Court Opinion

ID: 9965092
Source: CourtListenerOpinion
Date Created: 2024-05-01 17:06:03.045744+00
Date Added: 2024-06-11T08:24:42.014729
License: Public Domain

FILED
                                                                     May 01 2024, 9:20 am

                                                                          CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
                                                                           and Tax Court

                                            IN THE

            Court of Appeals of Indiana
                                        James P. Devlin,
                                        Appellant-Defendant

                                                   v.

           Horizon Bank, successor in interest to Salin Bank & Trust
                            Company by merger,
                                          Appellee-Plaintiff

                                             May 1, 2024
                                    Court of Appeals Case No.
                                          23A-MF-1986
                          Appeal from the Hendricks Superior Court
                            The Honorable Rhett M. Stuard, Judge
                                       Trial Court Cause No.
                                        32D02-1802-MF-41

                                 Opinion by Judge Mathias
                               Judges May and Vaidik concur.

Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                     Page 1 of 25
      Mathias, Judge.

[1]   James P. Devlin appeals the trial court’s amended judgment in favor of Horizon

      Bank, the successor in interest to Salin Bank & Trust Company (“the Bank”).

      This cause arose out of Devlin’s surety agreement with the Bank, which

      agreement enabled Devlin’s son, Brendan, to obtain a farm operating loan.

      Devlin raises seven issues for our review, which we consolidate and restate as

      the following two issues:

              1. Whether the trial court clearly erred when it found and
              concluded that the Bank did not impair Brendan’s collateral for
              the loan when the Bank did not take steps to insist on receiving
              jointly payable proceeds prior to Brendan’s default.

              2. Whether the trial court erred when it interpreted Devlin’s
              surety agreement to not require the Bank to keep Devlin
              informed of subsequent modifications to its agreement with
              Brendan and to not keep Devlin informed of Brendan’s purported
              misconduct.

[2]   We affirm.

      Facts and Procedural History
[3]   Brendan Devlin is a farmer and Devlin’s son. On July 9, 2015, Brendan

      executed a set of documents with the Bank that enabled him to receive a farm

      Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024            Page 2 of 25
      operating loan.1 The loan consisted of an $800,000 line of credit with a variable

      interest rate and a July 9, 2016, maturity date. The loan was secured in part by

      Brendan’s crops, his receipt of certain insurance and government-program

      payments, and his farming inventory.

[4]   Brendan’s agreement with the Bank contained the following provisions with

      respect to Brendan’s sale of his crops:

              (1) To induce [the Bank] to extend the credit . . . secured by this
              Agreement, [Brendan] represents and warrants to [the Bank] that
              [Brendan] will sell . . . the Collateral only to those persons whose
              names and addresses have been set forth on sales schedules
              delivered to [the Bank]. Each schedule shall be in such form as
              [the Bank] may require . . . .

              (2) [Brendan] agrees to provide the [Bank] a written list or
              schedule of the buyers . . . including the entity name, contact
              name and address to whom or through whom the crops may be
              sold . . . . All such schedules and notifications shall be in writing
              and shall be delivered to [the Bank] not less than fourteen (14)
              days prior to any such sale . . . of the crops. Also, [Brendan]
              agrees to provide any updates or amendments to these schedules
              or lists to the [Bank].

      1
        Brendan’s then-wife, Carrie Doub, also executed all the necessary documents for Brendan to obtain this
      loan and its ensuing modifications, but for ease of reference we need only discuss Brendan. The Bank
      eventually obtained default judgments against both Brendan and Carrie, and they are not participants in this
      appeal.

      Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                  Page 3 of 25
              (3) All proceeds of any sale . . . shall be made immediately
              available to [the Bank] in a form jointly payable to [Brendan] and
              [the Bank]. . . .

              (4) [Brendan] acknowledges that if the crops are sold . . . to any
              person not listed on a schedule delivered to [the Bank] as
              provided above, at least seven (7) days prior to such sale . . . ,
              then under federal law, [Brendan] shall be subject to a fine which
              is the greater of $5,000 or 15% of the value of the benefit received
              from the sale . . . .

      Ex. Vol. 5, p. 125.

[5]   Following the parties’ execution of the loan documents, the Bank filed its

      U.C.C. Financing Statement with the Secretary of State, which secured the

      Bank’s interest in Brendan’s collateral. See Ind. Code §§ 26-1-9.1-308, -310

      (2023). In particular, the U.C.C. Financing Statement identified the Bank as a

      secured party to Brendan’s crops and identified in an attached schedule the

      locations of his crops. The U.C.C. Financing Statement also provided space for

      the Bank to identify potential buyers of those crops as reported to the Bank by

      Brendan. However, the Bank did not insist on receiving this information from

      Brendan, and, thus, the Bank left that space in the financing statement empty.

