Appendix — Willis v. Cleveland Trust Co.

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Supreme Court, U.S.

85 -18 99 (» FILED

APR 15 1908

j | JOSEPH F. SPANIOL, JR,

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IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1985

CHARLES F. WILLIS, OR.,

Petitioner,

vs.

THE CLEVELAND TRUST COMPANY

n/k/a Ameritrust Company

Executor of the Estate of

Harvey S. Firestone, Jr., Deceased

ELIZABETH FIRESTONE WILLIS Respondents

APPENDIX TO PETITION

FOR WRIT OF CERTIORARI

MATTHEW A. KANE

1000-16th Street, N.W.

Washington, D. C. 20036

(202) 659-2044

Counsel of Record

for Petitioner

JOHN L. WOLFE

Akron Center Plaza, Suite 505

50 South Main Street

Akron, Ohio 44308-1830

(216) 535-2441

Counsel for Petitioner

UN. So Bp ee ry er ~

ale

INDEX TO APPENDIX

App. Page

Appendix A

Supreme Court of Ohio, No. 84-1766,

Opinion dated January 15, 1986 ... 1

Appendix B

Court of Appeals of Ohio, Ninth

Judicial Circuit, Nos. 11595, 11599,

Opinion dated September 27, 1984 .. 13

Appendix C

Court of Common Pleas, County

of Summit, Case No. C.V. 79 3793,

Opinion dated January 12, 1984 ... 40

Appendix D

United States Court of Appeals

for the District of Columbia Circuit,

Nos. 80-2200, 80-2197, Opinion dated

June 26, 1981, 655 F.2d 1333 .... 49

Appendix E

United States District Court for

the District of Columbia, C.A.

No. 76-1225, Opinion and Order

dated muly 23, 1980 ss 2 2 6 & © @ 85

Appendix F

United States District Court for

the District of Columbia, C.A.

No. 76-1225, Opinion dated

August 29, 1980 e * e 2 e * ” e ° a 7 101

Appendix G

Supreme Court of Ohio, No. 84-1766,

Opinion dated November 27, 1985... 117

oiie

Appendix H

Supreme Court of Ohio, No. 84-1766

Order dated January 15, 1986 .... i119

Appendix I

Extract from transcript of proceedings

in Court of Common Pleas for Summit

County, Ohio, on June 27, 1983 ... 120

ale

APPENDIX A

SUPREME COURT OF OHIO

CLEVELAND TRUST COMPANY

n.k.a. AMERITRUST COMPANY,

EXECUTOR :

Appellee : No. 84-1766

Ve : Decided

CHARLES F. WILLIS, JR., : November 27,

: 1985

Appellant

Because the extended series of

finansial transactions and the lengthy

history of this litigation.are explained in

the lower courts' decisions, we will discuss

briefly only those facts which form the

basis for this appeal.

In this case appellant, Charles F.

Willis, Jr. ("Charles"), appeals from the

court of appeals' decision affirming the

court of common pleas' determination that

Charles must indemnify the estate of Harvey

S. Pirestone, Jr. ("Harvey") for payments

made by the estate on a promissory note that

Charles and Harvey both signed in 1969.

=2a

On February 15, 1983, the

Cleveland Trust Company, n.k.a. Ameritrust

Company ("Cleveland Trust"), as Executor of

the Estate of Harvey S. Firestone, Jr.,

filed an amended complaint against Charles

F. Willis, Jr. and Elizabeth Firestone

Willis ("Elizabeth"), Harvey's daughter and

formerly Charles’ wife, for possession of

securities owned by Charles and Elizabeth

and held as collateral by the Firestone

Bank, n.k.a. Bank One of Akron, NA

("“Firestone), for payment of the 1969 note.

Firestone deposited the securities with the

trial court. Cleveland Trust also sought

indemnification from Charles.

The 1969 note was the last ina

series of notes which Charles and Elizabeth

had signed principally to finance Charles‘

business ventures. Harvey co-signed the

last note to protect Elizabeth's financial

=3j-

resources. Charles was unaware that Harvey,

instead of Elizabeth, had co-signed the

note. After Harvey's death, Firestone

presented the 1969 note to Harvey's estate

for payment. The estate paid the balance

due on the note pursuant to an order from

the Summit County Probate Court. Charles

contended that Harvey signed the 1969 note

as a co-maker rather than as an |

accommodation party, and therefore Charles

was not required to indemnify Harvey's

estate.

The Court of Common Pleas of

Summit County determined that the signatory

Status of the parties was conclusively

established by Clevelana Trust's requests

for admissions. The requests were served on

Charles by mail on May 16, 1983 and required

a response “within twenty-eight (28) days."

On June 27, 1983, the first day of trial,

-4-

Charles attempted to file his response, but

the court refused permission. The requests

that established Charles as maker of the

note and Harvey as an accommodation party

were deemed admitted. The common pleas

court granted Cleveland Trust possession of

the collateral for purposes of sale and

judgment against Charles for the balance of

the note. On appeal the court of appeals

affirmed the decision of the common pleas

court as to Charles.

The cause is now before this court

pursuant to the allowance of a motion to

certify the record.

Per Curiam. The issue raised by

this appeal is whether the trial court

correctly ruled that the signatory status of

the parties was conclusively established by

Cleveland Trust's requests for admissions.

We hold that the trial court was correct in

that ruling.

-5-

Civ. R. 36 requires that when

requests for admissions are filed by a

party, the opposing party must timely

respond either by objection or answer.

Pailure to respond at all to the requests

will result in the requests becoming

admissions. Under compelling circumstances,

the court may allow untimely replies to

avoid the admissions.

In the instant case, Charles did

not respond to the requests for admissions

until the date of trial, forty-two days

after service. The requests designated a

period of twenty-eight days within which

Charles was to respond. When Charles failed

to answer the requests, the admissions

became facts of record which the court must

recognize.

A request for admission can be

used to establish a fact, even if it goes to

-6-

the heart of the case. This is in accord

with the purpose of the request to admit--to

resolve potentially disputed issues and thus

to expedite the trial. See St. Paul Fire &

Marine Ins. Co. v. Battle (1975), 44 Ohio

App. 2d 261, 269 [73 0.0.2d 291].

Any matter admitted under Civ. R.

36 is conclusively established unless the

court on motion permits withdrawal or

amendment of the admission. Civ. R. 36(B).

The court may permit the withdrawal if it

will aid in presenting the merits of the

case and the party who obtained the

admission fails to satisfy the court that

withdrawal will prejudice him in maintaining

his action. Balson v. Dodds (1980), 62 Ohio

St. 2d 287 [16 0.0. 3d 329], paragraph two

of the syllabus. This provision emphasizes

the importance of having the action resolved

on the merits, while at the same time

«Jo

assuring each party that justified reliance

on an admission in preparation for trial

will not operate to his prejudice.

In this case Charles failed to

justify his dilatory response to the

requests. One appeal Charles suggests that

illness prevented his timely response.

However, Charles did not move for a

protective order or otherwise request relief

from the duty of responding to these

requests for admissions. Extensions of time

fiay always be asked for and are usually

granted on a showing of good cause if timely

made under the Civil Rules. [In such

circumstances we do not see how Charles'

illness presented a substantial reason for

not responding earlier.

The most emphatic argument Charles

now makes is that permission to withdraw and

amend his admissions on the first day of

|

trial would not have prejudiced Cleveland

Trust in maintaining its action. We

disagree. Charles did not cooperate with

discovery requests and defied court orders

directing him to give nie deposition.

Because of this condict Cleveland Trust

relied on the requests for admissions as

proof of potentially disputed issues. On

the first day of trial Charles sought to

file his untimely response to the requests

for admissions. To permit filing of

Charles' response not only would have

prejudiced Cleveland Trust's pursuit of its

remedy and entailed further delay, but it

would have put a premium upon lack of

diligence. The record discloses plain

failure to respond to the requests without

justification for the delay. The trial

court did not abuse its discretion by

denying Charles' motion to amend.

-9-

Although Charles admitted to the

trial court that his response to the

requests was late, he now argues

differently. Charles contends that the

instruction with respect to the response

time for the requests was improper and that

a proper instruction would have read "within

thirty-two (32) days." Charles did not

raise this argument in the trial court and

we need not address it here. Nevertheless,

we have examined Charles’ argument and find

it to be without merit.

Charles primarily relies upon

Gictum in a municipal court opinion as

authority for his contention. Buckeye Union

Ins. Co. v. McGraw (1980), 64 Ohio Misc. 61

{18 0.0 3d 322]. See, also, Buckeye Union

Ins. Co. v. Regional Transit Auth. (1983),

14 Ohio Misc. 2d ll.

In Buckeye Union Ins. Co. v.

-10-

McGraw, supra, the court stated that the

minimum time prescribed by the rules for

response to requests to admit which are

served by mail is thirty-two days. The

court calculated tne minimum prescribed time

by adding the twenty-eight days provided for

in Civ. R. 36(A) to the additional three

days provided for in Civ. R. 6(E) when

notice is received by mail and then adding a

day based on its interpretation of the

preposition "within" as used in Civ. R.

36(A). The court stated that if the

instruction with respect to the response

time for requests to admit fails to give the

minimum prescribed time period the party

served may ignore the requests.

We disagree with the municipal

court's interpretation end construction of

the rules. Civ. R. 36(A) states that

responses are due “within a period

“A cts es Norn at BT aie ES A

designated in the request, not less than

twenty-eight days.” A designated period of

twenty-eight days satisfies the requirement

of the rule.

Civ. R. 6(£) adds three days to a

prescribed period of time if the party who

must perform a duty receives notice by mail.

There is no requirement that the three days

be incorporated into the period designated

in the notice.

Based on the foregoing we hold the

trial court correctly ruled that Cleveland

Trust's requests for admissions were

admitted. These admissions are dispositive

of the appeal. The judgment of the court of

appeals is affirmed as the Charles.1

CELEBREZZE, ~.J., SWEENEY, LOCHER,

HOLMES, C. BROWN, DOUGLAS and WRIGHT, J.J.,

concur.

1/ Blizabeth did not file a notice of

-12-

appeal in this court. Nevertheless, in a

brief styled "Brief of Defendant-Appellee,

Elizabeth Firestone Willis," Elizabeth

presents a proposition of law and requests

this court to reverse the court of appeals’

judgment against her, Elizabeth's contention

is not properly before us and we do not

consider it on appeal.

——

o13<

APPENDIX B

STATE OF OHIO ) IN THE COURT OF APPEALS

)ss: NINTH JUDICIAL DISTRICT

COUNTY OF SUMMIT)

THE CLEVELAND TRUST COMPANY) C.A. NOS. 11595

)

Executor of t.i.e Estate of ) 11599

Harvey S. Firestone, Jr., )

Deceased )

)

Plaintiff-Appellee )

Cross-Appellant )

)

v. )

)

THE FIRESTONE BANK )

)

Defendant ) APPEAL FROM

) JUDGMENT

and ) ENTERED IN THE

) COMMON PLEAS

ELIZABETH FIRESTONE WILLIS ) COURT OF

and ) SUMMIT, OHIO

CHARLES WILLIS ) CASE NO.

) Cv7930793

Defendants-Appellants )

Cross-Appellees )

DECISION AND JOURNAL ENTRY

Dated: September 27, 1984

These causes were heard June 25, 1984,

upon the record in the trial court,

including the transcript of proceedings, and

the briefs. They were argued by counsel for

o1§<

the parties and submitted to the court. We

have reviewed each assignment of error and

make the following disposition:

BAIRD, P. J.

Plaintiff in this action is the

executor of the estate of Harvey S.

Firestone, Jr. Plaintiff brought this

action for possession cf collateral held by

the Firestone Bank. Also named as parties

defendant were Mr. Firestone's daughter,

Elizabeth Firestone Willis, and her former

husband, Charles F. Willis, Jr. (Mr. and

Mrs. Willis were divorced on January 29,

1970). During the course of the Willis's

marriage they borrowed various sums of

money. This controversy centers around the

renewal of a $441,339 loan from Firestone

Bank. This loan was initially obtained in

1964, in the amount of $391,339, and the

fk Seas tee SO apiitadadd cee yuh

@-15<

proceeds were used to pay off another loan.

