COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59750 CAROLYN P. LINDSAY : : Plaintiff-appellee : : JOURNAL ENTRY vs. : and : OPINION ROBERT A. LINDSAY : : Defendant-appellant : : : DATE OF ANNOUNCEMENT OF DECISION : JANUARY 30, 1992 CHARACTER OF PROCEEDING : Civil appeal from : Euclid Municipal Court : Case No. 89-CVF-2145 JUDGMENT : AFFIRMED IN PART; REVERSED : IN PART AND REMANDED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiff-appellee: JOHN J. SHEEHAN, JR. Attorney at Law Hanna Building, Suite 422 1422 Euclid Avenue Cleveland, Ohio 44115-1967 For defendant-appellant: ANNE W. LINDSAY Attorney at Law 2525 Edgehill Road Cleveland Heights, OH 44106 (Cont.) - 1 - For defendant-appellant: HARVEY S. YASINOW Attorney at Law 1715 East 115 Street Cleveland, Ohio 44106 Cleveland, Ohio 44106 FRANCIS E. SWEENEY, J.: Defendant-appellant, Robert A. Lindsay, appeals from the decision of the City of Euclid Municipal Court, which rendered judgment in favor of plaintiff-appellee, Carolyn P. Lindsay, on her complaint and on appellant's cross-claim. For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings. Appellee brought suit demanding payment on a promissory note issued by appellant. Appellant timely answered, raising duress and breach of fiduciary duty rendering the note unlawful and unenforceable as affirmative defenses. Appellant also filed a counter-claim against appellee, demanding payment on a loan which he allegedly forgave by signing the present note. Final- ly, appellant sought Civ. R. 11 sanctions against appellee's attorney. After appellant filed a motion for default judgment on his counter-claim, appellee filed a motion for leave to file a reply to counter-claim instanter. The trial court granted appel- lee's motion, and the cause proceeded to a bench trial. The pertinent facts of this matter do not appear to be in dispute. The litigants were husband and wife before the dissolution of their marriage in 1988. Appellee was a former shareholder, - 2 - officer and director of the F.G.C. Corporation (hereinafter "F.G.C."), which manufactured custom frames for art work and prints. Appellant was also a shareholder, officer and director of F.G.C. prior to the sale of said company. However, by May 8, 1989, appellee was a director only of F.G.C. On May 8, 1989, the parties signed a "promissory note," wherein appellant agreed to pay appellee four thousand dollars and forgive a recent loan of one thousand eight hundred dollars to appellee in exchange for appellee's promise to cast an affir- mative vote as a director of F.G.C. at a meeting of the board of directors to approve the sale of all corporate assets. At various times throughout the trial, appellant attempted to estab- lish that his signature was obtained through duress. The trial court sustained all objections to testimony which purportedly would establish such defense. Based on the above evidence, the trial court found in favor of appellee and rendered judgment in the amount of five thousand eight hundred dollars. Appellant timely appeals, raising five assignments of error for our review. Appellant's first assignment of error is as follows: THE DEFENDANT'S MOTION FOR DEFAULT JUDGMENT SHOULD HAVE BEEN GRANTED. Appellant filed his motion for default judgment six days prior to the date on which appellee filed her motion for leave to file reply to counter-claim instanter. Appellant contends it - 3 - was error for the trial court to overrule his motion for default judgment. Appellant's argument lacks merit. Civ. R. 55(A) provides in pertinent part that "if a party against whom judgment by default is sought has appeared in the action, he . . . shall be served with written notice of the application for judgment at least seven days prior to the hear- ing on such application." In the present case, appellee had made an appearance in the action by filing the original complaint. Thus, the trial court would have been in error had it granted appellant's motion without a hearing on the application. There- after, appellee filed her motion for leave to file reply to counter-claim instanter. The trial court then granted appellee's motion and overruled appellant's. Appellant argues the trial court's ruling was an abuse of discretion similar to that found in Miller v. Lint (1980), 62 Ohio St. 2d 209. In Miller, the