COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 60925 ADVANCE CHEMICAL PRODUCTS COMPANY : : : Plaintiff-Appellee : JOURNAL ENTRY : v. : AND : NORTH COAST CLEANING SERVICE, : OPINION ET AL. : : Defendant-Appellant : DATE OF ANNOUNCEMENT OF DECISION: JUNE 25, 1992 CHARACTER OF PROCEEDING: CIVIL APPEAL FROM THE COMMON PLEAS COURT CASE NO. CP-180020 JUDGMENT: REVERSED; FINAL JUDGMENT ENTERED FOR DEFENDANT-APPELLANT, WILLIAM C. SPIGUTZ DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: HARVEY B. BRUNER MARY BETH CORRIGAN BRUNER, SHAPIRO & HARRIS 1600 Illuminating Building 55 Public Square Cleveland, Ohio 44113 For Defendant-Appellant: PAUL MANCINO, JR. 75 Public Square Building Suite 1016 Cleveland, Ohio 44113 - 2 - SPELLACY, J.: Plaintiff-appellee Advance Chemical Products, Inc. ("appellee") brought an action for breach of contract based on an account against defendant North Coast Cleaning Service, Inc. ("North Coast"), defendant-appellant William C. Spigutz ("appellant"), and appellant's two sons, defendants William L. Spigutz and R.M. Spigutz. A jury trial, at which North Coast failed to appear, was held and, at the conclusion of appellee's evidence, the trial court granted defendants William L. Spigutz's and R.M. Spigutz's motions for directed verdict. At the conclusion of the trial the jury found for appellee, and against appellant, in the amount of $9,712.34. The trial court, noting that it considered the proceedings to be an ex parte trial with respect to North Coast, entered judgment in the amount of $9,712.34 against North Coast. Appellant appeals and raises the following assignments of error: I. THE COURT COMMITTED PREJUDICIAL ERROR IN OVERRULING THE MOTION FOR CONTINUANCE FILED ON BEHALF OF THE DEFENDANT. II. THE COURT COMMITTED PREJUDICIAL ERROR IN ADMITTING THE ALLEGED ACCOUNT INTO EVIDENCE. III. THE COURT COMMITTED PREJUDICIAL ERROR IN NOT DISMISSING THIS CASE AS TO WILLIAM SPIGUTZ AS THERE WAS NO EVIDENCE WHICH WOULD AUTHORIZE PERSONAL LIABILITY UPON A THEORY OF PIERCING THE CORPORATE VEIL. IV. THE DEFENDANT WAS DENIED DUE PROCESS OF LAW WHEN THE COURT ALLOWED THE CASE TO BE PRESENTED TO A JURY UPON A THEORY NOT ALLEGED IN ANY OF THE PLEADINGS. -3- V. THE COURT COMMITTED PREJUDICIAL ERROR IN MAKING A FACTUAL DETERMINATION AND THUS USURPING THE FUNCTION OF THE JURY. I. In his first assignment of error, appellant contends the trial court erred when it denied his motion for a continuance. Appellant's assignment of error lacks merit. "The grant or denial of a continuance is a matter which is entrusted to the broad, sound discretion of the trial judge. An appellate court must not reverse the denial of a continuance unless there has been an abuse of discretion." State v. Unger (1981), 67 Ohio St. 2d 65, 67. The term "abuse of discretion is defined as "*** connot[ing] more than an error of law or judgment; it implies that the court's attitude is unreasonable, arbitrary or unconscionable." Blakemore v. Blakemore (1983), 5 Ohio St. 3d 217, 219. In this case, the trial court set the date for trial, October 25, 1990, at a pretrial on July 16, 1990. The trial court then granted a motion made by appellant's counsel to withdraw in a journal entry journalized on July 25, 1990. On October 5, 1990, appellant's new counsel filed a motion for a continuance stating that he planned to be out of the state on October 25, 1990. He also stated that he had recently been retained and had only discovered the scheduled trial date at a pretrial held on October 4, 1990. We find that the trial court's decision to deny appellant's motion for a continuance did not constitute an abuse of -4- discretion. Accordingly, appellant's first assignment of error is not well taken. II. In his second assignment of error, appellant contends the trial court erred when it admitted Exhibit A into evidence. Appellant's assignment of error has merit. Daniel Mauceri, president of appellee and its only witness at trial, testified that Exhibit A is a compilation of Exhibit B prepared by his secretary. Exhibit B consists of invoices and receiving slips dating from November 3, 1987, to November 11, 1988, and totalling $8,765.40. Mauceri further testified that, although Exhibit A was not prepared for this litigation, it was not kept in the usual and ordinary course of business. Evid. R. 801 provides, in pertinent part: The following definitions apply under this article: (A) Statement. A "statement" is (1) an oral or written assertion or (2) nonverbal conduct of a person, if it is intended by him as an assertion. (B) Declarant. A "declarant" is a person who makes a statement. (C) Hearsay. "Hearsay" is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted. Exhibit A constitutes hearsay because it is a statement made by a declarant who did not testify at trial and it was entered into evidence to prove the truth of the matter asserted. Hearsay - 5 - is not admissible unless it falls within an exception. Evid. R. 802. The only applicable exception is Evid. R. 803(b) which provides, in pertinent