Pirestone Bank received a note for the

amount of the loan signed by Mr. and Mrs.

Willis. This note was secured by stock in

Alaska Airlines, of which Mr. Willis was

president, and stock in Firestone Tire &

Rubber Company. The note to Firestone Bank

was renewed several times, and in 1967,

another $50,000 was borrowed. (Various

changes and substitutions in the collateral

were also made during the course of the

loan).

In October, 1969, Firestone Bank

prepared a renewal note for $441,339 and

sent it to Mr. Willis. Mr. Willis signed

the note anc forwarded the note to Mrs.

Willis. ues. Willis did not sign the note.

Unknown to Mr. Willis, Mr. Firestone signed

the note instead, and forwarded it to the

Firestone Bank. Pursuant to a written

-16-

agreement, Mrs. Willis gave Mr. Firestone a

note for $220,500 and an option to purchase

Mrs. Willis's interest in the Alaska

Airlines stock, owned jointly with her

husband, for $10 a share. Mrs. Willis also

agreed to leave her Firestone stock with the

Firestone Bank as collateral for the loan

and agreed not to dispose of her Alaska

Airlines stock.

Mr. Firestone died in 1973. Firestone

Bank sent 4 renewal note to Mr. Willis for

his and Mrs. Willis's signatures. Mr.

Willis refused to sign the renewal note, and

Firestone Bank made a claim against Mr.

Firestone's estate for the full amount of

the note plus interest. The Summit County

Probate Court ordered plaintiff, as

executor, to pay the note. After paying the

note, plaintiff brought this action to

secure possession of the collateral in the

hands of the Firestone Bank. In addition to

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the issues raised in this action, various

other questions between Mr. and Mrs. Willis

involving this transaction were resolved in

federal court, Willis v. Willis (C.A.D.C.,

1981), 655 F. 2d 1333, and on September 10,

1982, plaintiff was awarded judgment against

Mrs. Willis on her note for $220,500 in

Summit County Common Pleas Court.

After a trial without a jury the lower

court determined that Mr. Firestone had

signed as an accommodation maker, and that

the substitution of Mr. Firestone for Mrs.

Willis did not operate to discharge Mr.

Willis on the note. The court rendered —

judgment against Mr. Willis in the amount of

$858,958.13, and determined that the

$220,500 owed on the note by Mrs. Willis was

a part of this total debt. The trial court

ordered the following stock, held by the

court, transferred to plaintiff for sale:

-18-

NO. OF

STOCK TYPE OF OWNERSHIP SHARES

a. Alaska Airlines, Jointly held by 37,400

all common stock. Charles F. Willis,

Jr. and Elizabeth

Firestone Willis

b. Firestone Tire & Jointly held by 3,992

Rubber Co., all Charles F. Willis,

common stock. Jr. and Elizabeth

_ Firestone Willis

c. Firestone Tire & Solely owned by 20,500

Rubber Co., all Elizabeth Firestone

common stock. Willis

Plaintiff, Mr. Willis, and Mrs. Willis all

appeal.

MR. WILLIS'S ASSIGNMENT OF ERROR 1

"The trial court erred to defendant

Charles F. Willis, Jr.'s prejudice by

denying him his constitutional and

statutory right to trial by jury.”

The trial court concluded that the

return of the collateral prayed for in

plaintiff's complaint was a matter of equity

and not subject to a trial by jury. Mr. ;

Willis argues that in fact this was an j

action to recover specific property and was

triable to a jury under R.C. 2311.04. As

-19—

Mr. Willis points out, the recovery of the

collateral in this case is a two-step

process which requires the plaintiff to

first demonstrate the righ to be subrogated

to the rights of the creditor in the

securities held by the latter, and second to

demonstrate that the security may be

enforced against the principal. Zuellig v.

Hemerlie (1899), 60 Ohio St. 27. As the

Zuellig court pointed out, if the right of

subrogation is not established, the action

fails and no relief can be granted. Mr.

Willis agrees, in line with the court in

Zuellig, that subrogation is equitable

rather than legal in nature. Where it is

necessary to first determine whether the

plaintiff is entitled to equitable relief

before legal redress may be granted, the

action is, in its essential character,

equitable. Nordin v. Coulton (1943), 142

Ohio St. 277. We find no error, therefore,

in trying the complaint to the court.

-20-

Mr. Willis also argues: that his

counterclaim raised legal issues which would

have precluded plaintiff's recovery, and

that his counterclaim in effect converted

the action into one triable to a jury. Mr.

Willis's claims of fraud against Mr.

Firestone go to whether the security may be

enforced against Mr. Willis. This

counterclaim does not alter the overall

nature of the original action and we find no

abuse of discretion in denying Mr. Willis's

demand for a jury trial. The Huntington

National Bank v. Heritage Investment Group

(Oct. 5, 1983), Medina App. No. 1245,

unreported. Accordingly we overrule this

assignment of error.

MR. WILLIS'S ASSIGNMENT OF ERROR 2

"The court erred and abused its

judicial discretion in striking Charles

FP. Willis, Jr.'s untimely filed answers

to plaintiff's requests for admissions

and in overruling his motion for

reconsideration and for leave to amend

his admissions to permit late filing."

EBV AMARA aN, Cite CLS Ae ate tM

-2l-

Mr. Willis concedes that he failed to

timely file his answers to plaintiff's

request for admission. Pursuant to Civ. R.

36(A), when Mr. Willis faiied to timely

answer the requests were admitted. Balson

v. Dodds (1980), 62 Ohio St. 2d 287. The

proper procedure for withdrawing or amending

admissions is by motion pursuant to Civ. R.

36(B), and we find that the court did not

abuse its discretion in striking Mr.

Willis's untimely answer. Mr. Willis

subsequently moved to amend his answer to

Plaintiff's request for admiszions, and the

trial court denied the motion. Mr. Willis

claims that this denial was error. Civ. R.

36(8) provides:

"Any matter admitted under this rule is

conclusively established unless the

court on motion permits withdrawal or

amendment of the admission. Subject to

the provisions of Rule 16 governing

modification of a pretrial order, the

court may permit withdrawal or

amendment when the presentation of the

merits of the action will be subserved

thereby and the party who obtained the

-22-

admission fails to satisfy the court

that withdrawal or amendment will

prejudice him in maintaining his action

or defense on the merits. Any

admission made by a party under this

rule is for the purpose of the pending

action only and is not an admission by

him for any other purpose nor may it be

used against him in any cther

proceeding.”

As we have already noted, when Mr. Willis

failed to answer the requests for admission,

he admitted them pursuant to this rule. The

rule places his conscious choice to ignore

plaintiff's request on the same plane as the

conscious choice to admit them.

The decision to allow Mr. Willis to

withdraw or amend his admissions lies within

the sound discretion of the trial court. In

exercising this discretion the court must

balance the importance of having the issues

decided on their merits with the

desirability of allowing the parties to rely

on admissions in the preparation of trial.

Federal Advisory Committee Note Rule 36. We

“CSR Bik A Fila etn i Hat

a wa

POONA IE ah a lia WT OI es WOR trie

=23<

also feei that it is important to keep the

purpose of this rule in sight when

considering whether to allow a party to

amend or withdraw admissions: Civ. R. 36

provides a mechanism by which potentially

disputed issues may be expeditiously

resolved before trial, thereby expediting

proof of these issues at trial. St. Paul

Pire & Marine Ins. Co. v. Battle (1975), 44

Ohio App. 2d 261. To this end we do not

think it unreasonable to expect the moving

party to demonstrate that justice will be

better served by allowing the amendment, to

offer a justification for the need to amend,

or to explain the failure to properly

respond to the requests for admissions. K.

R. Jones v. Employers Ins. of Wausau (N.D.

Ga., 1982) 96 FP.R.D. 227.

In this case the complaint was filed on

March 26, 1979, and the trial commenced on

June 27, 1983. All parties engaged in

-24-

extensive discovery, but it appears that Mr.

Willis consistently sought to thwart

plaintiff's legitimate efforts at discovery.

Mr. Willis failed not only to answer

plaintiff's requests for admissions but

failed to appear for deposition and sought

to delay trial. Mr. Willis now presents

various medical reasons for his failure to

engage in discovery, but presented none of

these reasons to the trial court in a proper

and timely fashion. When Mr. Willis did

finally seek to withdraw or amend his

admissions, he did so on the day of trial.

If granted, the amendment would have caused

plaintiff to suffer the greatest possible

prejudice in reliance upon the admissions.

We find the court did not abuse its

discretion in denying Mr. Willis's motion to

amend his admissions.

Mr. Willis also argues that two

requests in particular were not the proper

subject of admissions. These requests

involve whether Mrs. Willis and Mr.

Firestone were accommodation parties on

notes to the Pirestone Bank. Not only did

Mr. Willis fail to properly object to the

requests but the questions were proper. We

find this argument to be without merit.

Accordingly, we overrule this assignment of

error.

MR. WILLIS'S ASSIGNMENT OF ERROR 3

"The trial court erred in exercising in

personam jurisdiction over Charles PF.

Willis, Jr., a non-resident of Ohio, by

entering a money judgment against him.”

The thrust of Mr. Willis's argument is

that he transacted no business in Ohio with

the Pirestone Bank or with Mr. Firestone

because Mr. Willis did not personaily return

the note to the Firestone Bank. Mr. Willis

concedes that if he had delivered the note

to the Bank he would have transacted

business in Ohio and would be subject to

-26-

personal jurisdiction under Civ. R. 4.3. In

determining whether the business transacted

in Ohio is sufficient to support personal

jurisdiction the critical issue is whether

it is fair and reasonable for the defendant

to appear and defend the action in an Ohio

court. Wainscott v. St. Louis - San

Francisco Ry. Co. (1976), 47 Ohio St. 2d

133. In this case Mr. Willis borrowed

$391,339 from the Firestone Bank in

November, 1964. Subsequent to 1964, Mr.

Willis executed a series of renewal notes

for the loan from the Firestone Bank and

delivered those to the Bank. During June,

1967, Mr. Willis borrowed an additional

$50,£00 from the Firestone Bank, bringing

his total indebtedness to $441,339. The

Firestone Bank was an Ohio banking

corporation with its principal place of

business in Akron, Ohio. The instant

litigation is aimed at resolving the

@27o

obligations arising out of the loans from

the notes delivered to the Pirestone Bank.

Based on the guidelines established in Civ.

R. 4.3 and Wainscott, supra, we conclude

that the quality and nature of Mr. Willis's

activities are sufficient to require him to

Gefend the present suit in Ohio. See, Barile

v. Univ. of Virginia (1981), 2 Ohio App. 3d

233. Accordingly, we overrule this

assignment of error.

MR. WILLIS'S ASSIGNMENT OF ERROR 4

"The trial court's journal entry

ordering Charles FP. Willis, Jr.'s

interest in shares of Alaska Airlines,

Inc. and Pirestone Tire & Rubber

Company common stock to be sold to

satisfy a debt of Harvey S. Firestone,

Jr. to The Pirestone Bank of Akron and

entering a money judgment against

Charles F. Willis, Jr. is contrary to

law and against the manifest weight of

the evidence."

In his brief, Mr. Willis presents the

following “arguments” under this assignment

of error.

a

"2.

"3

"4.

"Ss

"6.

subrogation on the instrument.

-28-

The 1969 promissory note was

intended to be either a joint

obligation or a joint and several

obligation of both Charles and

Elizabeth; therefore, when the

note was completed other than as

authorized, it could not be

enforced.

Charles F. Willis, Jr. was not a

maker of the 1969 note. %

Elizabeth Willis was not an

accommodation maker; therefore,

Harvey S. Firestone, Jr. cannot be >

an accommodation maker.

When the 1968 promissory note was

marked ‘Paid by Renewal,‘ there

was no longer any valid pledge of

any stock owned by either Charles

FP. Willis, Jr. and/or Elizabeth

Firestone Willis to The Firestone

Bank; therefore, the plaintiff

could acquire no security interest

in their stock.