[6]   Devlin is a certified public accountant and spent much of his career, prior to his

      retirement, as the head of the audit department of an Indiana bank. His work

      required him to audit “books and records, policies, [and] loans,” and he had a

      necessary understanding of “how banks work” and “[l]oan documents in

      particular.” Tr. Vol. 4, p. 153. At the time Brendan sought the loan from the

      Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024            Page 4 of 25
      Bank, Devlin had done his own calculations on Brendan’s likely crop proceeds.

      Those calculations made Devlin “feel good” about Brendan’s financial position.

      Id. at 158.

[7]   Devlin agreed to act as a surety for Brendan’s loan with the Bank. Specifically,

      in exchange for the Bank agreeing to extend the loan to Brendan, Devlin agreed

      to provide the Bank with the additional security of a mortgage against

      approximately eighty-five acres of land owned by Devlin near Lizton (“the

      Mortgage”). 2 The terms of the Mortgage capped Devlin’s exposure at $1.6

      million and made clear that it secured “a revolving line of credit[] under which

      [the Bank] may make future obligations and advances to [Brendan] . . . .”

      Appellee’s App. Vol. 2, p. 113. The Mortgage further made clear that it “also

      secures all modifications, extensions and renewals of [Brendan’s] Note . . . .” Id.

      Indeed, the Mortgage defined “Note” as “the promissory note dated July 9,

      2015, in the original principal amount of $800,000.00 from [Brendan] to [the

      Bank], together with all renewals of, extensions of, modifications of, refinancings of,

      consolidations of, and substitutions for the promissory note . . . .” Id. at 121 (emphasis

      added). And, in executing the Mortgage, Devlin agreed that he had “established

      adequate means of obtaining from [Brendan] on a continuing basis information

      about [Brendan’s] financial condition . . . .” Id. at 114.

      2
        Devlin’s wife also executed the documents relevant to the Mortgage, but she has since died, and for ease of
      reference we need only discuss Devlin.

      Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                  Page 5 of 25
[8]   In September 2015, Brendan and the Bank agreed to modify the terms of the

      loan such that the frequency of Brendan’s repayments changed from monthly to

      semi-annually (“the September 2015 modification”). Brendan proceeded to use

      all but a few hundred dollars of the line of credit, which included misusing the

      line of credit to buy $200,000 of real property and farm equipment. 3

      Accordingly, on July 9, 2016, the original maturity date, Brendan and the Bank

      agreed to a second modification of the loan, which pushed the maturity date

      back to October 9, 2016 (“the July 2016 modification”). Then, on that date,

      Brendan and the Bank agreed to another modification of the loan; under this

      modification, Brendan executed a new set of documents that reduced the

      amount available on the original line of credit to $600,000 with a new maturity

      date of October 9, 2017 (“the October 2016 modification”). And, in December

      2016, Brendan executed a third set of documents that converted the misused

      $200,000 into a term loan obligation (“the December 2016 loan”), which was a

      “[n]ormal and customary” banking practice in such circumstances. Tr. Vol. 4,

      p. 9. The Bank did not inform Devlin of any of those changes to the original

      loan’s terms.

[9]   Between the initial issuance of the loan and the October 2016 modification,

      Brendan made approximately $246,000 in payments to the Bank. But Brendan

      did not insist on payments for his crops being made jointly payable to both him

      3
        An employee of the Bank who worked on agricultural loans later testified that misusing a farm operating
      line of credit to buy real property and farm equipment is “commonly” done. Tr. Vol. 4, p. 8.

      Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                 Page 6 of 25
       and the Bank, and he received approximately $363,000 in additional proceeds

       from his sale of crops during that same time, which proceeds he deposited into

       his personal checking account with another bank. Brendan also received a

       government-program payment in excess of $43,000 that he deposited into that

       account. And, in the last months of 2016, after he had agreed to the October

       2016 modification, Brendan received approximately $348,000 from crop sales

       and $116,500 in government-program payments, which he again deposited into

       his personal checking account.

[10]   Meanwhile, between 2015 and 2017, Devlin also acted as a creditor to Brendan,

       extending to Brendan a separate revolving line of credit to help fund Brendan’s

       farming operations. At one point, Brendan owed approximately $150,000 to

       Devlin on this line of credit. Between December 2016 and April 2017, Brendan

       paid $77,750 to Devlin; Brendan paid those sums to Devlin using checks

       associated with a small business account he had with the Bank. During that

       same time period, Brendan withdrew more than $290,000 on his line of credit

       with the Bank. In 2020—after the Bank had filed suit—Brendan continued

       making payments to Devlin, and Brendan had paid his debt to Devlin down to

       about $14,000.

