In The Adventure of Silver Blaze, Sherlock Holmes was considering the theft of a prize racehorse and the murder of its owner. Holmes pointed out, “The curious incident of the dog in the night-time.” When the Scotland Yard detective replied, “The dog did nothing in the nighttime,” Holmes remarked, “That was the curious incident.” Why didn’t the watchdog bark at the thief?
In Santomieri v. Mangen, 2018-Ohio1443 (Third Dist. App., Auglaize County), the court of appeals was considering a promissory note, not a theft and murder. Santomieri claimed that the $40,000 note was issued in connection with a contract for Mangen to buy real estate from him. Mangen claimed that the note was issued because Santomieri had agreed to lend him $40,000 to finance Mangen’s purchase of another property from someone else after the deal with Santomieri fell through, and that Santomieri never paid the $40,000. Santomieri testified that he never agreed to lend Mangen $40,000 to help purchase another parcel of real estate. The curious incident? Mangen never denied owing the $40,000 until Santomieri sued to enforce the note.
The appellate court pointed out that a promissory note is a written unconditional promise to pay a certain sum of money at a future time. The law presumes that the person who signed the note received consideration. A borrower who claims that he never received the consideration must prove that claim by a preponderance of the evidence.
Mangen admitted that he signed the promissory note. He also admitted that he never paid any part of the $40,000. At that point, Santomieri’s case was proven, unless Mangen could prove that he never received consideration for his promise to pay the $40,000. The trial court found that Mangen’s claim was not credible. The appellate court upheld the trial court’s ruling.
Shortly before the promissory note came due, Mangen sent Santomieri a series of text messages. In the texts, Mangen apologized that he did not have cash available, and mentioned that he was trying to refinance his home to raise the money. None of the texts objected to Santomieri’s request for payment, or argued that Santomieri had not paid the $40,000 that he had supposedly agreed to lend. Mangen never claimed that he demanded the $40,000 from Santomieri, or asked Santomieri why Mangen had not yet received the supposedly loaned money. The absence of any text from Mangen protesting that he never received the $40,000 cash figured heavily in the trial court’s findings, and in the appellate court affirming the trial court’s decision.
Keeping it real: The trial court is the ultimate judge of the witness’ credibility but there was ample ground here for the appeal court to uphold the trial court’s determination. The appellate court pointed to several inconsistencies between Mangen’s conduct and his theory at trial, as well as discrepancies between his deposition testimony and his trial testimony.
If Mangen had been telling the truth, we would expect him to produce some evidence that he had protested Santomieri’s failure to pay him the $40,000 loan proceeds. Since Mangen had the burden of proving that he never received the proceeds, the lack of that evidence led to a judgment against him. Like the watchdog that failed to bark, Mangen’s texts’ failure to object, pointed to the solution.
For anyone who signs a promissory note and does not receive the agreed upon loan proceeds, the lesson is clear: don’t wait until the note becomes due. Object early, often, and in a form that creates a record, that the consideration for the note was never paid. Don’t become the curious incident of the borrower at collection time.
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