623 N.E.2d 741
No. 93-CV-13667.Municipal Court, Hamilton County.
Decided September 30, 1993.
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Billie L. Warren, for plaintiff.
Eugene J. Stagnaro, Jr., for defendant.
MARK P. PAINTER, Judge.
This case has meandered into this court as a result of proceedings in both the Domestic Relations and Probate Divisions of the Court of Common Pleas of Hamilton County. The plaintiff, representing the estate of Robert Ruehl, has sued the defendant in this court for $5,000; defendant has counterclaimed for $2,465.91. This case comes before this court on defendant’s motion for summary judgment.
I Facts
Defendant, Barbara Ruehl, admits that she owes the estate of Robert Ruehl $5,000 under the terms of a separation agreement incorporated into a divorce decree entered by the Hamilton County Court of Common Pleas, Domestic Relations Division, but contends that she is entitled to a setoff of $2,465.91. Plaintiff estate argues that defendant is precluded from benefitting from a setoff, due to her failure to submit a claim against the estate in the probate division.
The undisputed facts indicate that plaintiff’s decedent and defendant were married in 1982, and divorced in 1990. The marital property was distributed according to a separation agreement signed by both parties in 1989, and incorporated into the divorce decree. The agreement awarded the marital residence to defendant Barbara Ruehl. In return, the agreement provided that defendant would pay $15,250 to plaintiff as follows: defendant was to obtain a second mortgage on the real estate and pay $10,000 as soon thereafter as possible; the remaining $5,000 was due three years from the date of the decree at no interest. (The remaining $250 was added to wife’s obligation to compensate plaintiff’s decedent for a dog that had been given away, and was not requested as damages in this action.) Defendant paid the first $10,000 in accordance with the terms of the agreed entry. Robert Ruehl died in February 1991, and his estate brings this action to recover the outstanding balance of $5,000.
The separation agreement also states that plaintiff’s decedent agreed to pay a Mastercard bill of $4,778.39 and to hold defendant harmless thereon. Plaintiff’s decedent died without fully complying with this provision, and it is this failure to
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satisfy the terms of the agreement that is the basis of defendant’s counterclaim. An outstanding balance of $2,465.91 remains due on the Mastercard account, and defendant contends that plaintiff should be ordered to fulfill its decedent’s obligation to her under the separation agreement by offsetting the amount due Mastercard from the money she owes the estate. However, if defendant is forced to pay the $5,000 into the estate, the funds will be consumed in covering the legal and funeral expenses of the estate, and there being no additional estate assets, defendant will remain obligated to Mastercard for the balance due on that account.
II Discussion
Plaintiff asserts that defendant is barred from recovery because she failed to file a claim against the estate within one year of the appointment of the administrator pursuant to R.C. 2117.06 (the non-claim statute). It is admitted that the defendant did not comply with the statute. However, if defendant had properly filed a claim against the estate, defendant’s claim would have been inferior to claims for fees of administering the estate and funeral expenses, pursuant to R.C. 2117.25. In fact, the bank holding the Mastercard debt did file a claim, but the claim was not paid by the plaintiff’s estate, because there were insufficient funds in the estate. Even if defendant paid the $5,000 plaintiff requests in this action, counsel for the estate has stipulated that the prioritized debts of the estate would indeed deplete the $5,000 owed by the defendant. Thus, if defendant had paid the $5,000 she owes the estate under the separation agreement and had filed a claim with the estate for the amount due to indemnify her on the Mastercard account, by operation of probate law, her $5,000 payment would have gone to estate administration expenses, and she would still have her obligation to Mastercard. Defendant would thus be denied the benefit of the bargain she made under the terms of the property agreement.
Plaintiff estate’s position can be stated as follows: Defendant should have filed a claim against the estate for the decedent’s obligation, even though she owed a sum exceeding her claim; and because she did not, the claim is barred, even as a setoff (though in this case, a setoff in the probate estate would have been meaningless, in many cases, it would not have been). Would a normal person, or even a normal lawyer, believe that it is mandatory under the law to file a claim against another if you owe him or her a net balance? The claim would be “I owe you money.” Plaintiff’s position is untenable by common sense; fortunately, it is also legally untenable. The defendant’s counterclaim is preserved by R.C. 2309.19, which states: “When cross demands have existed between persons under such circumstances that if one had brought an action against the other a
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counterclaim could have been set up, neither can be deprived of the benefit thereof by assignment by the other, or by his death. The two demands must be deemed compensated so far as they equal each other.” The question this case presents is which statute controls — R.C. 2117.06 (the non-claim statute) or R.C. 2309.19
(the cross-demand statute).
The cornerstone case in analyzing the interrelationship between R.C. 2117.06 and R.C. 2309.19 is Eaver v. McGinnis
(1987), 41 Ohio App.3d 153, 534 N.E.2d 959. In Eaver, the administrator of an estate brought suit to enforce a debt against the defendant. The defendant counterclaimed that the decedent had owed the defendant a debt. The defendant moved for summary judgment, claiming he was entitled to a setoff and the administrator opposed on the grounds that the defendant was not entitled to a setoff because the defendant had not filed a claim against the estate within the time requirements outlined by R.C. 2117.06.
The Eaver court, in interpreting the apparent conflict between R.C. 2309.19 and R.C. 2117.06 stated, “where, concurrently with a statute of nonclaim, there is a cross-demand statute, the effect of the cross-demand statute is to allow a claimant to plead his claim as a setoff or counterclaim to a suit brought against him by the administrator on behalf of the estate. This is so even though the claimant has not presented his claim to the administrator in compliance with the provisions of the nonclaim statute.” Eaver, 41 Ohio App.3d at 154, 534 N.E.2d at 960. “A cross-demand may be pleaded by a defendant in an action as a defense to the administrator’s claim, to the extent that such cross-demand may be deemed to compensate the claim sued upon by the estate, even though it was not presented to the administrator.” Id. at 155, 534 N.E.2d at 960 (citin Benson v. Rosine [1945], 76 Ohio App. 439, 32 O.O. 195, 64 N.E.2d 845).
The Eaver court went on to say that once the estate sought payment of the debt from the defendant, the defendant was entitled to offset that demand by his unpresented claim. R.C. 2309.19 expressly allows an offset under such circumstances Id., 41 Ohio App.3d at 155, 534 N.E.2d at 961. The defendant’s claim, therefore, need not have been presented to the estate in order to allow a setoff of the unpresented claim up to an amount no greater than the amount of the estate’s claim against defendant. Obviously, any unpresented counterclaim in excess of the estate’s claim would be barred as to the excess. But in that event, it would be reasonable to present the claim to the estate, since it would not say “I owe you,” but “you owe me.”
III Conclusion
In the instant case, once the Robert Ruehl estate sought payment of the $5,000 debt created by the separation agreement, R.C. 2309.19 expressly allows a setoff
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of the Barbara Ruehl claim up to a limit of $5,000. There is no dispute that Barbara Ruehl owes the decedent’s estate $5,000. Also, there is no dispute that Robert Ruehl was required to pay off the Mastercard bill and hold Barbara Ruehl harmless pursuant to the separation agreement; his estate must honor that agreement, at least as allowing a setoff against defendant’s debt. The Barbara Ruehl claim is $2,465.91, the unpaid balance of the Mastercard, and since it is less than the plaintiff’s $5,000 claim she is entitled to a setoff of that amount. Therefore, judgment will be granted in favor of the plaintiff in the amount of $2,534.09.
Judgment accordingly.