ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEE
P. Jeffrey Schlesinger Lynn Hammond
Crown Point, Indiana Merrillville, Indiana
SUPREME COURT OF INDIANA
JAMES PHILLIP VADAS, )
Appellant (Respondent Below ), )
JOHN VADAS, ) No. 45S04-0103-CV-145
) in the Supreme Court
Appellant (Intervenor Below ), )
) No. 45A04-9901-CV-18
v. ) in the Court of Appeals
RITA J. VADAS, )
Appellee (Petitioner Below ). )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Diana Kavadias Schneider, Special Judge
Cause No. 45C01-9705-DR-1340
February 22, 2002
SHEPARD, Chief Justice.
James and Rita Vadas occupied and maintained a house James had sold to
his father before their marriage. They spent time and money remodeling it
in anticipation of buying it back some day. When they divorced, the
trial court treated the home as a marital asset. It was not.
Facts and Procedural History
In October 1993, James Vadas needed cash to pay his financial obligation to
an earlier wife. His father John Vadas agreed to buy James house
on Cline Avenue in Crown Point for $128,000, part of which he financed
with an $89,600 mortgage.
James and Rita married in April 1995. Within a few months, Rita
sold a house she received from a previous divorce settlement and the couple
moved into the Cline Avenue home. About $20,000 of proceeds
from the sale went into remodeling the Cline Avenue property. James took
a four-month leave of absence from his job to work on the remodeling,
and throughout their marriage, James and Rita paid the mortgage on the property.
John, James and Rita all expected that James and Rita would buy the
house back from John when they were financially able, but this never came
to pass. In May 1997, Rita filed for dissolution of the marriage
and claimed an equitable interest in the house. The trial court treated
the entire net equity of $78,000
See footnote as a marital asset. It awarded
the real estate interest to John and ordered him to pay half the
amount to Rita.
On review, the Court of Appeals agreed that Rita and James held a
vested, present interest in said property through their joint efforts and monetary contributions
Vadas v. Vadas, 728 N.E.2d 250, 259 (Ind. Ct. App.
2000). We granted transfer.
An Expectation Is Not a Vested Interest
A baseline principle of Indiana family law is that [o]nly property with a
vested interest at the time of dissolution may be divided as a marital
asset. Mullins v. Matlock, 638 N.E.2d 854, 856 (Ind. Ct. App. 1994).
Blacks Law Dictionary 1557 (7th ed. 1999) defines a vested interest as
one [t]hat has become a completed, consummated right for present or future enjoyment;
not contingent; unconditional; absolute. See also id. at 816.
This basic axiom has been applied to a variety of types of claims.
See, e.g., Kirkman v. Kirkman, 555 N.E.2d 1293 (Ind. 1990) (pension benefit
right properly excluded from property division because it had neither vested nor become
nonforfeitable upon termination of employment); Harris v. Harris, 690 N.E.2d 742 (Ind. Ct.
App. 1998) (employer 401(k) plan contributions that are contingent upon retirement at the
company are not vested interests, and thus not divisible as marital assets); Hacker
v. Hacker, 659 N.E.2d 1104 (Ind. Ct. App. 1995) (value of potential inheritance
not includible in marital pot); Mullins v. Matlock, 638 N.E.2d at 856 (A
chose in action, not vested but rather contingent and speculative in nature and
in value, is not capable of division and thus not marital property subject
to equal distribution . . . .).
The facts presented here find a close analogy to those of In re
Dall, 681 N.E.2d 718 (Ind. Ct. App. 1997). There, the wifes parents
provided $93,000 to build a home that was to be conveyed to the
husband and wife at some indefinite future date. Id. at 719-20.
The husband labored 2,400 hours helping to construct the home and, when the
couple divorced, the trial court included the home in the marital estate at
a value of $150,000. Id.
The Court of Appeals reversed, holding that an equitable interest in real property
titled in a third-party, although claimed by one or both of the divorcing
parties, should not be included in the marital estate. Id. at 722.
Although the couple may have hoped eventually to acquire legal title to
the property . . . they did not have a definite agreement that
title would be transferred to them. Id. at 721 (distinguishing Sovern v.
