COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59774 : : JOHN KAPLYSH : : Plaintiff-Appellee : : -vs- : JOURNAL ENTRY : AND WILLIAM KAPLYSH, ET AL. : OPINION : Defendants-Appellants : : : : DATE OF ANNOUNCEMENT NOVEMBER 7, 1991 OF DECISION: CHARACTER OF PROCEEDING: Civil appeal from Cuyahoga County Common Pleas Court Case No. 160,199 JUDGMENT: REVERSED AND REMANDED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: For Defendants-Appellants: THOMAS REPICKY THOMAS M. PAHYS 2200 Illuminating Bldg. 18123 Sloane Avenue Cleveland, Ohio 44113 Lakewood, Ohio 44107 -2- PATTON, J.: Defendant-appellant William Kaplysh ("appellant") appeals from the trial court's decision finding in favor of his brother, plaintiff-appellee John Kaplysh ("appellee"). Appellee brought suit against appellant for fraud, fraudulent conversion of profits from a partnership both brothers were jointly engaged in, and breach of fiduciary duty to the corporation. Appellee requested an accounting as to the business, sales and profits and half of the profits from the time when appellant allegedly dissolved the partnership until 1988 when the business operation ceased. The pertinent facts are as follows: Appellant and appellee were engaged in various joint businesses which were essentially set up as a partnership with the profits to be split fifty-fifty. The partnership agreements have always been oral. The business which is the subject of this dispute involves the sale of bingo supplies to various Catholic churches. From 1972 until 1977, appellant and appellee were equal shareholders in a corporation known as Variety Amusement, Inc. ("Variety"), along with their other brother, Harry. Variety engaged in the business of running bingo games and selling bingo supplies, all for profit. However, in 1977, the bingo laws changed and they were no longer able to run bingo games for a profit but they were permitted to sell bingo supplies. Hence, Variety dissolved and appellant and appellee became involved in a partnership known as J.B. Sales. This partnership was apparently set up as an equal -3- partnership, with each brother receiving one-half of any profits realized. Although the brothers were no longer able to receive profits from running bingo games, they continued to do so at no cost to the churches. Appellant testified that on or about January 19, 1978, the brothers had an oral agreement to dissolve the partnership. According to appellant's testimony, in 1978, with the consent of appellee, he changed J.B. Sales to a sole proprietorship, with appellant as the only owner and shareholder. Appellant, in 1979, incorporated said business as J.B.K. Sales, Inc. According to appellee's testimony, he was not made aware of his removal as a partner from J.B. Sales. He allegedly continued to help operate the bingo business until 1983. The record disclosed that he volunteered at various churches, because of his charitable nature, to run the bingo games. Appellee denied any knowledge about the dissolution of said partnership. Allegedly pursuant to an oral agreement to dissolve the partnership, appellant transferred funds in January, 1978 to appellee's bank account, which sum represented one-half of the profits from J.B. Sales. Appellant testified that since there was no other inventory or assets to be divided, the one-half share of the profits was sufficient as his share of the partner- ship and the affairs of the partnership had been settled. Appellant claimed appellee wished to retire and agreed to the dissolution of said partnership. Appellant testified that this -4- was a joint decision and that appellee was being "generous" because appellant needed the money more that appellee. (T. 275) Appellee testified it was not his intention to dissolve the partnership and in fact stated he was under the impression he was still a partner for years after the alleged dissolution. However, appellee averred he did not have many responsibilities, if any, regarding the bingo business. The testimony revealed that appellant was granted complete control of all the books and records of the partnership. Appellant also was granted the authority to manage the family finances as well. The record does not reveal that appellant abused his position as money manager. In fact, quite the contrary appears. Appellant conscientiously invested the monies of not only the partnership businesses, but the personal finances of other family members. Appellant's character is best illustrated by appellee's testimony wherein he stated that sometime in 1983 or 1984, he requested $20,000 or $30,000 from appellant in order that he may buy a house for his daughter. Appellant gave appellee the money without question and without the expectation of reimbursement. Appellee's role in J.B. Sales was admittedly small to virtually non-existent. Appellant essentially ran the operation and took care of the financial records. Appellee, on the other hand, was involved in the operation of a bar known as the Wedge Inn. In 1960, appellant and appellee bought a building at 2011 Broadview Road which housed a bar downstairs, the Wedge Inn, and -5- two apartments upstairs. Their joint office was also located in this building. Appellant kept the records for this business while appellee oversaw the operation. Appellee did not receive income for his role in J.B. Sales, but also stated he did not need the money. He received money from the bar business in the form of rental payments from the Wedge Inn and the two apartments. The Wedge Inn was sold in 1975. However, in 1980, the brothers repossessed the Wedge Inn from defaulting buyers. Appellant then transferred the sum of $10,000 from appellee's bank account into the business fund, which apparently represented a verbal agreement that appellee was buying out appellant's interest in the Wedge Inn. According to appellant's testimony, appellee then incorporated as 2011, Inc. with appellee's name as the sole owner, shareholder and holder of the liquor license. On March 21, 1985, appellant again transferred funds in the amount of $122,000 