part: The following are not excluded by the hearsay rule, even though the declarant is available as a witness: *** A memorandum, report, record, or data compilation, in any form, of acts, events, or conditions, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, ***. Exhibit A does not fall within Evid. R. 803(b) because it was not kept in the course of appellee's regularly conducted business activity. We find, therefore, that the trial court erred when it admitted Exhibit A into evidence. In addition, we find that the admission of Exhibit A into evidence was not harmless error. Although Exhibit A accurately records the sum of the invoices found in Exhibit B, $8,765.40, it is not merely a compilation of Exhibit B because it adds a $946.94 service charge not found in Exhibit B, for a total of $9,712.34. The jury's verdict was the amount from Exhibit A, $9,712.34. Accordingly, appellant's second assignment of error is well taken. III. - 6 - In his third assignment of error, appellant contends the trial court erred when it denied his motion for a directed verdict made under Civ. R. 50. Appellant's assignment of error has merit. The trial court instructed the jury on the issues of piercing the corporate veil and a corporate officer or director's personal liability on contracts for which the corporate principle is liable. "The test for granting a directed verdict *** is whether the movant is entitled to judgment as a matter of law when the evidence is construed most strongly in favor of the non- movant." Sanek v. Duracote Corp. (1989), 43 Ohio St. 3d 169, 172. First, appellant argues that insufficient evidence was adduced to support a piercing of the corporate veil. We agree. "The concept of the corporation being a separate entity *** is a legal fiction which will under certain circumstances be disregarded." Saeks v. Saeks (1985), 24 Ohio App. 3d 67, 70; see, also, State v. Standard Oil Co. (1892), 49 Ohio St. 137. "Courts, [however,] have been reluctant to disregard the corporate entity and have done so only where the corporation has been used as a cloak for fraud or illegality or where the sole owner has exercised such excessive control over the corporation that it no longer has a separate existence." E.S. Preston Assoc., Inc. v. Preston (1986), 24 Ohio St. 3d 7, 11. In Bucyrus-Erie Co. v. General Products Corp. (C.A.6, 1981), 643 F.2d 413, 418, the court held that: -7- [T]he corporate fiction should be disregarded when: (1) domination and control over the corporation by those to be held liable is so complete that the corporation has no separate mind, will, or existence of its own; (2) that domination and control was used to commit fraud or wrong or other dishonest or unjust act, and (3) injury or unjust loss resulted to the plaintiff from such control and wrong. *** This court has applied the test set forth in Bucyrus, supra. See Link v. Leadworks Corp. (April 23, 1992), Cuyahoga App. No. 60300, unreported, page 13; Midea v. Berry (Jan. 7, 1988), Cuyahoga App. No. 52649, unreported, page 5; Allied Pipe Products, Inc. v. Petina, d.b.a. Ferbert Fence Co. (Jan. 14, 1988), Cuyahoga App. No. 52844, unreported, page 3; see, also, American Hardware Supply v. Alan Supply, Inc. (1989), 63 Ohio App. 3d 838, 843. Pertinent evidence adduced at trial reveals the following: From 1975 until 1982, appellant operated Beachwood Cleaners, a corporation, which carried an account with appellee. In 1982, appellant formed North Coast, a separate corporation, and made himself president. Appellant, the only witness for the defense, testified that his wife, Helen Spigutz, is now president of North Coast and its sole shareholder. Initially, appellant testified that he had been an officer at North Coast. Appellant then explained that his position had been that of Office Manager. He also testified that his wife was the only individual authorized to sign North Coast's checks. Appellant was not aware of any corporate records concerning North -8- Coast except for the Articles of Incorporation and the Original Appointment of Agent, which were admitted into evidence. Appellant testified that North Coast's corporate meetings were held in his home, although minutes of the meetings were not recorded. Appellant further testified that appellee had never inquired about North Coast's corporate officers or shareholders. Mauceri testified that all the materials at issue were pur- chased by appellant. Mauceri also testified that appellant and his family were still operating a cleaning business and that appellee continued to do business, on a cash on delivery basis, with "the same people, delivering to the same address ***" to businesses called Inner-Space Cleaning and Cuyahoga Cleaning Service. (Tr. 15). Copies of checks from Inner-Space Cleaning Corp. and Cuyahoga Cleaning Services, Inc. made out to appellee and signed by "William C. Spigutz," "Helen Spigutz," and "Bill Spigutz" were entered into evidence. Mauceri testified that one of the signatures was appellant's. Appellant testified that