Under R.C. §1303.51(E), the only

right of subrogation is upon the |

note; therefore, when the executor ©

withdrew the note from evidence,

it abandoned any claim of

Even if the plaintiff is not

Claiming a right of recourse on

the instrument, it has no rights

against Charles F. Willis, Jr.

under any principles of law and

equity because Mr. Firestone was a

volunteer who signed the 1969 note

to protect the interest of his

=29=

daughter Elizabeth and not to

protect an interest of his own.

"7. Assuming arguendo that Charles F.

Willis, Jr. was contractually

bound on the 1969 note, he was

discharged when the 1969 note was

fraudulently and materially

altered by The Firestone Bank and

Mr. Firestone."

At the outset we observe that the note

was in fact admitted into evidence, and

reject the fifth argument. We also observe

that Mr. Willis admitted that he was the

maker of the 1969 note and that Mrs. Willis

and Mr. Firestone were accommodation makers

on the notes that they had signed.

Accordingly, we reject the first, second,

third and sixth arguments.

In his seventh argument Mr. Willis

claims he is entitled to discharge pursuant

to R.C. 1303.43 because the note was

materially and fraudlently altered. Mr.

Willis's argument is based on the

proposition that the note was incomplete

when he signed it, and that it was completed

-30-

other than as authorized. R.C. 1303.14

applies to notes which are signed when they

are incomplete in any necessary respect. As ;

used in R.C. 1303.14, necessary respect

means necessary to a complete instrument.

R.C. 1303.14 comment 2. Even though Mr.

Willis intended that another party sign the

note, the note was complete as to him when

he signed it. Parrish v. Terre Haute

Savings Bank (Ind. App., 1982), 431 N.E. 2d

132. Even assuming that the note was

incomplete in a necessary respect and was

completed other than as authorized so as to

amount to an alteration, the holder did not

alter the note so as to discharge the maker

pursuant to R.C. 1303.43(B)(1). In

addition, the substitution of Mr. Firestone

as an accommodation maker in no way-

increased the obligation of Mr. Willis as

the principal maker. Hutcheson v. Herron

(Ill. App., 1970), 266 N.E. 2d 449; R.C.

-3l-

1303.43 comment 2. Finally, the trial court

concluded that there was no showing of fraud

such as would discharge Mr. Willis on his

note. The record supports this finding and

we reject argument seven.

In his fourth argument Mr. Willis

claims that there was no valid pledge of

stock since neither he nor Mrs. Willis were

parties to the 1969 note. We will reserve

the question of Mrs. Willis's stock for the

discussion of her appeal. The key to this

argument as to Mr. Willis is that he was not

the maker of the 1969 note. As discussed

above, Mr. Willis admitted he was the maker

of the note. We reject this argument and

overrule this assignment of error.

MR. WILLIS'S ASSIGNMENT OF ERROR 5

"The trial court erred in imposing

sanctions on Charles F. Willis, Jr.

because of his failure to appear at

depositions and pre-trials scheduled

for June 8, and June 15, 1983."

=@32-

Mr. Willis argues that it was an abuse

of discretion for the court to impose

sanctions on him for failing tc appear at

his deposition. Mr. Willis argues that he

was unable to travel to Akron, for medical

reasons, and that his absence was therefore

justified. The record reflects that Mr.

Willis did not inform the court of his

medical difficulties prior to his failure to |

appear. By failing to secure an appropriate

continuance, Mr. Willis compelled counsel

for all parties to prepare for and attend

the scheduled deposition even though he had

no intention of doing so himself. We see no |

abuse of discretion in ordering Mr. Willis

to pay the expenses incurred by the parties

because of his conduct. Accordingly, we

overrule this assignment of error.

MRS. WILLIS'S ASSIGNMENT OF ERROR

"The trial court committed prejudicial

error by ordering stock owned by :

defendant-appellant Elizabeth Firestone —

Willis to be transferred to plaintiff

-33-

Cleveland Trust for sale to satisfy

plaintiff's judgment against

defendant-appellant Charles F. Willis,

Jr.*

CLEVELAND TRUST ASSIGNMENT OF ERROR

"The trial court erred by reducing the

amount of Cleveland Trust's recovery on

defendant Charles Willis's promissory

note of September 30, 1969 by an amount

equal to Cleveland Trust's previous

judgment in a separate proceeding on a

separate promissory note signed by

Elizabeth Firestone Willis."

The trial court ordered all of the

stock pledged as collateral sold, and

ordered that:

"**#*from the proceeds of sale, the

total debt owed to plaintiff by Charles

F. Willis, Jr. and Elizabeth Firestone

Willis shall be satisfied. Thereafter,

the balance of the proceeds from the

sale of said stock shall be shared by

Charles F. Willis, Jr. and Elizabeth

Firestone Willis in accordance with

their relative ownership of the stock

at the time it was pledged as security

for the note, as applied to the sale

price of the stock currently.”

As an accommodation party Mr. Firestone

stoced in the position of a surety for Mr.

Willis, the principal debtor. R.C. 1303.51

comment 1. Because Mrs. Willis furnished

collateral to secure the debt, she was also

-34-

a surety. Robinson v. Boyd (1899), 60 Ohio

St. 57. The issue is whether Mr. Firestone

and Mrs. Willis were co-sureties. The

crucial test in this regard is whether the

parties have a common liability upon the

same obligation. Assets Realization Co. v.

American Bonding Co. of Baltimore (1913), 88 |

Ohio St. 216; Robinson v. Boyd, supra. By

virtue of Mr. Firestone's signature on the

note and the extent of the collateral

pledged by Mrs. Willis, we conclude that

they bore a common burden on the same

obligation. Normally, this would make Mr.

Firestone and Mrs. Willis co-sureties with

the right of contribution. Restatement of

the Law, Security (1941) 400, Section 144.

Plaintiff and Mrs. Willis both argue,

however, that the normal rules of

contribution were varied by the terms of the |

agreement between Mr. Firestone and Mrs.

Willis. Plaintiff argues that Mrs. Willis

-35-

agreed to indemnify Mr. Firestone for any

loss he suffered; Mrs. Willis argues that

the pledge of collateral at her father's

request makes her a subsurety who is not

liable for contribution.

By its terms, the agreement terminated

upon Mr. Pirestone's death. Despite the

fact that Mrs. Willis's contractual

compulsion to furnish collateral was

accordingly removed, she continued to

furnish collateral for the note. In fact,

she also furnished collateral, in the form

of Alaska Airlines stock, throughout the

life of the note without reference to the

agreement with her father. We conclude

that, whatever their relationship before the

termination of the agreement, after the

termination of the agreement with her father

Mrs. Willis was a co-surety for her

husband's note, We also conclude that the

contract between Mr. Firestone and Mrs.

=36-

Willis contains so agreement by Mrs. Willis

to indemnify her father. In any event, such

an agreement would have terminated upon Mrs.

Firestone's death. As a result, plaintiff,

who paid Mr. Willis's note, is entitled to

contribution from the co-surety, Mrs.

Willis.

The trial court set the loss at

$858,958.13. Each surety is liable for one

half of this amount, or $429,479.07. In

line with the trial court's findings, we

feel that Mrs. Willis is entitled to a

credit against her $429,479.07 liability for

the $220,500 she has already paid on the

note she gave her father pursuant to their

agreement, reducing her liability to

$208,979.07. Contribution is an equitable

remedy based on considerations of justice.

From the terms of their agreement it seems

clear that Mr. Firestone wished to

substitute Mrs. Willis's liability on an

~37=

interest bearing note for liability on a

non-interest bearing note. The $220,500

note represents the same indebtedness on

Mrs. Willis's part and in effect represents

her initial liability as a co-surety.

Equity will not allow plaintiff to recover

twice on the same obligation.

As co-sureties, who must share the

loss, plaintiff and Mrs. Willis must also

share the proceeds from the sale of Mr.

Willis's interest in the collateral.

Assuming that all of these proceeds are paid

to plaintiff, Mrs. Willis should receive a

credit against her $208,979.07 liability for

one-half of Mr. Willis's interest in the

jointly held Alaska atekioss stock and the

jointly held Firestone stock. After Mrs.

Willis's liability of $208,979.07 is reduced

by the amount of these proceeds, such of her

stock held as collateral as is necessary,

may be sold to satisfy her remaining

-38-

liability. Restatement of the Law, Security)

(1941) 383, Section 141. Accordingly, we |

find plaintiff's assignment of error to be

without merit and find Mrs. Willis's

assignment of error to be well taken to the

extent indicated above.

SUMMARY

We affirm the trial court's decision as

to Mr. Willis, reverse the trial court's

decision as to Mrs. Willis, and remand to

the trial court for entry of judgment

against Mrs. Willis in accordance with this |

opinion.

The Court finds that there were

reasonable grounds for these appeals.

We order that a special mandate,

directing the County of Summit Common Pleas

Court to carry this judgment into execution,

shall issue out of this court. A certified ©

copy of this journal entry shall constitute

the mandate, pursuant to App. R. 27.

Immediately upon the filing hereof,

this document shall constitute the journal

entry of judgment, and it shall be file

stamped by the Clerk of the Court of Appeals

at which time the period for review shall

begin to run. App. R. 22(E).

Costs to be divided equally between

Charles Willis and The Cleveland Trust

Company.

Exception.

WILLIAM R. BAIRD

Presiding Judge

- for the Court -

MAHONEY, J.

HOFSTETTER, JR.

CONCUR

(Hofstetter, J., retired Judge of the

Eleventh District Court of Appeals, sitting

by assignment pursuant to Article IV, §6(C),

constitution).

-40-

APPENDIX C

COURT OF COMMON PLEAS

SUMMIT COUNTY, OHIO

THE CLEVELAND TRUST CASE NO. CV 79 3 793

COMPANY, EXECUTOR OF

THE ESTATE OF HARVEY

S. FIRESTONE, JR.,

DECEASED

JUDGE MURPHY

Plaintiff

-Vvs- FINDINGS OF FACT,

CONCLUSIONS OF LAW,

CHARLES F. WILLIS, ) JUDGMENT ENTRY

JR., et al )

)

)

ee ee et eet ee ee ee ee See

Defendants

This cause came on for trial

before this Court on the Amended Complaint

of the Plaintiff and the pleadings of the

parties for a declaration of the right to

the parties as to certain collateral held by

this Court. All parties being present, this

Court proceeded to hear the evidence adduced

by the parties on their respective claims,

and upon that evidence and the admission of

-4l-

the parties, makes the following findings:

PINDINGS OF FACT

1. The Defendants, Charles F.

Willis, Jr., and Elizabeth Firestone Willis,

executed a series of notes during the term

of their marriage for various purposes and

generally to further the business plans of

the said Charles F. Willis, Jr.

2. On or about September 30,

1969, a new note was prepared in the

principal sum of Four Hundred Forty-one

Thousand Three Hundred Ninety-nine Dollars

($441,399.00) which was signed by the

Defendant, Charles FP. Willis, Jr., and

forwarded to the attorney for Elizabeth

Firestone Willis, he having expected her to

sign said note as she had in the past as an

accommodation party.

3. During this period of time the

parties were separated and in the process of

-42-

obtaining a divorce, and due to her

financial situation, her father, Harvey S.

Firestone, Jr., the Plaintiff's decedent,

signed said note in her stead which

apparently was not known to the Defendant,

Charles F. Willis, Jr. but was in

furtherance of his business plans, and as

admitted, was an accommodation maker to him, |

4. During the course of the

transactions in the notes and up to the note

dated September 30, 1969, the parties, as

collateral security, delivered the following |

shares of common stock and held by this

Court as follows:

NO. OF |

STOCK TYPE OF OWNERSHIP SHARES |

a. Alaska Airlines, Jointly held by 37,4003

all common stock. Charles F. Willis, ;

Jr. and Elizabeth

Firestone Willis

b. Firestone Tire & Jointly held by 3,992

Rubber Co., all Charles F. Willis, }

common stock. Jr. and Elizabeth

Firestone Willis

-43-

c. Firestone Tire & Solely owned by 20,500

Rubber Co., all Elizabeth Pirestone

common stock. Willis

The above stock having been delivered to the

Clerk of this Court awaiting the resolution

of this suit by the Defendant, Firestone

Bank.