Sovern, 535 N.E.2d 563 (Ind. Ct. App. 1989), where the owners of record
title disclaimed any interest in the real estate.). Therefore, in Dall, neither
Husband nor Wife possessed the definite interest necessary for the home to be
included in the marital estate. 681 N.E.2d at 721.
The holding of Dall promotes predictability, consistency and efficiency by excluding remote and
speculative interests from the marital estate. See 681 N.E.2d at 722.
The property at issue here is just such a speculative interest. Ritas
investment and James labor increased the homes value during the marriage, but general
market conditions before and after the marriage would also account for some part
of the appreciation. (R. at 146-47, 279, 284.) The sale to
James and Rita was to occur at some unspecified future date, contingent upon
James getting back on his feet financially. (R. at 144.) Neither
price nor terms had been discussed, although John wanted to recover what he
put into the property (unlike the record owner in Sovern, who did not
claim any interest in the property in question). (R. at 147.)
Because James and Rita did not have a vested interest in the Cline
Avenue home, the trial court erred in including $78,000 equity as marital property.
Of course, the relationship between James and John Vadas and James occupation
of the remodeled residence reflects on the relative housing needs of James and
Rita and is a relevant consideration in dividing the property that is a
part of the marital pot.
A Moot Jurisdictional Challenge
The trial court entered judgment against both James and John in the total
amount of $35,261.54, and ordered the judgment attached to the Cline Avenue home.
The court allowed thirty days for payment in full, under penalty of
forced sale of the property.
On appeal, James and John argue that the trial court lacked personal jurisdiction
over John due to improper service. Vadas, 250 N.E.2d at 256; (Appellants
Br. at 5). Because we have concluded that the residence was not
marital property, we reverse both the judgment against John Vadas and the attachment
of the judgment to the Cline Avenue real estate, and need not address
the question about personal jurisdiction.
III. The Personal Property Division
On appeal, James also challenges the trial courts valuation and division of the
parties personal property, largely attacking the values assigned by the court. We
summarily affirm the Court of Appeals holding that there was no error as
to valuation. Ind. Appellate Rule 58(A)(2).
We reverse the judgment insofar as it included the residence as a marital
asset and remand so the trial court can reconsider division of the other
Dickson, and Rucker, JJ., concur.
Boehm, J., dissents with separate opinion, in which Sullivan, J., concurs.
ATTORNEY FOR APPELLANTS
P. Jeffrey Schlesinger
Crown Point, Indiana
ATTORNEY FOR APPELLEE
SUPREME COURT OF INDIANA
JAMES PHILLIP VADAS, )
Appellant (Respondent Below), )
) Indiana Supreme Court
JOHN VADAS, ) Cause No. 45S04-0103-CV-145
Appellant (Intervenor Below), ) Indiana Court of Appeals
) Cause No. 45A04-9901-CV-18
RITA J. VADAS, )
Appellee (Petitioner Below). )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Diane Kavadias Schneider, Special Judge
Cause No. 45C01-9705-DR-1340
ON PETITION FOR TRANSFER
February 22, 2002
BOEHM, Justice, dissenting.
I respectfully dissent. I believe the property at issue should be included
as marital property and that it was unnecessary to add John Vadas as
a party to this case.
I. James is Estopped from Denying His Interest in the Marital Home
Although I agree with the majority that John has title to the house
as against the rest of the world, I believe James is estopped from
denying that the couples interest in the property had vested. The doctrine
of estoppel springs from equitable principles, and it is designed to aid in
the administration of justice where, without its aid, injustice might result. Levin
v. Levin, 645 N.E.2d 601, 604 (Ind. 1994). Actual intent to defraud
is not required, and [t]he result of the conduct triggers the application of
the theory. Lawshe v. Glen Park Lumber Co., 176 Ind. App. 344,
347, 375 N.E.2d 275, 278 (1978). The Lawshe court noted:
[I]f one party is induced by another, on the faith of an oral
promise, to place himself in a worse position than he would have been
in had no promise been made, and if the party making the promise
derives a benefit as a result of the promise, a constructive fraud exists
which is subject to the trial courts equity jurisdiction.
