Opinion ID: 852389
Heading Depth: 2
Heading Rank: 1

Heading: Vendor Liability for the Condition of Trees on Land Near a Highway

Text: The issue here is one of first impression: under what circumstances a vendor of land may be liable to a third party for harm resulting from the condition of trees on the land near a highway. Both parties analyze the question under subsection 363(2) of the Restatement (Second) of Torts (1965), [2] adopted in Valinet v. Eskew, 574 N.E.2d 283, 285 (Ind.1991). Section 363(2) reads: A possessor of land in an urban area is subject to liability to persons using a public highway for physical harm resulting from his failure to exercise reasonable care to prevent an unreasonable risk of harm arising from the condition of trees on the land near the highway. A possessor is defined in part as a person who is in occupation of the land with intent to control it. Id. § 328E(a). Although this is this Court's first case involving a vendor's possession, possession is an issue common to all premises liability cases in order to subject to liability the person who could have known of any dangers on the land and therefore could have acted to prevent any foreseeable harm. Rhodes v. Wright, 805 N.E.2d 382, 385 (Ind.2004). A theme throughout our premises liability cases is that liability arises from actual control over the condition causing the injury. [3] Generally, a vendor in a land-sale contract will have no liability under section 363 because the vendor no longer occupies or controls the condition of the property even if the vendor retains legal title as security. See Skendzel v. Marshall, 261 Ind. 226, 234, 301 N.E.2d 641, 646 (1973) (When the parties [to a land-sale contract] enter into the contract, all incidents of ownership accrue to the vendee.... Conceptually, therefore, the retention of title by the vendor is the same as reserving a lien or mortgage.). Here Scheible acknowledges that a vendor will typically have no post-sale liability, but argues that Jackson can be held liable because he continued acting like a landowner after the sale. Scheible designated the following evidence in support of her contention that Jackson retained control of the property. First, Scheible notes that Smith needed Jackson's permission to make changes to the property. The land-sale contract provided that Smith may treat said real estate as his own with the understanding that [he] shall not commit any waste to said real estate or the improvements thereon. Also, prior to the time of the delivery of title to said real estate, [Smith] shall not construct any improvements on said property without the prior written permission of [the Jacksons.] Smith testified in deposition that [I] usually asked before I done something, because I wanted to do it fairly major, and I usually asked permission, because I felt like that if I done something major they should be aware of it, because technically it was still their property even though I was buying it on contract, and that's the way I felt. Smith provided knocking out a wall as an example of a change for which he would ask permission. Smith also testified that he asked permission to remove the tree after the accident, but later stated that [a]ll I know is they was aware that [the tree] was gonna be taken down. I don't know if I asked. Even when viewed most favorably to Scheible, this evidence does not suggest that Jackson controlled the condition of the property. The evidence merely reflects that the property was security for the installment contract, and Jackson required permission for major changes to protect his security interest. Second, Scheible points to the fact that Jackson alone held the casualty and liability insurance for the property as evidence that Jackson controlled the property. The land-sale contract provided that Smith would obtain certain levels of casualty and liability insurance for the property and that the policies would name both Smith and the Jacksons as insureds. That provision was not implemented. Instead, Smith paid Jackson the amounts of the premiums to maintain the existing policies, but Smith was never added as an insured. [4] The policy protected the home against fire and casualty loss, as well as liability to third parties. As with the requirement that Smith receive permission before improving the property, Jackson's maintaining insurance on the property is consistent with his desire to protect his financial investment and does not demonstrate his control. [5] See Helton v. Harbrecht, 701 N.E.2d 1265, 1268 (Ind.Ct.App.1998) (holding that construction company that carried general work site liability insurance did not control partially-constructed home at the time of accident when none of its employees had been at the site for a month), trans. denied. Third, Scheible notes that Jackson drove past the property on the way to visit family at least a dozen times each month in the six months before the accident and would have noticed the tree's condition. This fact also does not establish Jackson's control of the property. Upon execution of the land-sale contract, Smith took exclusive possession of the property, leaving Jackson with no control over the maintenance of the property. [6] Fourth, Scheible argues that Jackson's receipt of a notice from the city regarding tree saplings on the property indicates Jackson's control of the property. Jackson's receipt of the notice indicates that he held legal title to the property but does not establish control. Indeed, after Jackson received the notice, he gave it to Smith, who agreed to remedy the problem. Finally, at some point Smith renounced his rights and returned the property to the Jacksons. Some building materials remained on the property. Scheible points to the parties' actions after Smith renounced his rights to the property. Smith testified that he [r]enounced the rights, signed it back over, left all building materials there because [Jackson] felt like since I bought them for the property, they should stay there.... My thoughts weren't quite happy with that, but I said fine, because it wasn't about the materials. Jackson's assertion of control of the building materials after he had regained possession does not suggest that he controlled the condition of the property at the time of the accident. In addition to these points raised by Scheible, the Court of Appeals found that the financial terms of the sale raised a question as to the Jacksons' control of the property. The Jacksons sold the property for $60,000. Smith made a $10,000 down payment and agreed to make monthly payments of $450 for two years and a $43,913.34 balloon payment. The Court of Appeals reasoned that these terms reflected Smith's poor credit rating and reasonably foreseeable default so Jackson clearly had a keen interest in the maintenance of the Property during the short period of time until the possibility of repossession was foreclosed. Scheible v. Jackson, 881 N.E.2d 1052, 1058 (Ind.Ct. App.2008). Assuming that Jackson had a keen interest in the maintenance of the property, without more, that interest does not translate into his control over the property. Regardless of Jackson's retained equity in the property, all incidents of ownership passed to Smith upon execution of the land-sale contract. In sum, the contract called for possession to transfer to Smith at closing. None of the evidence designated is inconsistent with that provision. As a matter of law, liability under section 343, the only provision addressed by the parties, lies with Smith as the possessor of the land.