Horine v. Greencastle Production Credit Ass'n, No. 4-1285A351

• Docket Nº: No. 4-1285A351
• Citation: 505 N.E.2d 802
• Case Date: March 26, 1987
• Court: Court of Appeals of Indiana

Page 802

505 N.E.2d 802 V.F. HORINE, Sr., and Jean Horine, husband and wife,
Appellants (Defendants Below),
v.
GREENCASTLE PRODUCTION CREDIT ASSOCIATION, Appellee (Plaintiff Below). No. 4-1285A351. Court of Appeals of Indiana,
Fourth District. March 26, 1987.
Rehearing Denied April 29, 1987.

Paul E. Brown, Indianapolis, Paul Kruse, Parr, Richey, Obremsky & Morton, Lebanon, for appellants.

James P. Buchanan, Buchanan & Buchanan, Lebanon, for appellee.

Page 803

CONOVER, Presiding Judge.

Defendant-Appellant V.F. Horine and Jean Horine (the Horines) appeal the trial court's characterization of their action on a land contract as a rescission and the court's award of $137,370 to Plaintiff-Appellant Greencastle Production Credit Association (Greencastle).

We affirm.

ISSUES

The Horines present four issues for review. Restated and consolidated, they are, ¹

1. whether rescission of the contract is supported by the evidence, and

2. whether foreclosure was the proper remedy.

FACTS

In 1978, Gary L. and Mary Anne Watson (Watsons) purchased a farm on land contract from the Horines. The purchase price, $510,000, was to be paid in installments. The Watsons made a $120,000 down payment. Thereafter, the following schedule of payments was required by the contract:

 BEGINNING
                 PRINCIPAL AMOUNT OF
                 DATE BALANCE PAYMENT INTEREST PRINCIPAL
                 ---- ------- --------- -------- ---------
                April 7, 1979 $390,000.00 $32,000.00 $29,250.00 $2,750.00
                April 7, 1980 387,250.00 32,000.00 29,044.00 2,956.00
                April 7, 1981 384,294.00 32,000.00 28,822.00 3,178.00
                April 7, 1982 381,116.00 42,000.00 32,395.00 9,605.00
                April 7, 1983 371,511.00 -0- 31,578.00 -0-
                 DATE BALLOON PAYMENT
                 ---- ---------------
                April 7, 1981 $413,116.00
                April 7, 1982 413,511.00
                April 7, 1983 403,089.00"
                

(R. 61). From the date of the sale to April 7, 1981, interest was to be paid at a rate of 7 1/2% per annum. The remainder of the payment period required an interest rate of 8 1/2% per annum. The effect of the balloon payments in the schedule above was to give the vendees the option of paying off the total due before the end of the contract period, i.e., in 1981 or 1982 the vendees could pay the entire balance instead of the smaller installment payment. In any event, if the vendees allowed the contract to continue to its full term, a final payment of $403,089 had to be made on April 7, 1983, or the Watsons would be in default.

The Watsons did not make a balloon payment in 1981 or 1982 and chose merely to keep the contract current by making the respective installments. However, they failed to pay real estate taxes due for 1981 and 1982. On April 7, 1983, the Watsons defaulted. On April 30, 1983, the Horines notified the Watsons of their default and advised them they had 60 days in which to cure the default as provided in the contract. The Horines further advised the Watsons if default was not cured they would seek enforcement of the remedy provided in the escrow agreement executed contemporaneously with the contract.

That agreement provided an escrow agent was to hold two deeds, an executed warranty deed to the property in favor of the Watsons and a quitclaim deed in favor of the Horines. When and if the total purchase price was paid, the agent would deliver the warranty deed to the Watsons. If the Watsons defaulted, the quitclaim deed was to be delivered to the Horines. When the Watsons did in fact default the escrow agent delivered the quitclaim deed to the Horines. They recorded it on September

Page 804

1, 1983, because the default was never cured. On September 7, 1983, the Horines sued for possession.

Throughout the contract period the Watsons had borrowed heavily from Greencastle. It had taken a mortgage on the real estate as security. Furthermore, in 1978, the Watsons assigned all rights, title, equity and interest in the property to Greencastle as additional security. When the Watsons defaulted on the land contract they also defaulted on the payments required by the mortgage. Greencastle brought the present action in an effort to foreclose the mortgage it held on the property.

In Greencastle's action to foreclose its mortgage it named the Watsons and the Horines as defendants. The Horines filed a motion for summary judgment essentially asking the court to determine the extent of their interest in the property in relation to the Watsons and Greencastle. The trial court entered findings of fact and conclusions of law in favor of the Horines, determining they were entitled to possession of the property. The court found the property had been forfeited to the Horines, and foreclosure proceedings were not required. The court further found the value of the property was equal to the amount owed by the Watsons, thus, the Watsons had no equity in the property.

Greencastle, in its capacity as the assignor of the Watsons' interest in the property, appealed the granting of the Horines' motion for summary judgment.

On appeal, our First District, per Ratliff, J. affirmed the trial court's finding the Horines were entitled to possession of the property, but reversed the trial court's holding the property had been forfeited.

On remand, the trial court held the land contract between Horines and Watsons had been rescinded on September 1, 1983, by mutual assent pursuant to the terms of the land contract. The trial...