First Federal Sav. and Loan Ass'n of Gary v. Stone

• Citation: 467 N.E.2d 1226
• Decision Date: 28 August 1984
• Docket Number: No. 3-983A286,3-983A286
• Parties: FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF GARY, Appellant (Plaintiff, Counter defendant below), v. Edward E. STONE and Rosalie G. Stone, Appellees (Defendants, Counter Plaintiffs below), Roseland Construction Company, Inc., Fidelity Investment, Inc., Appellees (Defendants below).
• Court: Court of Appeals of Indiana

Page 1226

467 N.E.2d 1226

FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF GARY Appellant (Plaintiff, Counter defendant below), v. Edward E. STONE and Rosalie G. Stone, Appellees (Defendants Counter Plaintiffs below) Roseland Construction Company, Inc., Fidelity Investment Inc., Appellees (Defendants below).

No. 3-983A286.

Court of Appeals of Indiana,

Third District.

Aug. 28, 1984.

Glenn S. Vician, George W. Heintz, Borns, Quinn, Kopko & Lindquist, P.C., Merrillville, for appellant.

Don G. Blackmond, Doran, Manion, Boynton, Kamm & Esmont, South Bend, for appellees Edward E. Stone and Rosalie G. Stone.

Thomas C. Sopko, South Bend, for appellee Roseland Const. Co., Inc.

STATON, Presiding Judge.

First Federal Savings and Loan Association of Gary (First Federal) sued Edward and Rosalie Stone (Stones), Roseland Construction Company (Roseland), and Fidelity Investment, Inc. seeking to foreclose on a mortgage it held against Stones' home. Stones counterclaimed against First Federal and its agent which serviced the mortgage, Northern Indiana Mortgage Company (NIMCO), alleging they wrongfully refused tendered mortgage payments. That suit was consolidated with a suit filed by Roseland to foreclose on the mechanic's lien it held against Stones' home. First Federal appeals the trial court's judgment in favor of Stones on the foreclosure complaint, the court's award of certain insurance proceeds to Roseland, and the court's award of compensatory and punitive damages to Stones on their counterclaim.

The following issues are presented for our review:

(1) Whether First Federal timely filed its motion to correct errors;

(2) Whether First Federal waived its right to accelerate the mortgage debt by accepting late payments, and, if not, whether First Federal effectively exercised its right to accelerate the mortgage note;

(3) Whether First Federal forfeited its right to apply insurance proceeds from a fire loss to the mortgage debt by failing to notify the mortgagor of its election before repairs were made to the home; and

(4) Whether the evidence supports an award of compensatory and punitive damages against First Federal.

Affirmed in part; reversed and remanded in part.

Stones purchased a home in 1966. To finance their purchase, they borrowed money from NIMCO and gave NIMCO a mortgage on the home. NIMCO assigned the mortgage to First Federal but continued to service the mortgage as the agent of First Federal. The record indicates throughout 1979 First Federal accepted late mortgage payments from Stones. Stones then failed to make the November, 1979 payment. On December 14, 1979, NIMCO notified Stones that they had an excess in their escrow account and requested permission to use the excess for the December payment. Stones granted that permission.

On December 15, 1979, Stones' home was damaged by fire, and Stones notified their insurer and NIMCO of the loss. At that time the balance due on the mortgage was $5,154. First Federal advised NIMCO that, pursuant to its option under the mortgage, if the loss exceeded $5,000 it would apply the insurance proceeds to the mortgage debt. Not until January 25, 1980 did NIMCO advise Stones of First Federal's election. Unfortunately, repairs to the home had already been completed at a cost of over $7,000. The insuror issued checks for the repairs, but First Federal refused to endorse the checks, preventing them from being cashed by the contractor.

Meanwhile, on January 18, 1980, NIMCO had notified Stones that their mortgage loan payments for November, December, and January were delinquent, and that the February payment was due in thirteen days. NIMCO asked Stones to notify it of their plans to bring the mortgage up to date. On February 1, 1980, Stones tendered the full amount required to bring the mortgage up to date. However, that tender was refused. On February 11, 1980, NIMCO again advised Stones of First Federal's desire for payoff of the loan and invited Stones to come in and discuss the situation. On March 15, 1980, Stones met with Marly Rydson, the president of NIMCO. Rydson verbally abused the Stones but offered to plead their cause to First Federal if they would tender a check to bring the loan up to date. Stones tendered their payment, and it also was refused. First Federal then filed its complaint to foreclose the mortgage.