[11]   Brendan failed to repay his line of credit with the Bank by its maturity date in

       October 2017. Brendan’s default on the line of credit also operated as a default

       on the December 2016 loan. The Bank then, for the first time, sent written

       notices of its crop lien to potential buyers of Brendan’s crops for the upcoming

       2017 harvest season; this resulted in the issuance of some checks jointly payable

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024          Page 7 of 25
       to Brendan and the Bank, but the proceeds the Bank received from those

       payments were substantially less than the Bank had anticipated, and they were

       insufficient to satisfy Brendan’s debt. Meanwhile, Brendan sold crops from his

       2017 harvest to buyers who had not been notified by the Bank of its crop lien,

       and he did not use the proceeds of those sales to pay down or to satisfy his debt

       with the Bank.

[12]   In February 2018, the Bank filed its complaint, which it later twice amended.

       As relevant here, the Bank’s last-amended complaint sought to foreclose on the

       Mortgage and to obtain an in rem judgment against Devlin’s property. Devlin

       moved for summary judgment on the ground that Brendan and the Bank’s

       various modifications of the original loan without notice to him and consent

       from him discharged him of his obligations as a surety. The trial court denied

       that motion.

[13]   After a three-day bench trial in May 2023, the court entered judgment for the

       Bank. In doing so, the court expressly found and concluded that, while the

       Bank “could have been more diligent in its efforts to safeguard the proceeds

       from the sale of crops, none of the Bank’s actions were ‘improper.’” Appellant’s

       App. Vol. 2, p. 83. The court added that Brendan, not the Bank, was

       “responsible for the loss of collateral” as he had “utterly failed” to satisfy his

       obligations to the Bank. Id. at 83-84. And the court further made it a point to

       note that “Devlin himself is also to blame,” stating:

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024             Page 8 of 25
               69. Devlin[] is an educated and intelligent man, a CPA who
               audited banks during his professional life. He was best positioned
               to watch his son, to monitor the comings and goings of crops.

               70. Devlin certainly kept track of the money he personally lent
               Brendan, keeping notes regarding how much he loaned and how
               much was repaid.

               71. Devlin even accepted repayment from Brendan on a personal
               loan AFTER this case was filed and he had actual knowledge
               that Brendan was not repaying the Bank.

               72. With respect to the amount Brendan owed the Bank, for
               which Devlin had pledged his land as security, Devlin now
               claims that he effectively had no means to monitor what his son
               was doing and that he was solely at the mercy of the Bank to
               keep him advised of Brendan’s activity and to ensure that
               Brendan was acting honestly.

               73. Paraphrasing the Indiana Court of Appeals . . . , the Bank
               was not required to police Brendan’s integrity on behalf of
               Devlin.

       Id. at 84-85 (citation omitted). The trial court then foreclosed on the Mortgage

       and entered an in rem judgment against Devlin’s property. The court later

       amended that judgment to include an award to the Bank for its attorneys’ fees

       and costs, bringing the total amount of the in rem judgment to $1,137,566.74.

[14]   This appeal ensued.

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024           Page 9 of 25
       1. The trial court’s findings and conclusions that the Bank did
       not impair Brendan’s collateral are supported by the record.
[15]   On appeal, Devlin first argues that the trial court erred in various ways with

       respect to not holding the Bank responsible for “fail[ing] to enforce its security

       interest in Brendan’s crop proceeds.” Appellant’s Br. at 31-32. The trial court’s

       judgment on these issues is supported by findings of fact and conclusions

       thereon following a bench trial. For such issues, we review the court’s judgment

       under our clearly erroneous standard. Jones v. Gruca, 150 N.E.3d 632, 640 (Ind.

       Ct. App. 2020), trans. denied. “We ‘neither reweigh evidence nor judge witness

       credibility.’” Id. (quoting R.L. v. Ind. Dep’t of Child Servs. & Child Advocates, Inc.,

       144 N.E.3d 686, 689 (Ind. 2020)). Rather, a judgment is clearly erroneous only

       when there are no record facts that support the judgment or if the court applied

       an incorrect legal standard to the facts. Id.

[16]   Devlin argues that the Bank failed to do its utmost to secure its right to jointly

       payable proceeds from Brendan’s sale of his crops. In particular, he contends

       that the Bank did not obtain from Brendan a list of potential buyers of his crops

       when he signed the first set of loan documents in July 2015 and that the Bank

       failed to send any potential buyers written notice of its security interest in the

       proceeds of Brendan’s sale of his crops in 2015 and 2016, which enabled buyers

       to take those crops free of the Bank’s security interest. See I.C. § 26-1-9.1-320.

