COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71290 C. ROBERT WILHELMY, EXECUTOR : : Plaintiff-appellant : : JOURNAL ENTRY -vs- : AND : OPINION 15201 DETROIT CORPORATION : : Defendant-appellee : : DATE OF ANNOUNCEMENT OF DECISION: JUNE 5, 1997 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas Case No. CV-295872 JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellant: For Defendant-Appellee: JAMES P. MADDEN, ESQ. ROBERT E. LAZZARO, ESQ. PHILIP J. WALL, ESQ. 13317 Madison Avenue 20800 Center Ridge Road Cleveland, Ohio 44107-4814 Suite 301 Rocky River, Ohio 44116 - 2 - DYKE, J.: Plaintiff C. Robert Wilhelmy, Executor of the Estate of Marguerite Wilhelmy, appeals from the judgment of the trial court which determined that defendant 15201 Detroit Corporation had not defaulted upon its obligation pursuant to an installment note. For the reasons set forth below, we affirm. On September 26, 1995, plaintiff Marguerite Wilhelmy filed this action against defendant 15201 Detroit Corporation seeking recovery of $66,504.15 upon a promissory note. Defendant denied 1 liability and set forth a counterclaim against plaintiff seeking recovery of $100,000 which it had allegedly paid for plaintiff's living expenses. On November 25, 1995, the court was advised that Marguerite Wilhelmy had died. Thereafter, Mrs. Wilhelmy's son C. Robert Wilhelmy, executor of her estate, was substituted as plaintiff. On January 23, 1996, plaintiff filed an amended complaint which alleged that defendant had executed a security agreement in connection with the promissory note and that plaintiff was entitled to the collateral securing the debt. Defendant again denied liability and asserted that it was entitled to set-off other amounts which it had paid for the support of Mrs. Wilhelmy. 1 Defendant did not pursue this counterclaim at trial and the court subsequently rendered judgment for plaintiff upon defendant's counterclaim. - 3 - The matter proceeded to trial before the court on July 11, 1996. Plaintiff C. Robert Wilhelmy testified and also presented the testimony of accountant Jerome Lucas. C. Robert Wilhelmy testified that he is the executor of the estate of Marguerite Wilhelmy who died in November 1993. During her lifetime, Mrs. Wilhelmy owned Charles Wilhelmy Flowers at 15201 Detroit Avenue in Lakewood, and 7475 Ridge Road in Parma. In 1983, Mrs. Wilhelmy gave 60% of her interest in the two premises to her son Richard. In addition, she entered into a purchase agreement whereby she agreed to sell Richard the remaining 40% for $100,000.00 to be paid in 144 consecutive monthly installments of $1,253.55. Thereafter, in October 1983, 15201 Detroit Corporation, a corporation formed by Richard Wilhelmy and his wife Kathleen Wilhelmy, executed an installment note in which it promise to pay $100,000.00 to Mrs. Wilhelmy in monthly installments of $1,253.55. The corporation also granted Mrs. Wilhelmy a security interest in all fixtures, furniture, equipment and inventory at both premises. The corporation made payments directly to Mrs. Wilhelmy until some time in 1992. C. Robert Wilhelmy maintained that he had approximately ten to twelve conversations with his mother during which she indicated that 15201 Corporation was in default of its obligations on the installment note. In 1995, Richard and Kathleen separated for a time, and Mrs. Wilhelmy resolved to collect the deficiency in a lawsuit. - 4 - Robert admitted on cross-examination that Mrs. Wilhelmy did not pay rent at the condominium where she resided, did not pay for electricity, water or sewer bills, and did not pay for an automobile. He explained on redirect examination, however, that the condominium was originally purchased by Mrs. Wilhelmy and her late husband, and was then given to Richard and Kathleen. Jerome Lucas testified that he has been the accountant for Wilhelmy Flowers since 1979 and was also Mrs. Wilhelmy's accountant for her personal matters. Lucas was involved with structuring the 1983 gift and purchase between Mrs. Wilhelmy and defendant. Lucas testified that it was Mrs. Wilhelmy's desire to give the business to Richard. She was concerned, however, about having money to cover her expenses and was also concerned about protecting her social security. He and Mrs. Wilhelmy then determined that she would need approximately $1,200 per month for living