitled to have applied on any deficiency upon her claim on the note after the sale of the property under the mortgage. The plaintiff's demand against such defendants in this respect is for a money judgment.
This court has heretofore held that an action is equitable if it is necessary to determine first, whether the plaintiff is entitled to equitable relief before legal redress can be granted; but if the primary or paramount relief sought is legal and the equitable redress merely incidental, it is an action at law. Nordin v. Coulton, 142 Ohio St. 277, 51 N.E.2d 717; La Bounty v. Brumback, 126 Ohio St. 96, 184 N.E. 5.
Where a money judgment is the main relief sought, the fact that plaintiff seeks incidental and ancillary equitable relief, even though it be an accounting, does not convert the action to one in chancery and such action is not appealable on questions of law and fact. Chapman v. Lee, 45 Ohio St. 356, 13 N.E. 736; Lange v. Lange, 69 Ohio St. 346, 69 N.E. 611; Fisher v. Bower, 79 Ohio St. 248, 87 N.E. 256; The Complete Building Show. Co. v. Albertson, 99 Ohio St. 11, 121 N.E. 817; Forest City Investment Co. v. Haas, 110 Ohio St. 188, 143 N.E. 549.
In disposing of this issue the Court of Appeals, in its opinion, appropriately said:
"Applying this test to the pleadings herein, it is obvious that what plaintiff wants and the defendants dispute is the money due on the note, and judgment for it is the primary or paramount relief she seeks. The foreclosure of the mortgage is not contested. She wants a judgment against the several defendants by which to satisfy the deficiency she anticipates after the sale of the mortgaged premises. The liabilities of the defendants, other than Earhart, depend upon the effect of the claimed assumption agreements which she alleges were made for her benefit, and what was done under them. All this is important only as it may fix the amounts for which those defendants are liable, and if equitable processes are necessary to discover those amounts, and funds that should have been but were not applied on that debt, they are 'incidental and ancillary' to the primary questions."
Since this was not a chancery case but an action at law, the Court of Appeals did not err in sustaining the appellee-defendants' motion to dismiss the appeal on questions of law and fact.
The order of the Court of Appeals is therefore affirmed.
Order affirmed.
WEYGANDT, C.J., ZIMMERMAN, BELL, TURNER and MATTHIAS, JJ., concur.