       Had the Bank taken those steps, Devlin continues, the Bank could have ensured

       receipt of jointly payable proceeds and used those proceeds to reduce Brendan’s

       debt and, in turn, reduce Devlin’s exposure to liability. Likewise, Devlin asserts

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024               Page 10 of 25
       that the Bank failed to secure jointly payable insurance and government-

       program proceeds received by Brendan.

[17]   One who mortgages his or her land to secure the debt of another stands in the

       position of surety to the debtor. Brooks v. Bank of Geneva, 97 N.E.3d 647, 652

       (Ind. Ct. App.), aff’d on reh’g, 105 N.E.3d 197 (2018), trans. denied. “It is

       axiomatic that a surety is a favorite of the law and must be dealt with in the

       utmost good faith.” Id. Thus, under Indiana’s common law, a surety may seek

       to avoid liability in a suit by a creditor by asserting an impairment-of-collateral

       defense. 4 Farmers Loan & Trust Co. v. Letsinger, 652 N.E.2d 63, 66 (Ind. 1995).

       Pursuant to this defense, a surety may avoid liability to the extent that a

       “creditor unjustifiably impair[ed] the collateral securing a guarantied loan.” Id.

       at 67 (emphasis added). As relevant here, impairment of collateral means an

       injury to the value of the collateral or a deterioration of the interest securing the

       collateral. See Cole v. Loman & Gray, Inc., 713 N.E.2d 901, 904 (Ind. Ct. App.

       1999).

[18]   Our Supreme Court has explained that this defense “makes sense for two

       reasons.” Letsinger, 652 N.E.2d at 66. First, a surety, at the time of entering into

       the contract, “may make the judgment that the collateral for the loan . . . will be

       sufficient to cover the debt.” Id. Thus, if the creditor impairs that collateral, the

       surety “may become exposed to liability” beyond his expectation at the time of

       4
           We agree with Devlin that he did not waive his right to assert this defense in his Mortgage.

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                    Page 11 of 25
       the contract. Id. Second, a surety who does satisfy the debtor’s obligation to the

       creditor “steps into the shoes of the creditor” and assumes the creditor’s rights

       and duties. Id. at 67. Thus, if the creditor has unjustifiably impaired the

       collateral, the creditor will have impaired the surety’s recourse as the surety

       understood his recourse to be at the time of the contract. Id.

[19]   We first address Devlin’s argument that the Bank failed to obtain the

       information for and to send written notices of its security interest to potential

       buyers of Brendan’s crops in 2015 and 2016, which, according to Devlin,

       allowed Brendan to dissipate collateral. Devlin’s argument here is premised on

       his assertion that the trial court erred as matter of law when it considered

       whether the Bank’s decisions to not take those measures were justified or

       reasonable. According to Devlin, the trial court’s assessment mistakenly relied

       on precedent from our Court that discussed Indiana’s provisions of the Uniform

       Commercial Code on negotiable instruments, which is not the law applicable to

       Devlin’s surety agreement, 5 rather than relying on precedent that applied

       Indiana’s common law. Devlin then asserts that, under our common law, “if an

       impairment occurs, then the obligor is released to the extent of the impairment.

       Period.” Appellant’s Br. at 41.

[20]   The trial court’s judgment for the Bank does at times misapply case law relating

       to Indiana’s provisions of the U.C.C. on negotiable instruments, which, in

       5
        Devlin’s Mortgage is not a negotiable instrument because, among other reasons, it is not a promise to pay a
       sum certain. See Letsinger, 652 N.E.2d at 65 (citing I.C. § 26-1-3.1-104(a) (1994)).

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                Page 12 of 25
       interpreting a prior version of our U.C.C., considered whether the creditor had

       acted “improper[ly]” or “unreasonabl[y]” vis-à-vis the collateral. Williams v.

       Lafayette Prod. Credit Ass’n, 508 N.E.2d 579, 583-84 (Ind. Ct. App. 1987);

       Wisconics Eng’g, Inc. v. Fisher, 466 N.E.2d 745, 767 (Ind. Ct. App 1984)

       (quotation marks omitted), trans. denied. Our case law also often conflates

       Indiana’s common law and our U.C.C. provisions with respect to impairment

       of collateral. See, e.g., Cole, 713 N.E.2d at 904.

