Court Opinion

ID: 4018150
Source: CourtListenerOpinion
Date Created: 2016-07-22 15:04:26.016834+00
Date Added: 2024-06-11T07:44:56.749485
License: Public Domain

FILED
                                                                         Jul 22 2016, 8:34 am

                                                                             CLERK
                                                                         Indiana Supreme Court
                                                                            Court of Appeals
                                                                              and Tax Court

      ATTORNEYS FOR APPELLANTS                                   ATTORNEY FOR APPELLEES
      Amy L. Cueller                                             John M. Plummer, Jr.
      Daniel Cueller                                             Plummer Law Office
      The Cueller Law Office                                     Bedford, Indiana
      Indianapolis, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Richard Wilson and Hollie                                  July 22, 2016
      Wilson,                                                    Court of Appeals Case No.
      Appellants-Defendants,                                     13A04-1512-PL-2119
                                                                 Appeal from the Crawford Circuit
              v.                                                 Court
                                                                 The Honorable Elizabeth Swarens,
      Charles M. Huff and Bonnie M.                              Judge Pro Tempore
      Huff,                                                      Trial Court Cause No.
      Appellees-Plaintiffs.                                      13C01-1405-PL-8

      Najam, Judge.

                                        Statement of the Case
[1]   Richard Wilson and Hollie Wilson (collectively “the Wilsons”) appeal the trial

      court’s judgment, following a bench trial, in favor of Charles M. Huff and

      Bonnie M. Huff (collectively “the Huffs”) on both the Huffs’ complaint and the

      Wilsons’ counterclaim. They raise two issues on appeal, which we consolidate

      Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016                   Page 1 of 11
      and restate as one dispositive issue, namely, whether the trial court committed

      clear error in imputing knowledge of the Huffs’ leasehold interest in the

      property to the Wilsons.

[2]   We affirm.

                                  Facts and Procedural History
[3]   On April 27, 2012, the Huffs entered into a “Property Contract” (“Contract”) to

      “sell on contract” property located on Lot 650 in Wildridge RV Resort in

      Crawford County (“Property”) to the Wilsons. Plaintiff’s Ex. 1. Bonnie Huff

      drafted the Contract, and it stated in relevant part as follows:

              We C. M. Huff and Bonnie M. Huff do hereby sell on contract
              the following property[:]

              Lot 650 in Wildridge RV Resort, located in Crawford County,
              Indiana, a portion of the North half of the Northeast quarter of
              Section 5, Township 2 South, Range 2 West;

              to Holly J. Wilson and Richard L. Wilson.

              The selling price of said property is to be $28,500.00 with
              monthly payments of $237.50. The first monthly payment will
              be 4/24/2012, continuing for 119 payments. They are to take
              care of the Wildridge RV Resort yearly dues fee is [sic] to be paid
              in December for following Year. Insurance on said property,
              utilities (electric, etc.) and taxes are the responsibility of the
              buyer.

              If payment is more than 10 days late there is a $10.00 fee added
              each month until payments are caught up.
      Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016   Page 2 of 11
      Id. The Contract was signed by the Huffs, as “Sellers” of the Property, and the

      Wilsons, as “Buyers.” Id.

[4]   On May 27, 2014, the Huffs filed their complaint seeking to cancel the Contract

      and evict the Wilsons from the Property due to the Wilsons’ failure to make

      monthly payments as required under the Contract. The Huffs also sought

      compensatory damages and costs. After receiving notice of the lawsuit, Hollie

      Wilson did a title search on the Property for the first time and discovered that

      the Huffs did not own the Property. Rather, the Huffs had a July 2005

      assignment of a ninety-nine year lease from Willard Skaggs and Wanda Skaggs

      (collectively “the Skaggs”), who had themselves leased the Property from The

      Nashville Co., Inc., which was the owner of the Property. On June 23, the

      Wilsons filed their answer and counter-claim alleging that the Huffs committed

      fraud by misrepresenting themselves as owners of the Property, and they sought

      compensatory damages, attorney fees, and costs.

