## Facts

- Moneywatch Companies leased commercial space in the Kitty Hawk Center in Middletown, Ohio.
- In December 1992, Jeffrey Wilbers negotiated for the lease, stating he intended to form a corporation to run a golf-related business.
- Moneywatch requested and received Wilbers’s personal financial statement and business plan.
- On December 23, 1992, the lease was executed listing the tenant as “Jeff Wilbers, dba Golfing Adventures,” with rent not due until March 1, 1993.
- Wilbers formed J & J Adventures, Inc. in January 1993 and registered “Golfing Adventures” as its trade name in February 1993.
- After incorporation, Wilbers asked Moneywatch to change the tenant name on the lease to “J & J Adventures, Inc., dba Golfing Adventures.”
- Moneywatch confirmed by letter (March 1, 1993) that the tenant name would be changed and that the name change would be deemed part of the lease agreement.
- Rent was paid using checks bearing the corporation’s name, while Moneywatch continued to direct correspondence to Wilbers personally at his home.
- The business later defaulted under the lease, and Moneywatch sued Wilbers individually for breach.
- The trial court entered judgment for Moneywatch, finding Wilbers personally liable; Wilbers appealed.

## Issues

1. Whether changing the named tenant from Wilbers (d/b/a) to the newly formed corporation effected a novation that released Wilbers from personal liability on the lease.
2. Whether Wilbers could avoid personal liability by claiming he signed the lease only as a promoter for a corporation not yet formed.

## Decision

- The appellate court affirmed the judgment for Moneywatch.
- The court held no novation occurred because there was no clear, definite intent by all parties to discharge Wilbers and substitute the corporation as the sole obligor.
- The court held Wilbers remained personally liable as a promoter because he signed in his own name (d/b/a), Moneywatch relied on his personal financial information, and there was no clear agreement to look solely to the corporation.

## Legal Principles

- A novation requires a prior valid obligation, a new agreement of all parties, extinguishment of the old obligation, and a valid new obligation, plus clear and definite intent to replace and discharge the original obligor; the party asserting novation bears the burden of proof.
- A modification or substitution of a party name in a contract does not, by itself, establish a novation or release absent clear intent to discharge the original obligor.
- A promoter who contracts on behalf of a corporation not yet formed is personally liable unless the other contracting party clearly agrees to look only to the corporation for performance.
- In determining liability, courts apply objective manifestations in the contract and surrounding circumstances rather than a party’s undisclosed intent.
- An appellate court will defer to the trial court’s credibility determinations when supported by competent, credible evidence.

## Conclusion

The court held that changing the lease’s tenant name to a newly formed corporation did not release the original signatory, and that a promoter who signs a pre-incorporation lease in his own name remains personally liable absent a clear agreement that only the corporation would be bound.


Moneywatch Cos. v. Wilbers, 106 Ohio App. 3d 122, 665 N.E.2d 689 (Ohio Ct. App. 1995)