Id. Although it appears to me that the transfer from James to
John and the subsequent investment in the home by Rita were both done
in good faith, these events nevertheless give rise to estoppel.
II. The House Sale to John was in Substance a Loan from
James purchased the house during his first marriage, and initially held the property
jointly with his first wife. After dissolution of the first marriage, James
sold the house to John to permit James to satisfy his financial obligations
from the first marriage. In substance, John purchased the property from James
at one third of its market value because the mortgage in the amount
of $89,000 on a $128,000 sale was, in practical terms, retained as an
obligation of James. Both John and James agreed that the house would
be transferred back to James when James was ready. After the sale,
James continued living in the house for over a year and a half.
When James married Rita, the couple lived in the house except for
a few months when they resided at Ritas house to prepare it for
sale. The couple paid all expenses of the house, including the mortgage,
taxes, and insurance. They, not John, claimed the mortgage interest as a
deduction on their joint tax return, which is permissible only if it was
their debt and not Johns.
After James and Rita married, the couple decided to remodel the house and
refinance the home in their name as quickly as possible so Rita could
avoid recognizing gain from the sale of her house by reinvesting the proceeds.
This was permissible only if the house in which Rita invested the
proceeds was her own principal residence. 26 U.S.C. § 1034 (1994).
James assured Rita that the refinancing would be completed before February 1998.
Relying on James statements that the house would be deeded back to James
and Rita, Rita, who knew the house was titled in Johns name, used
all of the net proceeds from the sale of her home to remodel
This contributed to an increase in the value of the
house of almost $40,000. The majority notes that Ritas investment and James
labor increased the homes value during the marriage, but general market conditions before
and after the marriage would also account for some part of the appreciation.
The record seems to me to establish that most, if not all,
of the increase was attributed to Ritas investment in the home.
is clear that Rita directly infused a substantial sum for improvements to the
home, including a new roof, new siding, new drywall, new kitchen cabinets, new
appliances, new floors, new carpeting, and a newly remodeled bathroom. John, on
the other hand, invested no funds in the remodeling of the real estate.
John also allowed James, and eventually James and Rita as a couple,
to take the interest deduction for tax purposes on the mortgage. All
of this adds up to a substantial reliance by Rita in the homes
being a marital asset.
This court recently applied the doctrine of estoppel in Levin v. Levin.
In Levin, a married couple had a child after the wife was artificially
inseminated. Id. at 603. The husband supported the child and held
him out as his during the marriage. Id. The couple ultimately
divorced, and the dissolution decree required the husband to pay child support.
Id. After paying child support for five years, the husband filed a
motion requesting the court to vacate the child support order because the child
was not his biological son. Id. The trial court denied his
motion, and the Court of Appeals affirmed. Id. After granting transfer,
this Court affirmed the trial courts decision, holding that the husband was equitably
estopped from denying his child support obligation based on several factors, including: (1)
the husband induced the wife to go forward with the artificial insemination; (2)
the wife relied in good faith upon the husbands actions; (3) the
husband consented to the procedure; (4) the couple held the child out as
his; and (5) to hold otherwise would be unjust. Id. at 604-05.
Applying these standards, estoppel is appropriate here. James and John induced Rita
to go forward with remodeling the property, and Rita relied upon James and
Johns actions, believing in good faith the house would belong to her and
James. All parties involved agreed that the house would be transferred back
to James and Rita, and, as a result, everyone treated the property at
issue as if Rita and James owned the property.
One way to view this arrangement is a sale subject to a repurchase
agreement for $37,000. If so, the value of the equity in the
home above the sum of the repurchase price of $37,000 plus the mortgage
of $87,000 is a marital asset, just as any option to buy at
below market price has value. I think this arrangement may also be
properly viewed as, in effect, a loan secured by an equitable mortgage from
John. As such, the debt to John of $37,000 is a marital
liability, and the couples interest in the house is a marital asset.
[A] court may find an equitable mortgage where a deed, absolute on its
face, is executed simultaneously with an agreement under which the grantor is entitled
to a reconveyance upon performance of conditions. Moore v. Linville, 170 Ind.