to appellee's bank account. This sum, according to appellant's testimony, represented the life-time savings that the partnership, including the real estate business, was able to generate, the money J.B. Sales generated in 1977 prior to it being incorporated, but did not include any sums generated by JBK Sales, Inc. subsequent to the incorporation of the bingo supply business, as appellant was the sole proprietor since 1978. -6- In 1985, appellee requested an accounting from appellant regarding the recent disbursement of monies into his personal savings account. Up until that time, he never questioned his brother's integrity and business acumen; in fact, he felt he had no reason to do so. Marvin Sorin ("Sorin"), the brothers' accountant, testified that he has been their accountant for decades and has prepared the tax returns for the brothers individually and for their business ventures. Sorin testified that appellee's 1977 tax return did not indicate his occupational status but his 1978 return did in fact reveal he had retired, which testimony corroborated appellant's version that it was appellee's intention to retire. Moreover, Sorin testified that appellee never told him he had any interest in the bingo business after 1977. Sorin also testified that appellee's 1977 tax returns revealed almost $20,000 as his share of the partnership profits, which sum did not distinguish between the real estate business and the bingo business. However, in 1978, this sum was substantially reduced by approximately $12,000. Apparently, appellant did not provide a detailed accounting which met with appellee's satisfaction, so he filed the instant action. The trial court entered judgment in favor of appellee. Findings of fact and conclusions of law were requested and the court adopted appellee's findings verbatim. The findings of fact and conclusions of law were adopted by a judge other than -7- the one that presided over the trial. However, the findings and conclusions were adopted after a judgment had been rendered. The trial court awarded appellee $49,589.17, which sum represented one-half of the net profits of J.B.K. Sales, Inc. for the years 1979-1988. The trial court placed a value of the net profits for 1978 as $5,000 because the net income was not available for that year. Appellant filed a motion for new trial which was overruled. He assigns the following errors for our review: I. THE JUDGMENT IS NOT SUSTAINED BY THE WEIGHT OF THE EVIDENCE. II. THE JUDGMENT IS CONTRARY TO LAW. III. THE TRIAL COURT'S DENIAL OF DEFENDANT'S MOTION FOR NEW TRIAL REPRESENTS AN ABUSE OF DISCRETION. IV. THE FINDINGS OF FACT AND CONCLUSION [SIC] OF LAW FILED IN THIS CASE ARE UNSUPPORTED BY THE EVIDENCE; WERE ENTERED BY A JUDGE WHO NEITHER HEARD THE EVIDENCE NOR REVIEWED A TRANSCRIPT OF SAME; AND, ARE, THEREFORE, INVALID AND CONTRARY TO LAW. I., II. AND III. Because appellant's first, second and third assignments of error were presented together, they will be discussed jointly. Essentially, appellant argues that the trial court's decision is against the manifest weight of the evidence and contrary to law; hence, his motion for a new trial should have been granted. We agree. Civ. R. 59(A)(6) provides: -8- (A) Grounds. A new trial may be granted to all or any of the parties and on all or part of the issues upon any of the following grounds: * * * (6) The judgment is not sustained by the weight of the evidence; however, only one new trial may be granted on the weight of the evidence in the same case; In dealing with a challenge to the manifest weight of the evidence, a reviewing court can reverse only if the verdict is so manifestly contrary to the natural and reasonable inferences to be drawn from the evidence that it produces a result that is in complete violation of substantial justice. Hardiman v. Zep Mfg. Co. (1984), 14 Ohio App. 3d 222, 226. The natural and reasonable inferences in this case lead us to conclude that the verdict produced a result in complete violation of substantial justice. The reasonable inferences to be drawn from the parties' conduct leads this court to believe the partnership had been dissolved and the affairs terminated. Appellee was given his equal share of the partnership profits. There were no remaining assets to be divided prior to the business's subsequent incorporation. Appellee testified that he did not need the money the partnership generated and in fact did not receive any profits after 1977. According to his tax returns, he was on retired status in 1978 but was not retired in 1977. This fact comports with appellant's theory that there had been an oral agreement to terminate the partnership because appellee wished to retire. Further, appellee did not conduct any -9- affairs of the partnership. He was aware that the business was legally prohibited from realizing profits for running bingo games, but this did not interfere with his personal desire to help the churches run the bingo games because of his charitable nature. Incredulous is the fact that appellee was totally unaware of any business dealings when the testimony indicates the brothers shared a joint office in cramped quarters which contained all the records of their business ventures. Both brothers testified the documents were not under lock and key and appellee had access to the books and records at any time. The evidence does not indicate there was any intent to conceal the affairs of the businesses. Sorin testified he prepared both brothers' tax returns and consulted with appellee regarding the preparation of his individual and business returns. Sorin stated he prepared many of the returns in their joint office located at 2011 Broadview while both parties had been present. Moreover, appellee's signature appears on some of his tax returns. The reasonable inferences to be drawn from this evidence is that appellee was aware, or should have been aware of where his money was coming from and that appellant was not trying to conceal or defraud appellee. Appellee's tax returns indicate the profits changed dramatically from 1977 