John Henderson v. Tina Henderson ( 2019 )

FILED
Dec 18 2019, 8:38 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Christopher J. Evans Kathryn H. Burroughs
Dollard Evans Whalin LLP Monty K. Woolsey
Noblesville, Indiana Nancy L. Cross
Cross Glazier Burroughs, P.C.
Carmel, Indiana
IN THE
COURT OF APPEALS OF INDIANA
John Henderson, December 18, 2019
Appellant-Petitioner, Court of Appeals Case No.
19A-DC-1517
v. Appeal from the Hamilton
Superior Court
Tina Henderson, The Honorable David K. Najjar,
Appellee-Respondent Special Judge
Trial Court Cause No.
29D05-1702-DC-1121
Crone, Judge.
Case Summary
[1] John Henderson (“Husband”) appeals the trial court’s findings of fact,
conclusions thereon, and judgment (“the Order”) dissolving his marriage to
Tina Henderson (“Wife”) and dividing their marital estate. Husband argues
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 1 of 16
that the trial court erred by including his contractual interest in certain real
estate in the marital estate, valuing that real estate, and excluding certain
evidence. Finding no error, we affirm.
Facts and Procedural History
[2] In August 2000, Husband and Wife married. Husband is a farmer, and Wife is
a self-employed grant administrator. They had two children during the
marriage, and Wife was pregnant when the parties’ marriage was dissolved.
[3] In March 2010, Husband entered into a contract (“the Contract”) with Deborah
Hoover and Ruthanne Bowser (“Sellers”) to purchase 37.93 acres in Tipton
(“the Real Estate”) for $189,650.00, and he paid Sellers $1000 as a down
payment. Amended Ex. Vol. 3 at 68 (Husband’s Ex. 97). 1 Wife is not a party
to the Contract. The Contract requires Husband to make annual payments of
principal and interest in the amount of $15,137.76 for a term of twenty years,
but denies him the “privilege of pre-payment.” Id. at 69. Husband is also
required to pay the taxes on the Real Estate and to keep the Real Estate insured.
Id. The Contract requires Husband to use the Real Estate, and on the date the
Contract was executed, Husband took “full and complete possession of the Real
Estate” and obtained the right to plant crops and to perform all other functions
in connection with farming the Real Estate. Id. at 69. The Contract prohibits
1
Husband’s citations to the record regarding the Contract are completely inaccurate; he cites to the wrong
volumes and the wrong page numbers.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 2 of 16
the Real Estate from being rented, leased, or occupied by any person other than
Husband. Id. at 73. The Contract prohibits both Sellers and Husband from
selling or assigning their interests in the Contract or the Real Estate without the
other party’s written consent, provided, however, that consent shall not be
unreasonably withheld. Id. The Contract also prohibits Sellers from obtaining
a loan secured by a mortgage on the Real Estate. Id. The Contract contains a
forfeiture clause, which provides that if Husband fails to perform as agreed or
make any payments as they become due, “the Contract shall, at the option of
the Sellers, be forfeited and terminated and all payments theretofore made shall
be retained by the Sellers as rent” for the use of the Real Estate. Id. at 74.
Finally, the contract provides that upon Husband’s full performance and the
payment of all sums due under the Contract, Sellers agree to convey to
Husband the Real Estate by warranty deed. Id. at 70.
[4] In February 2017, Husband filed a petition for legal separation from Wife,
which was subsequently converted to one for dissolution. Husband and Wife
agreed to bifurcate the dissolution proceedings, so that property issues would be
decided separately from child-related issues. Mother requested findings of fact
and conclusions thereon pursuant to Indiana Trial Rule 52(A). In December
2018, a hearing was held solely on property issues, after which, the trial court
took the matter under advisement.
[5] In May 2019, the trial court issued the Order, dissolving the parties’ marriage
and dividing the marital estate; the child-related issues were addressed in a
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 3 of 16
subsequent order and are not in issue here. The Order provides in relevant part
as follows:
29. Husband is party to a land contract for the purchase of 37.93
acres of real estate located on S.R. 28, in Tipton, Indiana.
Husband entered into the land contract in March of 2010 and
made payments during the marriage from marital assets.
Husband also insured the property and paid taxes from marital
assets during the marriage. Husband farms the land that he is
purchasing on contract. The parties dispute the date of filing
value of the real estate as well as the payoff amount.
Wife contends the amount owed is $118,000 as represented by
the parties on financial statements to Farmers’ Bank. Husband
contends the payoff balance is $139,000, which matches
testimony and exhibits submitted at the final hearing by Donna
Lehman, a CPA who had done work for both parties in their
individual capacities as well as their business interests. A real
estate appraisal by Comer Real Estate states the value of the real
estate is $303,600 as of September 15, 2017. Wife contends the
real estate is worth $379,300 or $10,000 per acre, which is the
value the parties used on a financial statement prior to the date of
filing submitted to Farmers’ Bank.
