Opinion
Nos. 91-261, 91-528
Submitted January 14, 1992 —
Decided May 27, 1992.
APPEAL from and CERTIFIED by the Court of Appeals for Franklin County, No. 89AP-1047.
On February 24, 1969, intervening appellant, Huffy Corporation, then known as the Huffman Manufacturing Company ("Huffy"), entered into a lease of certain real property owned by appellant, Knowlton Company, wherein Huffy was the lessee and Knowlton Company was the lessor. In late 1971, an addendum to the lease granted Huffy the option to purchase the leased property at future intervals commencing March 1, 1979. Subsequently, appellant, MRED Properties ("MRED"), became the successor in interest to the Knowlton Company with respect to the lease.
In a letter dated February 25, 1988, Huffy informed MRED that it would exercise its option to purchase the property. While MRED was apparently ready, willing and able to tender a general warranty deed pursuant to Huffy's exercise of its option, Huffy instead filed an action for specific performance in the Mercer County Court of Common Pleas requesting that the court order MRED to perform in accordance with the purchase option and convey marketable and unencumbered title to the subject property. Huffy filed the action because, inter alia, it alleged, appellee, Austin E. Knowlton, claimed an ownership interest in the leased property, and Knowlton Company might also claim an interest in the same property. Huffy therefore requested the court to order appellee to deliver a quitclaim deed to the property, and permit Huffy to deposit the purchase price of the property with the clerk of the court. Lastly, Huffy asked that the court require MRED and appellee to interplead their respective claims to the purchase monies.
Upon Huffy's "Motion for Partial Summary Judgment; Motion to Distribute Deposited Funds," the trial court found part of the motion to be well taken. In a judgment entry dated November 21, 1988, the trial court ordered MRED to deliver a general warranty deed of the property to Huffy, and ordered appellee to execute and deliver a quitclaim deed to Huffy conveying any interest that he might have in the property.
Upon appeal, the Mercer County Court of Appeals reversed the trial court's order insofar as it required appellee to deliver a quitclaim deed of the property to Huffy, and remanded the cause for further proceedings. However, with respect to appellee's assignment of error that the trial court lacked jurisdiction over the case due to a pending action in the Franklin County Court of Common Pleas, the appellate court reasoned as follows:
"We have reviewed the judgment entries of the Franklin County Court of Common Pleas as presented to the trial court herein. The subject matter of those entries concerns the Lease Agreement and its enforcement between MRED Properties and Austin E. Knowlton. Huffy Corporation was not a party to those underlying lawsuits and Huffy's rights under the option to purchase from MRED were never adjudicated." Huffy Corp. v. MRED Properties (Aug. 2, 1990), Mercer App. No. 10-88-7, unreported, at 7, 1990 WL 113355. This judgment was not appealed.
Meanwhile, prior to the decision by the Mercer County Court of Appeals, appellee filed a "Motion For Additional Judgment Entry, Order, and Enforcement" with the Franklin County Court of Common Pleas on December 22, 1988. Appellee requested that the court hold Huffy's option to purchase void for lack of consideration or, in the alternative, order MRED to pay him seventy-five percent of the net proceeds from the sale of the property.
The action appellee sought to revive with this motion involved a plethora of litigation between appellee and Knowlton Company dating back to 1977 that was finally resolved by the Franklin County court in June 1986. In that action, the Franklin County Court of Common Pleas, inter alia, delineated how the payments from Huffy to the Knowlton Company were to be distributed. In pertinent part, the June 1986 judgment entry stated as follows: "ORDERED AND ADJUDGED, that the Huffy Corporation (formerly Huffman Manufacturing Company) be instructed, until further order of this Court, to make all future payments for the property located in Jefferson Township, Mercer County, Ohio, which is subject to the `Huffman' leases attached to the Final Entry and Order filed March 7, 1986, as Exhibits A, B, and C, as follows: * * *[.]"
After due consideration, the Franklin County Court of Common Pleas denied appellee's motion to revive the prior action, and stated that it did not have jurisdiction because "[i]t appears that the issue of the validity of the option to purchase held by Huffy Corporation has been raised for the first time in a suit in * * * Mercer County, Ohio, filed in June, 1988." The court held that in the June 1986 judgment entry, the phrase "until further order of this Court" did not involve the validity of the option to purchase but merely referred to the method of Huffy's payments to creditors under the subject lease. Therefore, the Franklin County Court of Common Pleas held that the Mercer County Court of Common Pleas had jurisdiction over Huffy's exercise of the purchase option since issues concerning the purchase option were first raised and determined in Mercer County.
