The Peoples State Bank v. Benton Township of Monroe County, Indiana, 28 N.E.3d 317

Background

In 2011 Benton Township Trustee Heather Cohee (a part‑time employee) executed a $335,295 promissory note with The Peoples State Bank to buy a fire truck, without a formal township appropriation or compliance with statutorily required notice/remonstrance procedures.
The Bank deposited loan proceeds into the township account; the township paid the vendor $287,149 and $616.52 for equipment; remaining loan funds were used for other township purposes.
The township defaulted on payments; the Bank offset funds from the township account, later entered a partial settlement: the township surrendered the truck, Bank sold it for $212,866, restored most offset funds, applied $30,000 to the loan, and the township paid $37,529.48 (total mitigation ~$67,529.48).
The Bank sued in May 2013 seeking the unpaid balance plus attorney fees; cross‑motions for summary judgment were filed and the trial court granted judgment for Benton Township, finding the loan transaction void because required taxpayer notice/remonstrance under I.C. § 36‑8‑13‑6.5 was not followed.
The Bank’s motion to correct error was denied; the Bank appealed, arguing enforceability of the promissory note and entitlement to equitable recovery despite statutory noncompliance.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the loan contract is enforceable despite lack of statutory notice/remonstrance	Bank: the promissory note is a valid negotiable instrument; township obligations for equipment purchases are "valid and binding" and enforceable	Benton Twp: the loan was incurred without statutorily required notice and remonstrance under I.C. §36‑8‑13‑6.5, so the obligation is void	Court held the contract is invalid for lack of statutory compliance; summary judgment for township affirmed
Whether taxpayer protections in §36‑8‑13‑6.5 can be circumvented by the lender	Bank: taxpayers’ remonstrance omission does not void township borrowing; Bank relied on statutory language that obligations are binding	Benton Twp: statutory process is a prerequisite; lenders must ensure compliance before dealing with municipal actors	Court: statutes must be read together; borrowing is "subject to" §6.5; lender bound to notice of municipal limits; protections stand
Whether equitable remedies (account stated, quantum meruit, money had and received) permit Bank recovery despite invalid contract	Bank: township received and used funds/benefit; accepted statements without protest; partial settlement does not foreclose further equitable recovery	Benton Twp: equitable doctrines generally unavailable against government when public spending and statutory procedure implicated	Court: equitable relief denied—municipal statutory protections prevail; partial settlement and mitigation preclude further equitable relief
Whether estoppel/ratification can validate the void contract	Bank: conduct and acceptance could ratify obligation	Benton Twp: estoppel/ratification not applied to public entities in these circumstances; public interest prevents validating unauthorized expenditures	Court: estoppel/ratification unavailable here; party dealing with public funds must verify authority; contract remains void

Key Cases Cited

Kornelik v. Mittal Steel USA, Inc., 952 N.E.2d 320 (Ind. Ct. App. 2011) (standard for reviewing denial of motion to correct error and abuse of discretion)
Williams v. Tharp, 914 N.E.2d 756 (Ind. 2009) (summary judgment clothed with a presumption of validity on appeal)
Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267 (Ind. 2009) (summary judgment standard and burdens of proof)
Sunman‑Dearborn Comm. Sch. Corp. v. Kral‑Zepf‑Freitag & Assoc., 338 N.E.2d 707 (Ind. Ct. App. 1975) (party contracting with township must prove statutory compliance to enforce contracts)
Cablevision of Chicago v. Colby Cable Corp., 417 N.E.2d 348 (Ind. Ct. App. 1981) (equitable doctrines like estoppel/ratification limited against municipalities where statutory procedures and public funds are implicated)