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Real Estate Capital Corp v. Thunder Corp.
Ohio Court of Common Pleas
287 N.E.2d 838, 31 Ohio Misc. 169 (1972)
Facts
Thunder Corp. (defendant) was incorporated on May 16, 1966, for the purpose of owning and operating apartment houses. Julius Cohen and Lawrence Berman were the two shareholders of Thunder, owning 80 percent and 20 percent of the stock, respectively. On March 14, 1967, Thunder issued a purported valid second mortgage, executed by Cohen as corporate officer, on its corporate property to Real Estate Capital Corp (REEC) (plaintiff) and K. B. Weissman for the principal amount of $105,000, including an assignment of rents and leases. The mortgage amount was not paid to Thunder, but instead to Winthrop Homes, Inc. (Winthrop). There was no relationship between Winthrop and Thunder other than Cohen being the sole shareholder of Winthrop. REEC and Weissman were never advised of any consideration or benefit passing to Thunder for the mortgage and assignment of rents and leases. Berman objected to the mortgage of the corporate property. On May 23, 1969, REEC and Weissman filed action against Thunder to foreclose the mortgage and appoint a receiver.
Rule of Law
Issue
Holding and Reasoning (Calhoun, J.)
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