[21]   Nonetheless, as Justice Sullivan made clear for our Supreme Court in Letsinger,

       Indiana’s common law on the impairment-of-collateral defense requires the

       creditor’s actions to have “unjustifiably impair[ed]” the collateral. 652 N.E.2d at

       67 (emphasis added). The Letsinger Court also cited as supporting authority

       Indiana’s provisions of the U.C.C. on secured transactions, which require that

       “a secured party must use reasonable care” with respect to collateral. Id. at 67

       (citing I.C. § 26-1-9-207(1) (1992)); see also I.C. § 26-1-9.1-207(a) (2023).

       Further, the Court recognized that our U.C.C.’s provisions on negotiable

       instruments “incorporated the general law of surety.” Letsinger, 652 N.E.2d at

       67. We therefore agree with the Bank that the trial court’s reasoning for its

       judgment is clear and that any misapplication of law relating to Indiana’s

       provisions of the U.C.C. on negotiable instruments was superfluous to the

       court’s judgment.

[22]   Accordingly, and Devlin’s assertions notwithstanding, the impairment-of-

       collateral defense under our common law does require the surety to establish

       some “unjustifi[ed]” or unreasonable act by the creditor. See id. at 66-67. For

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024            Page 13 of 25
       example, in Letsinger, the creditor failed to renew its security interest in the

       collateral, which renewal simply required the creditor to timely refile a

       financing statement. The debtor then filed for bankruptcy, and the unsecured

       collateral was liquidated to pay other creditors. Our Supreme Court held that

       the creditor’s failure to refile its financing statement “exposed the [sureties] to

       personal liability to which they did not contract,” and, thus, the sureties were

       discharged from their guarantee under the impairment-of-collateral defense. Id.

       at 66-67.

[23]   Here, the record supports the trial court’s finding that the Bank did not act

       unjustifiably or unreasonably either when the Bank did not insist that Brendan

       provide information for potential buyers at the outset of his relationship with

       the Bank or when the Bank did not send written notices to potential buyers of

       its crop lien prior to Brendan’s default. During the trial, the Bank introduced

       evidence from several expert witnesses. The Bank’s experts agreed that whether

       to insist on information for potential buyers and to send written notices to those

       potential buyers at the front-end of a farm operating loan would have been a

       function of the strength of the debtor’s loan application. The experts likewise

       agreed that Brendan’s loan application—including Devlin’s Mortgage in

       support of that application—was a strong application, and, as such, it would

       not have been “standard” or “customary” for a lender in the Bank’s position to

       initially insist on securing jointly payable proceeds from potential buyers. Tr.

       Vol. 2, pp. 205-06; Tr. Vol. 3, p. 157.

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024            Page 14 of 25
[24]   The Bank’s experts also agreed that, if a “borrower/farmer was determined to

       be dishonest and sell to other grain purchasers that were not notified,” insisting

       on jointly payable proceeds from potential buyers would not be likely to prevent

       him from doing so. Tr. Vol. 2, pp. 205-06. Indeed, Brendan proved that point—

       following his default on the loan, the Bank sent written notices to potential

       buyers of its crop lien in order to secure jointly payable proceeds, to which

       Brendan responded by simply selling his crops to buyers who had not been

       notified by the Bank of its lien.

[25]   Thus, we cannot say that Devlin has shown that the Bank’s failure to insist on

       obtaining jointly payable proceeds from potential buyers at the outset of its

       relationship with Brendan was unjustified or unreasonable. Nor can we say

       that, had the Bank done differently, it would have in fact mattered here given

       the clear evidence of Brendan’s determination to not repay the Bank. The trial

       court’s findings and conclusions as to this issue are therefore not clearly

       erroneous.

[26]   We briefly address Devlin’s two additional arguments, namely, that the Bank

       failed to secure jointly payable insurance and government-program proceeds.

       Those arguments are readily resolved on this particular record. First, there is no

       evidence credited by the trial court that Devlin ever received insurance

       proceeds. See Appellant’s App. Vol. 2, pp. 85-87. Thus, any failure by the Bank

       to secure jointly payable insurance proceeds cannot be a basis for reversible

       error here. See Hayko v. State, 211 N.E.3d 483, 492 (Ind. 2023) (discussing Ind.

       Appellate Rule 66(A)).

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024          Page 15 of 25
[27]   Second, while the trial court found and the record establishes that Brendan

       received approximately $159,000 in government-program payments that were

       not jointly payable, Devlin’s argument in his brief cites no part of this

       voluminous record to show what the Bank could have or should have done to

       secure those payments in a jointly payable manner prior to Brendan’s default.

