Langford v. Anderson Banking Co., 469

• Citation: 258 N.E.2d 60,146 Ind.App. 677
• Decision Date: 06 May 1970
• Docket Number: No. 469,No. 2,469,2
• Court: Court of Appeals of Indiana
• Parties: Estle LANGFORD, Mary C. Langford, Appellants, v. ANDERSON BANKING CO., Appellees. A 69

Page 60

258 N.E.2d 60

146 Ind.App. 677

Estle LANGFORD, Mary C. Langford, Appellants, v. ANDERSON BANKING CO., Appellees.

No. 469 A 69.

Appellate Court of Indiana, Division No. 2.

May 6, 1970.

Paul W. Kelley, Kelley, Arnold & Kelley, Anderson, for appellants.

John A. Farr, Jr., Busby, Austin, Cooper & Farr, Anderson, for appellees.

SHARP, Judge.

The Appellee, Anderson Banking Company, filed its complaint on note and to foreclose mortgage on March 31, 1960. The complaint alleged that on November 30, 1950, Harold E. Gallamore and Evelyn Cecelia Gallamore as husband and wife executed their promissory note to the Appellee, which promissory note was secured by a real estate mortgage of the same date on the real estate here in question executed by the Gallamores as mortgagors to the Appellee as mortgagee. Subsequently, Evelyn Cecelia Gallamore died and Harold E. Gallamore thereafter conveyed said real estate to the Appellants, Estle C. Langford and Mary C. Langford by a warranty deed dated June 13, 1952, in which warranty deed the Langfords agreed to assume and pay said mortgage to the Appellee. Said complaint further alleges that the Appellants as of April 1, 1960, were more than 12 installments delinquent on said note and mortgage and therefore were in default.

The Appellants filed answer in three legal paragraphs. The first legal paragraph was in admission and denial under Rule 1--3 of the Rules of the Supreme Court. The second legal paragraph was denominated as a third amended cross-complaint. The material allegations of Appellants' third amended cross-complaint are:

'(1) That on or about the 15th day of June, 1952, the cross-complainant approached the plaintiff herein for a mortgage loan upon the premises located at 2508 East 6th Street, Anderson, Indiana, and being more particularly described as follows:

Lot numbered 274 in Homewood Addition in Anderson Township, as shown by Plat Book 7, Page 94, Records of Madison County, Indiana

That plaintiff orally agreed to extend defendants a loan upon the premises if title was good and the property was unencumbered after the plaintiff's attorney examined the abstract of title.

(2) That on July 21, 1952 the plaintiffs' agent and attorney, Phillip S. Cooper, examined the defendants' abstract of title to the said real estate, and that the plaintiffs engaged Mr. Cooper in their behalf and he noted various liens and encumbrances against defendants' property among which was the following, to wit: 'At Page 7 of Part three is shown a drainage assessment in the amount of $3.30 which is a lien against the real estate', that a letter was written addressed to the defendants by plaintiff's agent and attorney, Cooper, which said letter is made a part of this complaint and marked Defendant's Exhibit 'A'.

(3) That on August 2, 1952, defendants paid the plaintiff the sum of $15.00 in consideration of plaintiff's attorney and agent for the examination of their abstract of title payment of which is shown by defendants' receipt which is made a part hereof and marked Defendants' Exhibit 'B'.

(4) That the plaintiff herein instead of mailing the letter of their attorney and agent to the defendants, retained it in their files, but granted the mortgage loan, but continued to conceal notice of the lien above shown, from the plaintiffs through their failure to so mail the letter addressed to defendants; that under the terms of the oral contract the plaintiffs were under a duty to notify the cross-complainants after examination of abstract by plaintiffs' agent, if any encumbrances existed against cross complainant's property.

(5) That on April 12, 1954, Lot #274 in Homewood Addition, as above described, was advertised and sold for a delinquent ditch assessment described in rhetorical paragraph three (3) of this complaint. That at the said sale Grace B. De Armond and William E. DeArmond purchased the said lot and were issued a tax certificate by the Madison County Auditor, dated April 12, 1954.

(6) That the cross complainants herein continued to pay the taxes due and payable on Lot 274 in Homewood Addition for the years payable in 1953, 1954, 1955 and 1956 and 1957.

(7) That when they sought to pay the taxes due and payable in the Spring of 1958, that the DeArmonds had been given a tax title deed to Lot #274, dated April 13, 1956, by the Auditor of Madison County.