1. Timeliness of Motion

The Stones contended that First Federal has failed to timely file its motion to correct errors. This case was tried on September 16, 1982. After the close of evidence and arguments, the trial court took the case under advisement. On January 12, 1983, the following docket entry was made:

"The Court notifies the parties that plaintiff's complaint to foreclose is denied, defendants Stone's [sic ] counterclaim is granted and Roseland granted. Blackmond and Sopko directed to prepare order for approval."

On February 17, 1983, First Federal filed a praecipe pursuant to Ind.Rules of Procedure, Trial Rule 53.2 requesting the clerk to withdraw the case from the trial judge. On March 30, 1983, the Supreme Court ordered that the jurisdiction of the case remain with the trial judge; it concluded that the trial judge entered his decision on January 12, 1983. On May 31, 1983, the trial court entered its findings and judgment. First Federal filed its motion to correct errors on July 28, 1983.

Stones contend the docket entry of January 12 constituted a final judgment, and First Federal was required to file its motion to correct errors within sixty days. Stones essentially argue that we are compelled to compute the sixty days from January 12, because the Supreme Court found that the January 12 docket entry constituted the entry of the judge's decision. We disagree.

TR. 53.2 is obviously designed to provide a remedy for litigants when, after trial, the judge for some reason fails to timely render a decision. The January 12 docket entry shows the judge made his decision and directed Stones' and Roseland's counsel to prepare an appropriate order. The Supreme Court determined the docket entry constituted a "ruling or decision" pursuant to TR. 53.1(C) sufficient to withstand First Federal's request to withdraw the case from the judge. However, it does not necessarily follow that the docket entry constituted a final appealable judgment.

A motion to correct errors must be filed within sixty days after the entry of a final judgment. TR. 59(C). A final judgment is one which disposes of all issues as to all parties; it puts an end to the litigation. Thompson v. Thompson (1972), 259 Ind. 266, 286 N.E.2d 657; Hudson v. Tyson (1978), 178 Ind.App. 376, 383 N.E.2d 66. A decision upon which judgment has not actually been entered is not final. Cox v. Indiana Subcontractors Ass'n, Inc. (1982), Ind.App., 441 N.E.2d 222. Further, a judgment which fails to determine damages is not final. Schenkel v. Citizens State Bank (1967), 140 Ind.App. 558, 224 N.E.2d 319.

Applying these rules to this case, it is apparent the docket entry of January 12 was not a final judgment. First, it is not an entry of judgment. It is merely an entry memorializing the court's notification of the parties of his decision. Second, it does not end the case. The docket entry requires the preparation of a written judgment with findings to be approved by the judge. Third, the docket entry fails to determine damages on Stones' counterclaim. Finally, it is clear the court never intended this entry as an entry of final judgment.

For these reasons we find no merit in Stones' contention that First Federal's motion to correct errors should have been filed within sixty days of the January 12 docket entry. First Federal's motion to correct error was timely filed after the entry of final judgment on May 31, 1983.

2. Right to Accelerate

First Federal contends the trial court should have granted the relief requested in its foreclosure action. First Federal initially argues the court erroneously found it waived the prompt payment condition by accepting late payments. The mortgage contained a non-waiver clause which provided that a waiver of the option to accelerate the note upon default at one time "shall not constitute a waiver of the right to exercise the [option] at any other time."

First Federal correctly points out that this non-waiver clause is effective in preventing acceptance of late payments from operating as a waiver of a subsequent default. Van Bibber v. Norris (1981) Ind., 419 N.E.2d 115. Thus, First Federal's acceptance of late payments does not result in a waiver of its right to require prompt payment. Nonetheless, we affirm the trial court's refusal to foreclose on the Stones' mortgage because First Federal waived the default it sued upon by failing to timely exercise its option to accelerate the maturity of the mortgage.

The applicable rule is as follows:

"[W]here the acceleration of the maturity of a mortgage debt on default is made optional with the mortgagee, some affirmative action must be taken by him evidencing his election to take advantage of the accelerating provision, and ... until such action has been taken the provision has no operation. The exercise of the option should be made in a manner clear and unequivocal, so as to leave no doubt as to the mortgagee's intention."

55 Am.Jur.2d, Mortgages, Sec. 386. In this case, First Federal's agent, NIMCO, advised Stones on January 18, 1980 that they were in arrears and asked Stones to advise it as to their plans to bring the mortgage up to date. On January 25, NIMCO wrote to the Stones the following memo.

"Dear Mr. Stone:

Please find enclosed a copy of a letter from the mortgagee, 1st. Federal Saving and Loan of Gary.

There is also a copy of the letter to Boggs adjustment.

Item # 6 of the mortgage states the mortgagee reserved the option to be paid or restoration.

The mortgage has been in default for some time and they wish is [sic ] to be paid in full.

Pay off as of 1-31-80 is $5,154.43

s/ Marly Rydson"

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