       See Appellant’s Br. at 46. Accordingly, and on this record, Devlin has not met

       his burden on appeal to show error here, either. See App. R. 46(A)(8)(a); see also

       Letsinger, 652 N.E.2d at 66-67.

[28]   In sum, the trial court’s findings and conclusions that the Bank did not act

       unjustifiably or unreasonably when it did not do more to secure jointly payable

       proceeds prior to Brendan’s default is not clearly erroneous.

       2. The trial court did not err in its interpretation of the
       Mortgage.
[29]   We next consider Devlin’s arguments that the Bank’s various modifications of

       the original loan discharged him from his obligations as a surety. Devlin

       similarly argues that Brendan’s misuse of the $200,000 and his sale of crops to

       buyers that had not been disclosed to the Bank constituted “misconduct” by

       Brendan, and the failure of the Bank to inform Devlin of that alleged

       misconduct also discharged him from his obligations as a surety. See

       Appellant’s Br. at 47.

[30]   The trial court resolved these arguments under the terms of Devlin’s Mortgage.

       We review questions of contract interpretation de novo. Decker v. Star Fin. Grp.,

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024             Page 16 of 25
       Inc., 204 N.E.3d 918, 921 (Ind. 2023). The goal of contract interpretation is to

       ascertain and give effect to the parties’ intent as reasonably manifested by the

       language of their agreement. Id. at 920 (quotation marks omitted). If the

       language is clear and unambiguous, it must be given its plain and ordinary

       meaning. Id. at 920-21 (quotation marks omitted).

[31]   As we have explained:

               Generally, the nature and extent of a [surety’s] liability depends
               upon the terms of the contract, and a [surety] cannot be made
               liable beyond the terms of the [contract]. Nevertheless, the terms
               of [the contract] should neither be so narrowly interpreted as to
               frustrate the obvious intent of the parties, nor so loosely
               interpreted as to relieve the [surety] of a liability fairly within
               their terms.

       Shoaff v. First Merchs. Bank, 201 N.E.3d 646, 653 (Ind. Ct. App. 2022) (quoting

       Broadbent v. Fifth Third Bank, 59 N.E.3d 305, 311 (Ind. Ct. App. 2016)).

       2.1. The plain terms of the Mortgage anticipated that the original
       loan’s terms might be modified and captured those modifications
       accordingly.

[32]   We initially consider Devlin’s argument that the several modifications to the

       original loan’s terms discharged him from his obligations as a surety. Under

       Indiana’s common law, when parties cause a material alteration of an

       underlying obligation without the consent of the surety, the surety is discharged

       from further liability regardless of whether the alteration is to the surety’s injury

       or benefit. Id. at 654 (quoting Keesling v. T.E.K. Partners, LLC, 861 N.E.2d 1246,

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024            Page 17 of 25
       1251 (Ind. Ct. App. 2007)). A material alteration that effects a discharge of the

       surety is one that alters the legal identity of the principal’s contract,

       substantially increases the risk of loss to the surety, or places the surety in a

       different position. Id. (quoting Keesling, 861 N.E.2d at 1251).

[33]   We have historically viewed modifications such as those entered into between

       Brendan and the Bank as material alterations that would discharge a surety if

       entered into without the surety’s consent. See, e.g., Brooks, 97 N.E.3d at 653

       (holding that a change to an obligor’s payment terms without the surety’s

       consent discharged the surety). But we have also recognized that a surety may

       “prospectively consent[] to alterations of [the underlying] obligation” in his

       surety agreement. Kruse v. Nat’l Bank of Indianapolis, 815 N.E.2d 137, 150 (Ind.

       Ct. App. 2004). As we have noted:

               We recognize that our jurisprudence in this area exhibits an
               internal tension. We have previously held, for example, that a
               change from monthly mortgage payments to semi-annual
               payments—without notice to the [surety]—was enough to
               discharge the [surety] from liability. In part, this tension is due to
               a fine distinction being drawn inconsistently. There is a
               difference between the question of whether an alteration is
               material, and whether it is contemplated and consented to by a
               contract.

       Shoaff, 201 N.E.3d at 655 (citing Brooks, 97 N.E.3d at 653).

[34]   In Shoaff, the surety’s agreement with the lender stated as follows:

               I consent to all renewals, extensions, modifications and
               substitutions of the Debt which may be made by you [the lender]
       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024             Page 18 of 25
               upon such terms and conditions as you may see fit from time to
               time without further notice to me and without limitation as to the
               number of renewals, extensions, modifications or substitutions.

       Id. at 650. The surety’s agreement also contained a long list of additional

       waivers, which included the surety’s consent to any renewals or extensions of

       the underlying debt agreement and “modify[ing] the terms of the Debt” or any

       instrument securing it. Id. at 651.

