Myers v. Garson - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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OPINIONS OF THE SUPREME COURT OF OHIO
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Myers, Appellee, v. Garson, Appellant, et al.
[Cite as Myers v. Garson (1993), Ohio St.3d .]
Appellate procedure -- Appellate court must not substitute its
judgment for that of the trial court where there exists
some competent and credible evidence supporting the
findings of fact and conclusions of law rendered by the
trial court.
(No. 92-868 -- Submitted April 28, 1993 -- Decided July 7,
1993.)
Appeal from the Court of Appeals for Summit County, No.
15214.
The pertinent facts of this action, as found by the trial
court, are as follows. Plaintiff-appellee, Forrest D. Myers,
and defendant-appellant, Harold M. Garson, had been in the
business of developing raw land for sale to others for many
years. On or about June 6, 1965, appellee and appellant
entered into an agreement for the purchase and financing of
certain raw land in Bath Township, Summit County. As part of
their "gentlemen's agreement," appellee would invest money and
appellant would develop the raw land. While the parties
initially agreed to a fifty-fifty split of profits on the
future sale of the property, they subsequently refined their
agreement to reflect a one-third split of profits when they
added appellant's business associate, Frank Wells, to their
arrangement. However, in 1967, appellant took over Wells'
one-third interest in the arrangement.
In 1968, the agreement between appellee and appellant was
further refined for refinancing, and the new agreement was
reduced to writing in a countersigned letter of January 2, 1968.
In 1970, appellant conveyed an additional interest in the
Bath Township property to appellee in consideration of
additional funds advanced by appellee from 1968 to 1970. At
that time, appellee once again owned fifty percent of the
property in issue, and as of March 23, 1970, the trial court
found that appellee was to recover fifty percent of the profits
from the ultimate disposition of the property. The land was
thereafter developed as a traditional housing development, and
in 1972, Phase I of the development consisting of twenty-three

lots was begun. No profits were realized from the development
of Phase I, and subsequently, appellee assisted in the
obtainment of sewer and gas easements and consents to
annexation needed to begin Phase II of the development.
By 1979, it is undisputed that appellee had advanced
$107,000 to the development and the parties attempted to set
forth their respective positions and determine the repayment of
advances, overhead and potential profits. At that time,
appellee quitclaimed his interest in the property to appellant,
but the parties never totally agreed to any new arrangement for
payment of monies.
During the early 1980s, Phase II of the development of the
property was completed at a profit of $1,353,861.
On December 28, 1984, appellee filed a complaint in the
court of common pleas for breach of contract against appellant
and several other entities who are no longer involved in this
action. In his complaint, appellee essentially alleged that
his 1965 agreement with appellant entitled him to the return of
his investment as well as fifty percent of the profits from the
entire development which became known as "Bathcrest Estates."
Over the next several years extensive discovery ensued, and the
matter eventually proceeded to a bench trial in late 1987 and
early 1988.
In a judgment entry dated June 10, 1988, the trial court
held, inter alia, that appellee and appellant were equal
partners in the land development project and that appellee was
entitled to his original investment as well as fifty percent of
the profits realized from the sale of the land development.
Subsequent motions for prejudgment interest and a new trial
were denied, and in a judgment entry dated November 22, 1988,
the trial court amended its prior entry by finding that the
relationship between the parties was not a legal partnership
but rather a joint venture.
Upon appellant's appeal, the court of appeals reversed and
remanded. The appellate court held that the trial court erred
in finding a joint venture agreement between the parties, and
that the cause should be remanded for a new trial. See Myers
v. Garson (July 12, 1989), Summit App. No. 13939, unreported.
On November 29, 1989, appellee's motion to certify the record
before this court was overruled.
On remand, both parties filed motions for summary judgment
pursuant to Civ. R. 56. In a judgment entry dated September 9,
1990, the trial court granted summary judgment in favor of
appellee on the money advanced by him to appellant ($107,000),
but directed that all other issues be determined at trial.
Thereafter, the parties agreed to resubmit the cause for
adjudication on the pre-existing trial record. In an opinion
issued June 17, 1991, the trial court made the following
conclusions of law:
"1. The hand-shake agreements between the Plaintiff and
Defendant were never formalized and, as a matter of law, their
relationship was as developers in raw development of land until
1970.
"2. As the course of the development of the land for
residential sale began in the 1970s, the relationship
substantially changed as a result of the development of the
property into a residential complex.