5. Harvey S. Firestone, Jr.,

being deceased, and the Plaintiff as his

personal representative, was ordered by the

Probate Court of Summit County, Ohio to pay

the aforesaid note to the Plaintiff upon its

demand, which amount was paid on or about

March 26, 1979, in the sum of Five Hundred

Twenty Thousand Eight Hundred Eighty-eight

Dollars and Seventy-four Cents

($520,888.74), along with certain other

interest having become due (See that Court's

Order of payment). This Court having

recomputed the amount due from the date of

that order, along with certain interest

payments made by the Plaintiff with the rate

-44-

of interest at 8% rather than the 9% in that §

Court's order and the 10% computed by the

Plaintiff (See Plaintiff's Request for

Admission, No. 50), is determined to be in

the sum of Eight Hundred Fifty-eight

Thousand Nine Hundred Fifty-eight Dollars

and Thirteen Cents ($858,958.13) as of the

date of trial.

6. At the time that the

Plaintiff's decedent signed the note to the |

Firestone Bank, the Defendant, Elizabeth

Firestone Willis, executed a note in the

amount of Two Hundred Twenty Thousand Five

Hundred Dollars ($220,500.00) to Harvey S.

Firestone, Jr. without interest and agreed

with Plaintiff's decedent that her stock

should remain as collateral security for the §

payment of the principal note.

On September 10, 1982, Plaintiff

was awarded judgment against Defendant,

Elizabeth Firestone Willis, by this Court in

-45-

the amount of Two Hundred Twenty Thousand

Pive Hundred Dollars ($220,500.00) with

interest at the rate of 10% per annum from

the date of judgment and the costs of that

suit (See record, Summit County Common

Pleas, CV 82 9 2731).

CONCLUSION OF LAW

l. Elizabeth Firestone Willis, by

virtue of her pledging her stock as

collateral security for the payment of the

within debt, when she was released and the

signature of Plaintiff's decedent

substituted on the note, allows that her

stock be held as collateral security for the

payment of the debt and which is assigned by

law to the Plaintiff to satisfy that debt.

| 2. There is one total debt due to

Plaintiff in the sum of Eight Hundred

Pifty-eight Thousand Nine Hundred

Pifty-eight Dollars and Thirteen Cents

($858,958.13) as at June 27, 1983, which

-46-

debt includes the judgment awarded the

Plaintiff against Elizabeth Firestone Willis

in the sum of Two Hundred Twenty Thousand

Five Hundred Dollars ($220,500.00) referred

to in paragraph six (6) above.

3. The Defendant, Charles F.

Willis, Jr., was not released by the

substitution of the signature of Plaintiff's

decedent for that of Elizabeth Firestone

Willis, there being no fraud being

demonstrated and there being no material

alteration to change his contract nor impair.

the security for its payment at the time the

note was signed. See R.C. 1303.43, Official

Comment 1. |

Accordingly, the security for the

debt, that is, Willis' stock pledged as

collateral security for the debt, is subject

to the claim of Plaintiff, in satisfaction

of the debt evidenced thereby. See R.C.

1303.51 (E).

-47=

4. As to Mr. Charles F. Willis,

Je.'s claim, lack of jurisdiction, in

personam, for this Court, this Court finds

sufficient business contacts in the State of

Ohio not only evidenced by the dealings of

the parties at the Pirestone Bank of Ohio,

but certainly this Court has “in rem"

jurisdiction by virtue of holding the

collateral security above mentioned.

It is therefore ORDERED, ADJUDGED

and DECREED that the following stock held by

the Court be transferred to the Plaintiff

for sale at market price:

NO. OF

STOCK TYPE OF OWNERSHIP SHARES

a. Alaska Airlines, Jointly held by 37,400

all common stock. Charles F. Willis,

Jr. and Elizabeth

Pirestone Willis

b. Pirestone Tire & Jointly held by 3,992

Rubber Co., all Charles F. Willis,

common stock. Jr. and Elizabeth

Firestone Willis

-48-

c. Firestone Tire & Solely owned by 20,500

Rubber Co., all Elizabeth Firestone

common stock. Willis

It is further ORDERED, ADJUDGED

and DECREED that Judgment be and is hereby

rendered against Charles F. Willis, Jr. in

the sum of Eight Hundred Fifty-eight

Thousand Nine Hundred Fifty-eight Dollars

and Thirteen Cents ($858,958.13), and from

the proceeds of sale, the total debt owed to

Plaintiff by Charles F. Willis, Jr. and

Elizabeth FPirestone Willis shall be

satisfied. Thereafter, the balance of the

proceeds from the sale of said stock shall

be shared by Charles F. Willis, Jr. and

Elizabeth Firestone Willis in accordance

with their relative ownership of the stock

at the time it was pledged as security for

the note, as applied to the sale price of

the stock currently.

JUDGE JAMES E. MURPHY

cc: All counsel of record

APPENDIX D

UNITED STATE COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT

CHARLES F. WILLIS, JR.,

Appellant,

Nos. 80-2200,

80-2197

Ve

ELIZABETH FIRESTONE

WILLIS, et al.

CHARLES F. WILLIS, JR.,

Ve

ELIZABETH FIRESTONE

WILLIS, et al.,

CLEVELAND TRUST CO.,

ed

Appellants.

Before TAMM, ROBB, and EDWARDS,

Circuit Judges.

Opinion for the Court filed by

Circuit Judge EDWARDS.

HARRY T. EDWARDS, Circuit Judge:

In this case Charles Willis

appeals from the District Court's decision

that his former wife, Elizabeth Willis, was

entitled to contribution for abebent which

she paid on a 1969 loan. Defendant

Cleveland Trust, executor for Harvey

Pirestone (Elizabeth's father), appeals fron |

the court's ruling that it has personal ;

jurisdiction over Cleveland Trust. For the

reasons set forth below, we reverse the |

District Court's determination that it could §

assert jurisdiction over Cleveland Trust.

We affirm, although for different reasons

than those relied on by the District Court,

the court's decision to grant Elizabeth half §

of the interest paid by her. We also affirm

the decisions of the District Court

dismissing Charles Willis’ claims against

the Pirestone Bank and against Elizabeth

Willis.

=-8l-

I. BACKGROUND

Because the extended series of

financial transactions and the lengthy

history of this litigation have been

carefully documented in the District Court's

opinion, we will discuss only briefly those

events which form the basis of this appeal.

This case began when Charles Willis sued his

former wife Elizabeth for a declaration of

theiz rights to property, both real property

located in the District of Columbia and

personal property consisting mostly of stock

owned jointly by Charles and Elizabeth, some

Of which was being held as collateral on a

1969 note with the Pirestone

1/ See Memorandum Opinion, reprinted in

Joint Appendix (J.A.) at 210; Finding of

Fact and Conclusion of Law, reprinted in

J.A. at 118.

-52-

Bank.2 The basis of Charles’ clains against

Elizabeth initially derived from an

antenuptial agreement and an alleged oral

settlement at the time of their divorce.

When Charles learned during the

course of litigation that Elizabeth's

father, Harvey Firestone, had co-signed the

1969 note instead of Elizabeth, Charles

amended his complaint by adding the

Firestone Bank, which held the note, and

Cleveland Trust Company, the executor of

Harvey's estate. Charles claimed that he

was discharged from the 1969 note by

Harvey's substitution and that Harvey,

2/ The 1969 note was merely the last of a

series of notes which Charles and Elizabeth

had signed principally to finance Charles’

business venture in Alaska Airlines. The

Districc Court found that each note in the

series constituted a separate contract.

=83<

Elizabeth and the Pirestone Bank had

converted his property and entered into a

conspiracy to defraud him. He continued to

assert his claims with respect to the real

estate and to seek a declaration of his

rights under the oral property settlement

and the antenuptial agreement. Elizabeth

counterclaimed for interest which she had

paid on the 1969 note and on a series of

previous notes.

Defendants Firestone Bank and

Cleveland Trust moved to be dismissed for

lack of personal jurisdiction. Ina

pretrial ruiing, the District Court granted

Pirestone's motion because it found that

Pirestone did not do business in the

District and that “virtually all

communications” in connection with the 1969

note occurred outside the District.

=84-

As Harvey's executor, defendant

Cleveland Trust was subject to the court's

jurisdiction to the same extent that Harvey

would have been. See D.C. Code Ann. §

13-421 (1973). The District Court found

that because Harvey had an interest in real

property within the District of Columbia,

which was the basis for one of Charles’

claims, Harvey, and consequently Cleveland 4

Trust, was subject to the court's

jurisdiction with respect to all of Charles'

claims. After the court found that it had

jurisdiction over Cleveland Trust, the

executor counterclaimed against Charles to

recover payments made by or on behalf of

Harvey on the 1969 note.

At the trial, the District Court

Genied Cleveland Trust's counterclaim

against Charles. It found that while Harvey

was liable to the Firestone Bank as a

co-maker on the 1969 note, Harvey was barred

by section 3-4073 of the Uniform

3/ Section 3-407 provides in part:

As against any person other than a

subsequent holder in due course

(a) alteration by the holder which is both

fraudulent and material discharges any party

whose contract is thereby changed unless

that party assents or is precluded from

asserting the defense;

(db) no other alteration discharges any

party and the instrument may be enforced

according to its original tenor, or as to

iacomplete instruments according to the

authority given. UCC § 3-407(2).

=56<

Commercial Code (UCC) from asserting a right

of contribution against Charles.4 Although

the court found that Elizabeth was not

liable on the 1969 note, it granted her

counterclaim for interest paid on the note.

The court reasoned that when Charles

authorized Elizabeth to sign the note, he

became liable in an action for contribution

on account of actions taken by her within

the scope of his authorization. The court

also found that no defendant had attempted

to defraud Charles or convert his property.

4/ The court found, and the parties agreed,

that Ohio law controlled the merits of the

claims arising from the 1969 note. For ease

of reference, however, we adopt the

convention of the District Court and the

parties of referring to the comparable UCC

section, which the court found to be

substantially identical to Ohio law.

aSJo

It dismissed his allegations of conspiracy

as "fantastic."5

Cleveland Trust appeals both from

the District Court's determination that it

was subject to the court's in personam

jurisdiction and from the court's denial of

its counterclaim against Charles for

contribution. Charles appeals from the

court's decision that it did not have in

personam jurisdiction over the Firestone

Bank, from the court's denial of his claims

for fraud and conversion and from the

court's decision to grant Elizabeth's

counterclaim for contribution for interest

5/ The court also held against Charles with

respect to his claims to the real property

and to his rights under the antenuptial

agreement and the oral settlement. No party

has appealed either the court's jurisdiction

to decide these claims or the court's

disposition of the claims on the merits.

=@$g-

paid on the 1969 note.

Because we reverse the District

Court and dismiss Cleveland Trust as a

defendant, we vacate the District Court's

disposition on the merits with respect to

both the claims against Cleveland Trust and

its counterclaims against Charles. Because

there is not question as to the court's

jurisdiction over Elizabeth, we reach the

merits of hers and Charles' claims against

each other and affirm the court's decision

to grant Elizabeth recovery of half the

interest paid on the 1969 note.

II. JURISDICTION OVER

CLEVELAND TRUST

The District Court determined

that, under the District of Columbia long

arm statute,® Harvey's interest in the real

estate located in the District of

6/ See D.C. Code Ann. § 13-421 et seq.

(1973).

-59-

Columbia was sufficient to establish

jurisdiction over Cleveland Trust with

respect to all of Charles' claims. See

Memorandum, reprinted in J.A. at 107, 109.

Cleveland Trust does not dispute the

District Court's determination that if the

court would have had jurisdiction over

Harvey it can now exert jurisdiction over

Cleveland Trust as his executor. Cleveland

Trust contends instead that Harvey's

interest in the real estate did not provide

a sufficient basis to asset jurisdiction

with respect to all of Charles' claims.’

7/ Because neither Charles nor Cleveland

Trust has appealed the District Court's

disposition of the merits of Charles’ claim

to the real estate, the District Court's

determination that it had jurisdiction over

Cleveland Trust with respect to that claim

is not before us. We assume for the

purposes of this analysis that jurisdiction

did exist for that claim.

We agree.

