# Appendix — Willis v. Cleveland Trust Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1986
- **Citation:** 478 U.S. 1005

## Text

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Supreme Court, U.S.

85 -18 99 (» FILED

APR 15 1908
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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

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@-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

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=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.”

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_1852%3A2. Public record. Not legal advice.