"3. As a matter of law, although Defendant sought to
define their roles in 1979 as being a non-equal relationship,
the Plaintiff rejected that theory. As a matter of law, the
redefinition of the 1970 through 1979 relationship was never
culminated.
"4. As a matter of law, Plaintiff and Defendant are
entitled to the return of their original investment.
Plaintiff's is $107,000 and Defendant's is $307,000.
"5. As a matter of law, there was no agreement between
the parties after 1979. The exhibits clearly establish that
there was no mutual understanding by either the Plaintiff or
Defendant as to any shared profits for further development.
"6. As a matter of law, the Plaintiff and defendant have
no obligation to each other other than $107,000 due and owing
as of 1979.
"7. As a matter of law, Plaintiff is entitled to $107,000
plus interest and costs from 7/12/79.
"8. As a matter of law, Plaintiff is not entitled to any
profits from the development of Phase II.
Upon further appeal by appellee, the court of appeals
reversed in part in a split decision. In relevant part, the
appellate court majority concluded as follows:
"The trial court's determination that Myers and Garson
rescinded their original agreement in 1979 is warranted by the
record. However, there is no support for the conclusion that
Myers intended to abandon his share of the profits from the
fourteen year endeavor and simply accept a return of his
investment. Rather, the evidence indicates that the parties
believed Myers had sold his interest in the Bathcrest project
to Garson for $307,000.
"***
"The only sensible interpretation of the events which
transpired, consistent with the parties' most likely
intentions, is that the original agreement was replaced in 1979
with a new arrangement whereby Myers would be paid $307,000 and
released from his obligations while Garson would receive full
title to the property and all profits in the Bathcrest
project. The trial court erred by failing to give full effect
to the novation that was thus established."
The appellate court therefore modified the judgment of the
trial court pursuant to App.R. 12(B), and held that Myers was
entitled to $307,000 plus interest from July 12, 1979, and
costs.
The cause is now before this court pursuant to the
allowance of a motion to certify the record.

Brouse & McDowell, Linda B. Kersker and David B. Nolin,
for appellee.
Skidmore & Associates Co., L.P.A., Archie W. Skidmore and
Spiros Vasilatos, Jr., for appellant.

A. William Sweeney, J. Preliminarily, appellant Garson
essentially contends that the decision by the court of appeals
was tainted because Judge John W. Reece did not recuse himself
from the appellate panel below, since at an earlier state of
the present litigation, Judge Reece had in fact recused himself

from hearing the action while he was sitting as a trial
judge.1 While one can perhaps argue that Judge Reece should
have disqualified himself from sitting on the appellate panel
below given his prior recusal, we remain unpersuaded because
appellant raised no objections until after he had obtained an
adverse decision from the court of appeals. In our view,
appellant had several opportunities to object to the presence
of Judge Reece on the court of appeals panel; however, no
objection was raised in a timely manner. As noted by the court
of appeals upon appellant's motion for reconsideration,
appellant could have contacted the court to discover Judge
Reece's presence on the appellate panel after appellant had
waived oral argument, but he neglected to do so. Therefore, we
reject appellant's hollow assertions that Judge Reece's
involvement with the decision below somehow prejudiced his
reliability or impartiality.
With respect to the determinative issue in this appeal,
appellee Myers argues, inter alia, that the court of appeals
merely followed the dictates of App. R.12(B) by "render[ing]
the judgment or final order that the trial court should have
rendered." It is appellee's contention that the court of
appeals below did not substitute its judgment for that of the
trial court, but simply corrected a legally insupportable
judgment of the trial court by finding that a novation took
place between the parties.
We have reviewed the extensive record developed during
this protracted litigation and find persuasive arguments and
elements supporting the reasoning of the court of appeals
below. However, as we have often noted in the past, where the
decision in a case turns upon credibility of testimony, and
where there exists competent and credible evidence supporting
the findings and conclusions of the trial court, deference to
such findings and conclusions must be given by the reviewing
court. See Seasons Coal Co. v. Cleveland (1984), 10 Ohio St.3d
77, 80, 10 OBR 408, 410, 461 N.E.2d 1273, 1276; and Cohen v.
Lamko, Inc. (1984), 10 Ohio St.3d 167, 10 OBR 500, 462 N.E.2d
407. In addition, this court has held that a reviewing court
is not authorized to reverse a correct trial judgment merely
because erroneous reasons were assigned as a basis therefor.
Agricultural Ins. Co. v. Constantine (1944), 144 Ohio St. 275,
284, 29 O.O. 426, 430, 58 N.E.2d 658, 663.
As this court observed in Seasons Coal, supra, at 80, 10
OBR at 410, 461 N.E.2d at 1276: "The underlying rationale of
giving deference to the findings of the trial court rests with
the knowledge that the trial judge is best able to view the
witnesses and observe their demeanor, gestures and voice
inflections, and use these observations in weighing the
credibility of the proffered testimony."
While it is true that the trial court decision of June 17,
1991 was based on the resubmission of the pre-existing trial
court record, it is also true that all the pertinent trial
court proceedings in this cause were presided over by the same
trial judge.
The appellate court below and appellee herein emphasize
that the trial court had specifically found that appellee, as
of March 23, 1970, "was to recover 50% of the profits from the
ultimate disposition of the property," but concluded that

