COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 60488 : SONOMA CORPORATION : : JOURNAL ENTRY Plaintiff-Appellant : : and -vs- : : OPINION : BANK ONE, AKRON, NA : : Defendant-Appellee : : -vs- JOHN COURY, JR., et al. Third Party Defendants-Appellants DATE OF ANNOUNCEMENT JUNE 18, 1992 OF DECISION: CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. 170,838 JUDGMENT: Affirmed. DATE OF JOURNALIZATION: __________________________ APPEARANCES: FOR PLAINTIFF AND THIRD PARTY FOR DEFENDANT-APPELLEE: DEFENDANTS-APPELLANT: IRA S. GOFFMAN RONALD N. TOWNE Roth & Rolf Company DONALD W. DAVIS, JR. 600 Bond Court Building Guy, Lammert & Towne 1300 E. 9th Street 2210 First National Tower Cleveland, Ohio 44114 Akron, Ohio 44308-1449 -2- PATRICIA A. BLACKMON, J.: Sonoma Corporation plaintiff-appellant, hereinafter Son- oma and its principals John Coury, Jr. and Robert Nemetz third party defendants-appellants, hereinafter Coury and Nemetz timely appeal the trial court's judgment for Bank One, Akron, NA defendant-appellee, hereinafter Bank One. For the reasons set forth below, we affirm. The essential facts are as follows: The underlying action in this case was one of conversion. Sonoma sued Bank One for revoking the payment of a check issued to Sonoma. The check was written by George Montague, dba, Renaissance, hereinafter Montague, drawn on Montague's Bank One account and totaling $188,000.00. Incidentally, the check represented the return of funds by Montague to Coury and Nemetz, Sonoma's owners. Sonoma claimed that the payment was final on March 1, 1989, consequently, the March 2, 1989 revocation by Bank One was illegal. Although Sonoma argued conversion, Bank One responded and sought indemnification from Coury and Nemetz. The trial court ruled in Bank One's favor and ordered restitutionary relief to Bank One. The events leading to the trial court's decision were based primarily on the underlying business arrangement among Montague, Coury, and Nemetz. Initially, Montague needed $100,000 to finance a business deal to purchase erasable computer discs. After meeting Coury and Nemetz also partners of J. R. Health Associates, Montague informed them of his need for the $100,000.00. The deal consisted of purchasing the disc from Sony -3- of Japan and selling the disc to Warner and Swasey of Cleveland. Within Thirty-one (31) days, Coury and Nemetz were to receive $100,000.00 and to realize 49% profits. Thereupon, Coury and Nemetz agreed, and Montague was given a check from J. R. Associates for $85,000.00, $10,000.00 check from Coury, and $5,000.00 cash from Nemetz. Afterwards, Montague prepared the first of two documents titled "Partnership Agreement". The second agreement was formed when Montague proposed that they purchase 30 additional discs, which costs $19,350.00. Although there were no facts to establish that Montague had purchased the 90 discs prior to the second proposal, equally there was no evidence presented to corroborate that the time for repayment was extended. There was uncontroverted evidence offered at the trial that neither Coury nor Nemetz investigated Montague's background. In fact, they accepted Montague's representation that Renaissance's net worth was $968,000.00. Meanwhile, Montague's promises started to prove false. For example, the alleged loans were not repaid in January. Montague repeatedly cancelled meetings with officials of both Sony and Warner & Swasey. Finally, Montague's representation that Coury's in-laws could use his condominium located in Hawaii proved false. Regardless of the falsifications and misrepresentations in January, 1989, Coury and Nemetz incorporated Sonoma. The signature card at Chase Bank for the Corporate account and the -4- Corporate resolution named Montague as President, Coury as Vice President, and Nemetz as Secretary-Treasurer. After the incorporation, Montague tendered the $188,000.00. The check was made payable to Sonoma and deposited in its Corporate account at Chase. Chase transmitted the check to Bank One for payment and it was received on February 28, 1989. Coury inquired of the status of the check and was told that it was NSF. Coury notified Montaque of the NSF status and he maintained that he was depositing $200,000 in his account that day. On March 1, 1989, the $188,000 check was submitted to Bank One, and it was paid. Coury inquired about the status of the check and Bank One responded and informed Coury that the check was paid. On a second call he was again informed that the check was paid. The next day, March 2, 1989, Bank One informed Coury and Chase that it was returning the check for NSF and revoking the payment. Even though Coury was aware of the revocation, he wrote three checks on Sonoma's account. It was uncontroverted that Bank One paid the $188,000 check in error. It was also undisputed that Coury made two purchases of Bob Evan's stock securities with checks drawn on Sonoma's account after he was informed of the revocation. Also, Coury testified that he would have purchased the stock regardless of NSF checks written to Sonoma. Prior to trial Sonoma requested Bank One to produce any and all checks drawn on its bank from any source, when the amount was $25,000 or more and returned after the midnight deadline. Bank -5- One objected, and Sonoma moved to compel, which the trial court denied. After the trial court reviewed the evidence, it granted judgment for Bank One; it found Bank One entitled to restitution; it held that Sonoma was not a holder in due course; it held that Bank One was not liable for conversion; it found Bank One's third party action moot. Sonoma, Coury and Nemetz for their appeal assigned four errors for this court to review. THE TRIAL COURT ERRED IN FINDING BANK ONE WAS ENTITLED TO RESTITUTION. Sonoma's first assignment of error lacks merit and is overruled. Although Sonoma argues that Bank One is not protected by normal restitutionary principles, we disagree. We adopt the position that a bank retains its restitutionary rights with respect to final payment of a NSF check that is mistakenly paid unless payment or acceptance is final in favor of a holder in due course, or when a payee has in good faith changed its position in reliance on the payment. National Savings and Trust Co. v. Park Corp. (C.A. 6, 1983), 722 F2d. 1303. Additionally, we find the trial court's decision or .