to 1978, and after 1978, his returns do -10- not indicate any income realized from specifically the bingo business. Further, the record does not reveal that there was any impropriety, intentionally or unintentionally, regarding the joint business ventures. In fact, quite the contrary appears from the record. Appellant was given the unquestioned authority to manage the financial affairs of the entire family, personally and professionally. Nothing in the record indicates his integrity was questionable. Appellant testified he tried his very best to make wise investments and protect the family money. Further, appellee testified he stopped his volunteer work of running the bingo games at the churches in 1983, yet the trial court awarded him a one-half share of the profits through 1988. This judgment clearly runs contrary to appellee's own testimony wherein he ceased any involvement with the bingo business in 1983. Last, appellee is chargeable with the knowledge of that which the partnership books and records reveal. Powell v. Wick (1935), 21 OLA 653. The books and records patently demonstrated the partnership was terminated in 1978 and the bingo business was incorporated in 1979. Appellee shared a small office with appellant where all the records were kept. Appellee's own testimony concedes that the books and records were open for viewing at any time. Hence, the reasonable inferences to be drawn lead us to -11- believe the verdict is against the manifest weight of the evidence. As such, he is entitled to a new trial. Appellant's assignments of error also deal with the trial court's findings concerning fraud and the equitable doctrines of laches, estoppel and waiver. We will first address his fraud claim. Appellant argues the trial court's decision finding that he committed fraud is against the manifest weight of the evidence as the element of justifiable reliance was not proven. A review of the findings of fact and conclusions of law reveals the trial court did not find appellant committed fraud. The trial court merely held that the action for fraud was not barred by the applicable statute of limitations. Instead, the grounds for recovery were that the partnership remained in effect because the affairs of said partnership were never wound up and that appellant committed constructive fraud through the abuse of a confidential relationship. The holding regarding constructive fraud has not been challenged by appellant on appeal. The amount awarded appellee only was intended to compensate him for one-half of the partnership profits from 1978 to 1988, relying on its holding that the partnership was still in effect. Hence, since the trial court found that appellant committed constructive fraud and not classic fraud, appellant's challenge to the element of justifiable reliance is rendered moot. -12- Appellant next argues appellee's claims should have been precluded because of the application of the equitable doctrines of laches, estoppel and waiver. Because we are remanding for a new trial, we are precluded from ruling on the merits of these contentions as they present issues of fact to be re-tried. In sum, we find the trial court did abuse its discretion in overruling appellant's motion for a new trial and find the judgment is against the manifest weight of the evidence. Accordingly, the first, second and third assignments of error are overruled. IV. In appellant's fourth assigned error he argues the trial court abused its discretion in allowing a judge other than the one who was assigned to the case to adopt the appellee's findings of fact and conclusions of law verbatim. Specifically, appellant argues the findings of fact and conclusions of law are a nullity which requires a new trial. We disagree. Civ. R. 63(B) reads: (B) After Verdict or Findings. If for any reason the judge before whom an action has been tried is unable to perform the duties to be performed by the court after a verdict is returned or findings of fact and conclusions of law are filed, another judge designated by the administrative judge, or in the case of a single- judge division by the chief justice of the supreme court, may perform those duties; but if such other judge is satisfied that he cannot perform those duties, he may in his discretion grant a new trial. -13- Under this rule a successor judge may carry out post-verdict duties of his predecessor. Elsnau v. Weigel (1983), 5 Ohio St. 3d 77, 78 (emphasis added). In this case, the verdict had already been rendered by the predecessor judge and he had overruled appellant's motion for a new trial. Hence, this left the adoption of findings of fact and conclusions of law a post-verdict duty. Although there was no transcript prepared at the time the successor judge adopted appellee's findings of fact and conclusions of law, we presume the successor judge reviewed the entire record that was before him. Moreover, our review of the trial transcript and the record below does not reveal any glaring errors which would prejudice appellant's case. Importantly, this court, in reviewing the within case, has the benefit of the transcript and is not limited to the findings of fact and conclu- sions of law. We have relied upon all the evidence presented and have not limited our review to the findings of fact and conclusions of law in arriving at our decision. Accordingly, the fourth assigned error is overruled. Judgment reversed and remanded for a new trial. -14- This cause is reversed and remanded to the lower court for further proceedings consistent with this opinion. It is, therefore, considered that said appellants recover of said appellee their costs herein. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. ANN McMANAMON, P.J. BLACKMON, J., CONCUR JUDGE JOHN T. PATTON N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announce- ment of decision (see Rule 26). Ten (10) days from the date hereof, this document will be stamped to indicate journaliza- tion, at which time it will become the judgment and order of the court and time period for review will begin to run. .