App. 429, 433, 352 N.E.2d 846, 849 (1976).
In these cases, the
law will give effect to the real and dominent [sic] intention of the
parties rather than be controlled by the form and names of the instrument.
Id. (quoting Kerfoot v. Kessener, 227 Ind. 58, 79, 84 N.E.2d 190,
199 (1949)). Here, John and James executed the deed with an oral
agreement that the house would be reconveyed to James when James got was
ready. John paid James $37,000
for real estate valued at $128,000, and
James assumed his fathers mortgage. The intent of the parties is clear:
James would continue to pay the houses expenses and live in the house,
and as soon as James was ready, his father would transfer title of
the house back to James in exchange for the $37,000.
what he expected when he consummated the expected re-transfer to James, John replied
that he wanted only to get my money out of it.
seems clear to me that this reflected his understanding that the transaction was,
in substance if not in form, a loan of $37,000 to James.
As a result, I would include the $37,000 debt to John as a
liability of the marital estate.
The trial court valued the house at $165,000, subject to a mortgage of
$87,000, leaving an equity of $78,000. The trial court divided this in
half and gave $39,000 to each spouse. It seems clear to me
that we need to take the calculation one step further and deduct the
fathers interest, whether viewed as a loan secured by an equitable mortgage or
as a cap on the value of his equity created by the option
to repurchase. Either way, the couples interest limits Johns interest to $37,000,
and the value of any equity above that amount is a marital asset,
regardless of whether James and Ritas interest is viewed as ownership or a
right to repurchase. After subtracting the fathers $37,000 interest from the $78,000
equity the trial court awarded, Rita and James interest in the house is
$41,000. Following the trial courts ruling, which split the couples equity in
the house equally, Rita should be compensated by $20,500.
John was not properly made a party to this dissolution proceeding for the
reasons explained in Part IV of this dissent. However, the nature of
Johns interest is irrelevant. It seems to me that its value, however
viewed, is $37,000 on this record.
III. Case Law Supports Ritas Interest
The majority relies on In re Dall, 681 N.E.2d 718 (Ind. Ct. App.
1997), where the court refused to include in the marital estate a couples
marital home that the wifes parents paid for and helped construct, but later
refused to transfer to the couple. The Dall court held that an
equitable interest in real property titled in a third-party [sic], although claimed by
one or both of the divorcing parties, should not be included in the
marital estate. Id. at 722. Dall declined to follow a prior
case, Sovern v. Sovern, 535 N.E.2d 563 (Ind. Ct. App. 1989), that included
real estate titled to the parents of a married couple in the marital
pot when the couple divorced. Dall, 681 N.E.2d at 721. Dall
distinguished Sovern, stating that the mother in Dall refused to transfer the house
to the couple, and therefore, [the couple] did not have a definite agreement
that title would be transferred to them. Id. Dall held, as
a result, the husband and wife did not possess the definite interest necessary
for the home to be included in the marital estate. Id.
In Dall, the wifes father purchased a lot for the couple, paid all
the contractors and subcontractors for building materials for the house, and helped construct
the home. Id. at 719. During the construction of the home,
the wifes mother refused to convey the house. Id. at 720.
The parents made all mortgage payments after the couple moved in. Id.
In this case, James had a continuing interest in the property, John never
paid the mortgage on the house, and John was willing at all times
to transfer the property to James and Rita. John did not construct
the house at issue. Rather, James purchased the house from a third
party during his first marriage, and held the property jointly with his first
wife. Unlike the Dall parents, John bought the house from James for
less than full consideration with the understanding that John would sell the house
back to James once James was able to get on his feet.
James, and later James and Rita, continued to live in the house and
carry its expenses, including mortgage payments. Finally, unlike Dall, where the mother
refused to convey the house, in the present case, John was willing to
deed the house to the couple whenever James was ready.
All of these facts distinguish this case from
Dall, and more closely resemble
Sovern. The court in Sovern acknowledged the trial courts astute recognition that
[b]are legal title alone does not eliminate either the property or the investment
thereon from being a part of the marital estate to be considered by
the Court in arriving at an equitable division. 535 N.E.2d at 565
n.1. The son in Sovern was awarded a marital residence and an
auto body shop. Id. at 567. The residence was titled in
the name of his parents, and the son, as well as both sets
of parents, helped with construction of the house. Id. at 564-65.