appellee was not entitled to any profits from the sale of the
property in issue. While the finding of the trial court in
this respect does indeed appear to be inconsistent with its
ultimate holding, the particular circumstances and course of
dealings between the parties, as set forth in the record, while
not explicitly set forth in the trial court's 1991 decision,
arguably support the trial court's conclusion. For example,
although the trial court made no specific findings as such,
appellee's refusals to advance further funds to appellant
between 1970 and 1976 could be characterized as breaches of the
parties' agreement that profits be divided equally, and thus
would not entitle appellee to any profits from the ultimate
disposition of the subject property. In addition, there was
sufficient evidence in the record to support the apparent
conclusion of the trial court that the profit-sharing agreement
between the parties, contemplated profit sharing only with
respect to Phase I of the Bathcrest Estates development. Since
Phase I yielded no profit, appellee would be entitled to no
profit from the disposition of that property. Moreover,
profits from the land development were not realized until the
sale of Phase II of the development, and Phase II was not
completed until after 1979 when the parties could not reach any
agreement whatsoever.
In any event, the court of appeals below went beyond its
prerogative as set forth in App.R. 12 and did not accord due
deference to the judgment of the trial court. In effect, the
appellate court substituted its judgment for that of the trier
of fact. While the court of appeals' finding of a novation
between the parties appears somewhat persuasive when viewed in
an after-the-fact context of what would have been most
advantageous from appellee's standpoint, the record is devoid
of any substantial evidence to support such a finding.
Thus, we reaffirm our prior reasoning in Seasons Coal,
supra, and hold that an appellate court must not substitute its
judgment for that of the trial court where there exists some
competent and credible evidence supporting the findings of fact
and conclusions of law rendered by the trial court. Upon a
careful review of the instant record, we find there was
competent and credible evidence supporting the judgment of the
trial court and, therefore, that judgment must be reinstated.
Notably, the cause sub judice amply points out that
different persons can arrive at different conclusions in a case
based on the same evidence. If nothing else, the protracted
history of the instant cause unquestionably underscores the
proposition that parties to an agreement should protect their
interests by reducing all of their understandings to writing.
So-called "gentlemen's agreements" not totally put in writing
can become shaded or altered in the minds of the contracting
parties over time, when changed circumstances and/or faulty
memories make it more advantageous to assert a different
meaning to an agreement than that which was originally
intended. The vagaries of the legal system cannot guarantee
that the "true" understanding of each of the parties is the one
that ultimately becomes the agreement to which they are legally
bound.
Based on all the foregoing, we reverse the judgment of the
court of appeals and reinstate the judgment of the trial court.

Judgment reversed.
Moyer, C.J., Douglas and Resnick, JJ., concur.
Wright, F.E. Sweeney and Pfeifer, JJ., dissent.

FOOTNOTE:
1 As conceded by counsel for appellant during oral
argument, there is nothing in the record indicating the reason
why Judge Reece recused himself from sitting on this case as a
trial judge. Thus, there is nothing in the record to indicate
that Judge Reece was duty-bound to recuse himself from the
panel in the court of appeals below.
Wright, J., dissenting. Not long ago a majority of my
colleagues declared that we sit as a court of equity. See
State v. West (1993), 66 Ohio St.3d 508, N.E.2d . I
cannot agree with such a premise; however, I do believe we
should apply common business sense to cases involving
commercial transactions. We certainly failed in this respect
today.
Stripped of irrelevant matters, the facts show two men
entering into a real estate development enterprise nearly
thirty years ago. Over the years Myers put up $107,000 while
Garson negotiated the sundry deals. The two men came to a
parting of the ways in 1979. Myers quitclaimed his interest in
the property to Garson. Garson, in turn, accepted the
property, offered $307,000 in consideration thereof, and
continued the enterprise. Garson set aside the $307,000 as an
account payable to Myers.2
This litigation began in 1984 and led to a court of
appeals' holding that the financier, Myers, was entitled to
$307,000 plus interest. The court held that the enterprise
ended in 1979 and Myers was not entitled to profits earned
subsequent to that date. The court below called this
relatively simple deal a "novation." My colleagues in the
majority have rejected this appellation in order to reach a
contrary result.
Incredibly, by our pronouncement today, the former partner
now owes $107,000, which is about a third of the debt he
expressly acknowledged in writing nearly fourteen years ago.
Did reason prevail here? I think not. We wonder why folks
criticize the courts. As Justice Robert H. Jackson once
bemoaned: "I give up. Now I realize fully what Mark Twain
meant when he said, 'The more you explain it, the more I don't
understand it.'" Securities & Exchange Comm. v. Chenery Corp.
(1947), 332 U.S. 194, 214, 67 S.Ct. 1760, 1762, 91 L.Ed. 1995,
2008 (Jackson, J., dissenting).
I dissent from this unreasonable and seemingly ludicrous
result.

