ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEES:
CRAIG D. DOYLE STEPHEN A. OLIVER
CHARLEYNE L. GABRIEL Boren & Oliver
Leeuw & Doyle Martinsville, Indiana
KEYBANK NATIONAL ASSOCIATION, ) ) Appellant-Plaintiff, ) ) vs. ) No. 55A01-9802-CV-53 ) NBD BANK, f/k/a THE INDIANA NATIONAL ) BANK, ASSOCIATED PROPERTY SERVICES, ) INC., and FRASIER FARMS, LTD., ) ) Appellees-Defendants. )
(emphasis added). The legal description described an existing parcel of real estate which
Loudermilk did not own. (R. 373). The mortgage was indexed in the Recorder's office
consistent with the legal description contained in the mortgage and, thus, out of the chain of
title of the Toole Real Estate. (R. 373).
In 1990, Loudermilk conveyed the Toole real estate, together with an additional parcel of real estate to Frazier Farms, LTD (Frazier). (R. 373). The deed representing this conveyance contained the correct legal description and was recorded in 1990. (R. 373).
In 1992, Frazier quitclaimed a parcel of real estate which included a portion of the Toole real estate to Loudermilk's son, Tracy Loudermilk (Tracy). (R. 374, 940). The address of this property was 3345 Pitkin Road and the correct legal description was Sections 13 and 14 Township 12 North, Range 1 West. (R. 393, 940). The quitclaim deed representing this conveyance contained the following erroneous legal description: Sections 13 and 14 Range 12 North, Range 1 West. (R. 374, 380) (emphasis added). This quitclaim deed was recorded in 1992. (R. 374, 940). The deed was recorded in the Toole Real Estate chain of title despite the error in the legal description because there are no properties identified by two range designations and, thus, it was obvious from the face of the deed that the Range 12 North should have read Township 12 North. (R. 933, 940) .
In 1994, Tracy executed a promissory note in favor of Keybank in the amount of $92,050.00. (R. 374). Tracy executed a mortgage in favor of Keybank to secure the note. (R. 374). The Keybank mortgage contained the same error in the legal description as the quitclaim deed. (R. 374). The Keybank mortgage was recorded in 1994. (R. 374). Again,
the mortgage was recorded within the Toole Real Estate chain of title despite the defect in
the legal description. (R. 883).
Later in 1994, Tracy filed for relief under Chapter 7 of the United States Bankruptcy Code. (R. 374). In 1995, Keybank initiated the present foreclosure action seeking to execute upon its mortgage. (R. 15-25). Neither NBD or Keybank discovered the errors in their respective mortgages. (R. 374-75). Instead, the trial court discovered the errors during the course of these proceedings. (R. 374-75).
After a bench trial, the trial court determined that Tracy's quitclaim deed and Keybank's mortgage were a nullity due to the error in the legal description. (R. 377-78). Accordingly, the trial court determined that NBD's mortgage had priority over Keybank's mortgage. (R. 379). This appeal followed.
the judgment and all reasonable inferences flowing therefrom, and we will not reweigh the
evidence or assess witness credibility. Id. 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.
Where trial court findings on one legal theory are adequate, findings on another legal theory
amount to mere surplusage and cannot constitute the basis for reversal even if erroneous.
Williams v. Rogier, 611 N.E.2d 189, 196 (Ind. Ct. App. 1993), trans. denied; Donavan v.
Ivy Knolls Apartments Partnership, 537 N.E.2d 47, 52 (Ind. Ct. App. 1989).
description was sufficient to establish the lien over the landowner's property because the
tract intended to have been mortgaged fell within the description. Id. In Hannon v. Hilliard,
101 Ind. 310 (1884), a mortgage which erroneously read the west part of the northeast half
of the northwest quarter . . . where only the word north should not have been inserted
before east half of the northwest quarter was sufficient to describe the property in question
because no ambiguity existed regarding what parcel of property the parties had intended, nor
did the description describe property other than that intended. Id. at 311-12, 315.
The same result obtains in the present case with respect to the Keybank mortgage because the error in the legal description was obvious on its face and had not caused ambiguity regarding the property intended to have been described. The error was obvious because it is axiomatic that a legal description cannot have two Range designations. Furthermore, it was obvious that the Township designation had been omitted and, therefore, the extra Range designation had been accidentally substituted for the Township designation. Therefore, the Keybank mortgage was valid because the precise tract intended, the 3345 Pitkin Road property, could be located despite the typographical error in the legal description. Moreover, the mortgage had been properly recorded within the chain of title despite the error. Accordingly, the trial court's determination that the error in the Keybank mortgage rendered it a nullity was clearly erroneous.
appear in the chain of title; because, otherwise, the recording statute would prove a snare,
instead of a protection. Stead v. Grosfield, 67 Mich. 289, 34 N.W. 871, 874 (1887).