he has not worked for four years as the result of a back injury. Applying the test set forth in Bucyrus, supra, we find that, even construing the evidence most favorably for appellee, the trial court erred when it concluded that sufficient evidence had been adduced to justify piercing of the corporate veil. Appellee has made no showing that appellant, through domination and control of North Coast, committed any fraud or wrong or other dishonest or unjust act. -9- Second, a corporate officer or director "is not personally liable on contracts *** for which his corporate principle is liable, unless he intentionally or inadvertently binds himself as an individual." Centennial Ins. Co. v. Tanny Int'l. (1975), 46 Ohio App. 2d 137, 142. If a contract does not expressly address the liability of the corporate officer or director, then liability is determined by the intent of the parties. Id. We find that, even construing the evidence most favorably for appellee, there is insufficient evidence to find appellant personally liable on the account between appellee and North Coast. Accordingly, appellant's third assignment of error is well taken. IV. In his fourth assignment of error, appellant contends the trial court erred when it instructed the jury on the issue of piercing the corporate veil even though that issue was not included in appellee's complaint. Appellant's assignment of error lacks merit. Civ. R. 15(B) provides, in pertinent part: When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment. Failure to amend as provided herein does not affect the result of the trial of these issues. *** -10- "Whether an unpleaded issue is tried by implied consent is to be determined by the trial court, whose finding will not be disturbed, absent a showing of an abuse of discretion." State, ex rel. Evans, v. Bainbridge Twp. Trustees (1983), 5 Ohio St. 3d 41, paragraph three of the syllabus. In Evan, supra, the court set forth some of the factors to be considered when determining whether an unpleaded issue is tried by implied consent: *** whether the parties impliedly consented to litigate an issue include: whether they recognized that an unpleaded issue entered the case; whether the opposing party had a fair opportunity to address the tendered issue or would offer additional evidence if the case were to be tried on a different theory; and, whether the witnesses were subjected to extensive cross-examination on the issue. Id. at paragraph one of the syllabus. In this case, both appellee and appellant mentioned the issue of piercing the corporate veil in their opening statements. In addition, appellant had a fair opportunity to address the issue and cross-examined Mauceri extensively on the issue. As a result, we find the trial court did not abuse its discretion when it instructed the jury on the issue of piercing the corporate veil. Accordingly, appellant's fourth assignment of error lacks merit. V. In his fifth assignment of error, appellant contends the trial court erred in its instruction to the jury. Appellant's assignment of error lacks merit. -11- Appellant makes two arguments in support of his assignment of error. First, appellant argues the trial court erred when it instructed the jury that a contract existed between appellee and North Coast. Appellant, however, failed to object to this portion of the trial court's instruction to the jury. Civ. R. 51(A) provides, in pertinent part: "A party may not assign as error the giving or the failure to give any instruction unless he objects thereto before the jury retires to consider its verdict, stating specifically the matter to which he objects and the grounds of his objection." As a result of his failure to object at trial, appellant waived his right to assign this error on appeal. Second, appellant argues the trial court erred when it instructed the jury that one of the factors to be considered when determining whether a corporate officer or director is personally liable on a contract is the manner in which the corporate officer or director signed the contract. This portion of the trial court's instruction to the jury was clearly superfluous. The only signatures involved were found on either receiving slips or checks. We find, however, the error to be harmless since the trial court emphasized that a corporate officer or director's signature was only one factor to consider when determining whether there is personal liability. Appellant's fifth assignment of error is not well taken. Based upon our decision to find appellant's third assignment of error well taken, we reverse and enter final judgment for appellant -12- This cause is reversed. It is, therefore, considered that said appellant(s) recover of said appellee(s) 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. Exceptions. FRANCIS E. SWEENEY, P.J., AND HARPER, J., CONCURS IN JUDGMENT ONLY. LEO M. SPELLACY JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time it will become the judgment and order of the court and time period for review will begin to run. .