[35]   After the debtor in Shoaff defaulted and the lender sought recourse against the

       surety, the surety argued that numerous subsequent modifications of the

       underlying debt agreement were material alterations entered into without his

       consent, which discharged him from his obligations. We disagreed, holding in

       relevant part that “the language of the [surety a]greement is exceptionally

       broad,” and “[c]ontracts are not invalidated merely because they cast so wide a

       net.” Id. at 656. We also noted that the surety was “a veteran attorney and—as

       with any litigant—is presumed to understand the documents which he signs

       and cannot be released from the terms of a contract due to his failure to read it.”

       Id.

[36]   So too here. The terms of Devlin’s Mortgage made clear that it secured “a

       revolving line of credit[] under which [the Bank] may make future obligations

       and advances to [Brendan] . . . .” Appellee’s App. Vol. 2, p. 113. The Mortgage

       further made clear that it “secure[d] all modifications, extensions and renewals of

       [Brendan’s] Note . . . .” Id. (emphasis added). And the Mortgage defined the

       “Note” being secured by Devlin as “the promissory note dated July 9, 2015, in

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024             Page 19 of 25
       the original principal amount of $800,000.00 from [Brendan] to [the Bank],

       together with all renewals of, extensions of, modifications of, refinancings of,

       consolidations of, and substitutions for the promissory note . . . .” Id. at 121 (emphasis

       added).

[37]   The terms of the Mortgage are unambiguous and binding. By its plain terms,

       Devlin prospectively agreed that he was securing not just the initial loan from

       the Bank to Brendan but also any ensuing modifications of, refinancings of,

       consolidations of, and substitutions for the initial loan. While Devlin complains

       that the word “consent” does not appear in the above language, the obvious

       response is that that specific word did not need to appear given the plain

       language of what it was that he agreed to secure. 6 We also note that Devlin, like

       the surety in Shoaff, was a particularly sophisticated party, and we see no reason

       why he should not be held to his agreement.

[38]   We therefore agree with the trial court that the plain terms of the Mortgage

       made it unnecessary for the Bank to seek additional consent from Devlin for the

       ensuing modifications entered into between Brendan and the Bank, and those

       modifications did not discharge Devlin from his obligations as a surety to the

       Bank.

       6
         Devlin also substantially relies on our Court’s opinion in First Federal Bank v. Greenwalt, but no part of our
       analysis in that opinion discusses the language of the surety’s agreement with the lender. 42 N.E.3d 89, 93-97
       (Ind. Ct. App. 2015).

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                   Page 20 of 25
       2.2. Devlin’s Mortgage did not reserve a right for him to terminate his
       surety agreement based on any later-disapproved-of acts between
       Brendan and the Bank, and he therefore cannot now complain of how
       they managed their relationship.

[39]   Last, Devlin contends that Brendan’s misuse of the $200,000 and his sale of

       crops to buyers that had not been disclosed to the Bank constituted

       “misconduct,” and the failure of the Bank to inform Devlin of that alleged

       misconduct discharged Devlin from his obligations as a surety.7 See Appellant’s

       Br. at 47. In support of this argument, Devlin relies on our Court’s opinion 8 in

       Indiana Telco Federal Credit Union v. Young, in which we stated that “a creditor’s

       failure to notify a surety of a debtor’s misconduct discharges the surety.” 156

       Ind. App. 483, 485, 297 N.E.2d 434, 435 (1973).

[40]   But we have since made clear that that language “is not as global as [it] might

       lead one to believe.” Yin v. Soc’y Nat’l Bank Ind., 665 N.E.2d 58, 64 (Ind. Ct.

       App. 1996), trans. denied. As we explained in Yin:

                a creditor’s mere failure to notify a surety of a debtor’s
                misconduct does not automatically discharge the surety. Were it
                otherwise, a surety who had full knowledge of a debtor’s
                misconduct could be discharged if the creditor failed to

       7
         The trial court resolved this issue at least in part under the Mortgage’s language that Devlin had
       “established adequate means of obtaining from [Brendan] on a continuing basis information about
       [Brendan’s] financial condition . . . .” Appellee’s App. Vol. 2, p. 114. We agree with Devlin that that
       language did not impose a duty on Devlin to track each of Brendan’s ensuing financial transactions.
       8
        In his brief, Devlin repeatedly misattributes this Court’s opinion in Indiana Telco to our Supreme Court. See
       Appellant’s Br. at 47-49.

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                                   Page 21 of 25
                independently notify the surety. This cannot be the intended
                result of the statement in Indiana Telco.

       Id. at 65.