Upon appeal, the Franklin County Court of Appeals reversed and remanded. In relevant part, the appellate court reasoned as follows:
"The question is whether the trial court retained any continuing jurisdiction and, if so, whether matters regarding the validity of the option are within the scope of the jurisdiction retained. We conclude that the trial court retained continuing jurisdiction in this case. The court granted a declaratory judgment that the reciprocal leases were valid and enforceable. R.C. 2721.09 provides that a court may grant further relief based on a declaratory judgment when necessary and proper. This provision reflects the court's inherent power to enforce its decrees and render them effective. A court need not expressly retain jurisdiction to grant further relief. The trial court also expressly retained jurisdiction in this case. Each of its judgment entries contain[s] the words `until further order of the court' within that portion of the judgment ordering the payment of rent to defendant. * * *"
Thus, the court of appeals held that the 1986 judgment entry referred to above, as well as a prior 1984 judgment entry that also involved lease payments from Huffy to the Knowlton Company, conferred contiuiing exclusive jurisdiction on the Franklin County Court of Common Pleas to consider appellee's motion to modify or enforce the 1986 order.
Finding its judgment to be in conflict with the judgment of the Court of Appeals for Mercer County in Huffy Corp. v. MRED Properties, supra, the court of appeals certified the record of the case to this court for review and final determination. The cause is also before this court pursuant to the allowance of a motion to certify the record.
This court granted MRED's motion to certify the record in case No. 91-261 and consolidated the cases on April 17, 1991. 59 Ohio St.3d 708, 571 N.E.2d 134.
On May 29, 1991, this court granted Huffy Corporation's motion to intervene as a party-appellant. 60 Ohio St.3d 712, 573 N.E.2d 670.
Arter Hadden, Danny L. Cvetanovich, Stephen E. Auch and Judith E. Trail, for appellant.
Chester, Hoffman, Willcox Saxbe, John J. Chester, Donald C. Brey and W. Vincent Rakestraw, for appellee.
Vorys, Sater, Seymour Pease, Michael G. Long, James B. Cushman and James A. Wilson, for intervening appellant.
While the factual context underlying the cause sub judice is somewhat complex, the determinative issue before this court is easily stated, viz., whether the Mercer County Court of Common Pleas or the Franklin County Court of Common Pleas has jurisdiction over Huffy's attempt to exercise a purchase option of the leased property owned by appellant MRED, successor in interest to the Knowlton Company. For the reasons that follow, we hold that the Mercer County Court of Common Pleas has exclusive jurisdiction.
In State, ex rel. Phillips, v. Polcar (1977), 50 Ohio St.2d 279, 4 O.O.3d 445, 364 N.E.2d 33, this court held in the syllabus:
"As between courts of concurrent jurisdiction, the tribunal whose power is first invoked by the institution of proper proceedings acquires jurisdiction, to the exclusion of all other tribunals, to adjudicate upon the whole issue and to settle the rights of the parties. ( John Weenink Sons Co. v. Court of Common Pleas, 150 Ohio St. 349 [38 O.O. 189, 82 N.E.2d 730], approved and followed.)"
Appellant MRED and intervening appellant Huffy contend that under the priority doctrine set forth in Polcar, supra, the Mercer County Court of Common Pleas has jurisdiction over issues as to the validity of the option to purchase the leased property, as well as entitlement to the proceeds from the sale of such property. Huffy points out that, as holder of the purchase option, it was never a party to any of the Franklin County litigation involving appellee, and that the Franklin County Court of Appeals therefore held there was no jurisdiction over Huffy's purchase option when its validity was called into question during the extensive litigation involving appellee, Austin Knowlton, and the Knowlton Company. See Knowlton Co. v. Knowlton (1983), 10 Ohio App.3d 82, 85, 10 OBR 104, 108, 460 N.E.2d 632, 636.
Therein, the Franklin County Court of Appeals stated in relevant part:
"* * * It is alleged that, by an addendum to a lease dated November 1, 1971, Huffman was granted an option to purchase certain real estate exercisable in 1979, but that the option was granted without consideration. Assuming the allegations of the complaint are correct and no consideration was given, the option would not be enforceable by Huffman, and any action should be against Huffman. As of the time of the filing of the complaint, the option was not exercisable, and there is no indication by supplemental complaint or otherwise that Huffman has yet attempted to exercise the option, much less successfully done so. Even assuming that there otherwise could be a valid claim against defendants, it had not yet arisen at the time of the filing of the complaint."
