COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68106 CUYAHOGA COUNTY GENERAL : HEALTH DIST. : : PLAINTIFF-APPELLEE : JOURNAL ENTRY : v. : AND : : OPINION LILLIE M. WHITE : : : DEFENDANT-APPELLANT : : and : : CAROL ANN YELANOSKY : : DEFENDANT/THIRD-PARTY : PLAINTIFF/APPELLEE : DATE OF ANNOUNCEMENT OF DECISION: JULY 13, 1995 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, Case No. CV-234446. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Appellant: Dorothea J. Kingsbury, Esq., 250 Hilltop Building, 5031 Mayfield Road, Lyndhurst, Ohio, 44124. For Appellee: Michael Pokorny, Assistant County Prosecutor, 8th Floor, The Justice Center, 1200 Ontario Street, Cleveland, Ohio, 44113. For Carol Ann Yelanosky: S. Robert E. Lazzaro, Esq., 13317 Madison Avenue, Cleveland, Ohio, 44107. - 2 - SWEENEY, JAMES D., P.J.: Third-party defendant/counterclaimant/appellant Lillie M. White ("White") appeals from the trial court's October 4, 1994 ruling granting plaintiff-appellee Cuyahoga County General Health 1 District's ("County") motion for summary judgment. For the reasons adduced below, we affirm. Prior to addressing the merits of the arguments raised by appellant, we note that the notice of appeal mistakenly specified that the appeal was taken from the order of October 4, 1994, rather 2 than from the order of March 23, 1994. Appellant's assignments of error attack only that earlier order and defendant/third-party 1 This status form ruling provided: [Plaintiff's] motion for SJ granted. The sewage disposal system has been determined to be defective to the satisfaction of the court and consistent with R.C. 3707.01. Final. 2 The order of March 23, 1994, which disposed of White's counterclaim for declaratory judgment, provided: Upon review of the briefs of the parties, the court finds that the agreement entered into between [defendant]/third party [plaintiff] Yelanosky and third party [defendant] and counterclaimant White is not a land installment contract, nor did the parties intend to create a mortgage, nor will the court create an equitable mortgage. The court further finds that the monthly payments did not cover taxes and insurance; however, only the unpaid taxes are subject to interest. [Plaintiff] has leave through 4/25/94 to file motion for SJ. Briefs in opposition due 5/23/94. - 3 - plaintiff/appellee Carol Ann Yelanosky's appellate brief rebuts the arguments presented by appellant. App.R. 3(A) and (D) provide: (A) Filing the Notice of Appeal. An appeal as of right shall be taken by filing a notice of appeal with the clerk of the trial court within the time allowed by Rule 4. Failure of an appellant to take any step other than the timely filing of a notice of appeal does not effect the validity of the appeal, but is ground only for such action as the court of appeals deems appropriate, which may include dismissal of the appeal. Appeals by leave of court shall be taken in the manner prescribed by Rule 5. * * * (D) Content of the Notice of Appeal. The notice of appeal shall specify the party or parties taking the appeal; shall designate the judgment, order or part thereof appealed from; and shall name the court to which the appeal is taken. * * *. (Emphasis added.) Loc.App.R. 3(B)(1) provides: (B) Appeal of Right. 1. The notice of appeal shall have attached to it a copy of the judgment or order appealed from (journal entry) signed by the trial judge and bearing the clerk's stamp "Received for Filing" with the date of receipt by the clerk and a copy of Affidavit of Indigency where relevant. The subject attachments are not jurisdictional but their omission may be the basis for a dismissal. (Emphasis added.) Despite the appellant's mistake in appealing from the incorrect order, the notice of appeal served the purpose intended, which is to apprise the opposing party that an appeal had been taken. Maritime Manufacturers, Inc. v. Hi-Skipper Marina (1982), - 4 - 70 Ohio St.2d 257; Cf Buckeye Union Ins. Co. v. Stiffler (Lorain, 1992), 81 Ohio App.3d 227, 231, and Dollar Leasing Corp. v. Okocha & Associates Co., LPA (August 11, 1994), Cuyahoga App. No. 66041, unreported, at the discussion of the first assignment of error. Both sides fully briefed the merits of the appellant's argument so it is evident that the mistake did not materially prejudice the appellee. Accordingly, the mistake was harmless. Turning to the merits of the appeal, the record on appeal indicates that the County filed a complaint for injunctive relief in June of 1992, against Yelanosky seeking replacement of the septic system at Yelanosky's property at 23411 Forbes Road, Oakwood Village, Ohio. See R.C. 3701, et seq. Yelanosky in turn filed a third-party complaint for indemnification and contribution against White, alleging that pursuant to the terms of an agreement between the two, White, who was occupying the premises on the property, agreed to maintain the property. White then