Ohio Supreme Court held the trial court abused its discretion in allowing the defendant to file her answer beyond the rule date without regard to the re- quirements of the Ohio Rules of Civil Procedure. The defendant therein, upon receiving notice of a motion for default judgment, proceeded to file her answer thirty-six days after expiration of the answer date, but failed to comport with Civ. R. 6(B)(2), which provides that late filings can only be accomplished "upon motion" and that failure to act was the result of "excusable neglect." The defendant therein failed to file a written motion - 4 - pursuant to Civ. R. 7(B)(1) and failed to effect service of said motion pursuant to Civ. R. 6(D), and, further, defendant's answer failed to contain any certificate of service pursuant to Civ. R. 5(D). Moreover, the defendant did not even attempt to show "excusable neglect" as required by Civ. R. 6(B). In the present case, appellee's motion to file reply to counter-claim instanter was in writing, and service of said motion is not contested. Furthermore, appellee's reply to appel- lant's counter-claim does contain a certificate of service. Additionally, while it is preferable to have an affidavit sup- porting appellee's allegation of excusable neglect, see Evans v. Chapman (1986), 28 Ohio St. 3d 132, 135, appellee did allege in a motion brought pursuant to Civ. R. 6(B) such excusable neglect. The plaintiff herein simply did not show a disregard for the rules of civil procedure as established in Miller. Finally, this court admits the instant case falls in a gray area between Miller, supra, and Evans, supra, considering that appellant's default motion was pending and a written motion pur- suant to Civ. R. 6(B) was filed by appellee. However, this court is mindful of the admonition that cases should be decided upon their merits, where possible, rather than on procedural grounds. Marion Credit Assn. v. Cochran (1988), 40 Ohio St. 3d 265. Thus, we conclude the trial court did not abuse its discretion in overruling appellant's motion for default judgment while at the - 5 - same time granting appellee's motion for leave to file reply to counter-claim instanter. Appellant's first assignment of error is, accordingly, overruled. Appellant's second assignment of error states: THE PROMISSORY NOTE, ON ITS FACE, IS AGAINST PUBLIC POLICY AND VOID. Appellant argues the instant promissory note is against public policy and is void on its face since the consideration for defendant's promise of money is plaintiff's promise to vote in favor of the sale of F.G.C.'s corporate assets. This argument has merit. It has long been established "that a contract made by a director of a corporation with reference to his official action, based upon a consideration personal to himself, is against pub- lic policy and void, and a contract which restricts a director in the discharge of his official duties is unenforceable." Suesskind v. Wilson (1931), 124 Ohio St. 54, 57-58, citing Thomas v. Matthews (1916), 94 Ohio St. 32. On its face, it is clear that the instant promissory note is void and unenforceable in that in consideration for such note, appellee "promise[d] not to change my previously disclosed inten- tion to cast an affirmative vote as a director of F.G.C. Corpora- tion." Furthermore, appellee's testimony at trial established that she "had requested some sort of an agreement, if not a check, before I got -- before I attended the meeting, before I - 6 - agreed to the sale of the shop, ***." Thus, it is clear that the instant promissory note was the quid pro quo of a contract made by a director of a corporation with reference to her official action based upon a consideration personal to herself. Appellee received the promissory note in exchange for her attendance at the board of director's meeting and her affirmative vote as a director of the F.G.C. Corporation. Therefore, appellant's second assignment of error is sus- tained. The trial court's judgment of four thousand dollars for appellee on her complaint and order that defendant forgive the $1,800 loan is reversed. However, the cause is remanded on defendant-appellant's counterclaim as it appears the only issue the trial court allowed to be litigated was the note itself. Appellant's third and fourth assignments of error raise similar issues of law and