Court Opinion

ID: 9715042
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:52:57.872883+00
Date Added: 2024-06-11T18:23:30.948220
License: Public Domain

SULLIVAN, Judge,
dissenting.
The adage that "hard cases make bad law" 1 might be applied to the case before us. But assuming that the law enunciated is not "bad," the decision nevertheless represents a dramatic change in the law of contracts-more particularly with regard to consideration.
The majority opinion states that consideration must consist of a "bargained-for exchange." In order to meet this test, it is not necessary that the benefit or detriment be negotiated, agreed upon by both parties and reflected by specific language in the instruments. It is sufficient that the detriment or benefit to the particular party flows from the bargain. The transaction of which the release was a part must be considered in its entirety. The consideration for the release need not be found in the release itself. It may be found in contemporaneous aspects of, the transaction. Goeke v. Merchants National Bank and Trust Co. (1984) 1st Dist. Ind.App., 467 N.E.2d 760, trans. denied.
It is not necessary that the consideration flow between the promisor and the prom-isee. So long as the promisor obtains a benefit, the benefit may flow from a third party, e.g., the mortgagee here. See Timberlake v. J.R. Watkins Co. (1965) 138 Ind.App. 554, 209 N.E.2d 909, reh. denied 211 N.E.2d 193; 17 Am.Jur.2d, Contracts, Sec. 96.
It is clear that the benefit to Hazel was bargained for. The mortgagee's release of her upon the obligation was clearly and specifically a part of the bargain. Hazel's judgment constituted a lien against the real estate in David's name. Therefore it had to be released before the mortgage could be satisfied, taxes paid and clear title delivered. Therefore Hazel did benefit by the liability avoidance. That specific benefit was, by Hazel's own testimony, specifically contemplated as a consequence of her execution of the documents. That this bargained-for consideration was not specifically stated as the guid pro quo for the unambiguous release is not determinative. As noted in 17 C.J.8., Contracts See. 74, p. 763, cited by the majority, consideration exists
"if it is present anywhere in the entire transaction surrounding the agreement, regardless of whether any label has been put on it, and regardless of whether it was spelled out in the writing."
There were absolutely no representations or misrepresentations made by David nor by the mortgagee to Hazel with regard to the release. There was no hint of undue influence. The release executed was clear, unequivocal and unambiguous. That Hazel perhaps did not avail herself of the full and fair opportunity to read the release does not relieve her from the consequences of that clear and unambiguous instrument. Moore v. Bowyer (1979) 1st Dist., 180 Ind.App. 429, 388 N.E.2d 611. The release therefore must be given its full legal effect.
As stated in Robison v. Fickle (1976) 2d Dist., 167 Ind.App. 651, 340 N.E.2d 824, *1153829, although in a slightly different contractual context:
"'The intention of the parties to a contract is always vital to an understanding of that contract and of the relationships and rights created. However, as stated in City of Indianapolis v. Kingsbury (1884), 101 Ind. 200, 218: '... the intention to which Courts give heed is not an intention hidden in the mind of the landowner, but an intention manifested by his acts. It is the intention which finds expression in conduct and not that which 'is secreted in the heart of the owner, that the law regards. Acts indicate the intention, and upon the intention clearly expressed by open acts and visible conduct the public and individual citizens may act.'
Thus does the law hold one to the natural legal consequences of words consciously chosen and utilized in a contract. 4 Willi-ston on Contracts (3d ed.) See. 606."
See also Mullen v. Tucker (1987) 4th Dist. Ind.App., 510 N.E.2d 711, 718 ("a release . constitutes a 'settlement' ... notwithstanding the motives prompting the execution of the release.")
Though in retrospect Hazel may have made a bad bargain, such does not diminish the effect of her execution of the release. As set forth in Rutter v. Excel Industries, Inc. (1982) 3d Dist. Ind.App., 488 N.E.2d 1080, 1081:
"'The freedom to contract includes the freedom to contract improvidently, and in the absence of countervailing policy considerations, private reservations or mistake will not avoid the results of apparent consent.
'If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe he was assenting to the terms proposed by the other party, and that the other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms' Smith v. Hughes (Eng.1871), LR. 6 Q.B. 597."
That the amount of iHagel’s mortgage and tax liability avoidance may have been of a substantially lesser amount than the $10,800 judgment. released is not a basis for the trial court's judgment. Inadequate consideration, as opposed to failure of consideration is not a basis for setting the release aside. Harrison-Floyd Farm Bureau Co-Op. v. Reed (1989) 1st Dist. Ind. App., 546 N.E.2d 855; Herrera v. Collection Service, Inc. (1982) 2d Dist. Ind.App., 441 N.E.2d 981. '
A compassionate motivation to relieve Hazel from the consequences of her arguably bad bargain is understandable. Absent fraud, undue influence, incapacity or some other cognizable grounds for relief, however, I am unable to discern any legal basis for the holding today. The fact remains that Hazel signed the release which clearly stated its tenor and effect. In doing so she gave up the hope or possibility of recovering her $10,800 judgment against David, who at the time was virtually bankrupt and without any assets either in Indiana or Florida. In return shé avoided having a judgment against her for an amount in excess of the $41,000 mortgage balance due at the time of closing. In light of David's relatively precarious financial position, it is not unlikely that Hazel would have felt the major impact of that mortgage liability. In this light, the bargain from Hazel's perspective may not have been all that unwise.
In any event I am constrained to dissent. I would reverse the judgment and direct the court to give full force and effect to the release.

. Holmes, J. in Northern Securities Co. v. United States (1904) 193 U.S. 197, 24 S.Ct. 436, 48 L.Ed. 679.