Hardy v. Hardy
| Decision Date | 11 August 2009 |
| Docket Number | No. 09A02-0905-CV-389.,09A02-0905-CV-389. |
| Citation | 910 N.E.2d 851 |
| Parties | Derrick Chance HARDY and Robert T. Hardy, Appellant-Defendants, v. Ashly Megan HARDY, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
R. Tod Groff, Miller, Tolbert, Muehlhausen, Muehlhausen, Groff, Damm, P.C., Logansport, IN, Attorney for Appellee.
Robert M. Hardy ("Father") and Derrick Chance Hardy ("Son") challenge the trial court's order denying their request for reformation of the underlying warranty deed and ordering the partition and sale of the land as requested by Ashly Megan Hardy ("Daughter").
We affirm.
Whether the trial court erred in denying Father and Son's request for reformation of the warranty deed to include a life estate for Father.
The facts most favorable to the judgment are as follows: Father originally owned a total of eighty acres of Cass County farmland, including his residence on a ten-acre tract. In 2004, Father faced methamphetamine drug charges in Oklahoma and Indiana, and he owed federal income taxes for a period spanning five years. On October 15, 2004, in an effort to avoid the possibility of having to pay a hefty controlled substance excise tax in the event of his conviction in Indiana;1 the possible forfeiture of his land;2 a possible fine in Oklahoma, if convicted, ranging from $25,000.00 to $500,000.00;3 and the potential for a federal income tax lien4 attaching to his land, Father purposefully conveyed seventy-acres of his farmland to Son and Daughter as joint tenants with rights of survivorship.
Daughter was seventeen years of age at the time of the conveyance, and neither Father nor Son informed her of the conveyance. She first learned of her ownership interest approximately one year later in December of 2005, when Father and Son asked her to convey, by quitclaim deed, two acres of the land to Son and his then-wife to build a house. Daughter "didn't really understand that [she] was co-owner of [the land]" at the time. (Tr. 51). Initially reluctant, she eventually signed a quitclaim deed conveying the two acres; the deed was recorded on December 9, 2005. Father failed to pay Daughter $4,000.00 for the conveyance as he had promised.
Father was subsequently convicted of the methamphetamine offenses and was incarcerated in Oklahoma and Indiana from June of 2005 through May 15, 2006, and from September 24, 2007 through December 1, 2008, respectively. While Father was incarcerated in Oklahoma, he instructed Son, as his attorney-in-fact, to effect a conveyance to Son of Father's interest in the remaining ten acres of Father's farmland to avoid forfeiture, seizure, or a tax lien from attaching to the land. Son effected the conveyance by a quitclaim deed recorded on June 29, 2005.
Also, from 2005 to 2008, Father and Son entered into several agreements to lease the sixty-eight acres to Phillip Miller. Pursuant to three different lease agreements, they collected over $52,000.00 in rent proceeds, which were not disclosed to Daughter, but rather, were deposited into an account for Father's sole benefit.
In the meantime, Daughter began to make inquiries about her interest; her questions went ignored by both Father and Son. Subsequently, on May 27, 2008, Daughter filed a complaint wherein she requested partition and sale of the real estate, as well as an accounting from Son, and determination of any credit or reimbursements due and owing to her. (App.12).
On July 9, 2008, Son filed an answer wherein he moved the court to deny Daughter's request for partition and to grant his petition to "reform the deed to reflect the intent of the parties including [Father] and [to] impose a constructive trust to protect the interests of Father, Son, and Daughter." (App. 14-15). Son moved to join Father as a real party in interest. On October 10, 2008, the trial court granted Son's motion and ordered Father joined as a party defendant.
During the discovery phase of this action, Daughter learned about the cash lease agreements and the rental proceeds pocketed by Father. The trial court conducted a bench trial on December 5, 2008. Father, Son, Daughter, and Mother testified. Although signatures purporting to be Daughter's appeared on the three lease agreements, Daughter testified that she had no knowledge of the lease agreements prior to their being signed. She testified further that she neither signed nor authorized anyone to sign them on her behalf. Father testified that he had signed Daughter's signature to at least one of the lease agreements, possibly more; however, he claimed to have done so with her permission.
Dana Hardy ("Mother"), Father's former wife and mother of Son and Daughter testified on behalf of Father. She testified that Father had conveyed the seventy acres to Son and Daughter with the intention of reserving a life estate for himself, entitling him to the use and income from the land during his lifetime; and upon his death, Son and Daughter would inherit the land outright. (App.198).
On January 9, 2008, the trial court issued an order, containing, in pertinent part, the following findings of fact and conclusions of law:
5. At the time of the conveyance, daughter was a minor, provided no monetary consideration for the conveyance, and had no knowledge of the conveyance until December 2005, when daughter was approached by son to join in a new conveyance, conveying two acres of the original seventy-acre conveyance to son and son's wife.
6. The conveyance was made by father to hinder, delay, or defraud potential creditors (including the government) occasioned by father's pending criminal prosecutions in two states.
7. Father alleges the conveyance included either a constructive or implied trust to reconvey the property back to him upon demand, which trust (if it existed) would have defeated father's intent in making the conveyance to begin with, see I.C. 30-4-3-2(b).
8. One who vests the legal title to his property in another, for the purpose of putting out of reach of, and defrauding his creditors, cannot recover the property on the theory that there was no consideration for the conveyance or that there was an agreement to reconvey.
9. Daughter denies making any oral promise to reconvey the seventy-acre parcel back to her father.
10. No fraud or wrongdoing is found attributable to the son or daughter in procuring the conveyance from father to son and daughter.
11. The conveyance was made after father's consultation with legal counsel. Father represents that legal counsel was informed of the father's intent and prepared the instrument to affect [sic] the conveyance in accordance with the father's intent.
12. The mistake of which father complains is one of law, and not fact. The court is therefore not permitted to reform the deed imposing a constructive or implied trust on behalf of father.
13. As a result of the original conveyance (and two acres conveyed therefrom), son and daughter are cotenants of the remaining sixty eight acres.
14. A cotenant who has received more than such cotenant's just share of the rent and profits as to the common property may be required to account there for [sic] to the other cotenant in an action for partition.
15. In accordance with I.C. 32-17-4-1 et. seq. and the facts of this case, daughter has filed a complaint for partition of the conveyance and accounting which is her right to prosecute.
16. The court determines since the conveyance that the father has no legal interest in the remaining sixty eight acre parcel.
17. Since the conveyance, the subject real estate has generated cash rent income, less real estate taxes, of forty-five thousand six hundred sixty dollars ($45,660.00).
18. The cash rent income above, was received by the son, and deposited in accounts benefitting the father.
19. That cash rent income should have been split equally between cotenants, son and daughter.
20. Daughter has not received any of the aforementioned cash rent income and is entitled to cash or set off in the partition equivalent to twenty-two thousand eight hundred and thirty dollars ($22,830.00).
21. The subject sixty eight acre tract is valued at three hundred ninety four thousand four hundred dollars ($394,400.00), being the equivalent of five thousand eight hundred dollars ($5,800.00) per acre.
22. The court now determines that a partition should be made between son and daughter of the remaining sixty eight acre tract. The court does enter an interlocutory judgment that partition be made with son receiving forty-four (44%) percent of said tract, and daughter receiving fifty-six (56%) percent of said tract.
23. The court determines that the land for which partition is demanded cannot be divided without damage to the owners, son and daughter. Therefore the court orders the entire sixty-eight acre tract sold in accordance with I.C. 32-17-4-12.
24. The son and daughter through legal counsel shall proceed in accordance with I.C. 34-55-4-3, to determine for sale the appraised cash value of said sixty-eight acre tract.
(Order 1-3) (emphasis in original). Father and Son now appeal.
Father and Son argue that the trial court's judgment denying reformation of the deed is clearly erroneous. We cannot agree.
Our standard of review is as follows: Where, as here, the trial court has made special findings of fact and conclusions of law, we apply a two-tiered standard of review, considering whether the evidence supports the findings and whether the findings support the judgment. Balvich v. Spicer, 894 N.E.2d 235, 242 (Ind.Ct.App.2008). We neither reweigh the evidence nor assess the credibility of witnesses, but consider only the evidence most favorable to the judgment. Id. Sua sponte findings control only as to the issues they cover. Gibbs v. Kashak, 883 N.E.2d 825, 827-28 (Ind.Ct.App.2008). A general judgment will control as to...
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