filed a counterclaim for declaratory judgment against Yelanosky seeking a declaration that: (1) the agreement between Yelanosky and White was a land contract; (2) the land contract was paid in full; and, (3) Yelanosky deliver a warranty deed to White. White and Yelanosky stipulated that the issues between them would be decided on briefs submitted to the court. The previously mentioned order of March 23, 1994, disposed of the claims between White and Yelanosky. See footnote 2, supra. - 5 - Thereafter, White refused to comply with Yelanosky's demand for monies owed and to repair the failed septic system, resulting in White being evicted from the property in Bedford Municipal Court Case No. 94-CVG-1310. The subject property was then condemned and subsequently sold to another party. White presents three assignments of error from the order of March 23, 1994. These assignments will be discussed jointly. I THE TRIAL COURT ERRED IN DETERMINING THAT THE AGREEMENT BETWEEN APPELLANT AND APPELLEE WAS NOT A LAND CONTRACT. II THE TRIAL COURT ERRED IN DETERMINING THAT APPELLANT AND APPELLEE DID NOT INTEND TO CREATE A MORTGAGE. III THE TRIAL COURT ERRED IN DETERMINING THAT THE MONTHLY PAYMENTS DID NOT COVER TAXES AND INSURANCE AND THAT THE UNPAID REAL ESTATE TAXES DUE FOR THE REAL PROPERTY WERE SUBJECT TO INTEREST. The agreement upon which the parties rely, a copy of which is attached to White's trial brief at exhibit 1 and Yelanosky's trial brief at exhibit A, is a preprinted form agreement from the Ohio Legal Blank Company, titled "Land Contract with Dower Clause." The parties to the agreement typed in a variety of information in the 3 blanks provided and signed the agreement on February 28, 1963. 3 The parties to the agreement and the promissory note were appellant and her husband, and appellee-Yelanosky and her husband. - 6 - The agreement, prepared by attorney Stephen Gobosv, now deceased, was not witnessed, notarized or recorded. At the time of the signing of the agreement, the Whites also executed a preprinted promissory note in favor of the Yelanoskys. The agreement provides in pertinent part the following: * * * Witnesseth: That the said party of the first part [Yelanosky] hath this day agreed to sell unto the party of the second part [White], their heirs, executors, administrators or assigns, the following described tract or lot of land, situated in the Village of Oakwood, County of Cuyahoga and State of Ohio, [legal description omitted] And the said party of the second part doth hereby agree to pay to the said party of the first part, *** for the land aforesaid, the sum of Thirteen Thousand Nine Hundred and no/100 Dollars ($13,900.00), being the value of said premises, payable as follows: Five Hundred and no/100 Dollars ($500.00), cash in hand, the receipt whereof is hereby acknowledged, and the balance of $13,400.00, bearing interest at the rate of 6% per annum, computed monthly, shall be paid to the Party of the First Part in consecutive monthly installments of $96.00 per month, beginning March 25, 1963, and continuing on said calendar date of each month thereafter. Said monthly installment shall include interest, taxes and insurance and such payments shall be first applied on the interest, and the taxes shall be added to the balance of the principal as they shall become due. Party of the second part shall have a ten (10) day grace period after said due date, without increase of the interest rate. However, after said ten (10) day grace period the interest shall be increased to 7% per annum, computed monthly. - 7 - Party of the second part shall have the right, option and privilege of financing the subject premises at any time after the signing hereof with any lending institution of their own choosing, at which time party of the second part shall then fully pay the balance due at that time to party of the first part. Party of the first part agrees to pay Robert J. Dvorak, real estate broker, [illegible]% commission from the down payment and shall give said Robert J. Dvorak a cognovit note, secured by a second mortgage, for the balance due for such commission. It is specifically agreed by the parties hereto that if any three consecutive monthly installments shall become delinquent, party of the first part may elect to proceed under any terms or conditions hereinafter provided in case of such default. Party of the second part hereby agrees to maintain the premises in its physical condition, wear and tear excepted, and specifically agrees not to enter into any agreement or contract for the repair or remodelling, other than on a cash basis, without the written consent of the party of the first part. * * * It is expressly agreed by and between the parties to this agreement, that if any one of the installments, or interest accrued thereon, shall not be paid when due, then all of said installments remaining unpaid shall at once become due and