[5]   The trial court held a bench trial on August 18, 2015, and, in an order dated

      November 13, 2015, the trial court entered the following findings of fact,

      conclusions thereon, and judgment:

                                           FINDINGS OF FACT

              1. Huffs are the owners of a certain 99 year lease along with
                 improvements on the following described real estate in
                 Crawford County, Indiana, to-wit:

      Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016   Page 3 of 11
             Lot 650 in Wildridge RV Resort, located in Crawford County,
             Indiana, a portion of the North half of the Northeast quarter of
             Section 5, Township 2 South, Range 2 West.

        2. The Huffs acquired their interest in the above-described
           property by Assignment of Lease dated July 2, 2005[,] from
           Willard Skaggs and Wanda Skaggs, recorded July 14, 2005[,]
           in Miscellaneous Record Book 35, at page 242[,] in the office
           of the Crawford County Recorder.

        3. On April 27, 2012, Wilsons contracted with Huffs to purchase
           Huff’s [sic] interest in said recreational lot along with the
           improvements thereon for $28,500.00, and agree[d] to pay
           $237.50 a month for 119 monthly payments to satisfy the
           purchase prices.

        4. In addition to the purchase price, Wilsons agreed to pay the
           resort dues, insurance on said property, utilities, taxes[,] and
           late fees for payments that are more than 10 days overdue.

        5. Wilsons did not have a title search done prior to executing the
           Contract.

        6. Wilsons failed to make all of the Contract payments, and
           made no payments after January[] 2015.

        7. Wilsons have failed to make the following monthly payments
           due under the Contract: September 2012; March 2014; April
           2014; May 2014; February 2015; March 2015; April 2015;
           May 2015; June 2015; July 2015; August 2015. (Total 11
           months x $237.50 = $2,612.50) (Does not include late fees
           unpaid.)

Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016        Page 4 of 11
        8. The Wilsons continued to occupy and maintain possession of
           said Lot 650 until on or about August 31, 2015.

        9. The Wilsons were present on the premises for [sic] 4 different
           times in the year 2015.

        10. The Lot 650 was first leased for 99 years in October[] 1985,
            leaving approximately 73 years on the lease at the time of the
            Huff/Wilson Contract.

        11. Upon payment in full of the purchase price, the Huffs would
            have assigned their lease to the Wilsons.

        12. A search of the records in the office of the Crawford County
            Recorder would have disclosed that the Huffs[’] interest was a
            leasehold interest[.]

        13. The Property Contract does not represent that Huffs own the
            fee simple title to the Lot 650, nor do they represent that they
            will convey same.

        14. There was insufficient evidence to prove Huffs misrepresented
            their interest in Lot 650.

        15. Wilsons knew, or should have known, that they were buying
            an assignment of Huffs[’] leasehold interest as the lease
            transfer from Skaggs to Huff[s] was recorded in the Office of
            the Crawford County Recorder on July 14, 2005.

        16. Upon the filing of their Counterclaim, Wilsons continued to
            occupy the premises and make some payments, which is
            inconsistent with their claim that they were defrauded.

Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016       Page 5 of 11
        17. Both parties asked for rescission of the contract in open court.

                                 CONCLUSIONS OF LAW

        1. The Wilson[s] breached the Property Contract with the Huffs
           by failing to pay the monthly contract payments of $237.50
           for 11 months out of the time they possessed the premises
           (April[] 2012 to August[] 2015).

        2. Because of [the Wilsons’] continued use and possession of the
           premises without complying with the terms of the Contract,
           the Huffs have been damaged in the amount of $2,612.50.