Although both sets of parents contributed money and various items, most of the
money to construct the home came from the son and daughters marital resources.
Id. at 565. The parents were willing at all times to
deed the property to the couple. Id. The son held himself
and his wife out as owners, and the house was insured in both
the son and daughters names, not the parents. Id. Here, like
Sovern, the property at issue is titled in the fathers name, but the
father as well as Rita and James all have contributed equity to the
The majority points out that there is no specified date for John to
transfer back to James, and neither the price nor the terms of the
transfer was fixed by any documents. It seems to me that the
time term was set by a condition, albeit a nebulous one, that James
get back on his feet and the price was to get [Johns] money
out of it.
See footnote Here, the parties testimony gives an even more solid
footing to fill these lacunae.
IV. Personal Jurisdiction and Joinder of the Father
I believe the trial court and Court of Appeals were incorrect in holding
that John was properly served and made a party to the dissolution proceedings.
However, I believe that issue is irrelevant to this case. Although
the dissolution court could not determine Johns rights in the house without joining
John, it could determine, as between James and Rita, what assets are in
the marital pot.
In July 1997, Rita filed a Motion to Join John as a party
pursuant to Trial Rule 20(A)(2).
She mailed a copy of this motion
to James counsel by first class mail, but she did not serve John
with a copy of the motion and issued no summons. The final
hearing on the parties dissolution took place in January 1998. During the
first day of a two-day hearing, John was called as a witness by
Rita. John made no objection to being called as a witness, and
The trial court found that John was a necessary party to the litigation
pursuant to Trial Rule 20(A)(2) and, when it filed the dissolution decree in
August of 1998, ruled for the first time that he was joined as
a party. John unsuccessfully filed a Motion to Correct Errors claiming the
trial court erred by joining him as a party.
Vadas v. Vadas,
728 N.E.2d 250, 255 (Ind. Ct. App. 2000). The Court of Appeals
concluded that John voluntarily waived any objection to personal jurisdiction because he voluntarily
appeared in court and participated in the proceedings by testifying as a witness
without objection. Id. at 256. As a result, the Court of
Appeals held that John was precluded from challenging the trial courts personal jurisdiction
over him. Id.
In my view, John was never added as a party by the trial
court. Indiana Trial Rule 4 provides that [t]he court acquires jurisdiction over
a party or person who under these rules commences or joins in the
action, is served with summons or enters an appearance, or who is subjected
to the power of the court under any other law. Ind. Trial
Rule 4. John meets none of these tests. He did not
commence or join the action, he was never served with a summons, and
he did not enter an appearance. There is no statute authorizing this
procedure to add a party.
The parties cite no Indiana precedent for the proposition that testifying as a
witness without objection at a trial subjects a witness or his property to
the jurisdiction of the trial court, and I know of none. Indeed,
in my view, this procedure violated Johns due process and due course of
law rights guaranteed by the federal and state constitutions. The minimal requirements
of due process are notice reasonably calculated to apprise an interested party of
the pendency of the action, Matter of Murray, 266 Ind. 221, 223, 362
N.E.2d 128, 129 (1977), the opportunity to present evidence on ones behalf,
Anderson Fed. Sav. & Loan Assn v. Guardianship of Davidson, 173 Ind. App.
549, 555, 364 N.E.2d 781, 784 (1977), the opportunity to cross-examine witnesses,
Armes v. Pierce Governor Co., Inc., 121 Ind. App. 566, 575, 101 N.E.2d
199, 203-04 (1951), and the opportunity to be fully heard, Neill v. Ridner,
153 Ind. App. 149, 155, 286 N.E.2d 427, 430 (1972). These rights
apply to third parties who are needed to adjudicate an issue, just as
they do to any other party to a proceeding. Anderson, 173 Ind.