30. The Court finds the value of the real estate is $303,600 and
the amount owed on the property is $139,000.
Appealed Order at 7. The trial court included the value of the Real Estate and
the amount due on the Contract in the marital estate and calculated the marital
estate’s net worth to be $903,261.03. Id. at 5-6, 10, 12 (findings 24 and 48).
The trial court found that Husband had rebutted the presumption that an equal
division of the marital estate would be just and reasonable and awarded him
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 4 of 16
55% of the marital estate and Mother 45%. The Order awarded Husband the
contractual interest in the Real Estate, providing as follows: “Husband shall
also be solely responsible for the remaining balance owed on [the Contract] and
shall receive the contractual interest in the 37.93 acres on State Road 28 in
Tipton, Indiana free and clear of any claim of Wife.” Id. at 14. Husband was
also awarded the marital residence and was ordered to refinance the mortgage
and remove Wife from all liability for the mortgage. When the refinancing was
completed, Wife was ordered to execute a quitclaim deed transferring her
interest in the marital residence to Husband. To achieve an equitable division,
Husband was ordered to pay Wife $257,504.47. Husband appeals.
Discussion and Decision
[6] Here, the trial court entered findings of fact and conclusions thereon at Wife’s
request. Our standard of review is well established:
Where the trial court has entered special findings of fact and
conclusions thereon, our court will “not set aside the findings or
judgment unless clearly erroneous, and due regard shall be given
to the opportunity of the trial court to judge the credibility of the
witnesses.” Ind. Trial Rule 52(A). Under our … two-tiered
standard of review, we must determine whether the evidence
supports the findings and whether those findings support the
judgment. We consider the evidence most favorable to the trial
court’s judgment, and we do not reweigh evidence or reassess the
credibility of witnesses. We will find clear error only if the record
does not offer facts or inferences to support the trial court’s
findings or conclusions of law.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 5 of 16
B.L. v. J.S., 59 N.E.3d 253, 258-59 (Ind. Ct. App. 2016) (citations and quotation
marks omitted), trans. denied. We accept unchallenged findings as true.
McMaster v. McMaster, 681 N.E.2d 744, 747 (Ind. Ct. App. 1997).
Section 1 – The trial court did not err by including Husband’s
contractual interest in the Real Estate in the marital estate.
[7] Husband contends that findings 24, 29, 30, and 48 of the Order are clearly
erroneous insofar as they treat the value of his contractual interest in the Real
Estate as a divisible marital asset. 2 In addressing his contention, we are guided
by the following principles:
[I]n a dissolution action, all marital property goes into the marital
pot for division, whether it was owned by either spouse before
the marriage, acquired by either spouse after the marriage and
before final separation of the parties, or acquired by their joint
efforts. Ind. Code § 31-15-7-4(a). For purposes of dissolution,
property means all the assets of either party or both parties. Ind.
Code § 31-9-2-98. The requirement that all marital assets be
placed in the marital pot is meant to insure that the trial court
first determines that value before endeavoring to divide property.
Indiana’s “one pot” theory prohibits the exclusion of any asset in
which a party has a vested interest from the scope of the trial
court’s power to divide and award. While the trial court may
decide to award a particular asset solely to one spouse as part of
its just and reasonable property division, it must first include the
asset in its consideration of the marital estate to be divided. The
2
Husband does not challenge the trial court’s findings that he made payments on the Contract and paid for
the insurance and property taxes on the Real Estate using marital assets during the marriage. Appealed
Order at 7 (finding 29).
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 6 of 16
systematic exclusion of any marital asset from the marital pot is
erroneous.
Falatovics v. Falatovics, 15 N.E.3d 108, 110 (Ind. Ct. App. 2014) (emphasis in
Falatovics omitted) (citations and quotation marks omitted).
[8] Specifically, Husband argues that the Real Estate is not a divisible marital asset
because it is not owned by the parties. See Estudillo v. Estudillo, 956 N.E.2d
1084, 1091 (Ind. Ct. App. 2011) (“[A] trial court may not distribute property
not owned by the parties.”). According to Husband, (1) Sellers are the titled
owners of the Real Estate; (2) Husband’s “standing relative to the Real Estate is
that of a purchaser having certain contractual rights who, conditionally, may
eventually receive legal title to the Real Estate assuming fulfillment of certain
terms and obligations as set forth within the Contract”; and (3) to the extent
Husband has an interest in the Real Estate, “it an equitable interest which the
trial court is without authority to distribute.” Appellant’s Br. at 10. To support
his position, Husband relies on the following general rule: “[A]n 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.