(8) That the knowledge of the tax sale was gained by the defendants and cross complainants as they sought to pay their taxes when they found that the title had been transferred into the names of DeArmonds, at which time they went to the Anderson Banking Company and found a copy of the letter which had previously been addressed to them in the files of the said Anderson Banking Company and hereinbefore marked plaintiffs' Exhibit 'A'.

(9) That subsequent thereto, the defendants and cross complainants herein, instituted an action against the DeArmonds to set aside the tax title deed, in which judgment was adversely rendered against the cross complainants. That subsequent to the adverse judgment the cross complainants appealed the judgment to the Appellate Court of Indiana in which case the trial court was reversed in favor of cross complainants herein.

(10) That in regaining title to cross complainant's property above described, in addition to preserving plaintiff's mortgage against it, they incurred expenses of attorney fees and local counsel in trial and Appellate Court of the sum of $5,405.75, brief printing and appeal cost in the amount of $1,066.00, loss of earnings in appearing in Court, approximately $800.00, and other necessary expenses.

(11) That demand was subsequently made upon the Anderson Banking, both by the defendants' attorney and by the defendants personally for the loss sustained, but that the demand was refused.

(12) That by virtue of the facts as alleged in rhetorical paragraphs 1 through 4 whereby if upon examination of the cross complainant's abstract of title showed no encumbrances thereon that the plaintiffs would extend a loan unto the cross complainants, and that by virtue of this said breach of oral contract by the plaintiff, Anderson Banking Company, the defendants and cross complainants herein have been damaged to the extent of the sum of ten thousand ($10,000.00) dollars.'

The third legal paragraph of answer was denominated as a Special Answer, which stated:

'1. That the plaintiffs through their failure to notify defendants that there was an existing ditch lien upon their property, which is the property against which plaintiffs seek to foreclose, caused defendants to believe there were no existing liens against said property when in fact there was a ditch lien.

2. That such implied representation on the part of plaintiffs was false and fraudulent, either actually or constructively.

3. That defendants were ignorant of the falsity of plaintiff's representation and acted in good faith in relying upon such representation and were induced to execute this mortgage in favor of plaintiff.

4. That the defendants as a result of plaintiff's misrepresentation suffered damage in that they were required to extensively defend their rights to ownership of this property against others.'

The Appellees' answer to the third amended cross-complaint of the Appellants stated:

'1. That it admits the allegations contained in Rhetorical Paragraph 11 of said Defendants' Third Amended Cross-Complaint.

2. That it denies the allegations contained in Rhetorical Paragraphs 1, 2, 3, 4 and 12 of said Third Amended Cross-Complaint.

3. That it is without knowledge concerning the truth of the allegations contained in Rhetorical Paragraphs 5, 6, 7, 8, 9, and 10 of said Third Amended Cross-Complaint.'

Appellee also filed a Reply to the Special Answer of the Appellants which merely denied all the material allegations thereof.

The case was tried by the court without the intervention of a jury. In its judgment the trial court found for the Appellee on its complaint and entered a judgment and decree of foreclosure. The trial court found against the Appellants on their third amended cross-complaint and entered judgment accordingly.

The Appellants filed a Motion for a New Trial, the sole grounds of which were stated in the following form:

'That the decision is not sustained by sufficient evidence and is contrary to law.'

In their memorandum attached to said Motion for a New Trial under Rule 1--14B the Appellants stated:

'1. For first grounds for new trial, the cross-complainants allege that the Court erred in foreclosing the plaintiff's non-existent real estate mortgage.

When Grace B. DeArmond and William E. DeArmond obtained a tax title deed from the Auditor of Madison County on April 13th, 1956, for Lot No. 274 in Homewood Addition, subject matter of the mortgage, they took it free and clear of plaintiff's mortgage and all encumbrances. Under Burns Indiana Statute 64--2203 the plaintiff's mortgage had already been extinguished when it was foreclosed.

2. Foreclosure of a real estate mortgage is an equitable proceeding and the plaintiff is estopped from seeking equity to enforce foreclosure of their mortgage with approximate expense of the sum of $1,500 for they do not come into equity with clean hands. The plaintiff is seeking enforcement of foreclosure and damages when their own equitable conduct is a matter with relation to which they seek relief and to grant them such relief is most unconscionable and error on the part of the Court.

3. For the third ground for new trial the cross-complainants allege that the Court erred in sustaining plaintiff's motion for a finding for the plaintiff, Anderson Banking Company, and against the defendants on their third amended cross-complaint based upon the mere fact that the deed from the Gallamores to the Langfords (Plaintiff's Exhibit 3) was dated and recorded prior to plaintiff's agent, Phillip Cooper's abstract opinion (defendant's Exhibit A) and that cross-complainants did not rely on the...