[1] Section 13-423(b) of the District of

Columbia long arm statute® provides that

"(w)hen jurisdiction over a person is based

solely upon this [long arm] section, only a

claim for relief arising from acts

enumerated in this section may be asserted

against him." The District of Columbia

courts have interpreted section 13-423(b) as |

a bar to claims unrelated to the acts

forming the basis for personal jurisdiction. ©

See Berwyn Fuel, Inc. v. Hogan, 399 A.2d 79,

80, (D.C. 1979) (per curiam); Cohane v.

Arpeja-California, Inc., 385. A.2d 153,159

(D.C.), cert. denied, 439 U.S. 980, 99 S.Ct. @

567, 58 L.Ed.2d 651 (1978). Because

Charles' remaining claims against Harvey

neither derived from nor are connected with

Harvey's interest in the real estate, we

find that the District Court erred in

8/ See D.C. Code Ann. § 13-423(b) (1973).

-61-

relying on the real estate as a basis for

asserting in personam jurisdiction over

Cleveland Trust with respect to the other

unrelated claims.

(2] In his brief and at oral argument

before this panel, Charles did not rely on

the theory advanced by the District Court.

Instead, Charlies now contends that because,

under section 13-423(a)(1),9 Harvey was

transacting business in the District of

Columbia, Cleveland Trust is subject to the

court's jurisdiction. Because the District

of Columbia courts have held that section

9/ See D.C. Code Ann. 13-423(a)(1) (1973).

Charles' counsel expressly rejected at oral

argument any reliance on $§ 13-423 (a)(3)

and (a)(4), which essentially provided

jurisdiction over torts committed in or

having an effect in the District of Colunm-

bia, as a basis for jurisdiction. See D.C.

Code Ann. §§ 13-423(a)(3) and (a)(4) (1973).

=€2<

(a)(1) was intended to extend the District's

jurisdiction to the limits of the due

process clause, see Environmental Research

International, Inc. v. Lockwood Greene

Engineers, Inc. 355 A.2d 808 (D.C. 1976) (en |

banc), it is necessary to determine whether

sufficient minimal contacts existed between |

Harvey and the District to satisfy due

process. An examination of both the evidence

presented in response to Cleveland Trust's

Motion to Dismiss and the evidence that was |

adduced at trial reveals that Charles failed ~

to satisfy his burden of proof. ’

In Charles‘ response to Cleveland

Trust's Motion to Dismiss, it was alleged

that Harvey Firestone had an interest in

property in the District of Columbia and

that he had paid off deeds of trust on that

property. Charles also alleged that the

other cause of action arose out of the

"tortious conduct of the decedent acting

-63-

alone or in concert with his daughter and

the Pirestone Bank to impair plaintiff's

rights of action in the District of Columbia

were” See Opposition of Plaintiff to Motion

of Defendant The Cleveland Trust Company,

reprinted in J.A. at 100. Charles acknow-

ledged that the 1969 note did not show that

Harvey signed it in the District; however,

he alleged that Harvey's signing had an im-

pact in the District of Columbia. See id.

at 101,10

As noted above, the allegations

that Harvey had an interest in real estate

in the District and paid off two deeds of

trust not provide a sufficient basis for

exerting in personam jurisdiction over

Cleveland Trust with respect to the other

unrelated claims. Charles‘ second allega-

tion, that Harvey acting in concert with his

10/ Neither party submitted affidavits and

the motion to dismiss was decided on the

pleadings.

-64-

daughter impaired Charles' interests in the ;

District, fails to allege that Harvey

entered into the District, wrote letters

into or placed calls in the District.

Because Charles rejected sections (a) (3) and |

(a)(4) as the bases for jurisdiction, see

note 9, supra, it does not matter whether

Harvey's acts in Ohio had an effect in the

District. Because no fact was alleged in

response to the Motion to Dismiss to

establish that Harvey was doing business or

had any contact in the District, Charles

failed to allege any claim--apart from the

suit on the real estate--upon which the

District Court might properly assert in

personam jurisdiction over Cleveland Trust.

See Mosley v. Nationwide Purchasing, Inc.,

485 F.2d 418, 420 (Temp.Emer.Ct.App.1973)

(Tamm, J.)(interpreting D.C. Code §

13-423(a)).

Although the District Court made

-65-

no findings after a full trial that there

were ary contacts between Harvey and the

District of Columbia, Charles argues that

evidence exists in the trial record that

Harvey both placed calls in and sent letters

to the District. The evidence noted by

Charles establishes that Harvey consulted

with his accountants in Ohio and

subsequently entered into an agreement with

Elizabeth to take her place on the 1969

note. See J.A., Vol. II, Defendant's

- Exhibits 132, 133 and 136. None of these

exhibits establishes, however, that Harvey

had any contact with the District of

Columbia. Charles also notes that dH. W.

Harrell, whom the District Court found to be

the “financial adviser of the Firestone

family,” sent two letters to Elizabeth's

attorney. See J.A., Vol. II, Defendant's

Exhibit 114 and Plaintiff's Exhibit 19. The

first letter reported on all cutstanding

-66-

loans against Elizabeth and listed the total

number of Firestone shares held by her. The

second letter, written in response to a

request from Elizabeth's attorney, noted the 7

interest paid on loans held by Charles and ;

Elizabeth. The evidence noted by Charles

also establishes that Harvey placed two

calls in the District of Columbia. See

J.A., Vol. II, Defendant's Exhibits 128 and [FF

131 and Plaintiff's Exhibits 25 and 60. The |

issue remaining before us is whether these

contacts provided a sufficient basis for

exerting jurisdiction over Cleveland Trust

as Harvey's executor.

In determining whether the

exercise of jurisdiction satisfied due

process, the Supreme Court in World-wide

Volkswagen Corp. v. Woodson, 444 U.S. 286,

100 S.Ct. 559, 62 L.Ed.2d 490 (1980),

engaged in a two-pronged analysis. The

Court found that the doctrine of "minimum

a$J=

contacts” performed two related but

distinguishable functions. The first

function is to protect defendants from the

burden of litigating in distant forums.

Relevant considerations, which the Court

grouped under the rubric of reasonableness

and fairness, include an assessment of the

burden on the defendant considered in light

of the forum state's interest in

adjudicating the dispute, the plaintiff's |

need for some forum in which to litigate and

the interstate judicial system's interest in

efficient resolution of controversies. See

id. at 292. The second prong, which

recognizes the territorial limitations on

the power of the states, requires that there

be sufficient affiliating circumstances

connecting the forum state and the

nonresident defendant to empower the court

to require that defendant to appear. See

a

-68-

[3] Under the first prong, we find |

that the interests of reasonableness and

fairness do not favor adjudicating this case qa

in the District of Columbia. The District _

of Columbia has little interest in providing |

a forum to a nonresident plaintiff. See t-

McGee v. International Life Insurance Co.,

355 U.S. 220, 223, 78 S.Ct. 199, 201, 2

L.Ed.2d 223 (1957). Nor does the District

have an interest in the subject matter of

the suit; the contract was neither made nor

performed in the Distcict and the rights

asserted on the contract involve, as the

District Court found, unsettled issues of

Ohio law. Moreover, the District has

enacted no jurisdictional statute which

might indicate its manifest interest in the

subject matter in dispute. See Shaffer v.

Heitner, 433 U.S. 186, 214-15, 97 S.Ct.

2569, 2584-85, 53 L.Ed.2d 683 (1977). While

it might be convenient for Charles to bring

-69-

this action in the District, there is no

indication that this is the only forum

available. Indeed, it would seem that a

suit by Charles in Ohio, where the majority

of parties and witnesses are located, and

whose laws the parties agree govern, would

advance the interest of the interstate

judicial system. We do not mean to suggest

that a center of gravity test is necessary

to establish jurisdiction; we only find that

under the criteria noted in World-Wide there

appears to be little interest either on the

part of the District of Columbia or on the

part of the interstate judicial system which

would outweigh the burden placed on the

nonresident defendant.

The second prong of World-wide

requires the presence of sufficient

affiliating circumstances to empower a state

to asset jurisdiction over a nonresident

defendant. Although this determination

-70-

presents a close question, we find that

under Kulko v. California Superior Court,

436 U.S. 84, 98 S.Ct. 1696, 56 L.Ed.2d 132

(1978),11 Harvey's limited contacts with the |

District of Columbia do not provide

sufficient affiliating circumstances.

1l/ In Kulko, the former wife of the defen-

dant brought suit in California to secure

increased child support payments from defen- |

dant on behalf of their children. Although

defendant was domiciled in New York, the

California courts asserted in personam jur-

isdiction over him because he had “purposely

availed himself of the benefits and protec-

tions of California" by sending his daughter

to live with her mother there. The Supreme

Court reversed, holding that the exercise of

in personam jurisdiction by the California

courts over the father, a New York domici-

liary, would violate the due process clause

of the FPourteenth Amendment.

“Teo

[4] The fact that Harvey and

Elizabeth entered into an agreement is by

itself an insufficient contact. Absent some

indication that the agreement was signed or

negotiated in the District of Columbia, the

fact that one party is a resident of the

forum state is an insufficient basis for

asserting jurisdiction over the other. See

Hanson v. Denckla, 357 U.S. 235, 78 S.Ct.

1228, 2 L.Ed.2d 1283 (1958). The alleged

relevance of the communications between H.

W. Harrell and Elizabeth's attorney derives

from Charles’ assumption that Harrell was

acting as Harvey's agent. The District

Court, however, did not find that to be the

case. The court found that Harrell acted as

financial adviser for the whole Firestone

family. As such, the fact that Harrell

informed Elizabeth of her outstanding loans

or supplied her attorney with information at

his request does not imply that Harrell was

-72<

acting as Harvey's agent. Indeed, Harrell :

often looked after Charles‘ own business

interests in Akron and acted as an

intermediary, for example, between Charles

and the Firestone Bank.

The two contacts that are relevant |

are the two telephone calis made by Harvey. '

One of these calls was to inform Elizabeth,

who was in the process of divorcing Charles,

that the bank was not going to demand

immediate action on her note with Charles. 7

During the second call, Harvey requested i

that the 1969 note be sent to him. While it}

is true these contact concern a financial

transaction--i.e., the 1969 note--the

District Court found that it was Harvey's :

concern for his daughter's financial

stability .hat prompted him to devise a plan§

to reduce her indebtedness. See J.A. at

129. Thus, Harvey appears to have had no

commercial purpose in placing calls in the

=73-

District. The remaining question thus

before us is whether these two

non-commercial calls are sufficient

affiliating circumstances to subject

Harvey's executor to the jurisdiction of the

District of Columbia.

Kulko, supra, reaffirmed the

principle first stated in International Shoe

Co. v. Washington, 326 U.S. 310, 318, 66

S.Ct. 154, 159, 90 L.Ed.2d 95 (1945), that

the nature and the quality of the contacts

control the propriety of the forum state's

assertion of jurisdiction. Thus, Kulko

distinguishes acts taken in the context of a

family relationship from those designed to

solicit business. “(T]he mere act of

sending a child to California to live with

her mother is not a commercial act and

connotes no intent to obtain or expectancy

of receiving a corresponding benefit in the

State that would make fair the assertion of

that State's judicial jurisdiction." Id. at

-74- |

101, 98 S.Ct. at 1701. Although the contact

P

may be directly related to the transaction | i

at issue, as the father's sending his child P

to California was in Kulko, the telling

question was designed to derive a benefit

from the forum state which would justify the.

assertion of jurisdiction. |

Because Harvey's acts were not

designed to derive any benefit of the sort

contemplated by the Court in Kulko,12 such |

as participation in a commercial venture in he

the District of Columbia, the nature of the |

contacts argues against a finding that

Cleveland Trust should be subjected to the

burden of defending its interests here. Our

decision that jurisdiction is inappropriate

because the contacts proved by Charles do

not satisfy the second prong of World-Wide

is reinforced by our evaluation of the first

12/ See Kulko v. California Superior Court,

436 U.S. at 94-97, 101, 98 S.Ct. at 1698-99,

1701.

