Board of Com'rs of Madison County v. Midwest Associates, Inc.

• Decision Date: 01 April 1969
• Docket Number: No. 568A95,No. 1,568A95,1
• Citation: 144 Ind.App. 264,245 N.E.2d 853
• Parties: BOARD OF COMMISSIONERS OF the COUNTY OF MADISON, Indiana, Roy L. Boicourt, Auditor of Madison County, Indiana and Horace W. Hays, Treasurer of Madison County, Indiana, Appellants, v. MIDWEST ASSOCIATES, INC., Appellee
• Court: Indiana Appellate Court

Page 853

245 N.E.2d 853

144 Ind.App. 264

BOARD OF COMMISSIONERS OF the COUNTY OF MADISON, Indiana Roy L. Boicourt, Auditor of Madison County Indiana and Horace W. Hays, Treasurer of Madison County, Indiana, Appellants, v. MIDWEST ASSOCIATES, INC., Appellee.

No. 568A95.

Appellate Court of Indiana, Division No. 1.

April 1, 1969.

Rehearing Denied May 6, 1969.

Walter C. Dietzen, Anderson, Richard E. Kreegar, Anderson, for appellants.

Harold J. Anderson, Anderson, for appellee.

LOWDERMILK, Presiding Justice.

This cause of action grew out of a verified petition for restraining order without notice, a temporary injunction, and an injunction filed by the appellee, plaintiff below, against the appellants, defendants below, to enjoin the appellants from selling at tax sale certain real estate situated in the City of Alexandria, Madison County, Indiana.

This property was formerly known as Air Force Plant #46 and was purchased from the United States of America, acting by and through the Administrator of General Services, by Midwest Associates, Inc., an Indiana corporation. Such purchase was evidenced by a 'Contract for Deed', executed on February 17, 1960, by and between the United States Government and individuals operating as a partnership, which later incorporated as Midwest Associates, Inc., hereinafter referred to as 'buyer'. A copy of said contract discloses that if the buyers shall make payments and perform the covenants mentioned on their part to be made and performed, then the United States Government covenants and agrees to convey, without warranty, express or implied, said property by quitclaim deed to buyer. The agreed purchase price for said real estate and personal property was $340,000, of which $34,000 was to be paid at the time of the execution of the contract, and the sum of $3,825 every three months thereafter, together with interest at the rate of five per cent per annum on the unpaid balance, until one-third of the purchase price or $113,333.34, representing principal only, and all accrued interest, has been paid. When such above sum has been paid, the United States Government agreed to deliver to the buyer its quitclaim deed without representation or warranty of any kind or nature, together with a bill of sale for the personal property involved, and the buyer agreed to, at that time, execute and deliver to the United States Government its promissory installment note for the remaining balance of the purchase price with interest at the rate of five per cent per annum, which note is to be payable in the same equal quarter-annual installments of $3,825 each, plus interest, together with a purchase money mortgage on the real property and a chattel mortgage on the personal property to secure the payment of said note. On February 22, 1960, the United States Government notified buyer to take possession of the land and its appurtenances and certain personal property and the same was done.

The judge of the Superior Court of Madison County issued a restraining order against the appellants, restraining them from offering and selling said real estate at a tax sale, which had, prior to the issuance of the restraining order, been advertised to be sold at County Tax Sale at the court house in Madison County, Indiana, for delinquent real estate taxes in the amount of $73,158.17.

On November 6, 1967, the cause was heard and on the 31st day of January, 1968, the court issued its decree, ordering that the restraining order and temporary injunction be made perpetual and that the assessed taxes are declared null and void and stricken from the tax records in Madison County; and that the appellants be permanently enjoined from collecting said taxes levied and assessed against the real estate prior to June 18, 1965.

Thereafter, the appellants timely filed their motion for new trial, which was overruled on the 29th day of February, 1968, and from which this appeal lies.

We must first determine in whom the title to the real estate in question is vested.

The record, on its face, discloses that legal title remained in the United States Government.

The question thus presented is whether or not the 'Contract for Deed' precluded the equitable title to said real estate from vesting in the purchaser and prohibited the appellant from levying a tax on the subject real estate.