(quoting Estudillo, 956 N.E.2d at 1091). This rule has been acknowledged
several times by Indiana courts, including the Indiana Supreme Court, and
appears to have originated in In re Marriage of Dall, 681 N.E.2d 718, 722 (Ind.
Ct. App. 1997). See Vadas v. Vadas, 762 N.E.2d 1234, 1235-36 (Ind. 2002)
(quoting Dall); Estudillo, 956 N.E.2d at 1091 (citing Dall); Nicevski v. Nicevski,
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 7 of 16
909 N.E.2d 446, 449 (Ind. Ct. App. 2009) (quoting Dall), trans. denied; In re
Marriage of Bartley, 712 N.E.2d 537, 545 (Ind. Ct. App. 1999) (citing Dall).
[9] We begin our analysis with an examination of Dall. There, the wife’s parents
purchased a lot and provided nearly all the resources to build a home on the lot
for the wife, husband, and their children. When the lot was first acquired, the
parties apparently had an oral agreement that title would be conveyed to the
wife and husband sometime in the future. However, the wife’s mother “refused
the couple’s request to convey title during construction of the home, and the
parties were unable to come to any agreement after that time.” 681 N.E.2d at
720. When the husband filed for dissolution, the wife’s parents still owned
record title to the property.
[10] Despite the fact that the wife’s parents had record title to the property, the trial
court included the value of the property in the Dalls’ marital estate. The wife
appealed, contending that the property was not a marital asset. In addressing
the issue, the Dall court observed,
Case law has long established that an unvested interest in
property is not divisible as a marital asset.... No one has vested
rights in an ancestor’s property until the latter’s death.... Even
some vested interests, such as remainders in which the spouses
have no present possessory interest, are deemed too remote to be
included in a property settlement.
Id. at 722 (quoting Hacker v. Hacker, 659 N.E.2d 1104, 1107 (Ind. Ct. App.
1995)). Thus, the Dall court reasoned, “an equitable interest in real property
titled in a third-party, although claimed by one or both of the divorcing parties,
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 8 of 16
should not be included in the marital estate.” Id. The Dall court concluded
that the trial court improperly included the value of the property in the marital
estate, explaining,
Neither [h]usband nor [w]ife holds a vested interest in the marital
residence, and their purported equitable interest in the property is
indeterminate. …. Nor is there evidence that [w]ife will
definitely acquire title to the home. There are any number of
circumstances that could prevent or discourage [wife’s parents]
from transferring title to [w]ife, thereby preventing her from
acquiring ownership.
Id. The Dall court reversed and remanded and clarified that, at most, “the trial
court may consider the value of the [w]ife’s continued possession and residence
in the home in determining a just and equitable division of the marital assets.”
Id. at 723-24. 3
[11] Significantly, the Dall court attached the following footnote to the rule that an
equitable interest in real property titled in a third party should not be included
in the marital estate:
This rule would not apply where the real estate is titled in a third-party,
and husband and/or wife are the contract purchaser. In that case, the
parties have a vested interest in the contract, which is a marital
asset, and their equitable interest in the real estate is not
indeterminate but is derived from the contract. Neither would the
3
In reaching its decision, the Dall court relied on Hacker, 659 N.E.2d at 1111, in which another panel of this
Court concluded that the trial court, in determining a just and reasonable division of the marital estate,
properly considered husband’s present possessory interest in the family farm on which he lived rent-free as an
economic circumstance of the parties.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 9 of 16
rule apply where the real estate is titled in a partnership,
corporation or other business organization in which the spouse
has an ascertainable interest as a partner, shareholder or member.
Id. at 722 n.5 (emphasis added). Given these limitations, the rule in Dall may
be considered an overstatement. Unfortunately, subsequent cases that cited
Dall did not acknowledge the limitations in the footnote. Those cases,
however, did not involve the circumstances described in the footnote. See
Vadas, 762 N.E.2d at 1235-36 (trial court properly excluded marital home from
marital estate where couple lived in home that husband sold to his father before
couple got married and couple never became financially able to buy back the
house as expected); Estudillo, 956 N.E.2d at 1091 (trial court did not err in
excluding real estate from marital estate where, just prior to wife’s filing for
dissolution, husband transferred title to real estate to his adult daughter from a
prior relationship); Nicevski, 909 N.E.2d at 449 (trial court erred in including
marital home in marital estate where husband and wife lived in marital home
legally titled to husband’s parents, husband and wife disputed origin of money
used to purchase the home, and husband’s parents were not joined as necessary
nonparties); Marriage of Bartley, 712 N.E.2d at 545 (social security widow’s
benefits from prior marriage that she forfeited during her marriage to husband
could not be considered in distributing marital estate).