payable, at the option of the first party. The party of the second part further agrees to keep the building now on said land, or which hereafter be erected thereon, insured for not less than $13,000.00 in a solvent insurance company approved by the party of the first part, for the benefit of the party of the first part as their interest may appear, and to place and keep the policy of insurance with the party of the first part, and to pay all taxes - 8 - and assessments of every description whatsoever that may be levied or assessed upon said land or any part thereof ***. In case default shall be made by the party of the second part *** it shall and will be lawful for the party of the first part *** to elect to treat this contract as thenceforth void, and to re-enter upon said premises *** without serving on the party of the second part *** a notice to quit said land, and in case this contract shall be so treated as thenceforth void, the party of the second part *** thenceforth be deemed a mere tenant at will *** and be liable to be proceeded against without notice to quit ***. Now if the party of the second part *** shall well and truly pay the full purchase money aforesaid, with interest, taxes, assessments and insurance at the time and in the manner above stipulated, then, on full receipt *** the said party of the first part *** shall well and truly make and deliver *** to said party of the second part, on surrender of their duplicate contract, a good and sufficient Warranty Deed of the land aforesaid, subject to any mechanic's lien or incumbrance caused by the acts of the second party, and subject to the conditions, restrictions and stipulations, herein named, otherwise free from any and all incumbrances save taxes and assessments due and to become due, which said second party assumes. And I, Richard Yelanosky, husband of said Carol Ann Yelanosky, in consideration of the making of the payments by the second party as herein provided for, and of one dollar to me paid, the receipt whereof is hereby acknowledged, consent to the terms of the foregoing contract and bind myself to unite in the aforesaid deed and therein release all my right and expectancy of dower in the premises above described to said second party ***. In Witness Whereof, we hereunto set our hands, this 28th day of February in the year of our Lord one thousand nine hundred and sixty- three. - 9 - Signed and acknowledged in the presence of ________________________ ________________________ [Carol Ann Yelanosky] [Richard Yelanosky] [Modest White] [Willie Mae White] * * * (Emphasis added)[Explanation added]. The $13,400 promissory note made contemporaneously by the Whites at the time of the making of the agreement above, provided the following: $13,400.00 Cleveland, Ohio February 28, 1963 For value received, we promise to pay to the order of Carol Ann Yelanosky and Richard Yelanosky, husband and wife, Thirteen Thousand Four Hundred and no/100 Dollars, at Cleveland, Ohio, with interest at 6 per cent per annum. Principal and interest shall be payable in consecutive monthly installments, beginning March 25, 1963, of not less than Ninety-six and no/100 Dollars ($96.00) each, thereafter,and the balance, if any, until fully paid. The payments made hereon shall apply first on the accrued interest and second on principal. This note is given for part of the unpaid balance owing to Carol Ann Yelanosky and Richard Yelanosky for land sold to the makers hereof, and said land is security for this note. If any installment on this note be not paid when due, then the entire unpaid principal hereof shall at once become due and payable, at the option of the holder hereof. - 10 - [Modest White] [Willie Mae White] (Emphasis added.) We now turn our attention to the merits of appellant's arguments. The first assignment of error is without merit as a result of the agreement's absence of statutory compliance. The version of R.C. 5301.01 in effect at the time of the making of the agreement provided the following: 5301.01 Acknowledgment of deeds, mortgages, and leases. A deed, mortgage, land contract as referred to in division (B)(2) of section 317.08 of the Revised Code, or lease of any interest in real property must be signed by the grantor, mortgagor, vendor, or lessor, and such signing must be acknowledged by the grantor, mortgagor, vendor, or lessor in the presence of two witnesses, who shall attest the signing and subscribe their names to the attestation. Such signing must be acknowledged by the grantor, mortgagor, vendor, or lessor before a judge of a court of record in this state or a clerk thereof, a county auditor, county engineer, notary public, mayor, or county court judge, who shall certify the acknowledgment and subscribe his name to the certificate of such acknowledgment. (Eff. 8-11-61)(Emphasis added). The agreement at issue was not acknowledged in the presence of two witnesses, nor was it