expenses and Lucas structured the gift and purchase accordingly in order to provide her with this monthly amount. Lucas further testified that shortly before her death, Mrs. Wilhelmy called him and requested that he compute the balance due on the installment loan. Lucas explained that Mrs. Wilhelmy was crying, and said that Robert asked for the balance. According to Lucas, Mrs. Wilhelmy said, "I don't know why [Robert] is being so greedy." Lucas reviewed the direct payments made by defendant to Mrs. Wilhelmy on the installment note and established that there was an - 5 - unpaid balance on the loan of $69,635.48. Lucas then deducted $20,191.58 from this amount, representing a debt which Mrs. Wilhelmy owed to the corporation. Lucas then added interest from 1993 until October 1995. He therefore concluded that there was a net deficiency of $49,443.90 which was due from defendant. He stated, however, that in addition to the direct payments, which totalled $83,222.98, defendant made numerous other payments to Mrs. Wilhelmy including hospitalization, car insurance, condominium fees, telephone, and utilities. From 1984 through June 1995, defendant expended $118,320 for these additional payments for Mrs. Wilhelmy's support. Lucas further opined that in light of these additional payments, no further money was due to plaintiff upon the installment note. Defendant presented the testimony of Kathleen Wilhelmy who likewise testified that defendant paid over $83,000 directly to plaintiff upon the installment loan, and also paid for other expenses for plaintiff. In 1992, Kathleen explained to Mrs. Wilhelmy that she was having financial problems and that the direct payments upon the loan would cease. She testified: [Mrs. Wilhelmy] knew that we were having financial problems. I told her that it wasn't going to be possible to continue on doing what I was doing, and she said to me that she didn't want to go live with her sister. She wanted to maintain her own residence. I said that I - 6 - would try to do everything I could to make sure she did. (Tr. 80-81). Plaintiff presented the testimony of attorney Philip Wall on rebuttal who testified that he received a letter from Mrs. Wilhelmy written "in strictest confidence" in which she asked him to "keep ahead of my business contract." (Tr. 95) Wall interpreted this as a request to pursue the claim for deficiency upon the installment contract. The court subsequently rendered the findings of fact and conclusions of law which provided in relevant part as follows: Direct payments made to Marguerite Wilhelmy on the subject note were halted during the year 1992. (3) No request or demand for payments was made by the Plaintiff, Marguerite Wilhelmy for the next four (4) years; (4) After the year 1992, Defendant continued to pay for Marguerite Wilhelmy's noted expenses and condominium maintenance fees. Marguerite Wilhelmy also continued to reside rent free, in the Florida condominium owned by the officers of Defendant corporation. The payments made on behalf of Marguerite Wilhelmy for her bills by 15201 Detroit Corporation have totalled the actual cash sum of $118,320.86. This amount does not include the rent free use of the noted condominium by Marguerite Wilhelmy from January 1984 until her death on November 23, 1995, inclu- sive. *** Under Ohio law, written contracts can be modified orally. In fact, even a gratuitous oral agreement to modify a prior written agreement is binding if it is acted upon by the parties and if a refusal to enforce the oral modification would result in injury or damage to the promisee. See, Software Clearing House, Inc. v. Intrak, Inc. (1990), 66 Ohio App.3d 163, 583 N.E.2d 1056; Mehurin v. Stone (1981), 37 Ohio St. 49; Paramount Supply Co. v. Sherlin Corp. (1984), 16 Ohio App.3d 176, 475 N.E.2d 197. - 7 - It is also the law in Ohio that subsequent acts and agreements may modify the terms of a contract and that neither consideration nor a writing is necessary. See, Software, supra; Morrison v. DeVore Trucking, Inc. (1980), 68 Ohio App.2d 428 N.E.2d 438; O.R.C. 1302.12. In this matter before the Court, it is clear that there was an oral modification of the terms of the Purchase Agreement/Promissory Note, that the Defendant, 15201 Detroit Corporation, acted on said modification, that the Plaintiff, Marguerite Wilhelmy, accepted the benefits