-75-

prong. Although the considerations grouped

under the first prong may not be

dispositive, see World-Wide, supra, 444 U.S.

at 294, 101 S.Ct. at 565, the virtual

absence of any interest of the forum state

in hearing this matter also argues for

dismissal for want of jurisdiction.13

III. ELIZABETH'S COUNTERCLAIM

POR CONTRIBUTION

Charles appeals from the

District Court's conclusion that

Elizabeth was entitled to

13/ We affirm as well the District Court's

decision that it did not have jurisdiction

over the Firestone Bank. The court found

that virtually all communications with

respect to the 1969 note tock place outside

the District of Columbia. We find that the

District Court's factual conclusion was

correct and that the Pirestone Bank's

limited contact was an insufficient basis

for personal jurisdiction.

aaa aa

-76-

"contribution"l4 from Charles for the

14, When two persons have assumed a joint

obligation such as a contract, a creditor

normally may enforce the obligation against 5

either party; however, as between the joint |

debtors each is only liable for one-half of

the debt. “Contribution” is an equitable

remedy designed to allow a joint debtor who

has been compelled to pay the whole debt to

recover half from the other debtcr. See

Pietro v. Leonetti, 26 Ohio App.2d 221, 270

N.E.2d 660, 662 (1971), aff'd 30 Ohio St.2d

178, 283 N.E.2d (1972). Contribution is

distinguished from “subrogation" by the fact —

that the right to contribution derives from

the existence of a joint obligation.

Subrogation, however, results from the fact

that in some circumstances a party may be

allowed to assert the claims of a creditor

to prevent unjust enrichment.

@7J=

interest which she paid on the 1969 note.15

whe court held that because Charles had

uthorized Elizabeth to sign as a co-maker,

1e became liable under the Ohio analogue of

ICC section 3-40716 for all obligation

irising

\5/ The court held that Elizabeth was

intitled to contribution for the interest

maid on the whole series of notes which she

co-signed with Charles. However, the court

ilso found that each of the notes was a

separate contract and that the statute of

Limitations barred recovery on the notes

xrior to the 1969 note. Because neither

arty appeals the court's determination that

she statute of limitation bars recovery on

sxrior notes, this appeal focuses solely on

plizabeth's rights in relation to the 1969

ote.

L6/ See note 3, supra.

=-7§=

out of Elizabeth's actions as a co-maker.

Charles contends that the court's result is ©

not supported by Ohio law. Furthermore, he

argues that the validity of the judgment in

favor of Elizabeth is cast in doubt by other

findings of the court. Because the court |

found that Elizabeth was neither a party to

nor liable on the 1969 note, see J.A. at

215, Charles contends that the court's

decision produces the anomalous result of

preventing Charles from enforcing the note

against Elizabeth but allowing her to sue

him on the note.

(5) We affirm the result reached

by the District Court but for different

reasons than those advanced below. Although

the court found Elizabeth was not liable on

the 1969 note and that the collateral which

she had pledged for the 1968 note had been

released, the court also found that

Elizabeth's separate agreement with her

-79=

father resulted in her Pirestone stock being

used as collateral for the 1969 note. Thus,

although Elizabeth was not personally bound

by the 1969 note, her property was subject

to foreclosure if either of the co-makers

defaulted. We hold that, given these facts,

Ohio law allows Elizabeth to recover as a

subrogee.

Although Ohio doe not allow a mere

volunteer to create a claim by bestowing a

gratuitous benefit, the Ohio courts have

stated that a person who pays another's

debts to protect his own property is not a

volunteer. See In re Outhwaite's Estate, 94

N.E.2d 122 (Ohio Misc. 1949), aff'd, 94

N.E.2d 59 (Ohio App. 1950); Reed v. Ramey,

82 Ohio App. 171, 80 N.E.2d 250 (Ohio App.

1947). The court in Reed stated:

{[I]£ the facts untraversed had shown

that the [company] had a lien on

plaintiffs' property which could be

-80-

foreclosed, then the plaintiffs were

fully warranted in protecting their

title and ownership of the property from

possible sale under foreclosure by

paying the creditor, and would have a

right to collect the amount of such

payment from the defendants. Under such

circumstances, they could not be

considered mere volunteers.

80 N.E.2d at 256. Here the Firestone Bank

had a lien on Elizabeth's Firestone stock

which she protected from foreclosure by

maintaining the interest payments. Thus she

had a protectible interest sufficient to

entitle her to subrogation.

The District Court considered

Elizabeth's claim that she be treated as a

subrogee but rejected it because it would

entitle her to collect the entire interest

payment from Charles. The court felt that

it would violate equitable principles to

-8l-

give Elizabeth a better position than she

would have had it she had signed the 1969

note. ‘Ne believe that the District Court

was not compelled to reach that conclusion.

The District Court found that both

Charles and Harvey were liable on the 1969

note. The court held, however, that since

Harvey had signed the 1969 note without

Charles’ knowledge or approval, Harvey could

not seek contribution from Charles for

payments made on the note. The Court found

that under section 3-407 of the UCC, Charles

was discharged from liability on the note as

against claims made by Harvey.

The District Court also found

that. despite the fact that Elizabeth was

not a party to or liable on the 1969 note,

Charles was liable to Elizabeth for

contribution. On this point the trial court

found that Elizabeth could recover a portion

of the interest that she had paid because

-82-

the actions that she had taken were within

the scope of Charles’ authorization.

Although we are not required to

decide any claims of Charles against Harvey,

or vice versa, for purposes of our analysis

here we find that Charles and Harvey were

co-makers on the 1969 note. As such, each

was entitled to contribution from the other.

Furthermore, even assuming arguendo that the

1969 note was “altered,” we believe that

neither the literal language of section

3-407 of the UCC, referring only to

alteration by the holder, nor the purpcse of

the section bars contribution in favor of

Harvey. We reject any contrary holdings of

the District Court.

Since we find that Charles and

Harvey alone were the "co-makers" of the

1969 note, we disagree with the District

Court's conclusion that Elizabeth could

recover as a co-maker. Nevertheless, we do

=-83-

hold that Elizabeth could assert rights

against Charles on a claim of subrogation.

As a subrogee, it is true that Elizabeth

could normally seek full recovery against

either co-maker (i.e., Charles or Harvey)

for the interest that she paid on the 1969

note. Either co-maker could in turn seek

contribution from the other. However, in

considering the extent to which Elizabeth

should be entitled to recover as a subrogee,

the District Court could have apportioned

the liability between the two co-makers. A

remedy which would have allowed Elizabeth to

have recovered only half of the interest

payments from Charles was surely within the

equitable powers of the District Court. We

thus find that the result reached by the

court was correct, although its limited

conception of its powers prevented it from

adopting what we consider to be the course

most consistent with Ohio law.

-84-

IV. CONCLUSION

Consistent with our opinion in

this case, our judgments are as follows:

(1) We affirm the decision of the

District Court dismissing Charles Willis'

suit against the Firestone Bank.

(2) We reverse the decision of the

District Court asserting personal

jurisdiction over Cleveland Trust and remand

the case with instructions to the District

Court to dismiss Charles Willis' actions

against Cleveland Trust and Cleveland

Trust's counterclaims against Charles

Willis.

(3) We affirm the District Court's

judgment of $38,131.98 in favor of Elizabeth

Willis against Charles Willis, albeit for

reasons different than those advanced by the

Pistrict Court.

(4) We affirm the additional

judgments of the District Court in favor of

Elizabeth Willis with respect to claims

asserted by Charles Willis against her.

-85-

APPENDIX E

UNITED STATES DISTRICT COURT

POR THE DISTRICT OF COLUMBIA

CHARLES F. WILLIS, JR.,

Plaintiff,

Ve C. A. NO. 76-1225

ELIZABETH PIRESTONE

WILLIS, et al.,

Defendants.

FINDING OF FACT AND CONCLUSIONS

OF LAW OF UNITED STATES DIS‘TRIC'

HUGH CHARLSS RR, RCCHEY

This case was tried to the Court

without a jury on April 14 & 15, 1979.

Plaintiff, Charles F. Willis, Jr.,

("Charles") brings this action seeking

monetary damages, a declaratory judgment,

WAILABLE COPY

=86<

and equitable relief. The two defendants

are Elizabeth Firestone Willis ("Elizabeth")

and The Cleveland Trust Company, as Executor

for the Estate of Harvey Firestone, Jr.

Elizabeth and Charles were divorced in 1970;

Mr. Firestone, who died in 1973, was

Elizabeth's father. Charles’ claims for

monetary and injunctive relief are based on

assertions of breach of contract, |

inequitable conduct, fraud, conversion and a

conspiracy to commit fraud. His claim for a

declaratory judgment rests on the theory

that he has been discharged from liability

on a promissory note which he signed in

1969. The Court finds that none of Charles

claims have any merit. The Cleveland Trust

Company has filed a counterclaim seeking

indemnification, or, alternatively,

contribution for payments made by Harvey

Firestone, Jr. and his Estate on the 1969

interest in the parties’ commercial

dealings. First, he claims that under §

3-407(2)(a) the “fraudulent alteration" by

the holder of the note, The Firestone Bank,

has discharged him from all liability. As

an additional ground, he claims that the

holder's “release” of Elizabeth and its

"unjustifiable impairment" of his right to

the collateral are both grounds for a

discharge pursuanr to § 3-606(1) of the UCC.

The executor's counterclaim rests on the

premise that Harvey Firestone was merely an

accommodation party to the note, pursuant to

§ 3-415(1). Accordingly, the Executor seeks

complete indemnification for ail expenses

borne by Mr. Firestone and his Estate.

Alternatively, the Executor submits that

even if Mr. Pirestone were a co-maker of the

note, he has a right to contribution.

Elizabeth Willis’ claim parallels that of

-39-

the Executor. She seeks indemnification, as

an accommodation maker, for her interest

payments on the earlier notes or

alternatively, contribution for amount paid

in excess of one-half of the interest paid

by her and Charles.

The Court must now resolve the

following legal issues:

1) Were Harvey Pirestone and

Elizabeth Willis accommodation makers on the

note or notes they signed with Charles

willis? |

2) Did the addition of Harvey

Firestone's name to the note of September

30, 1969 discharge Charles Willis under

either § 3-407(2)(a) or § 3-606(I) of the

UCC?

3) Is Harvey Firestone barred from

indemnification or contribution by §

3~407(2)(b) of the UCC?

-90-

4) Does the statute of limitations

bar any valid claim?

5) Does the defendants’ alleged

failure to turn over the withheld collateral

constitute conversion?

* *

The Court shall now turn to the

main issues presented by the parties' claims

and counterclaims.

C. Elizabeth Willis and farvey

Firestone Were Not Accommoda-

tion Hakers on the Notes They

Signed with Charles W Ss.

Section 415(1) of UCC article 3,

Ohio Rev. Code Ann. § 1303.51(A), states,

"An accommodation party is one who signs the

instrument in any capacity for the purpose

of lending his name to another party to it."

Official comment 1 to this section explains

that “an accommodation party is always a

surety . .. and it is his only distin-

$<

guishing feature." Elizabeth Willis assets

that she was merely an accommodation maker

when she signed the notes with her husband;

Harvey Firestone contends that his status as

an accommodation maker is derived from his

daughter, whom he allegedly replaced as

surety on the 1969 note. The Court is

unpersuaded by the contentions of Elizabeth

and Mr. Firestone and it finds that she was

a co-maker of the notes signed with her

husband. Because Mr. Firestone can acquire

no greater rights than the party to the note

whom he replaced, he too was a co-maker.

a

In the light of the foregoing, the

Court concludes that Elizabeth Willis

received a direct benefit from the proceeds

of the notes which she signed with her

husband and thus, it was not the intent of

the parties to those notes that Elizabeth

~92-

sign in an accommodation status.

Accordingly, the Court concludes that

Elizabeth was not an accommodation party

within the meaning of § 3-415(1) of the UCC.

| Having found that Elizabeth Willis

was not an accommodation maker, the Court

must reach a similar conclusion with respect

to her father. Although Mr. Firestone

played no direct role in the borrowing

activities of his daughter between 1958 and

1968, it is undisputed that he may stand in

no better position than the party to the

note whom he replaces. Accordingly, the

Court finds that Harvey Pirestone was not an

accommodetion maker on the notes dated

September 30, 1969.

x &

Nor does section 3-606(1)(a) aid

Charles. First the Firestone Bank never

"released" Elizabeth Willis from the note of

September 30, 1969. Elizabeth was not a

party to that note because her signature was

never placed on the operative instrument.