        3. Because of the breach by Wilsons, the Property Contract
           should be canceled.

        4. The Wilsons have failed to meet their burden of proof on their
           Counterclaim alleging misrepresentation.

        5. The Huffs are entitled to possession of Lot 650.

                                           JUDGMENT

             The Court now considers, orders and adjudges as follows:

        1. The Property Contract between the Huffs and the Wilsons is
           hereby canceled.

        2. The Huffs shall have the exclusive possession of Lot 650 in
           Wildridge RV Resort.

Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016   Page 6 of 11
              3. The Huffs are awarded judgment against the Wilsons in the
                 amount of $2,612.50 plus court costs.

              4. Judgment is entered for Plaintiffs on Defendants’
                 Counterclaim.

      Appellant’s App. at 5-7. This appeal ensued.

                                      Discussion and Decision
                                              Standard of Review

[6]   At the Wilsons’ request, the trial court entered findings and conclusions

      pursuant to Indiana Trial Rule 52, and our standard of review in that situation

      is well settled:

              First, we determine whether the evidence supports the findings
              and second, whether the findings support the judgment. In
              deference to the trial court’s proximity to the issues, we disturb
              the judgment only where there is no evidence supporting the
              findings or the findings fail to support the judgment. We do not
              reweigh the evidence, but consider only the evidence favorable to
              the trial court’s judgment. Challengers must establish that the
              trial court’s findings are clearly erroneous. Findings are clearly
              erroneous when a review of the record leaves us firmly convinced
              a mistake has been made. However, while we defer substantially
              to findings of fact, we do not do so to conclusions of law.
              Additionally, a judgment is clearly erroneous under Indiana Trial
              Rule 52 if it relies on an incorrect legal standard. We evaluate
              questions of law de novo and owe no deference to a trial court’s
              determination of such questions.

      Estate of Kappel v. Kappel, 979 N.E.2d 642, 651-52 (Ind. Ct. App. 2012)

      (quotation marks and citations omitted).
      Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016   Page 7 of 11
[7]   And, because the Wilsons did not prevail at trial on their counterclaim, they

      appeal from a negative judgment.

              A judgment entered against a party who bore the burden of proof
              at trial is a negative judgment. Garling v. Ind. Dep’t of Natural Res.,
              766 N.E.2d 409, 411 (Ind. Ct. App. 2002). On appeal, we will
              not reverse a negative judgment unless it is contrary to law.
              Mominee v. King, 629 N.E.2d 1280, 1282 (Ind. Ct. App. 1994).
              To determine whether a judgment is contrary to law, we consider
              the evidence in the light most favorable to the appellee, together
              with all the reasonable inferences to be drawn therefrom. J.W. v.
              Hendricks Cnty. Office of Family & Children, 697 N.E.2d 480, 482
              (Ind. Ct. App. 1998). A party appealing from a negative
              judgment must show that the evidence points unerringly to a
              conclusion different than that reached by the trial court.
              Mominee, 629 N.E.2d at 1282.

      Smith v. Dermatology Associates of Fort Wayne, P.C., 977 N.E.2d 1, 4 (Ind. Ct.

      App. 2012).

                             Constructive and Actual Notice of Leasehold

[8]   The Wilsons do not challenge the trial court’s findings and conclusions that

      they failed to make monthly payments as required under the Contract. Instead,

      they contend that they should not be held liable for the missed monthly

      payments and should be reimbursed for the monthly payments they made

      because the Huffs fraudulently claimed in the Contract to be selling the

      Property rather than selling a ninety-nine year lease of the Property. In making

      this argument, the Wilsons point to the plain language of the Contract which

      Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016     Page 8 of 11
       purports to “sell on contract the following property” and makes no mention of a

       lease of the Property. Plaintiff’s Ex. 1.

[9]    However, the Wilsons are mistaken in their contention that only the language

       of the Contract is relevant to what real estate interest would be conveyed by the

       document. Rather, as the trial court correctly found, the “Wilsons knew, or

       should have known, that they were buying an assignment of [the] Huffs[’]

       leasehold interest” in the Property because the lease transfer to the Huffs was

       duly recorded. Appellant’s App. at 6.