The law recognizes two kinds of notice, constructive and actual. Altman v. Circle City Glass Corp., 484 N.E.2d 1296, 1298 (Ind. Ct. App. 1985), trans. denied. Constructive notice is provided when a deed or mortgage is properly acknowledged and placed on the record as required by statute. Id. However, an otherwise valid instrument which is not entitled to be recorded, improperly recorded, or recorded out of the chain of title does not operate as constructive notice, although binding upon persons having actual notice. Id. Notice is actual when notice has been directly and personally given to the person to be notified. Id. Additionally, actual notice may be implied or inferred from the fact that the person charged had means of obtaining knowledge which he did not use. Id. Whatever fairly puts a reasonable, prudent person on inquiry is sufficient notice to cause that person to be charged with actual notice, where the means of knowledge are at hand and he omits to make the inquiry from which he would have ascertained the existence of a deed or mortgage. Id. Thus, the means of knowledge combined with the duty to utilize that means equates with knowledge itself. Id. Whether knowledge of an adverse interest will be imputed in any given case is a question of fact to be determined objectively from the totality of the circumstances. Id. at 1299. In Altman, we found that Altman had actual/inquiry notice of an adverse interest in real property because he had received a letter from a title insurance company advising him of the necessity to terminate the adverse interest. Id. Similarly, in Huffman v. Foreman, 163 Ind.App. 263, 323 N.E.2d 651 (1975), we held that Huffman had
actual/inquiry notice when, at closing, he had been provided with a copy of a conditional
land sales contract which purported to convey an interest in the property in question. Id. at
In State ex rel. Graham v. Walters, 31 Ind.App. 77, 66 N.E. 182 (1903), a mortgage was misrecorded as the N.E.¼ of a certain section instead of the N.W.¼ of that section. We held that such a misdescription of the land in the record in the mortgage rendered the recording worthless such that a subsequent mortgage, given in good faith for valuable consideration, had priority over the earlier mortgage. Id. at 183. Similarly, in Rinehardt v. Reifers, 158 Ind. 675, 64 N.E. 459 (1902), our supreme court held that a mortgage which contained an erroneous legal description as lots 13 and 14 in University Park addition was ineffective to provide notice where the correct legal description should have read lots 13 and 14 in University Park, Second Addition. (emphasis added). Id. at 459. Our supreme court noted that where the error in a legal description identifies another body of land, it will not be effective against a subsequent mortgagee who accepted his mortgage in ignorance of the mistake, and in bona fide reliance upon the appearance of the public record. Id.
In the present case, the NBD mortgage was recorded outside the chain of title. Therefore, Keybank had no constructive notice. Nor has there been any contention that Keybank had been directly and personally given actual notice of the NBD mortgage. Nevertheless, NBD contends that Keybank had actual/inquiry notice of the NBD mortgage because a proper review of [the public records] should have disclosed not only the existence of the NBD mortgage, but the nature of the scrivener's error in that mortgage
when compared to the warranty deeds in [Tracy Loudermilk's] chain of title. (Appellees
brief at 13). Furthermore, NBD presented substantial evidence that Keybank failed to
discover that which a proper search would have disclosed. (Appellee's brief at 13).
We disagree. As noted above, the NBD mortgage described an entirely different tract of land than the Toole Real Estate. Thus, the NBD mortgage had been recorded out of the chain of title for the Toole Real Estate. Accordingly, the public records could not have placed Keybank on notice, whether constructive, actual, or inquiry, of the NBD mortgage. Subsequent purchasers, lessees, and mortgagees must be able to rely on the public record. To hold otherwise would cause the recording statute to prove a snare, instead of a protection.
Based on the above, we conclude that the Keybank took its mortgage on the Toole real estate as a bona fide purchaser, in good faith, for a valuable consideration, and without notice of the NBD mortgage. Accordingly, the Keybank mortgage has priority over the NBD mortgage. Therefore, we must reverse and remand for further proceedings consistent with this decision.
NAJAM, J., and RILEY, J., concur.
Converted by Andrew Scriven