Perrysburg Township v. City of Rossford, 103 Ohio St. 3d 79

Summary

The Ohio Supreme Court considered whether an agreement containing an unconditional promise to repay $5 million plus interest was a security under Ohio Revised Code 1707.01(B). The court held that promissory notes listed in the statute are presumptively securities and adopted the federal Reves family-resemblance test to determine whether a particular note qualifies. Applying that test at the pleading stage, the court concluded that the township could potentially prove the note was a security and affirmed reversal of the dismissal.

Holdings

1. The second sentence of R.C. 1707.01(B) is substantive and lists instruments, including promissory notes, that are presumptively securities; it is not merely a list of examples restricted by the first sentence's general definition.
2. The agreement was a promissory note because it contained RAAA's written promise to repay a definite sum of $5 million plus eight percent annual interest, and it was therefore presumptively a security under R.C. 1707.01(B).
3. Ohio courts must apply the Reves family-resemblance test to determine whether a particular promissory note is a security.
4. The complaint alleged facts from which Perrysburg Township could prove that the note was a security; the Civ.R. 12(B)(6) motion therefore should not have been granted.

Questions Presented

1. Whether an instrument containing an unconditional promise to repay a specified sum of money on a date certain may constitute a security under R.C. 1707.01(B).
2. Whether the agreement at issue was presumptively a security as a promissory note under R.C. 1707.01(B).
3. Whether the complaint sufficiently alleged that the note was a security to survive a Civ.R. 12(B)(6) motion to dismiss.

Disposition

affirmed