App. at 556, 364 N.E.2d at 785. Because John was never given
the benefit of any of the procedures required by Trial Rule 4, he
was not put on notice that his rights were being adjudicated. Formal
summons and service can be waived, but waiver requires a set of circumstances
where the person charged with waiver is aware he has been served and
takes actions inconsistent with asserting failure of service. When John appeared at
his sons trial and testified at his sons divorce hearing, he could expect
his sons rights to be adjudicated, but he had no reason to believe
his own interests were to be resolved.
Serving a copy of the motion on the lawyer representing Johns son did
not cure this problem. James lawyer already represented James in the dissolution
and could properly assume she received her copy of the motion on behalf
of her client pursuant to Ritas obligation to serve her with a copy
of any motion. The lawyer had no indication that the motion served
on her was intended to put a third party on notice, even if
the third party was her clients father. There is no reason to
question James lawyers statement that she accepted the service as the attorney for
James, not as the attorney for John.
In my view, Rita unnecessarily sought to add John under Indiana Trial Rule
20(A)(2). Had Rita sought title to the house, Trial Rule 20(A)(2) would
have been necessary because an order terminating Johns interest would be required.
However, Rita asked only for a dollar amount reflecting her interest in the
marital assets. That can be awarded without affecting Johns title to the
house. Because John was not made a party, John is still free
to dispute the extent of his interest in the house. If John
chooses to do that, James will be exposed to the risk of inconsistent
adjudications. To avoid this risk, however, James could, if he wished, have
invoked Indiana Trial Rule 19(A)(2)(b). That rule provides:
A person who is subject to service of process shall be joined as
a party in the action if . . . he claims an interest
relating to the subject of the action and is so situated that the
disposition of the action in his absence may . . . leave any
of the persons already parties subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations by reason of his claimed interest.
T.R. 19(A)(2)(b). This rule provides for mandatory joinder to avoid James exposure
to paying both Rita and John for the same asset. If this
procedure had been invoked, Johns rights would have been properly adjudicated in this
In sum, I think it was error to treat John as a party.
The only effect of this proceeding is to determine that James, not
James and Rita, owns whatever interest the couple, or either of them, had
in the property. Only James and Rita are necessary parties to this
adjudication, and only they are bound by it.
In conclusion, I would include the real estate at issue in the marital
estate, and compensate Rita in the amount of $20,500, $18,500 less than the
trial court and Court of Appeals would award her, but $20,500 more than
the majority awards. Further, I would hold that the trial court erred
by finding John to be properly added as a party to this action,
but find this error irrelevant to the resolution of the dissolution.
Sullivan, J., concurs.
Based on an appraised value of $165,000, (R. at 100), less Johns
remaining mortgage balance of $87,000, (R. at 101).
Rita and James opened a joint checking account once they were married,
and Rita deposited the net proceeds from the sale of her house, $25,158.55,
in the joint checking account. Rita also deposited all of her paychecks
in the joint checking account after the couple was married. James, on
the other hand, had a separate business account which was not shared with
Rita and to which Rita had no access. The trial court found
that checks totaling $32,044.77 were written on the parties joint checking account for
supplies, appliances, and materials for the house at issue. Although it is
disputed whether and how much money James contributed to the joint accounts during
the marriage, James, who took a leave of absence for a period of
four months during the marriage, admitted that he had less than $5,000 in
the account at the time he married Rita.
The only indication in the record that the value increase was due
to market conditions was a statement made by James claiming that the increase
was because the [p]roperty values go up regardless. The house was sold
to John in 1993 for $128,000 and was appraised at $165,000 in 1997,
an increase of $37,000 in less than four years. The trial court
found the remodeling cost was $32,044.77. As a result, it seems clear
that the remodeling done to the house in the amount of $32,044.77 contributed
the bulk, if not all, of the increased value of the house.
In Moore, the Moores owned property that was subject to a first
mortgage and a lien. Id. at 430-31, 352 N.E.2d at 847.
The Moores asked the Linvilles to lend them money to pay off the
encumbrances and other bills incident to the property. Id. at 431, 352
N.E.2d at 847. The Linvilles executed a detailed agreement whereby they lent
the Moores money in exchange for title to the Moores house. Id.
at 431-32, 352 N.E.2d at 847-48. Once the money was paid, title
would be given back to the Moores. Id., 352 N.E.2d at 848.
