Peoples Bank & Trust Co. v. Price
Decision Date | 23 July 1999 |
Docket Number | No. 49A04-9810-CV-490.,49A04-9810-CV-490. |
Citation | 714 N.E.2d 712 |
Parties | PEOPLES BANK & TRUST COMPANY, Appellant-Plaintiff, v. Henry J. PRICE, Appellee-Defendant. |
Court | Indiana Appellate Court |
Christopher E. Baker, R. Brock Jordan, Rubin & Levin, Indianapolis, Indiana, Attorneys for Appellant.
William C. Potter, II, Audrey M. Bougard, Price, Potter & Mellowitz, Indianapolis, Indiana, Attorneys for Appellee.
Appellant-Plaintiff Peoples Bank & Trust Co. ("Peoples") brings this interlocutory appeal of the denial of its motion for summary judgment in its lawsuit based on three promissory notes executed by Appellee-Defendant Henry J. Price ("Price"). We reverse.
The dispositive issue may be restated as whether Peoples is entitled to summary judgment in its action to collect on three promissory notes executed by Price.
The operative facts are undisputed. In 1995, Price and Timothy Luther ("Luther") entered into an arrangement to finance the purchase of luxury automobiles that Luther thought he could resell at a profit. (R. 89). Price would execute a promissory note to Peoples, obtain a check payable to both Price and Luther, and then endorse the check and provide it to Luther for the purchase of a car. (R. 89-90). When Luther sold the car, he was to apply the proceeds to pay off the note and split the profits with Price. (R. 90).
Beginning in August of 1995, Price borrowed a total of $148,200.00 from Peoples under the terms of three promissory notes styled "Fixed Rate Consumer Note, Disclosure and Security Agreement," each representing the purchase of a Mercedes automobile. (R. 14, 18, 22). Price was the only person who signed the notes and signed in the capacity of "borrower." (R. 14, 18, 22). Each note provided that it would be secured by the particular Mercedes automobile to be purchased and specified by the serial number or vehicle identification number ("VIN") of that car. (R. 14, 18, 22). The notes contained the following covenants:
(R. 15, 19, 23). The promissory notes provided that in the event of default, Peoples had the right to accelerate all payments and demand all amounts owing, including the costs of collection and reasonable attorney fees. (R. 15, 19, 23).
In conjunction with the closing of this type of loan, the bank officer would complete a form styled "CONSUMER LOAN APPROVAL CHECKLIST." (R. 95). These checklists read as follows:
APPROVED SUBJECT TO THE FOLLOWING CONDITIONS:
_v_ PURCHASE: Check payable to customer and dealer with restrictive endorsement stamp.
___ REFINANCE: Title application form 44049, ST-108 or ST-108Em $5.00 title fee and title.
EVIDENCE THAT THE ABOVE CONDITIONS ARE MET MUST BE INCLUDED IN THE LOAN PACKAGE.
(R. 95). The bank officer would note on the checklist that the loans were "ready to close." (R. 95).
Upon the execution of each note, Peoples would provide Price with a check payable to both Price and Luther. (R. 41-43). Each of the three checks contained a restrictive endorsement providing that title to the vehicle in question would be placed in the name of Price, and, that Price, by accepting and/or endorsing the check, guaranteed that the application for Certificate of Title would show that Peoples maintained a first lien on each of the respective vehicles. (R. 41-43). Price endorsed each of the three checks and provided them to Luther. (R. 41-43).
Luther made sporadic payments on the notes with checks issued from his business known as "Jim Britts Motorsports, Inc." (R. 97-111). However, in the later part of 1996, it was discovered that the cars which purported to secure the notes were fictitious. (R. 91). As there was no collateral securing the notes, Peoples accelerated the balance due and ultimately filed the present lawsuit against Price to enforce its rights under the notes. (R. 10).
Price answered the complaint denying any liability under the notes. (R. 31-32). Price raised affirmative defenses including his argument that the proximate cause of People's damages was its failure to obtain the titles to the vehicles in question or to ascertain whether the VINs listed in the notes actually existed. (R. 32). Price counterclaimed against Peoples alleging that it was liable to him for the damages he incurred due to Peoples' negligence in failing to verify the existence of the identification numbers. (R. 34).
Peoples moved for summary judgment on its claims under the notes as well as upon Price's counterclaim. Price made the following assertions by affidavit:
13. Peoples' negligence in ascertaining that the titles' claimed vehicle numbers were false and that the vehicles therefore did not exist has caused me damages in an amount to be proven at trial.
(R. 92).
The trial court denied Peoples' motions for summary judgment finding in pertinent part as follows:
Considering all the facts and circumstances surrounding these transactions, there is a question of material fact as to whether [Peoples] breached a duty it owed or assumed to Price to verify the VIN numbers of the automobiles which were to serve as security for these notes prior to consummation of the three loan transactions.
(R. 174).1 This appeal ensued.
As stated in Stevenson v. Hamilton Mutual Insurance Company, 672 N.E.2d 467, 470-71 (Ind.Ct.App.1996), trans. denied:
In reviewing a motion for summary judgment, this court applies the same standard as the trial court. We must determine whether there is a genuine issue of material fact and whether the law has been correctly applied by the trial court. Summary judgment is appropriate only if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Neither the trial court, nor the reviewing court, may look beyond the evidence specifically designated to the trial court. Once the movant for summary judgment has established that no genuine issue of material fact exists by submission of materials contemplated by T.R. 56, the nonmovant may not rest on his pleadings but must set forth specific facts, using supporting materials contemplated under the rule, which show the existence of a genuine issue for trial. A trial court's grant of summary judgment is `clothed with a presumption of validity,' and the appellant bears the...
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