fact; thus, they will be considered jointly. They state: III. EVIDENCE PERTAINING TO THE DEFENSE OF DURESS SHOULD NOT HAVE BEEN EXCLUDED ON THE BASIS OF RELEVANCE. IV.THE DEFENDANT SHOULD HAVE BEEN ALLOWED TO PROFFER EVIDENCE EXCLUDED ON DIRECT EXAMINATION, AND TO CROSS-EXAMINE THE PLAINTIFF ON MATERIAL ISSUES. Appellant contends the trial court should not have excluded testimony relative to the defense of duress. On numerous occa- sions, appellant's counsel attempted to elicit testimony on the subject of duress. The trial court repeatedly thwarted such efforts, noting that such testimony would be irrelevant to the - 7 - controversy at bar. Appellant's counsel then attempted to prof- fer testimony for the record. The trial court, however, rejected any such proffer of testimony. Appellant argues this was rever- sible error. We agree. In the present case, the issue of duress was highly relevant to appellant's defense. The defense of duress has long been recognized as a defense to the signing of a promissory note. Tallmadge v. Robinson (1952), 158 Ohio St. 333. Moreover, this court has recognized the defense of economic duress or "business compulsion." Woman's Federal Savings and Loan Association v. Potz (Nov. 117, 1983), Cuyahoga App. No. 46690, unreported, at 4; Mancino v. Friedman (1980), 69 Ohio App. 2d 30. Thus, it was error for the trial court to exclude testimony concerning appel- lant's defense of duress. Moreover, it is reversible error for a trial court to ex- clude a proffer of evidence excluded on direct examination. State v. Hartford (1984), 21 Ohio App. 3d 29, paragraph 1 of court's syllabus. In fact, a proffer of excluded evidence is a prerequisite of appellate review. Id.; State v. Rivers (1977), 50 Ohio App. 2d 129. Thus, counsel must be afforded an oppor- tunity to proffer excluded evidence or otherwise make known to the court the substance of the excluded evidence. Birath v. Birath (1988), 53 Ohio App. 3d 31. In the present case, appellant's counsel attempted to elicit testimony from appellant, Anne Lindsay, and Kelley Shaw - 8 - concerning the circumstances which led appellant to sign the instant promissory note. In such case, the trial court sustained appellee's objection and refused to allow appellant an oppor- tunity to proffer for the record such testimony. This was reversible error. However, inasmuch as the instant promissory note is void and unenforceable on its face, the defense of duress and our disposi- tion of appellant's third and fourth assignments of error become moot on remand of appellant's counter-claims. Appellant's final assignment of error follows: SANCTIONS SHOULD HAVE BEEN IMPOSED AGAINST THE PLAINTIFF'S ATTORNEY PURSUANT TO RULE 11 OF THE OHIO RULES OF CIVIL PROCEDURE. Appellant contends the trial court should have imposed sanctions against appellee's attorney pursuant to Civ. R. 11, which appellant contends would include his attorneys' fees and costs incurred in defending against an alleged "unwarranted" claim. Appellant argues that appellee's attorney should have known, and it is alleged he did know, that the instant note was invalid and unenforceable. A trial court's decision regarding the imposition of sanc- tions pursuant to Civ. R. 11 will not be reversed absent an abuse of discretion. State, ex rel. Fant, v. Stykes (1987), 29 Ohio St. 3d 65. Moreover, a hearing should be held to receive evi- dence to make a determination of whether a willful violation of Civ. R. 11 has occurred. Id. - 9 - In the present case, no hearing was held, nor was any evi- dence presented, to determine whether a willful violation of Civ. R. 11 had occurred. Thus, the trial court did not err in failing to impose Civ. R. 11 sanctions against appellee's coun- sel. Thus, appellant's final assignment of error is overruled. Judgment is, therefore, affirmed in part, reversed in part, and remanded on appellant's counterclaim for further proceedings not inconsistent with this opinion. - 10 - This cause is reversed and remanded to the lower court for further proceedings consistent with this opinion. It is, therefore, considered that said appellant recover of said appellee his 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. JOHN F. CORRIGAN, J. KRUPANSKY, C.J. CONCUR JUDGE FRANCIS E. SWEENEY 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. .