[41]   In support of that assessment, we relied on the Restatement (First) of Security §

       124(2) (1941). Id. at 64-65. The modern version of that same rule is now found

       in the Restatement (Third) of Suretyship and Guaranty § 47 (1996), which

       reads:

                If, pursuant to the terms of the contract creating the secondary obligation,
                the secondary obligor has the power, upon the occurrence of a specified
                event, to terminate the secondary obligation with respect to
                subsequent defaults of the principal obligor on the underlying
                obligation or subsequently incurred duties of the principal
                obligor, and:

                        (a) such event occurs;

                        (b) the obligee knows such event has occurred; and

                        (c) the obligee has reason to know that the occurrence of
                        such event is unknown to the secondary obligor;

                the secondary obligor is discharged from the secondary
                obligation with respect to defaults of the principal obligor that
                occur, or duties of the principal obligor incurred, thereafter and
                before the secondary obligor obtains knowledge of the occurrence
                of the event.

       (Emphasis added.)

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                   Page 22 of 25
[42]   The Restatement provides the following illustrations of section 47’s operation:

               1. B enters into a contract with O to construct four buildings,
               with construction of each successive building to be started only
               after completion of the previous one. S agrees with O to be a
               surety with respect to the completion of the buildings in
               accordance with the contract. S’s contract with O gives S the power,
               upon the failure of B to complete any building in substantial compliance
               with the contract specifications, to terminate its liability with respect to
               buildings not yet begun. O discovers that the air conditioning
               system in the first building is not in compliance with the contract
               specifications and that the noncompliance is such that major
               portions of the building will need reconstruction in order for the
               building to comply with the contract. S is unaware of this
               noncompliance and O has reason to know of S’s ignorance. If O
               does not disclose the noncompliance to S, S will be discharged
               from liability for defaults of B with respect to the subsequent
               buildings that are begun before S learns of the noncompliance.

               2. Pursuant to an enforceable, irrevocable contract, G guarantees
               all extensions of credit by Conservative Bank to B that may be
               made before December 31. Pursuant to the contract, Conservative
               Bank may assign its rights under the contract to any other bank but,
               upon assignment, G has the right to terminate the guaranty with respect
               to subsequent extensions of credit. On October 1, Conservative Bank
               assigns all its rights under the contract to Risktaking Bank. As its
               name suggests, Risktaking Bank is more likely to make risky
               loans than is Conservative Bank. Conservative Bank and
               Risktaking Bank do not inform G of the assignment, and have
               reason to know that G is unaware of it. G is discharged from
               liability for loans made by Risktaking Bank to B until G learns of
               the assignment. After that time, G may protect its interests by
               terminating the guaranty with respect to subsequent extensions of
               credit.

       Id. cmt. a (emphases added).
       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024                   Page 23 of 25
[43]   We find section 47 clear and persuasive as to Indiana law. A surety may

       terminate its surety agreement based on subsequent defaults of the debtor only

       if the surety’s contract reserved the right to terminate the agreement for those

       specified acts. Here, Devlin’s Mortgage reserved no such right and specified no

       such acts that would operate to terminate his surety agreement. See Appellee’s

       App. Vol. 2, pp. 113-22. Instead, Devlin merely seeks to second-guess how

       Brendan and the Bank managed their relationship following the initial issuance

       of the loan. We think Devlin’s arguments, if adopted, would undermine good-

       faith dealings between lenders and debtors and would empower sureties to

       litigate any subsequent action of a debtor as “misconduct” entitling the surety

       to discharge.

[44]   In sum, we do not believe Devlin’s position is consistent with Indiana law. We

       hold that, for a surety to seek to terminate his surety agreement based on

       subsequent defaults of the debtor on the underlying obligation or subsequently

       incurred duties of debtor, the surety must have reserved the right in his surety

       agreement to terminate upon the occurrence of any such specified event. That

       did not happen here, and we therefore affirm the trial court’s judgment on this

       issue as well.

       Conclusion
[45]   For all of these reasons, we affirm the trial court’s judgment to foreclose on the

       Mortgage and its amended in rem judgment against Devlin’s property.

[46]   Affirmed.

       Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024          Page 24 of 25
May, J., and Vaidik, J., concur.

ATTORNEY FOR APPELLANT
Don R. Hostetler
Hostetler Law LLC
Indianapolis, Indiana

ATTORNEYS FOR APPELLEE
Paul D. Vink
Nathan T. Danielson
Bose McKinney & Evans LLP
Indianapolis, Indiana

Court of Appeals of Indiana | Opinion 23A-MF-1986 | May 1, 2024   Page 25 of 25