Moneywatch Companies v. Wilbers, 665 N.E.2d 689 (Ohio Ct. App. 1995)

Facts

Wilbers signed a lease with Moneywatch for commercial property space.  During negotiations, Wilbers stated his intent to create a corporation and was told he would still need to remain personally liable.  After Wilbers formed the corporation, he notified Moneywatch and the name on the lease was changed to the corporate name.  The rent payments eventually stopped and the premises were vacated.

Procedural History

Moneywatch brought a breach of contract against Wilbers personally.  After a bench trial, judge entered judgment in favor of Moneywatch for $13,922.67.

Issue(s)

Did the trial judge err in holding Wilbers personally liable instead of the corporation?

Holding(s)

No.

Reasoning/Analysis

Wilbers argued a novation occurred and he is not personally liable.  A novation is where a previous valid obligation is extinguished by a new valid contract, accomplished through substitution of parties, with the consent of both parties, and based on valid consideration.  The Court found a novation did not occur because there was no clear and definite intent from Moneywatch to create a new contract through novation.  Also, there was insufficient consideration. In the absence of the proper steps, Wilbers is personally liable.

Judgment/Outcome

The Court affirmed the judgment of the trial court.