[10]   A lease for more than three years must be recorded in the recorder’s office of

       the county where the land is situated. Ind. Code § 32-21-4-1(a) (2012). When

       such a lease is “properly acknowledged and placed on record” as required by

       statute, it is “constructive notice of [its] existence,” 1 and a subsequent grantee is

       charged with “notice of all that is shown by record, including recitals in

       instruments so recorded” C. Callahan Co. v. Lafayette Consumers Co., 2 N.E.2d
994, 1000 (Ind. Ct. App. 1936); see also Bank of New York v. Nally, 820 N.E.2d
644, 648 (Ind. 2005) (holding that a “purchaser of real estate is presumed to

       1
         Current Indiana Code Section 32-21-4-1(c) also provides that leases of more than three years that are
       properly recorded provide “constructive notice of the contents of the instrument as of the date of filing.”
       Prior to July 1, 2014, this subsection contained that same language but the subsection began with the
       statement, “[t]his subsection applies only to a mortgage . . . regardless of when a mortgage was recorded.”
       I.C. 32-21-4-1 (2012). Regardless, long-standing case law clearly provides that a properly recorded lease of
       longer than three years provides constructive notice of its existence. See, e.g., C. Callahan Co. v. Lafayette
       Consumers Co., 2 N.E.2d 994, 1000 (Ind. Ct. App. 1936).

       Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016                            Page 9 of 11
       have examined the records” in the chain of title and “is charged with notice,

       actual or constructive,” of all such properly recorded instruments).

[11]   Moreover, actual notice may be inferred from the fact that a person who is

       charged with a duty of searching the records of a particular property had the

       means of knowledge that he did not use. Keybank Nat. Ass’n v. NBD Bank, 699
N.E.2d 322, 327 (Ind. Ct. App. 1998).

               Whatever fairly puts a reasonable, prudent person on inquiry is
               sufficient notice to cause that person to be charged with actual
               notice, where the means of knowledge are at hand and he omits
               to make the inquiry from which he would have ascertained the
               existence of a deed or mortgage. [Altman v. Circle City Glass Corp.,
               484 N.E.2d 1296, 1298 (Ind. Ct. App. 1985), trans. denied.] Thus,
               the means of knowledge combined with the duty to utilize that
               means equates with knowledge itself. Id. Whether knowledge of
               an adverse interest will be imputed in any given case is a question
               of fact to be determined objectively from the totality of the
               circumstances. Id. at 1299.

       Id.

[12]   Here, the Huffs recorded their Assignment of Lease from the Skaggs on July 14,

       2005, in the Crawford County Recorder’s Office, thereby providing constructive

       notice of the leasehold to all future purchasers of the Property, including the

       Wilsons. C. Callahan Co., 2 N.E.2d at 1000. And the evidence supports the trial

       court’s finding that the Wilsons would have discovered that the Huffs held a

       leasehold interest in the property if the Wilsons had searched the records in the

       county recorder’s office. From that fact, the trial court could have determined

       Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016   Page 10 of 11
       that the Wilsons were charged with actual notice of the leasehold interest.

       Keybank, 699 N.E.2d at 327. The fact that the Wilsons did not conduct a title

       search before signing the Contract is of no moment. They are presumed as a

       matter of law to have actual or constructive notice of the duly recorded

       leasehold within the chain of title. Nally, 820 N.E.2d at 648. Because the

       Wilsons are charged with such notice, as a matter of law they could not have

       been misled by the language of the Contract stating that the Huffs were selling

       the Property to the Wilsons.

[13]   The trial court did not err in imputing knowledge of the Huffs’ leasehold

       interest in the Property to the Wilsons and holding that the Wilsons failed to

       prove their counterclaim alleging fraudulent misrepresentation. Thus, we

       affirm the trial court’s judgment for the Huffs on their claim and the Wilsons’

       counterclaim.

[14]   Affirmed.

       Robb, J., and Crone, J., concur.

       Court of Appeals of Indiana | Opinion 13A04-1512-PL-2119 | July 22, 2016   Page 11 of 11