acknowledged before any official detailed in the statute. Also, it was not recorded in the office of the county recorder as required by R.C. 5301.25, indeed, absent the proper mandatory acknowledgments, the document is not entitled to - 11 - be recorded. See State ex rel. Puthoff v. Cullen (1966), 5 Ohio App.2d 13. The effect of failing to obtain the proper acknowledgments precludes the agreement from being considered a land contract, installment or otherwise, sufficient to pass legal title to the premises. Wright v. Citizens Bank (1898), 59 Ohio St. 80. Appellant's sole argument on this assignment is that the trial court applied the statute retroactively, believing the relevant version of R.C. 5301.01 to have been enacted six years after the making of the agreement. This argument concerning the retroactive application of a statute is meaningless since the statute relied on by this court and the trial court was clearly effective in 1961, some two years before the making of the agreement. The second assignment of error argues that a mortgage was intended to be created through the making of the promissory note for $13,400.00 as security for the sale of the premises to the White's. This belief is without merit. In order for an equitable mortgage to be forthcoming, the agreement upon which the equitable mortgage is based must first be executed and recorded as prescribed by the real property statutes, specifically R.C. 5301.01 and .25. Wright v. Franklin Bank (1898), 59 Ohio St. 80. The agreement at issue was not executed in compliance with the real property statutes. Accordingly, the trial court did not err in determining that an equitable mortgage did not arise. - 12 - The third assignment of error argues that the trial court erred in determining that interest on unpaid taxes and insurance is due under the terms of the agreement. Appellant also argues that taxes and insurance were to be paid as part of the monthly payment, and were not subject to any interest when paid late. A reading of the agreement indicates the following terms and conditions relative to the issues raised in the third assignment: 1. A purchase price of $13,900.00, with a cash downpayment of $500.00 and the remainder of $13,400.00 financed over time; 2. The $13,400.00, bearing an interest rate of 6% per year, computed monthly, was to be paid in monthly installments of $96.00 per month; 3. The monthly installment of $96.00 "shall include interest, taxes and insurance and such payments shall be first applied on the interest, and the taxes shall be added to the balance of the principal as they shall become due."; 4. After the expiration of the ten-day grace period for payment of the monthly installments, the interest rate would increase to 7% per year, computed monthly; 5. The Whites were to maintain insurance on the premises, for the benefit of the Yelanoskys, and to pay "all taxes and assessments of every description." Appellant concurs in the long-standing rule that when interest is due on a monetary debt, payments on that debt shall be applied first to interest and then to principal. Prepakt Concrete Co. v. Koski Construction Co. (1989), 60 Ohio App.3d 28. The parties contemplated that the monthly installment of $96.00 represented a payment toward only principal and interest as evidenced by the - 13 - terms of the promissory note. The agreement recognized this construction by providing that payments on the debt were to be applied first to interest and that taxes were to be added to the balance on the principal when those taxes became due. Thus, some monthly installments would reflect only payments to interest and principal, while other monthly installments, when taxes were due, would reflect payments to interest and payments to principal plus taxes due for that month. The agreement also makes clear that the taxes would be added to the principal and that interest was computed on the principal at 6% or 7%, depending on whether the grace period had expired. Thus, the trial court did not err in determining that the monthly payment of $96.00 did not include the taxes due. It is also clear that payments on insurance were also separate from the monthly installment amount of $96.00 per month, as that $96.00 per month represented a payment on interest and principal on the debt of $13,400.00, as evidenced by the terms of the promissory note. Interest on the insurance payment was not warranted where the terms of the agreement did not provide that the cost of the insurance would be added to the principal balance. Accordingly, the third assignment of error is overruled. Judgment affirmed. - 14 - It is ordered that appellee recover of appellant its costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas 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. ANN DYKE, J., and TERRENCE O'DONNELL, J., CONCUR. JAMES D. SWEENEY PRESIDING 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 .