Marriage of Glendenning, In re
| Decision Date | 29 August 1997 |
| Docket Number | No. 34A02-9705-CV-260,34A02-9705-CV-260 |
| Citation | 684 N.E.2d 1175 |
| Parties | In re the MARRIAGE OF Jay B. GLENDENNING, Appellant-Respondent, and Angela D. (Glendenning) Martel, Appellee-Petitioner. |
| Court | Indiana Appellate Court |
Jay B. Glendenning [Father] appeals the trial court's determination, after a trial before the bench, that Father would receive no credit against his child support arrearage for funds which had been held in trust for both parties by the late David H. Williams, the former attorney of Angela D. Martel [Mother]. Father also asserts that the trial court erred by finding him in contempt for his failure to pay child support as ordered. We affirm.
The operative facts are not disputed. Father and Mother divorced in 1991. In the Decree, the trial court ordered that the marital residence be sold and the proceeds be applied to pay certain debts. The remainder was to be divided equally between the parties, with $2,500.00 of Father's share to be paid to Mother's first attorney, Stephen M. Jessup. At the time of the divorce in 1991, the property appraised for $18,900.00.
However, as will be discussed below, the house did not sell until 1995. Over the intervening years, Father invested materials and labor in improvements to the house to make it more marketable and valuable. On April 18, 1994, the parties filed a stipulation in the trial court to the effect that Father had accumulated a child support arrearage in the amount of $24,310.00, and that Father's arrearage would be paid from his share of the proceeds of the sale of the house.
In 1995, the house sold for a purchase price of $40,000.00. After payment of the debts and other expenses (except the $2,500.00 owed to Mother's former attorney), the sale netted the parties $31,049.90. Thus, under the division set out in the Decree, Mother would have received 1/2 of this amount, $15,524.95, Father would have received $13,024.95 ($15,524.95 - $2,500.00), and Mother's attorney, Stephen M. Jessup, would have been paid $2,500.00. Thus, under the formula set out in the Decree, Father's share would not satisfy his child support arrearage.
However, at closing, Father contested this distribution, and demanded that he be reimbursed and/or compensated for the expenditures and improvements that he had made relative to the house. This dispute could not be resolved at closing. Jessup was paid $2,500.00 of the sale proceeds. The title company which facilitated the closing cut a check payable to both Father and Mother for the remaining $28,549.90 ($31,049.90 - $2,500.00). The parties agreed that Mother's then attorney, David H. Williams, would "hold" the money until the dispute was resolved because, although the precise allocation was disputed, it was clear that Mother would receive most of the proceeds due to the substantial arrearage. Mother and Father endorsed the check. Williams also endorsed the check, signing "David H. Williams, Trustee." At some point, the language "AND DAVID H. WILLIAMS, TRUSTEE" was typed on the front of the check as an additional payee. The check was paid to Williams.
The parties' attempt to resolve the dispute without litigation failed. On May 22, 1995, Williams petitioned the trial court to hold a hearing to determine the proper allocation of the proceeds between the parties.
However, on June 5, 1995, Williams committed suicide. The $28,549.90 Williams was holding for the parties has never been found or accounted for. Apparently, Williams had converted or embezzled the money for his own use. 1
On March 5, 1997, Mother filed the instant petition requesting that Father be held in contempt for failing to pay child support. The matter was tried before the bench. The trial court found that Father was not entitled to any credit against his child support arrearage for monies held and converted by Williams. Thus, the trial court found Father in contempt for his failure to pay the child support arrearage. This appeal ensued. Additional facts are supplied as necessary.
On appeal of a bench decision, the appellate court will not set aside the judgment unless it is clearly erroneous. Ind.Trial Rule 52(A). When the trial court enters findings on its own motion (as in the present case), specific findings control only as to issues they cover while a general judgment standard applies to any issue upon which the court has not found. Matter of Estate of Burmeister, 621 N.E.2d 647, 649 (Ind.Ct.App.1993). The reviewing court will affirm if the judgment can be sustained on any legal theory supported by the evidence most favorable to the judgment, together with all reasonable inferences to be drawn therefrom. Klebes v. Forest Lake Corp., 607 N.E.2d 978, 982 (Ind.Ct.App.1993), trans. denied.
Father asserts that Mother should be charged with Williams' conversion of the sale proceeds because Williams had been her attorney. Father points out that Williams had been chosen to hold the money, despite the dispute over the precise allocation between the parties, because it had been clear that Mother would be entitled to most of the proceeds due to the agreement regarding the arrearage. Father argues that, because the parties had stipulated that Father's child-support arrearage would be paid out of the proceeds, his obligation to pay the arrearage was satisfied when Mother's attorney took possession of the money. Accordingly, Father reasons, the trial court erred by not giving him credit against his child support obligation for his share of the funds converted by Williams. We disagree.
This appears to be an issue of first impression in Indiana. However, our hornbooks have served us well. As stated in 30A C.J.S. Escrows §§ 9-10 (1992):
It is the general rule that an instrument cannot be deposited as an escrow with the agent or attorney of the grantee or other party who is to have the benefit of the instrument ... since such a deposit is equivalent to a delivery directly to the grantee.
However, an agent of the grantee is not necessarily incapacitated by force of his agency from acting as the depositary of an escrow, and he may become such depositary where under the circumstances of the case, to do so involves no violation of duty as agent of the grantee, or where he acts as an individual and not as agent....
The intention of the parties, at the time of the deposit with the escrow agent, is controlling as to whether he is acting as an individual or in his capacity as attorney for one of the parties....
On consummation of the contract and deposit, the escrow holder is generally considered the agent of both parties to the escrow, and he owes an obligation to each party measured by an application of the ordinary principles of agency....
The escrow holder has also been denominated a trustee for the parties, charged with the performance of an express trust governed by the escrow agreement, ... Otherwise expressed, one assuming to act as a depositary in escrow occupies a fiduciary relationship to each of the parties ...
When the condition on which the instrument is to take effect is performed, the nature of the dual agency changes and the depositary or escrow holder becomes a mere agent or trustee for each party with respect to the things in escrow to which each has thus become completely entitled, and his possession is equivalent to possession by such party.
Id. at pp. 507-509 (Emphasis added). Moreover, as stated in 28 Am.Jur.2d Escrow § 20 (1966):
As a general rule, a loss occasioned by the default, peculation, or similar wrong of an escrow holder, must, as between the parties to the escrow transaction, be borne by the one who, at the time of its occurrence, was lawfully entitled to the right or property affected, and this is true irrespective of which party selected the escrow agent. Ordinarily, the question as to who is entitled to the right or property affected depends upon a determination whether there has been timely satisfaction of the condition of the escrow prior to the loss, or a determination of whose agent the escrow holder is at the time of the loss, applying the equitable principle that where one of two innocent persons must suffer from the wrongful act of a third, the loss should be born by him who put the wrongdoer in a position of trust and confidence and thus enable him to perpetuate the wrong. Thus, in determining upon whom the...
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