It is now incumbent upon this court to determine the true meaning and legal effect of the 'Contract for Deed' entered into between the United States Government and the buyer.

We must look to the terms of the contract. The contract entered into by and between the United States Government and the buyer was titled 'Contract for Deed' which is not the customary label given to contracts in the State of Indiana to convey real estate with a down payment and deferred regular periodic payment until full payment has been made and a deed delivered. However, the contract is to be construed from the verbiage of its contents and not the title.

Having carefully considered the contract in the light of 17 Am.Jur.2d, Contracts, § 6, p. 341, which states:

'An executory contract is one in which a party binds himself to do or not to do a particular thing, whereas an executed contract is one in which the object of the agreement is performed and everything that was to be done is done. The distinction would seem to relate to the legal effect of a contract at two different stages. An executory contract, it is said, conveys a chose in action, while an executed contract conveys a chose in possession.'

we must necessarily conclude that the contract is an executory contract of which a part has been executed. That is to say, that that portion of the same pertaining to the sale of the property, and the surrendering of possession to the buyer is an executed portion of the contract, and the conveyance of the legal title by deed to the buyer and the execution of certain mortgages to seller is executory.

Having determined this to be an executory contract to convey real estate we must next determine the status of the equitable title from the execution of the contract to the date of delivery of the deed to buyer.

The buyer contends that the legal title does remain in the United States Government until a quitclaim deed is furnished to it and the buyer is thereby entitled to claim the immunity of the United States Government from liability to the State for taxes and thus escape liability for property taxes which accrued as of March 1, 1960, 1961, 1962, 1963, and 1964, and until such further and future time as the legal title is transferred to the appellee.

Appellant, Board of Commissioners of the County of Madison, Indiana, contends that the real estate in question is subject to taxes to the State of Indiana by virtue of the contract for sale. This the buyer denies and it further contends that by the terms of the contract it was to receive title to the real estate without warranty, express or implied, by quitclaim deed, only after the payment of certain sums consisting of a down payment and quarterly payments aggregating one-third of the purchase price.

Buyer further contends that the contract itself precludes the title and ownership of said property from taxation by the State of Indiana, and relies upon that portion of the contract as follows: '* * * but the title and ownership of said property shall remain in the seller or its assigns and no right, title or interest in said property either legal or equitable shall pass by virtue of this agreement.'

Neither of the parties have cited any section of a Federal statute nor submitted any regulation or other promulgation thereunder in their briefs which would affect the question presented by the issues.

The record fails to disclose and the parties make no mention that there was a representation made to the buyer that the property would be exempt from taxation during that period of time from the actual transfer of possession of the property to the buyer until the legal title thereto was actually transferred to the buyer.

It must be noted and considered for the purposes of this opinion that the parties did consider the possibility of State taxation and the seller set the contract up to protect itself against any lien thereon for State taxes. This is evidenced by language from the contract for deed as follows:

'Buyer will, while any of the indebtedness secured hereby remains unpaid, pay before they become delinquent, all taxes, both general and special, assessments and governmental charges lawfully levied or assessed against the above-described property or any part thereof; will promptly furnish the seller or holder of the indebtedness secured hereby the receipts, or photostatic or duplicate copies thereof, showing such payments except when payments are made by seller as hereinafter provided. Buyer will not permit the above-described property, or any part thereof, to be sold or forfeited whatsoever. Any irregularities or defects in the levy or assessment of taxes, assessments, and governmental charges paid by the seller are hereby expressly waived and receipt by the proper officer shall be conclusive evidence both as to the amount and validity of such payments.

'Nothing herein contained, however, shall prohibit buyer from contesting in good faith the validity of any such taxes which may be levied and assessed against the property above described; provided, buyer gives due written notice of its intention to contest such taxes to the seller at least thirty (30) days before the date any such tax or assessment may become delinquent, and provided further that buyer has on deposit with seller, at least fifteen (15) days prior to the date any such tax or assessment may become delinquent, a sum sufficient to satisfy any judgment that may be obtained against buyer or the property by reason of any such contest.

'That if any taxes, assessments or insurance premium be not paid when due, or if any installment of the purchase price or...