of said modification and that the Promissory Note was in fact paid in full. Plaintiff now appeals and assigns three errors for our review. Plaintiff's assignments of error are interrelated and state: THE TRIAL COURT ERRED IN FINDING THAT THE WRITTEN CON- TRACT BINDING THE CORPORATION WAS MODIFIED BY AN ORAL AGREEMENT WITH THE CHILDREN. THE TRIAL COURT ERRED IN FINDING SUFFICIENT EVIDENCE OF A MODIFICATION OF THE WRITTEN CONTRACT, AND OF ESTOPPEL, BY MOM'S ACCEPTANCE OF THE CHILDREN'S KINDNESSES. THE TRIAL COURT ERRED IN FINDING THAT GRATUITOUS PAYMENTS BY CHILDREN IN SUPPORT OF THEIR MOM WERE ATTRIBUTABLE TO THE DISCHARGE OF A CORPORATE DEBT. Within these assignments of error, plaintiff asserts that modification of the parties' agreement was not supported by con- sideration or estoppel as Mrs. Wilhelmy merely accepted support from defendants as their mother. Alternatively, plaintiff claims that estoppel was not shown by clear and convincing evidence. Prior to addressing the substantive issues presented within this assignment of error, we acknowledge our standard of review: Judgments supported by some competent, credible evidence going to all the essential elements of the case will not be reversed by a reviewing court as being against the manifest weight of the evidence. - 8 - Seasons Coal Co. v. Cleveland (1984), 10 Ohio St.3d 77, 79-80. For, the trial judge is best able to view the witnesses and observe their demeanor, gestures and voice inflections, and use these observations in weighing the credibility of the proffered testimony. The interplay between the presumption of correctness and the ability of an appellate court to reverse a trial court decision based on the manifest weight of the evidence was succinctly set forth in the holding of this court in C.E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St.2d 279 [8 O.O.3d 261]. Id. Accord Smaldino v. Larsick (1993), 90 Ohio App.3d 691, 697. With regard to the substantive law, subsequent acts and agreements may modify the terms of a contract, and, unless otherwise specified, neither consideration nor a writing is necessary. Id., at 698. To be a valid modification, a verbal agreement which purports to modify a prior written contract must rest upon some new and distinct legal consideration, or must have been so far executed or acted upon by the parties that a refusal to carry it out would operate as a fraud on one of the parties. Thurston v. Ludwig (1856), 6 Ohio St. 1, syllabus; Bahner v. Jordan (January 12, 1996), Scioto App. No. 95CA2331, unreported; Pingue v. Durante (May 9, 1996), Franklin App. No. 95APG09-1241, unreported. Accord Restatement 2d, Contracts (1981), Section 89 (the modifi- cation of an executory contract is binding "to the extent that justice requires enforcement in view of the material change of position in reliance on the promise.") In this instance the judgment of the trial court is supported by competent credible evidence, as the record amply demonstrates that in 1992 Mrs. Wilhelmy and Kathleen Wilhelmy agreed that - 9 - because Kathleen and Richard were providing extensive support to Mrs. Wilhelmy, that the direct loan payments would cease. Indeed, even plaintiff's own witness Jerome Lucas testified that Mrs. Wilhelmy pursued the collection matter with extreme misgivings and stated that defendants had always taken care of her and helped her. (Tr. 37) Even assuming that the support payments do not constitute consideration to support this contract modification, it is undis- puted that the parties acted in reliance on this new arrangement since defendants continued to expend significant amounts of money for Mrs. Wilhelmy's living expenses, and Mrs. Wilhelmy undertook no efforts to collect the repayments until shortly before her death in 1995. Moreover, in light of the fact that Mrs. Wilhelmy's living expenses were paid with funds generated from the defendant corporation, and in light of the fact that these payments greatly exceeded the amount claimed to be due under the installment loan, that it would work a fraud upon defendant to refuse to enforce the modification. The assignments of error are without merit. Affirmed. - 10 - 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. DAVID T. MATIA, J., CONCURS SWEENEY, C.J., CONCURS IN JUDGMENT ONLY ANN DYKE JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .