COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 66926 THE BLONDER COMPANY : : JOURNAL ENTRY Plaintiff-Appellant : : AND vs. : : OPINION AS CREATION TAPETENFABRIK GmbH : : Defendant-Appellee : : DATE OF ANNOUNCEMENT OF DECISION: OCTOBER 5, 1995 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. CV-227948 JUDGMENT: REVERSED AND REMANDED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellant: For Defendant-Appellee: JOHN E. MARTINDALE DALE E. MARKWORTH Martindale & Brzytwa Mansour, Gavin, Gerlack & Manos 900 Skylight Office Tower Co., L.P.A. 1660 West 2nd Street 2150 Illuminating Building Cleveland, Ohio 44113-1411 55 Public Square Cleveland, Ohio 44113-1994 DAVID W. NEEL STEPHEN S. HART (Pro Hac Vice) Climaco, Climaco, Seminatore, Walter, Conston, Alexander & Co. Green, P.C. The Halle Building 90 Park Avenue 1228 Euclid Avenue New York, NY 10016-1387 Cleveland, Ohio 44115 - 2 - O'DONNELL, J.: Appellant, The Blonder Company, appeals from the decision of the trial court granting summary judgment in favor of appellee. AS Creation Tapetenfabrik GmbH. On February 28, 1992, Blonder, a Cleveland based distributor of wallpaper, filed suit against AS Creation, a German wallpaper manufacturer, and Donald Sherman, alleging he was their agent, for breach of contract and fraud. This suit arose out of an alleged agreement between Blonder and AS Creation which was negotiated by Sherman wherein Blonder expected to be provided with two distinct lines of wallpaper for a minimum of two years. Donald Sherman has been dismissed from the case and is not a party to this appeal. AS Creation moved for summary judgment on September 30, 1993, arguing that no contract existed between Blonder and AS Creation, and that Sherman was not an agent and therefore did not have authority to bind AS Creation to any contract. AS Creation incorporated the affidavit of its chief executive officer, Franz Jurgen Schneider, who stated that Sherman was not an authorized or appointed agent of AS Creation. Blonder responded to this motion asserting that Sherman acted as an agent of AS Creation with either expressed or implied authority to enter into contracts on its behalf. Blonder produced various evidentiary materials including the deposition testimony of Sherman who stated that AS Creation's export manager, Andrew - 3 - Nyman, told him that he was an agent of AS Creation, working on a commission basis. Blonder further presented evidence that an agreement had been reached between itself and AS Creation in January of 1990 when Sherman, Nyman and Larry Marston of Blonder met at Marco Island, Florida. Sherman stated that Nyman "started off by saying that Blonder is going to be very happy with the fact that we've decided to extend the life of both . . . collection[s], those items selected through 1992." After the meeting Sherman sent Nyman a note confirming some of the details of their discussion and particularly the fact that the "life" of the two patterns would extend through 1992. Sherman then sent Blonder a facsimile which stated in pertinent part: SHIPPED VIA FEDX (2 PKGS) ARE THE TAG BOOKS WE DISCUSSED: "LADY S" (AKA: DESIGN ART) AND "BE HAPPY". PAGES 3-5 CONTAIN THE SALIENT DETAILS. "BE HAPPY" WILL BE CURRENT THRU 12/92, AND YOUR STOCKED FABRIC COST WOULD BE IN THE ORDER OF $8.00/YD. * * * WE CAN DISCUSS OTHER DETAILS AT YOUR CONVENIENCE. On January 21, 1994, the trial court rendered summary judgment in favor of AS Creation without formal opinion. Blonder now appeals raising two assignments of error. - 4 - I. THE TRIAL COURT ERRED IN GRANTING APPELLEE'S MOTION FOR SUMMARY JUDGMENT WHERE GENUINE ISSUES OF MATERIAL FACT REMAIN AS TO THE EXISTENCE OF A CONTRACT WHICH APPELLEE BREACHED WHEN IT STOPPED SERVICING THE COLLECTIONS PREMATURELY IN DECEMBER 1991. Blonder argues that genuine issues of material fact exist regarding the capacity in which Donald Sherman acted in transacting business between AS Creation and Blonder, and his authority to contract. AS Creation believes no genuine issues of material fact exist and therefore urge summary judgment as an appropriate disposition. The issue for our resolution is whether or not the trial court properly granted summary judgment in favor of AS Creation. Civ. R. 56(C) provides in pertinent part: *** Summary judgment shall be rendered forthwith if the pleading, depositions, answers to interrogatories, written admissions, affidavits *** show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. ***. We begin by examining the law regarding the relationship between an intermediary and a corporation. The relationship of principal and agent, and resultant liability of the principal for the acts of the agent, may be created by an express grant of authority by the principal. Absent express