FOOTNOTE:
2 The court of appeals explained the pertinent facts more
clearly than did the majority:
"The trial court's determination that Myers and Garson
rescinded their original agreement in 1979 is warranted by the
record. However, there is no support for the conclusion that
Myers intended to abandon his share of the profits from the
fourteen year endeavor and simply accept a return of his
investment. Rather, the evidence indicates that the parties

believed Myers had sold his interest in the Bathcrest project
to Garson for $307,000.
"Myers never expressly rejected Garson's offer to buy out
his share. Instead, he quitclaimed his interest in the real
estate to Garson, consistent with the proposal. Myers'
correspondence of July 12, 1979 to Garson's attorney
accompanying the deed acknowledged the $200,000 to be paid in
addition to the return of his original investment [of
$107,000]. Verification of this amount was requested.
Elizabeth Thompson, Myers' assistant, forwarded a letter dated
July 23, 1979 on Myers' behalf inquiring as to when the
$200,000 was to be paid. Garson proceeded with the remainder
of the project, he testified, believing an agreement had been
reached. A sum of $307,000 was set aside in an account for
Myers. Myers completely discontinued his participation in the
endeavor and did nothing in the next five years to dispel
Garson's understanding that he was on his own. Indeed, a
letter from Myers to his son dated June 19, 1983 suggests that
Myers was under the impression that Garson owed him $200,000.
In any event, Myers did not once demand performance upon the
original pre-1979 agreement until after Garson had realized a
substantial profit on the completed project." (Emphasis sic.)
Pfeifer, J., dissenting. Forrest Myers thought he had a
simple problem when he filed suit in l984 to unwind a real
estate development venture he entered into with Harold Garson
in l965.
Judge Sheila G. Farmer, after weighing the evidence,
provided a reasonable solution: an equal division of profits
after return of capital to the parties. Unfortunately, Judge
Farmer, on remand, then decided to proclaim the legal status of
the relationship as being terminated. Almost a decade later
Forrest Myers has seen this dispute through two trial judges,
two passes through the Summit County Court of Appeals and one
review by the Supreme Court. Given all that legal scrutiny,
the specific legal status of the Myers-Garson business venture
has yet to be identified. The reviewing courts have been quick
to tell the parties what their business relationship was not,
but reticent to announce what it was.
Instead of providing a reasonable winding up of this
business and an end to the dispute, reviewing courts have lost
their way -- wandering about in search of legal theory.
The trial court was correct the first time -- then on
retrial misunderstood what the court of appeals apparently
expected her to do. Judge Farmer crafted the appropriate
remedy the first time she weighed the evidence. We should
reinstate her first judgment entry -- a division of the profits
after a return of original capital to the parties.
Judge Farmer, before the first appeal, had the opportunity
to assess the issues that might warrant some result other than
that the parties agreed to an equal division of the profits.
If the project failed, had Myers avoided potential future
liability by quitclaiming the property to Garson? Was Garson
forced to invest personal funds that should have been
contributed by Myers? Did Garson have to devote more of his
own time and development expertise to complete the project as a
result of Myers' effort to terminate? Or did the quitclaim
deed by Myers simply facilitate Garson's ability to expedite

the documents necessary to complete the financing and
subsequent sale of individual home sites?
All the above matters and many others were before Judge
Farmer when she initially tried the case. Upon consideration
of all the evidence, the history of the relationship between
the parties on prior projects as well as the specific details
of this venture, the trial court decided the case.
The admonitions of the majority to the court of appeals
are appropriate in this case; however, after offering advice,
the majority reinstates the wrong decision of the trial court.
This leaves Forrest Myers, after having risked $107,000 in
1965, and after almost a decade of litigation, with no part of
the $l,353,86l in profits from the development, no interest on
the original investment until l979, and with legal fees most
probably sufficient to wipe out the funds awarded under this
court's holding. Talk about a haircut!
Wright, J., concurs in the foregoing dissenting opinion.