Amici Resources, LLC v. Alan D. Nelson Living Trust
49 N.E.3d 1046
Ind. Ct. App.2016Background
- Matthies obtained a $39,913.13 judgment against Solid Foundations Investment Properties, Inc. (SFIP) on December 10, 2012 and later sought to enforce that judgment as a lien on SFIP’s real property.
- SFIP, led by Gary Hippensteel, purchased the Central Avenue property from HSBC in April 2013; SFIP borrowed $127,500 from the Alan D. Nelson Living Trust (Nelson Trust) and executed a mortgage and promissory note for that loan.
- Amici Resources, LLC (Amici) entered a joint venture with SFIP and loaned $39,000 for rehabilitation, secured by a second mortgage.
- The Central Avenue property sold June 2, 2014; $40,000 of sale proceeds were held in escrow.
- Trial court held (1) Nelson Trust’s mortgage was a purchase-money mortgage and had first priority, (2) Amici’s mortgage had second priority, and (3) awarded Amici a $39,000 judgment against Hippensteel and SFIP; Matthies appealed.
Issues
| Issue | Plaintiff's Argument (Matthies) | Defendant's Argument (Nelson Trust / Amici) | Held |
|---|---|---|---|
| Admissibility of parol evidence | Trial court erred by considering extrinsic financing and partnership documents beyond the purchase agreement | Stranger-to-contract rule permits parol evidence when dispute involves third parties to the written purchase agreement | Court: No error — parol rule inapplicable; court may consider financing and partnership documents |
| Whether Nelson Trust’s mortgage is a purchase-money mortgage | The mortgage is not a purchase-money mortgage (or is invalid) | Loan proceeds were applied to purchase and documents were part of the same transaction | Court: Mortgage is a purchase-money mortgage; valid priority over prior judgment lien |
| Priority between Nelson Trust mortgage and Matthies’s judgment lien | Matthies’ judgment should have priority over subsequent mortgages | Purchase-money mortgage has statutory and equitable priority over prior judgment liens | Court: Nelson Trust mortgage has priority over Matthies’s judgment lien |
| Priority between Amici’s mortgage and Matthies’s judgment lien | Matthies’s judgment lien has priority over Amici’s second mortgage | Amici argued its lien had second priority over Matthies | Court: Trial court erred — Matthies’ judgment lien has priority over Amici; Amici is junior to Matthies (but junior to Nelson Trust) |
Key Cases Cited
- Cooper v. Cooper, 730 N.E.2d 212 (Ind. Ct. App.) (parol evidence / stranger-to-contract rule)
- Evan v. Poe & Assocs., Inc., 873 N.E.2d 92 (Ind. Ct. App.) (parol evidence and strangers to contract)
- Liberty Parts Warehouse, Inc. v. Marshall Cnty. Bank & Trust, 459 N.E.2d 738 (Ind. Ct. App.) (definition and tests for purchase-money mortgage)
- Wermes v. McCowan, 3 N.E.2d 720 (Ill. App.) (contemporaneousness test: deed and mortgage as one transaction)
- Johnson v. Johnson, 920 N.E.2d 253 (Ind.) (priority-in-time principle for liens)
- Arend v. Etsler, 737 N.E.2d 1173 (Ind. Ct. App.) (judgment lien arises when recorded; judgment liens attach to subsequently acquired property)