agency, however, the relation may be one of implied or apparent agency. See Master Control v. Bancohio Natl. (1991), 61 Ohio St.3d 570. In the case at bar a genuine issue of material fact is in dispute because Sherman testified at his deposition that he was an agent of AS - 5 - Creation, while Schneider, in his affidavit, testified that no agency was created. As for Sherman's authority to bind AS Creation to a contract, the law of "Apparent Authority" is that: Even where one assuming to act as agent for a party in the making of a contract has no actual authority to so act, such party will be bound by the contract if such party has by his words or conduct, reasonably interpreted, caused the other party to the contract to believe that the one assuming to act as agent had the necessary authority to make the contract. Master Control, supra, at 576; Cascoilo v. Control Mut. Ins. Co. (1983), 4 Ohio St.3d 179. The following material facts create a genuine issue as to whether or not Sherman acted as an agent of AS Creation with either express or implied authority: (1) Blonder paid AS Creation directly; (2) AS Creation paid Sherman a fee, upon receipt of Blonder's payment; (3) Blonder's employee Marstrom thought Sherman was binding AS Creation by making the agreement to handle its product; (4) Sherman faxed information to Blonder stating AS Creation would indemnify Sherman and its distributors in the event of a copyright infringement suit; (5) Sherman faxed AS Creation price increases to Blonder; (6) AS Creation sent some sample books to Blonder directly and some through Sherman; - 6 - (7) Sherman stated in his deposition that AS Creation permitted him to select patterns and designs to market as its agent in the United States. (Sherman Deposition pp. 22-23). We are further mindful of Welco Indus. v. Applied Cos. (1993), 67 Ohio St.3d 344, in which the court stated: Under Civ. R. 56, summary judgment is proper when "(1) [n]o genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whim the motion for summary judgment is made, that conclusion is adverse to that party. Applying then the standards of Civ. R. 56(C) and following the Supreme Court directive in Welco, we conclude that genuine issues of material fact exist as to whether Sherman was an agent of AS Creation and whether he had authority to bind them to a contract with Blonder. Therefore we find that the trial court erred in granting summary judgment in favor of AS Creation. Appellant's first assignment of error is well taken. II. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT ON BLONDER'S FRAUD CLAIM. Blonder alleges that AS Creation used Sherman to misrepresent the length of time that certain lines of wallcovering would be available for distribution in the United States. AS Creation urges that the trial court correctly granted summary judgment on this issue because R.C. 1302.04, the statute - 7 - of frauds, requires a writing before a contract for the sale of goods in excess of $500.00 can be enforced. For purposes of summary judgment, we must consider whether or not any genuine issues exist and whether the moving party is entitled to judgment as a matter of law. See Civ. R. 56(C). In this case we find that the facsimile transmittals and letters between Sherman and AS Creation and between Sherman and Blonder create a genuine issue of material fact as to whether a contract existed between AS Creation and Blonder, and as to whether Sherman misrepresented the availability of wallcovering patterns. Since we have determined that there are genuine issues of material fact with regard to whether a contract existed and whether Sherman acted as an agent of AS Creation with authority to bind it to a contract with Blonder and whether or not Sherman misrepresented product availability to Blonder, we conclude that the trial court improperly granted summary judgment on Blonder's fraud claim. Appellants second assignment of error has merit. Judgment reversed and cause remanded. - 8 - This cause is reversed and remanded to the lower court for further proceedings consistent with this opinion. It is, therefore, considered that said appellant(s) recover of said appellee(s) 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. PATTON, C.J., CONCURS; NAHRA, J., DISSENTS (See Dissenting Opinion, Nahra, J., attached) JUDGE TERRENCE O'DONNELL 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 journalization, at which time it will become the judgment and order of the court and time period for review will begin to run. - 9 - COURT OF APPEALS OF OHIO EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 66926 THE BLONDER COMPANY, : : : Plaintiff-Appellant : D I S S E N T I N G : vs. : O P I N I O N : AS CREATION TAPETENFABRIK GmbH, : : : Defendant-Appellee : DATE: OCTOBER 5, 1995 NAHRA, J., DISSENTING: I believe the trial court was correct in granting summary judgment to the appellee, AS Creation. There was no evidence that Sherman had actual authority to bind AS Creation and no evidence to support a claim of apparent authority. Sherman could take orders from Blonder and other customers and pass them on to AS Creation. Nothing in the record before the trial court would support a finding that he had authority to contract on behalf of AS Creation and to obligate AS Creation to manufacture a line of goods for a specific period of time. Contary to the facts as stated in the majority opinion, Sherman never stated Nyman "told him he was an agent of AS Creation;" rather, Sherman stated only that he considered himself an agent of both parties. -2- Moreover, the record reflects there was no meeting between "Sherman, Nyman and Larry Marston" at Marco Island, Florida. In reality, Sherman met with Nyman alone and then later informed Marston of a comment Nyman had made. Second, the majority opinion, distilled to its essence, bases its decision on a premise for which there is no authority, viz., that an "agent" can create his own agency. The majority opinion disregards the unchallenged testimony of Nyman and the affidavit of Schneider that Sherman had no authority to make contracts; instead, it finds a genuine issue of material fact in Sherman's equivocal statements given at his deposition. A review of the materials submitted to the trial court, however, actually fails to indicate any "words or conduct" of AS Creation which would "cause" Blonder to believe at the relevant time period that Sherman had apparent authority to form a contract on AS Creation's behalf. See, Master Consolidated Corp. v. BancOhio Natl. Bank (1991), 61 Ohio St.3d 570 at 577. Indeed, none of the seven "material facts" listed by the majority opinion could create a "genuine issue" of apparent agency since they are activities which occurred after the date of the formation of the alleged contract. Furthermore, the actions are consistent only with AS Creation's role as a manufacturer of a product. The evidence produced by Blonder in the trial court proved the following: 1) the faxes from Blonder are to Sherman and Sherman's replies are on his own letterhead; 2) AS Creation is listed on those documents as merely the manufacturer; 3) the February 1990 letter from Blonder to Sherman sets out respective -3- duties in an agreement between those two parties; 4) in their deposition testimony, Blonder's officers Magrey and Marston admitted they spoke only with Sherman concerning any agreement; they could recall few details of their early conversations with Sherman except that he could obtain the products for Blonder; 5) Magrey and Marston did not testify Sherman had told them he was making a contract with Blonder on AS Creation's behalf; 6) the deposition testimony of Magrey and Marston also established that Blonder had essentially made the decision with Sherman to market some of AS Creation's products prior to the January 1990 wallcovering convention; and 7) Blonder produced no evidence that AS Creation received or was aware of the January through May, 1990 faxes between Blonder and Sherman. Cf., Illinois Controls, Inc. v. Langham (1994), 70 Ohio St.3d 512. Thus, Blonder's evidence proved only that an agreement was reached between Blonder and Sherman. Kashfi v. Phibro-Salomon, Inc. (S.D.N.Y. 1986), 628 F.Supp. 727. In reviewing this evidence, there is a glaring lack of any action on AS Creation's part which would create an "apparent" agency. Moreover, Sherman's deposition testimony also fails to supply the necessary element of Blonder's claim. Sherman's deposition testimony made it clear that he considered himself "independent" and a "middleman" whose service was to facilitate the business of both companies. Indeed, he stated he alone personally dealt with Blonder, he obtained the products for Blonder, he determined the pricing for the products -4- he supplied, and he did the "troubleshooting" if Blonder had any problems; he considered Blonder to be his "customer." Moreover, Nyman's testimony supported Schneider's affidavit that AS Creation by its "acts or conduct" gave Sherman no authority to contract on its behalf. Nyman merely stated he allowed Sherman to choose samples of the products he would introduce to the United States distributors. Sherman had total discretion in doing so. Nyman testified that pursuant to their arrangement, Sherman was to display these samples; he could set his own prices for the products in order to make a profit for himself, he would obtain purchase orders and send them to AS Creation, and AS Creation was thereafter free to accept or to reject the purchase orders. Sherman