The Moores fell behind on the payments to the Linvilles. Id.
at 432-33, 352 N.E.2d at 848. Although the court held that the
Linvilles were the fee simple owners of the property, the court ultimately based
its decision on the Moores failure to comply with the requirements of the
agreement to make the payments. Id. at 436, 352 N.E.2d at 850.
This failure to do equity denied the Moores equitable relief. Id.
The court set out several factors that bear on creation of an
equitable mortgage, including: (1) whether pre-transaction negotiations were aimed at protecting the property
from claims of other creditors; (2) whether the grantor has become indebted as
part of the transaction; (3) whether the instruments provided that the grantor could
redeem the land by performing certain conditions within a certain time; (4) whether
the grantee gave inadequate consideration for the transaction; (5) whether the grantor paid
interest to the grantee; (6) whether the grantor retained control, possession, and use
of the property where no rent was fixed or paid; (7) whether the
grantor improved the real estate, which a tenant would not likely do; and
(8) whether the grantee did not exercise any control or ownership of the
property. Id. at 434-35, 352 N.E.2d at 849-50.
There is some discrepancy in the record as to exactly how much
John paid his son for the house. John testified that James owed
him $37,000. The closing statement shows the father paid $39,008.98, but that
amount may include miscellaneous adjustments that are not explained in the record, such
as accrued taxes.
The trial court found that the real estate at issue was subject
to two mortgages. The first mortgage was with Crown Mortgage in the
amount of $89,600. This was taken out as the first transfer to
John. The second was with Household Finance Corporation in the amount of
$18,000. The trial court found that the second mortgage was executed by
James and his father after the dissolution of marriage was filed, and was
in direct violation of the Courts order. Because these proceeds were in
Johns hands, this mortgage was properly disregarded in calculating the equity for division
of the real estate.
The following exchange took place during the hearing:
Attorney: Do you believe you have an equity interest in this home?
Attorney: And what do you believe your equity interest is? How
much is it?
John: We have a gift equity there when I purchased the home
so its right around thirty-seven thousand dollars . . . .
Attorney: Do you believe that you have accumulated any equity in this home
during the period of time that Rita and James were married?
John: I suppose whatever the real estate market how it climbed, I
have no idea.
Attorney: But youre not claiming any other equity in the home? .
John: You mean money-wise?
John: No, all I want is whatever I put into it and
if the home had sold to someone else or to him whatever the
selling price is, if I get my money out of it, whatever is
left over if theres anything, why.
A contract for the sale of land is subject to the Statute
of Frauds. Ind. Code § 32-2-1-1 (1998). However, this
transfer does not fall within the purview of the Statute of Frauds for
several reasons. First, in my view, this transaction is not incident to
an agreement for the sale of land, but rather an agreement to lend
money secured by title to James house. Second, even if this transaction
is viewed as a sale of land, this would fall within an exception
to the Statute of Frauds because part performance of the agreement was exhibited
when Rita and James continued possession of the house and made several improvements
to the land. Cf. Dupont Feedmill Corp. v. Standard Supply Corp., 182
Ind. App. 459, 463, 395 N.E.2d 808, 811 (1979) (Circumstances generally held sufficient
to invoke the doctrine of part performance as an exception to the Statute
of Frauds are some combination of the following: payment of the purchase price
or a part thereof, possession, and lasting and valuable improvements on the land.).
Finally, John would be estopped from denying a contract existed based on
the theory of promissory estoppel because all parties involved admitted an oral agreement
existed. Cf. Wabash Grain, Inc. v. Bank One, 713 N.E.2d 323, 326
(Ind. Ct. App. 1999) (where estoppel has been established by showing that other
partys refusal to carry out terms of agreement resulted in unjust and unconscionable
injury and loss, a case may be removed from the operation of the
statute of frauds).
Indiana Trial Rule 20(A)(2) provides:
All persons may be joined in one  action as defendants if there
is asserted against them jointly, severally, or in the alternative, any right to
relief in respect of, or arising out of, the same transaction, occurrence, or
series of transactions or occurrences and if any question of law or fact
common to all defendants will arise in the action.