
    Schonberg, d. b. a. Schonberg Printing Co., v. Platt.
    (Decided May 6, 1929.)
    
      Messrs. Rocker & Schwarts, for plaintiff in error.
    
      Mr. John A. Alburn, for defendant in error.
   Sullivan, J.

This cause is here on proceedings in error from the municipal court of the city of Cleveland, wherein an action was brought by the plaintiff in error to recover from the defendant in error, Warren C. Platt, $854, being the balance due on a printing bill, and to this was filed what is denominated a counterclaim for damages, arising from the alleged breach of a contract over which there is a controversy as to whether it is a written or an oral contract, and the allegations for recovery upon the counterclaim so denominated are false and fraudulent representations on the part of the plaintiff. The court below made a finding in favor of the plaintiff for the amount claimed and for the defendant in the sum of $903.85, thus obliterating the plaintiff’s claim, over which there appeared to be no contest, and leaving a difference in favor of the defendant in the sum of $49.85.

The deciding element in this case, in our judgment, is whether, in law, the court had any right to take into consideration as against the plaintiff in error the alleged counterclaim, because the allegations of the pleading must conform in character to the statute, which provides:

Section 11317, General Code: “A counterclaim is a cause of action existing in favor of a defendant against a plaintiff or another defendant, or both, between whom a several judgment might be had in the action, and arising out of the contract or transaction set forth in the petition as the foundation of the plaintiff’s claim, or connected with the subject of the action.”

It is necessary to search the record in order to ascertain this question, because if the demand of the defendant in error is not a counterclaim, then the judgment of the plaintiff uncontested remains as a final judgment, and some other action is necessary to recover upon the counterclaim, providing it is meritoriously founded.

The defendant in error was a magazine publisher, and prior to September 13, 1927, the plaintiff was the principal stockholder and president of the corporation which owned the assets of a monthly published magazine known as “Town and Country Club News.” The sale of this magazine, as appears by the record, was the subject of a meeting, but subsequently thereto a price was agreed upon at $16,000, provided the defendant would buy it immediately. The parties, having arrived at a mutual agreement in relation to this sale, proceeded to the office of counsel, where a down payment of $2,500 was made.

It appears from the record that in order to convey the title to the property, consisting of the stock, the assets, and the magazine, it became necessary to proceed upon the theory based upon conceded facts in the record that the property known as “Town and Country Club News,” and of which the plaintiff owned 51 per cent., was a corporation, even though the details as to the organization of which had not finally been consummated. The record shows, however, that in order to make the conveyance a resort was had to the minutes of the corporation, and all necessary resolutions of ratification and consummation were duly passed at the request and upon the instance of the counsel for the defendant.

The ultimate object appears to have been the securing of all the stock by the proper transfer thereof, by proper signature and otherwise, the transfer of the assets and the delivery of the property, and all these as well as all other necessary acts seemed to conform to the mutual understanding and facts of record that, in order to acquire the stock and assets and the magazine, the deal must necessarily, and therefore legally, be with a corporation instead of an individual. It must be remembered that the plaintiff owned or controlled all the stock of the corporation, and that, in order to pass title from that legal entity, it was necessary to follow the law and the usual practice necessary to the transfer of corporate property, which, in the instant case, was in the name of “The Country Club News Company.”

There appears to be no evidence in the record for any other view, and especially such a view as would lend color to the claim that the dealing was with David Schonberg, doing business as Schonberg Printing Company, because from the record it is conclusive that Schonberg could only act in the disposal of the corporation just named as president, director, and controlling stockholder, in conjunction with the proper and necessary motions, resolutions, and minutes necessary to be requisitioned in order to consummate the deal.

Therefore, we have come to the unanimous conclusion that the dealings between the parties in relation to the sale of the property which is the subject-matter of the alleged counterclaim were by and with a corporation.

Now the question pertinently arises, under such a legal status, what legal responsibility or liability attaches to plaintiff in error in a deal wherein he himself was not a party? If the deal was by and with the corporation, no responsibility for any default would legally attach to him under the record in the case, and yet, notwithstanding the corporate character of the contracting party,- it is an individual, to wit, the plaintiff in error, against whom the counterclaim is directed and against whom the court below rendered a judgment which more than obliterated the claim of the plaintiff in error which was concededly meritorious and unchallenged. This situation creates an incongruity and an anomaly, and it is clear that in the present action the counterclaim has no basis in law against the plaintiff in error, an individual. Therefore, it follows that the misrepresentation and alleged falsities upon which the counterclaim is based found their source in the corporation itself, through its president and controlling stockholder, and not through the individual.

It follows, therefore, that the statute itself fixing the character of a counterclaim settles the entire question, because, under this view of the case, the cause of action existing in favor of the defendant and against the plaintiff does not arise out of a contract or transaction set forth in the petition, nor does there appear to be any foundation for the defendant’s claim by reason of what is above noted, and neither does it appear that there is any connection with the subject of the action, because there is no connection between the parties themselves as individuals in the transaction known as the sale of the property owned by “The Country Club News Company. ’ ’

Under this aspect of the case it is unnecessary to pass upon the assignment of error as to whether the court violated the rules of evidence by admitting evidence of an oral character to contradict or vary the terms of a valid written contract; nor does it become necessary to inquire as to the weight of the evidence, because our attitude upon the main question, as above set forth, eliminates those assignments of error from the case.

Holding these views, the judgment of the lower court is reversed, and final judgment is rendered for the plaintiff in error in the sum of $854, and the cross-petition is therefore dismissed.

Judgment reversed and judgment for plaintiff in error.

Vickery, P. J., and Levine, J., concur.  