received money only if AS Creation accepted a purchase order. Clearly, since AS Creation retained the discretion to accept or reject Blonder's orders, the evidence failed to prove Sherman had authority to contract for AS Creation. Sherman acted independently, not as AS Creation's agent. See, e.g., Cascioli v. Central Mut. Ins. Co. (1983), 4 Ohio St.3d 179. In summary, although Sherman stated in his deposition testimony that he gained Nyman's approval to market AS Creation's products "as their (sic) agent" and "for a commission," he also stated he saw himself as Blonder's agent in the transactions between Blonder and AS Creation and that he could not make any decisions with regard to the supply of the products, especially the duration of their manufacture. Despite the majority opinion's reliance on it, Sherman's testimony, therefore, was -5- insufficient to prove AS Creation gave him apparent authority to contract on its behalf. Thus, since Blonder failed to produce evidence sufficient to demonstrate a genuine issue of material fact existed concerning its allegation that Sherman acted as AS Creation's agent when he dealt with Blonder, the trial court correctly granted summary judgment on that claim. Cascioli v. Central Mut. Ins. Co., supra; cf., Master Consolidated Corp. v. BancOhio Natl. Bank, supra; General Cartage & Storage Co. v. Cox (1906), 74 Ohio St. 284. Similarly, summary judgment was appropriate with regard to Blonder's fraud claim since Blonder also failed to present sufficient evidence on the necessary elements of this cause of action. First, there was no evidence that Blonder entered into any agreement with AS Creation, hence, there was no "transaction" to which a claim of fraud could apply. See, e.g., Friedland v. Lipman (1980), 68 Ohio App.2d 255. Second, Blonder's evidence demonstrated that it was only after Blonder had already committed itself to distribute the two designs that Sherman informed it that the life of both the designs would be extended to December 1992. Indeed, the first fax between Sherman and Blonder indicates that Blonder agreed to distribute at least one of the designs merely on Sherman's assurance that its duration was a minimum of two years. Since Blonder's own evidence proved this was the standard duration, appellant could not prove either a misrepresentation or that it reasonably relied on a misrepresentation to its detriment. -6- Third, in reply to Blonder's evidence attached its brief in opposition to summary judgment, AS Creation correctly asserted Blonder's fraud claim against AS Creation was barred by the Ohio Supreme Court's decision in Marion Production Credit Assn. v. Cochran (1988), 40 Ohio St.3d 265. In Marion, at paragraph 2 of the syllabus, the supreme court pertinently stated the following: 2. The Statute of Frauds may not be interposed in furtherance of fraud. An act of fraud against which relief will be granted, notwithstanding the Statute of Frauds, consists in the refusal to perform an agreement upon the faith of which plaintiff has been misled to his injury, and not a mere refusal to perform an agreement, which, by reason of the Statute of Frauds, cannot be enforced by legal action. 3. Whether the alleged misrepresentation is of a promise of future performance or of a then- present fact, it will not defeat the operation of the Statute of Frauds unless such fraudulent inducement is premised upon matters which are wholly extrinsic to the writing. The Statute of Frauds may not be overcome by a fraudulent inducement claim which alleges that the inducement to sign the writing was a promise, the terms of which are directly contradicted by the signed writing. Accordingly, an oral agreement cannot be enforced in preference to a signed writing which pertains to exactly the same subject matter, yet has different terms. Id., at syllabus. In this case, the alleged misrepresentation was the duration of the two designs Blonder had "agreed" to distribute. The deposition testimony supplied to the trial court, together with the writings upon which Blonder relied to establish both the "agreement" with AS Creation and the misrepresentation, i.e., the faxes exchanged between Blonder, Sherman and AS Creation, all mention the duration of the designs, however, they do not -7- establish the existence of any contract between Blonder and AS Creation. The Statute of Frauds, therefore, applied to bar Blonder's claim against AS Creation. Id.; cf., Stegawski v. Cleveland Anesthesia Group, Inc. (1987), 37 Ohio App.3d 78; Busler v. D & H Mfg., Inc. (1992), 81 Ohio App.3d 385. For the foregoing reasons, and from a review of the record, it is clear the trial court did not err in granting AS Creation's motion for summary judgment since no genuine issue of material .