Krieg v. Hieber
| Decision Date | 03 February 2004 |
| Docket Number | No. 17A05-0306-CV-311.,17A05-0306-CV-311. |
| Parties | Carlin KRIEG, Appellant-Plaintiff, v. Donald HIEBER, Appellee-Defendant. |
| Court | Indiana Appellate Court |
Wm. Joseph Carlin Jr., Kruse & Kruse P.C., Auburn, IN, Attorney for Appellant.
Robert Owen Vegeler, Vegeler Law Office LLC, Fort Wayne, IN, Attorney for Appellee.
Appellant-Plaintiff Carlin Krieg ("Krieg") appeals the trial court's judgment in favor of Appellee-Defendant Donald Hieber ("Hieber"). We reverse and remand.
Krieg raises two issues, which we restate as:
I. Whether the trial court erred by considering parol or extrinsic evidence in making its determination that the contracting parties did not negotiate the contract price in contemplation of Krieg's right of residency; and
II. Whether the trial court erred by concluding that the holder of a life estate is not entitled to insurance proceeds from an insurance policy procured by the reversioner.
In 1999, Krieg owned a dairy farm located at 7721 State Road 8 in St. Joe, Indiana (the "Farm"), which consisted of approximately eighty-two acres of real estate. On December 23, 1997, the value of the Farm was appraised at $154,000.00. In August of 1999, Krieg asked Hieber if he wanted to purchase the Farm, and Hieber responded in the negative. Krieg then informed Hieber that he intended to sell the Farm at a price of one hundred and six thousand dollars, with an additional twenty-four thousand dollars for the machinery and one thousand dollars per cow for the cattle. Hieber told Krieg that he was interested in purchasing the Farm, machinery, and cattle. Indeed, that same day, Hieber went to the bank to inquire about financing the purchase. Because Hieber was only able to secure financing for the Farm and machinery, he told Krieg that he would purchase the Farm and machinery, but not the cattle. Subsequently, however, Krieg and Hieber reached an agreement concerning the sale of the cattle. Krieg orally informed Hieber that he wanted to retain a "right of residency" in the Farm. Tr. at 25. On September 14, 1999, Krieg executed a hand-written statement ("Statement"), which Hieber signed, whereby Krieg agreed to sell the Farm for one hundred and six thousand dollars, the machinery for twenty-four thousand dollars, and the cattle for forty-five thousand dollars. The Statement provides, in part, that: "I [Krieg] have the privilege of living in home for life time." Appellant's App. at 11.
On October 6, 1999, Krieg and Hieber executed a Purchase Agreement regarding the sale of the Farm, the machinery, and the cattle. The Purchase Agreement provides that Krieg "shall transfer full and complete possession at the time of closing, subject to [his] right of residency." Ex. 1. The Purchase Agreement also contains an integration clause as follows:
Upon acceptance, this offer shall become binding upon and inure to the benefit of [Hieber] and [Krieg] and their respective heirs, executors, administrators[,] successors, and assigns, and shall be deemed to contain all the terms and conditions agreed upon, it being agreed that there are no conditions, representations, warranties or agreements not stated in this instrument.
Id. In addition, pursuant to the Purchase Agreement, Hieber requested that Krieg maintain fire and extended coverage insurance on any improvements to the Farm until the date of closing. At closing, on November 5, 1999, Krieg, i.e., the Grantor, executed a Warranty Deed to Hieber, i.e., the Grantee, for the Farm, "[s]ubject to right of residency of the Grantor in the house, garage, apartment, and land thereto, including use of the driveway."1 Appellant's App. at 54. The Warranty Deed was recorded on November 9, 1999.
Prior to December 6, 1999, Krieg carried insurance on the Farm. However, on December 6, 1999, Krieg cancelled insurance coverage on the Farm in the amount of $189,000.00 and only retained insurance coverage in the amount of $5,000.00 for his personal property. On or about December 10, 1999, Hieber purchased insurance coverage on the Farm.
On November 19, 2000, the house located on the Farm was partially burned in an accidental fire, rendering it uninhabitable. Because the fire loss was covered by Hieber's insurance policy, Hieber filed an insurance claim and received the insurance proceeds. Hieber did not repair the house, but rather, used the proceeds to reduce his mortgage debt on the Farm.