Although Charles intended Elizabeth to sign

as his co-maker, this intent, by itself, is

not sufficient to transform her into an

actual maker. Elizabeth's signature is

needed for her to become a party to the

note. See UCC § 3~401(1) (Ohio Rev. Code

Ann. § 1303.37). Because Elizabeth was

never a party to the 1969 note, the Bank

could not have released her from liability

under that instrument. Thus, the Bank did

not release any party to the 1969 note or

impair Charles’ right gf recourse against

any party to that note.

The Bank, however, did release

Elizabeth from liability on the 1968 note

when it cancelled that instrument after

acceptance of the 1969 note. See UCC §

-94-

3-605 (Ohio Rev. Code Ann. § 1303.71).

Charles was also released from liability on

the 1968 note at the same time.

z & 2

Section 3-407(2)(b), by its plain

language, must bar any claim by Harvey

Pirestone'’s Executor against Charles Willis.

When Mr. Firestone signed the note, he

completed the instrument in a manner which

was contrary to the authority given; this

variance -- the presence of Harvey Firestone

as a co-maker -- may not be enforced by one

other than a holder in due course. When the

Executor attempts to recover contribution

from Charles, it is seeking to accomplish

this proscribed result. Because Charles did

not authorize the signature of Harvey

Firestone, Jr. on the note, Mr. Firestone is

a mere interloper and he may acquire no

rights against Charles after the Bank has

-95-

called upon him to honor the obligation for

which he volunteered.

2 2 &

In the instant case, Charles

Willis’ authorization was limited to one

co-maker, his wife. Any other co-maker

would exceed that authorization and,

therefore, could acquire no rights against

Charles. Thus, when Mr. Firestone signed

the note of September 30, 1969, he was a

mere interloper or volunteer, and not a

co-maker within the terms of Charies'

contract with the Bank. Accordingly, the

Court finds that § 3-407(2)(b), Ohio Rev.

Code Ann. § 1303.43(b)(2), bars any claim by

defendant The Cleveland Trust Company, as

Executor for the Estate of Harvey Pirestone,

Jc., against Charles Willis for payments

made on either the principal or interest of

the note of September 30, 1969.

Elizabeth also possesses a clear

right to recover any payments which she made

on earlier notes which exceed her

proportionate share of the obligation. She

signed these notes as a co-maker and is

therefore entitled to contribution.

> 2 2

VI. CONCLUSION.

Based on its findings of fact, the

Court makes the following conclusions of

law: |

1. Under the antenuptial

agreement, Charles Willis is not entitled to

sole possession of the 3,992 shares of

Pirestone Co. stock registered in the joint

names of Charles and Elizabeth Willis.

2. The Georgetown property

formerly owned by Charles and Elizabeth

Willis should not be placed ina

constructive trust for the benefit of

Charles Willis.

3. Charles Willis did not enter

into a contract with Elizabeth Willis

concerning the property settlement to

accompany their divorce.

4. Charles Willis is not entitled

to a declaratory judgment of discharge with

regard to the note he signed dated September

30, 1969.

5. The Cleveland Trust Company,

as Executor for the Estate of Harvey

Firestone, Jr., is barred from recovery on

its counterclaim by virtue of UCC §

3-407(2)(b), Ohio Rev. Code Ann. §

1303.43(b)(2).

6. Pursuant to UCC §§ 3-115,

-407(2)(b), and -413(1), Ohio Rev. Code Ann.

§§ 1303.13, .43 & .49, Elizabeth Willis is

entitled to a judgment of $38,131.98,

representing contribution for payments which

she made in excess of one-half the costs

paid by her and Charles Willis on the

September 30, 1969 note.

~98-

7. Elizabeth Willis’ claim for

contributicen with respect to prior notes is

barred by the District of Columbia statute

of limitation. D.C. Code § 12-301.

8. Elizabeth Willis and Harvey

Firestone, Jr. did not conspire to commit

fraud upon Charles Willis.

9. Except to the extend that the

collateral for the 1969 note is necessary to

satisfy obligations arising out of the

judgment which the Court shall enter in this

action, the stock must be returned to the

individuals in whose names it is registered.

An order in accordance with the

foregoing shall be issued of even date

herewith.

Dated: July 23, 1980 Charles R. Richey

United States District Judge

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

CHARLES F. WILLIS, JR., :

Plaintiff, :

Ve : C. A. NO. 76-1225

ELIZABETH FIRESTONE “a

WILLIS, et al. $

Defendants. :

ORDER

In accordance with the findings of

fact and conclusions of law of even date

herewith, it is, by the Court this 23rd day

of July, 1980

ORDERED that, with respect to

plaintiff's entire complaint, judgment shall

be, and the same hereby is, entered for

defendants, and it is

FURTHER ORDERED that, with respect

to plaintiff's demand for a declaratory

judgment of discharge on the promissory note

-1C0-

of September 30, 1969, declaratory judgment

shall be, and the same hereby is, denied,

and it is

FURTHER ORDERED that, with respect

to the counterclaim of defendant The

Cleveland Trust Company, as Executor for the

Estate of Harvey Firestone, Jr., said

counterclaim shall be, and the same hereby

is, denied and dismissed, and it is

FURTHER ORDERED with respect to

defendant Elizabeth Firestone Willis'

counter-claim, judgment shall be, and the

same hereby is entered in defendant's favor

against Charles F. Willis in the amount of

thirty-eight thousand one hundred ninety~-one

dollars and ninety-eight cents ($38,191.98),

and it is

FURTHER ORDERED that each party.

shall bear its own costs.

Charles R. Richey

United States District Judge

-101-

APPENDIX F

UNITED STATES DISTRICT COURT

POR THE DISTRICY’ OF COLUMBIA

CHARLES F. WILLIS, JR.,

Plaintiff, :

v. : C. A. NO. 76-1225

ELIZABETH FIRESTONE $

WILLIS, et al., :

Defendants. :

MEMORANDUM OPINION OF UNITED STATES

DISTRICT JUDGE CHARLES R. RICHEY

This case is before the Court on

cross-motions to amend the findings of fact

and conclusions of law entered by the Court

on July 23, 1980. Plaintiff Charles Willis

("Charles") and defendant The Cleveland

-102-

Trust Company as Executor for the Estate of

Harvey Firestone, Jr. have each filed such a

motion. For the reasons set forth below,

the Court has decided to grant these motions

in part and to deny them in part. The

Court, however, has decided not to change

its conclusions of law. Because the Court's

prior opinion sets forth the background of

this case in full, no summary shall be

provided here.

I.

Defendant raises four issues which

merit discussion by the Court. First,

defendant objects to part IV(E) of the

Court's opinion, concerning its right to

recover against the plaintiff. The Executor

claims that it was not a “volunteer” when it

honored the note which Mr. Firestone had

signed and further, that it would be

inequitable to bar contribution under such

circumstances.

-103-

Although defendant paid the note pursuant to

a valid court crder, Mr. Firestone was

nonetheless a “volunteer” when he signed the

instrument. The Court's prior opinion does

not suggest that the note was paid

voluntarily, but rather that the obligation

to pay the note - Mr. Firestone's decision

to sign the instrument - was the act of a

volunteer. Neither The Firestone Bank nor

Charles Willis, the two parties to the

instrument, requested Mr. Firestone's

participation; indeed, the facts show that

Mr. Pirestone acted outside the scope of Mr.

Willis's authorization. Under such

circumstances, it is not inequitable to bar

defendant's claim for contribution. This

result is not only mandated by the plain

language of UCC § 3-407(2)(b), but also in

accord with the pre-UCC business law.

Section 3-407(2) actually liberalized the

old Uniform Negotiable Instruments Law and

-104-

precedent prior that law. Before the

adoption of the UCC, the addition of new

maker without the consent of the original

maker released the original maker from all

liability on the note. Stacey v. Fritzler,

160 Ore. 231, 84 P.2d 97, 104 (1938); see

Annot., 119 A.L.R. 898 (1939). It is clear

that Charles, as a maker of the instrument,

is entitled to some deference in selecting

his co-makers and the Court's decision

reflects this deference. Defendant seeks to

recover plaintiff's money or, in the

alternative, his stock, even though

plaintiff never consented to such an

agreement with hima. Although the Executor

claims that Charles Willis has been unjustly

enriched, it has failed to cite a single

case in which one party has volunteered to

honor the debt of another, without the

consent or or knowledge of the original

debtor, and thereby acquired a right of

-105-

contribution or indemnification against the

debtor. The Court rejects defendant's

contention and declines to amend its prior

conclusions of Law concerning the Cleveland

Trust Company's claim for contribution,

Defendant has also renewed its

contention that Elizabeth Willis was an

accommodation maker within the meaning of

UCC § 3-415. Defendant again claims that

Charles Willis was the party responsible for

the joint holding of the Alaska Airlines,

Inc. stock and, therefore, his former wife

Elizabeth should not be treated as a

co-maker. Yet, Elizabeth was certainly

aware of her husband's activities and she

apparently did not object to the joint

holding. Indeed Elizabeth regularly signed

renewal notes with the jointly held stock as

collateral. Under these circumstances,

Elizabeth's consent to the joint titling

must be inferred. In effect, Elizabeth is

SN

-106-

requesting the Court to make her husband an

insurer of her investment activities. Under

her theory, if the stock had depreciated, so

that the investment was not profitable, she

would be able to seek indemnification; yet,

if the stock purchased with the loan

proceeds had appreciated, she would have

been able to enjoy the increased value. The

Court rejects this proposition. Elizabeth

benefited from the proceeds of the loans

which she co-signed with her husband, and,

as a result, she must be deemed a co-maker.

Defendant also argues that

Charles’ borrowing activity with the

Industrial Bank of Commerce reflects a

“pattern” of conduct indicative of

Elizabeth's status as an accommodation maker

on the loans with The Firestone Bank. Of

course, no claim is before the Court

regarding Charles and Elizabeth's loans with

the Industrial Bank of Commerce. [In its

-107-

prior opinion, the Court failed to make

findings regarding Charles and Elizabeth's

dealings with this bank because the Court

did not find these activities relevant to

its determination of Elizabeth's status with

respect to The Firestone Bank loans. Even

assuming that defendant is correct that

Elizabeth was an accommodation maker on the

Industrial Bank loans, this fact would not

create enough of a “pattern” to overcome the

Clear proof of a benefit to Elizabeth

decived from The Firestone Bank loans.

Thus, the Court declines to amend its

findings in the manner which defendant has

requested,

Third, defendant has asserted, for

the first time, the theory that Elizabeth

Willis must be considered a subrogee for the

money which she paid The Firestone Bank

between April, 1974 and December, 1975. [In

Part IV(F) of the Court's opinion, it held

-108-

that Elizabeth was entitled to contribution

for these payments and it did not address

the issue subrogation. The doctrine of

subrogation is equitable in nature. See 73

Am Jr. 2d Subrogation § 12 (1974). It rests

on the implication of a promise by one party

to compensate another who has incurred

expenses for his benefit. Here, Elizabeth

made interest payments on a note which

Charles had signed; she was not a volunteer

because the Bank still retained her

collateral and she acted, in part, to

protect this interest. Id. § ll. asa

subrogee, Elizabeth seeks to acquire the

rights of Charles's creditor, the Bank,

thereby permitting her to recover ail of her

payments which benefited Charles. Yet, this

result would place Elizabeth in the same

position as an accommodation maker and the

Court has already ruled that Elizabeth is

not entitled to this status. See Opinion of

-109-

July 23, 1980, part IV(C). Charles only

authorized Elizabeth to stand as his

co-maker; by acting to protect her

collateral, she is not entitled to acquire

any greater rights against him. Indeed, it

would be anomalous if Elizabeth were

permitted to gain a stronger position

against her co-investor when she did not

sign the loan when she did. Thus, the

equities do not favor a conclusion of law

which states that Elizabeth was a subrogee.

As a result, this aspect of defendant's

motion to amend must be denied.

Pinally, defendant has moved the

Court to amend its finding that Charles

Willis typed Elizabeth's name on the note

which Harvey Firestone, Jr. later signed.