Appellee, Austin Knowlton, argues that the Franklin County Court of Common Pleas possesses continuing exclusive jurisdiction over certain reciprocal leases between himself and Knowlton Company in addition to the lease between Huffy and Knowlton Company. Appellee asserts that the Franklin County Court of Common Pleas reserved such jurisdiction in several court orders when it determined distribution of lease payments payable by Huffy under its lease with Knowlton Company. Appellee submits that the Franklin County Court of Common Pleas does not lose jurisdiction over the lease simply because a previously unlitigated issue emerges. In any event, appellee maintained during oral argument that the validity of Huffy's purchase option has never been an issue in the Mercer County litigation. Appellee contends that the reciprocal leases are at issue herein and that the Franklin County Court of Common Pleas necessarily has exclusive jurisdiction over such leases, given that court's express reservation of jurisdiction.
Both sides to this action present legitimate reasons supporting their respective positions. In our view, however, appellants' arguments are more persuasive than those advanced by appellee and, therefore, we reverse the judgment of the court of appeals below. Our reasoning for this conclusion is based on several factors. First of all, the property in issue is located in Mercer County. With all other things being equal, jurisdiction over the disposition of the property would naturally arise where it is located, i.e., in Mercer County. Second, while the Franklin County litigation produced orders and entries referring to the reciprocal leases between appellee and the Knowlton Company, such orders concerned only distribution of lease payments that Huffy was making under the terms of its lease with the Knowlton Company. Huffy was never a party, indispensable or otherwise, to any of the prior Franklin County litigation involving appellee, the Knowlton Company and MRED. Third, the action commenced by Huffy in Mercer County involves the exercise of its purchase option provided in the 1971 addendum to the 1969 lease. As mentioned before, the Franklin County Court of Appeals found in 1983 in Knowlton Co., supra, that the issue of the validity of the purchase option under the lease could not be litigated without Huffy as a party.
Thus, in invoking the priority doctrine set forth in Polcar, supra, we hold that the Mercer County Court of Common Pleas, first acquired jurisdiction over the purchase option sought to be exercised by Huffy, and that the Franklin County Court of Common Pleas, therefore, does not have jurisdiction, as found by the Franklin County Court of Common Pleas itself. In our view, judicial economy compels a holding that the Mercer County Court of Common Pleas has exclusive jurisdiction over the issues raised in this case.
Accordingly, the judgment of the court of appeals is hereby reversed.
Judgment reversed.
HARSHA, NAHRA, DONOFRIO and RESNICK, JJ., concur.
HOLMES, J., separately dissents without opinion.
DOUGLAS, J., dissents.
WILLIAM H. HARSHA III, J., of the Fourth Appellate District, sitting for MOYER, C.J.
JOSEPH J. NAHRA, J., of the Eighth Appellate District, sitting for WRIGHT, J.
JOSEPH DONOFRIO, J., of the Seventh Appellate District, sitting for H. BROWN, J.
I respectfully dissent. I would affirm, in all respects, the well-reasoned opinion of the court of appeals.
This is not a complicated case. The subject matter of this case has been litigated over a number of years. Apparently, all of that litigation, with the exception of the most recent case filed in Mercer County, has taken place in Franklin County. In several entries, the Franklin County Court of Common Pleas reserved subject-matter jurisdiction. The majority properly cites at least one of the orders of the Franklin County Common Pleas Court. Without question that trial court, in its June 24, 1986 amended entry and order, expressly reserved jurisdiction over the subject matter involved in this litigation. Strangely, after setting forth the language of the trial court, the majority, for some reason, then promptly ignores the clear reservation-of-jurisdiction language of the order.
The majority also properly sets forth the cogent and persuasive reasoning of the court of appeals. I would add to that reasoning only that there is no issue herein involving the priority doctrine set forth in State, ex rel. Phillips, v. Polcar (1977), 50 Ohio St.2d 279, 4 O.O.3d 445, 364 N.E.2d 33. That doctrine applies only to courts having concurrent jurisdiction. Here there could be no concurrent jurisdiction because the Franklin County court had reserved jurisdiction unto itself by explicitly saying, "* * * until further order of this Court * * *." (Emphasis added.)
The court of appeals was entirely correct in its judgment. That judgment should be affirmed.