On May 23, 2001, Krieg filed a Complaint for Right of Residency against Hieber, alleging estoppel and breach of contract. In his complaint, Krieg argued that his right of residency served as consideration for the reduced purchase price in the Purchase Agreement between himself and Hieber and, thus, Hieber breached the contract by not using the fire insurance proceeds to reconstruct the house wherein Krieg resided. As relief, Krieg requested that the trial court: (1) impose a constructive trust over the insurance proceeds; (2) require Hieber to use the insurance proceeds to rebuild the damaged portion of the residence; (3) award damages for loss of use of the residence until such time as it is rebuilt; and (4) award attorney fees. At trial, Krieg's request for relief changed in that he no longer wished to live in the "rebuilt" house on the Farm. Instead, Krieg asked the trial court to determine, with the help of life expectancy tables, the value of his life estate and award damages accordingly. Tr. at 18. After conducting a bench trial, the trial court entered a judgment in favor of Hieber. In so doing, the trial court issued findings of fact and conclusions thereon. In relevant part, the trial court issued Finding 14 and Conclusions 5 and 6, as follows:
14. Krieg initiated the conversation concerning the sale of the Farm and set the price which was accepted by Hieber before Krieg ever mentioned and before Hieber ever knew that Krieg wanted to reserve a right of residency. At the time that Krieg made the offer which was accepted by Hieber for the Farm, Hieber had no knowledge of Plaintiff's Exhibit 3 which was an appraisal of the Farm made several years earlier for Krieg's refinancing and which indicated a fair market value of $154,000.00 for the Farm. At no time did Hieber know of the appraisal set forth in Plaintiff's Exhibit 3 and did not believe that the Farm was worth $154,000.00 and would not have purchased the Farm for $154,000. At no time was Hieber interested in buying the Farm until he was approached by Krieg with a volunteered, fixed price.
5. The price paid by Hieber in accepting the offer of Krieg was fair under the circumstances and was not discounted in order to recognize a right of residency in Krieg.
6. The price paid for the Farm by Hieber was reasonable and was accepted by Hieber, subject to financing, before Hieber was knowledgeable of the right of residency, and therefore, Hieber could not have discounted the price based upon such.
7. Krieg acted knowingly and voluntarily in changing the insurance after the sale had closed, acknowledging that he was only insuring the personal property and that he did not wish to insure a right of residency.
8. Both parties had an insurable interest in the Farm in that a life tenant and a [reversioner] each has an insurable interest. A right of residency, although not the same as a life estate, is similar.
* * * * *
11. Krieg had more than adequate time and ability to insure his interests in the Farm and to protect his interests both individually and through his attorney. Such is shown by the Purchase Agreement which stated that Hieber could receive insurance proceeds for any preclosing loss.
12. Krieg voluntarily placed himself in the position of losing his right of residency, or the value thereof.
13. Krieg has failed to meet his burden of proof on the relevant issues in this cause.
Appellant's App. at 5-7. It is from the trial court's order that Krieg now appeals.
In challenging the trial court's judgment, Krieg, i.e., the party carrying the burden of proof at trial, is appealing from a negative judgment. A party appealing a negative judgment must establish that the evidence is without conflict and leads to but one conclusion and that the trial court did not reach that conclusion. OVRS Acquisition Corp. v. Cmty. Health Serv., Inc., 657 N.E.2d 117, 125 (Ind.Ct.App.1995), trans. denied. The appellant may attack the trial court's judgment only as contrary to law. Id. On appeal, we will affirm the trial court's judgment unless all evidence leads to the conclusion that the trial court's findings are clearly erroneous and against the logic and effect of the facts. In re Estate of Banko, 622 N.E.2d 476, 480-81 (Ind.1993). In determining whether the findings of fact are clearly erroneous, we may neither reweigh the evidence nor judge the credibility of the witnesses. Id. at 481. Instead, we will consider only the evidence most favorable to the judgment together with all reasonable inferences that may be drawn therefrom. Maddox v. Wright, 489 N.E.2d 133, 134 (Ind.Ct.App.1986).
Krieg first argues that the trial court erred by considering certain parol evidence at trial.2 In particular, Krieg challenges the trial court's consideration of evidence regarding the "negotiations" between the contracting parties on the purchase price of the Farm. In general, where the parties to an agreement have reduced the agreement to a written document and have included an integration clause that the written document embodies the complete agreement between the parties, as Krieg and Hieber did in this case, the parol evidence rule prohibits courts from considering parol or extrinsic evidence for the purpose of varying or adding to the terms of the written contract. Millner v. Mumby, 599 N.E.2d 627, 629 (Ind.Ct.App. 1992)....
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