Defendant claims that the Bank performed

this act and plaintiff agrees. Accordingly,

the Court shall amend pages 12 and 25 of its

opinion of July 23, 1980. On page 12, the

-110-

Court shall substitute the following in

place of the fourth line on the page: “for

a second signature and above this space The

Firestone Bank had typed“. On page 25, the

Court substitute the following for the last

two lines on the page: "co-maker was

re-stated by Mr. Willis’ express adoption of

the Bank's act of typing Elizabeth's name

next to the only available signature space.

Id. In light of”.

Defendant's motion shall be denied

in all other respects.

II.

Plaintiff Charles Willis has also

presented few new issues in his motion to

amend. For example, Mr. Willis offers a

proposed chronology for the signing the the

1969 note; the Court rejects his contention

and will stand by its finding that the stock

option agreement and note were both signed

on April 1, 1970, as reflected by the dates

-lll-

contained therein. The Court also declines

to accept Mr. Willis' theory regarding the

application of the statute of limitations to

Elizabeth's claims for contribution. The

statute of limitations could not begia to

run until Elizabeth possessed a cause of

action. Her claim could not accrue until

the entire debt had been paid, because

before then, it would be impossible to

determine whether she had paid more than

Charles. Accordingly, the Court rejects

Charles’ claim that the statute of

limitations began to run at the time

Elizabeth paid The Firestone Bank. Finally,

the Court must also decline to accept

Charles’ argument that Elizabeth could not

recover unless she paid more than half of

the entire debt. Although generally a party

is not entitled to contribution for more

than his or her proportionate share, this

rule is not inflexible. See 18 Am. Jr. 2d

-112-

Contribution § 15 (1965). It is well

established that if one party negotiates a

compromise extinguishing a joint debts, that

party is entitled to contribution for the

amount actually paid, even though that

amount may be less than his or her

propor’:ionate share of the original debt.

Id. Here, Harvey Firestone, Jr. and his

Executor both paid the largest share of this

debt, leaving only $76,263.96 to be paid by

Elizabeth. There is no reason why the

actions of this third party should accrue

solely to the benefit of Charles Willis.

Mr. Firestone's activity, like the

compromise of a debt, has conferred a

benefit on others and the remaining expenses

should be shared equally. Thus, when

Elizabeth acted as debtor by making the

interest payments on the 1969 note, she

became entitled to contribution for her

expenses in excess of one-half of the sum

-1l3-

paid by her and Charles. The Court has

entered judgment in her favor for this

amount and it declines to alter that

judgment.

The Court, however, shall make

several additional findings which plaintiff

has requested. First, the Court shall add a

finding that the sufstitution of Harvey

Firestone, Jr.'s name for Elizabeth Willis's

on the 1969 note was recognized by Mr. Ross,.

the Vice-President of The Firestone Bank and

he brought it to the personal attention of

the Bank president. Thus, the Bank was

aware of the change in parties. This

additional finding does not alter the

Court's conclusions of law in any respect;

indeed, the Bank's awareness of the change

in parties was already implicit in the 3x5

card attached to the 1969 note in the Bank's

file. See Opinion of July 23, 1980, at 13.

Second, the Court shall add the

-114-

finding that the Bank's cancellation of the

1968 note also cancelled the collateral

agreement which Elizabeth had signed in that

note. Thus, Elizabeth's interest in the

Alaska Airlines, Inc. stock was not subject

to an enforceable collateral agreement with

the Bank. The Court, however, rejects

Charles renewed contention that this release

impaired his right of recourse against

Elizabeth. First, Elizabeth's Firestone

stock remained as collateral through her

agreement with her father and this stock

could have readily satisfied any right of

contribution which Charles might come to

possess. Second, and more importantly,

plaintife's contention regarding his right

of recourse against Elizabeth reflects a

fundamental misconception concerning the

specific instrument on which such right

might have existed. Even though Elizabeth

was released from the 1968 note, so was

-115-

Charles; in fact, this entire note was

cancelled. As a result, Charles could have

no right of recourse on this instrument.

With regard to the 1969 note, Elizabeth was

never a party to that note and the Bank,

therefore, never released her from any

obligation on that instrument. Thus,

Charles’ right of recourse could not

possibly have been impaired by the Bank's

"release" of Elizabeth from liability.

Accordingly, Charles has no claim under UCC

§ 3-606(1) and the Court declines to amend

its judgment in that regard.

Plaintiff's motion shall be denied

in all other respects.

Itt.

Pinally, the Court shall amend its

judgment to reflect the conclusions

concerning the ownership of the parties'

stock stated in the opinion of July 23,

-116-

1980. Plaintiff and defendant Elizabeth

Willis have both sought a declaratory

judgment on this issue and it is appropriate

that such a judgment be entered.

An order in accordance with the

foregoing shall be issued of even date

herewith.

Dated: August 29, 1980 Charles R. Richey

United States District Judge

-1ll7-

APPENDIX G

THE SUPREME COURT OF OHIO

COL"JMBUS

1985 TERM

To wit: November

27, 1985

Cleveland Trust Co., Case No. 84-1766

n.k.a. Ameritrust Co.,

Exr. of the Estate of

Harvey S. Firestone, Jr.,

Deceased

Appellee,

JUDGMENT ENTRY

APPEAL FROM THE

COURT OF APPEALS

Ve

Charles FP. Willis, Jr.,

Appellants.

eo 60 06 60 08 86 26 68 86 88 66

This cause, here on appeal from

the Court of Appeals for Summit County, was

heard Lin: he manner prescribed by law. On

consideration thereof, the judgment of the

Court of Appeals is affirmed for the reasons

set forth in the opinion rendered herein.

It is further ordered that the

appellee recover from the appellant its

costs herein expended; and that a mandate be

-118-

sent to the Court of Court of Common Pleas

to carry this judgment into execution; and

that a copy of this entry be certified to

the Court of Appeals for Summit County for

entry.

Frank D. Celebreeze

Chief Justice

I, James Wm. Kelly, Clerk of the

Supreme Court of Ohio, do hereby certify

that the foregoing order was correctly

copied from the records of said Court, to

wit, from the Journal of this Court.

IN WITNESS WHEREOF, I have

hereunto subscribed my name and affixed the

seal of said Supreme Court, this date

November 27, 1985.

JAMES WM. KELLY,

Clerk

SAM F. ADKINS,

Deputy

-119-

APPENDIX H

THE SUPREME COURT OF OHIO

COLUMBUS

1986 TERM

To wit: January 15, 1986

Cleveland Trust Cc., : Case No. 84-1766

Appellee,

Vv. REHEARING ENTRY

Firestone Bank et al., (Summit County)

Appellants.

It is ordered by the Court that

rehearing in this case is denied.

RANK D. CELEBREZZE

Chief Justice

I, James. Wm. Kelly, Clerk of the

Supreme Court of Ohio, do hereby certify

that the foregoing order was correctly

copied from the records of said Court, to

wit, from the Journal.

IN WITNESS WHEREOF, I have

hereunto subscribed my name and

affixed the seal of said Supreme

Court, on this 15th day of

January, 1986.

JAMES WM. KELLY, CLERK

SAM. F. ADKINS, DEPUTY

-120-

APPENDIX I

EXTRACT FROM TRANSCRIPT OF

PROCEEDING IN COURT OF COMMON PLEAS

SUMMIT COUNTY, OHIO, ON JUNE 27, 1983

"MR. KANE: (Counsel for

Petitioner): No, Your Honor, I

don’t intend to tax the patience

of the Court.

But as to Admissions Number 1

through 23, these involve

transactions which took place with

New York banks as to who got the

proceeds, which loans, what

purpose they were used for, and

all that. The only relevance of

that type of testimony to this

case would be if it were still in

issue in this case as to whether

Elizabeth is an accommodation

makec on that note, whether she

received value for the signature

that she put on that note.

That is already ces judicata.

The United States District Court

for the District of Columbia which

had jurisdiction over Elizabeth

and Charlie found--Judge Richey

found by statements of fact that

she was not an accommodation

maker, that she received one-half

of the stock that was purchased

with these funds, that she

received some of her living

expenses and so forth like that;

and she is not an accommodation

maker, that she was a maker for

value.

-12l-

That issue is no longer

before the Court, and so all of

these admissions which deal with

the background and which would be

the factual support for that issue

are irrelevant. As I understand--

THE COURT: Those issues have

only been determined between

Elizabeth and Charles, right? I

must make a determination here.

Isn't that correct?

MR. KANE: I think the legal

status as between those two people

has been determined, yes, sir.

Now, as to The Cleveland--

status of Cleveland Trust, that's

what you have to determine, as to

whether they were co-maker,

interloper, or accommodation

party. But the status of--

THE COURT: But the

admissions of Charles are not

requested by Elizabeth nor are

they against her interest at this

point. Isn't that right?

MR. KANE: I'm saying they're

not relevant to any issue which

still is in the case between

Charles and The Cleveland Trust.

THE COURT: All right.

MR. KANE: Because they--

Elizabeth's status has been

determined.

-122-

Now, if The Cleveland Trust

is going to try to piggyback her

and say that becavse--and try to

reopen this question of accom-

modation party and say she was an

accommodation party and therefore

when we signed the stock option

agreement we accommodated her and

we're a piggyback, they're too

late. That's already been decided

in the District of Columbia.

That's not an accommodation party.

That's the reason that--one

of the reasons we object, also, to

Number 28, because what they're

doing is asking us to admit

something which is contrary to an

already-decided judgment to a

Court of competent jurisdiction.

THE COURT: You assume that

judgment is correct. You're a

good man.

MR. KANE: Well, we've ex-

hausted our appeals, so he is cor-

rect. There's nothing I can do

about it.

THE COURT: Is that as high

as you can go? The Appellate

Court in the District?

MR. KANE: That's--the United

States Court of Appeals for the

District of Columbia.

THE COURT: I thought there

was a higher Court.

MR. KANE: There is a Supreme

Court, but they don’t usually take

local cases like this.

-123-

THE COURT: All right. I

understand your objection."

Later on that same day, the issue

was raised by counsel for Elizabeth in

connection with identical admission which

had been requested from her:

"Mr. Kerper (Counsel for The

Cleveland Trust Co.):

Number 28, Your Honor:

‘Elizabeth Firestone Willis

was an accommodation party on the

series of notes to The Firestone

Bank executed by her and Charles

F. Willis, Jr. between November,

1964 and September 30th, 1968.'

I'm going to request that the

Court rule that--that for purposes

of this case as to this party,

that is, the Plaintiff, Cleveland

Trust, has admitted and that under

the rule the answer which was

given by Elizabeth Firestone

Willis is improper; and, secondly,

that The Cleveland Trust is not

bound by any judgment which was

reach in the D. C. Court.

THE COURT: You want to argue

that point, Counselor?

MR. WEINER: We would, Your

Honor, if I may be heard.

You have the answer before

you, Your Honor?

-124-

THE COURT: Yes, sir. Yes,

sir.

MR. WEINER: Okay. I do

believe the answer is certainly

appropriate under Rule 36, and I'm

not quite sure why Counsel says

it’s not appropriate; and I'd like

to hear from Counsel as to why

it's not appropriate. That issue

as to whether or not Elizabeth

Firestone Willis was an

accommodation party in a series of

notes was resolved as between

Elizabeth Firestone Willis and

Charles Willis in the District

Court and Court of Appeals in

Washington, It's a legal matter.

MR. KERPER: My response to

that, Your Honor, is, we're not

asking to be used against Charles

Willis. We're asking on behalf of

Cleveland Trust, and Cleveland

Trust was not a party to that

lawsuit.

THE COURT: And so ruled by

dismissing these summary

judgments--

MR. WEINER: But, Your

Honor--

THE COURT: <--on the

cross-claims of Elizabeth and

Charles Willis.

MR. WEINER: Your Honor, the

question is, they're asking for a

legal conclusion: Was she an

-125-

accommodation party? And the

Court in D. C. resolved that

issue. Now--I mean, as between

Elizabeth and Charles, the only

two people on those notes.

Now, I don't know how Counsel

can ask a party to take a position

contrary to what the Court in a

case where they have jurisdiction

has found.

THE COURT: I don't know

whether Counsel agrees with that

Court. All I'm saying is, The

Cleveland Trust Company was not

party to it. Accordingly, T am

not bound to accept it as res

judicata or collateral estoppel or

whatever you want to call it.”