[12] Returning to Husband’s claim that any interest he has in the Real Estate is an
equitable interest and, pursuant to Dall, an equitable interest should not be
included in the marital estate, we observe that Husband does not acknowledge
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 10 of 16
the Dall court’s footnote that “the rule does not apply where the real estate is
titled in a third-party, and husband and/or wife are the contract purchaser.”
618 N.E.2d at 722 n.5. Here, unlike Dall and the aforementioned cases,
Husband and Sellers have executed a written contract for Husband’s purchase
of the Real Estate. Husband has a vested interest in the Contract, and his
equitable interest in the Real Estate is not indeterminate but is derived from the
Contract. See id. He will obtain title to the Real Estate upon his full
performance with and payment of the amount due under the Contract. As
such, the general rule announced in Dall, that an equitable interest in real
property titled in a third party should not be included in the marital estate, does
not apply to the circumstances present in this case.
[13] Our supreme court’s discussion in Skendzel v. Marshall, 261 Ind. 226, 301
N.E.2d 641 (1973), regarding the ownership of property purchased via land
contract supports our determination. In Skendzel, our supreme court held as
follows:
Under a typical conditional land contract, the vendor retains
legal title until the total contract price is paid by the vendee.
Payments are generally made in periodic installments. Legal title
does not vest in the vendee until the contract terms are satisfied,
but equitable title vests in the vendee at the time the contract is
consummated. When the parties enter into the contract, all
incidents of ownership accrue to the vendee. The vendee assumes
the risk of loss and is the recipient of all appreciation in value.
The vendee, as equitable owner, is responsible for taxes. The
vendee has a sufficient interest in land so that upon sale of that
interest, he holds a vendor’s lien.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 11 of 16
This Court has held, consistent with the above notions of
equitable ownership, that a land contract, once consummated
constitutes a present sale and purchase. The vendor has, in
effect, exchanged his property for the unconditional obligation of
the vendee, the performance of which is secured by the retention
of the legal title. The Court, in effect, views a conditional land
contract as a sale with a security interest in the form of legal title
reserved by the vendor. Conceptually, therefore, the retention of
the title by the vendor is the same as reserving a lien or mortgage.
Realistically, vendor-vendee should be viewed as mortgagee-
mortgagor. To conceive of the relationship in different terms is to
pay homage to form over substance.
Id. at 234, 301 N.E.2d at 646 (citations and quotation marks omitted).
[14] Here, pursuant to the Contract, Husband enjoys full use and occupancy of the
Real Estate, pays taxes on it, and maintains the insurance. He, not Sellers,
bears the risk of loss and will benefit from any appreciation in value of the Real
Estate. Upon Husband’s full performance and payment of all sums due under
the Contract, the Sellers are obligated to convey to Husband the Real Estate by
warranty deed. Sellers’ retention of the legal title to the Real Estate is akin to a
mortgage on the Real Estate. Husband argues that given the many restrictions
in the Contract, it should be considered more like an automobile lease. We are
unpersuaded. Accordingly, we conclude that the trial court did not err by
including Husband’s contractual interest in the Real Estate in the marital estate.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 12 of 16
Section 2 – The trial court did not abuse its discretion in
valuing the Real Estate.
[15] Husband also contends that the trial court erred in valuing the Real Estate. “We
review a trial court’s decision in ascertaining the value of property in a
dissolution action for an abuse of discretion.” Balicki v. Balicki, 837 N.E.2d 532,
536 (Ind. Ct. App. 2005), trans. denied (2006). Generally, a trial court does not
abuse its discretion if the court’s chosen valuation is within the range of values
supported by the evidence. Crider v. Crider, 15 N.E.3d 1042, 1056 (Ind. Ct. App.
2014), trans. denied. “[T]he burden of producing evidence as to the value of the
marital property rests squarely ‘on the shoulders of the parties and their
attorneys.’” Galloway v. Galloway, 855 N.E.2d 302, 306 (Ind. Ct. App. 2006)
(quoting Perkins v. Harding, 836 N.E.2d 295, 302 (Ind. Ct. App. 2005)). “A
valuation submitted by one of the parties is competent evidence of the value of
property in a dissolution action and may alone support the trial court’s
determination in that regard.” Alexander v. Alexander, 927 N.E.2d 926, 935 (Ind.
Ct. App. 2010) (quoting Houchens v. Boschert, 758 N.E.2d 585, 590 (Ind. Ct.
App. 2001), trans. denied), trans. denied.
[16] Here, Husband submitted an appraisal valuing the Real Estate at $303,000.
Wife provided evidence that the Real Estate was worth $379,000. The trial
court weighed the evidence and determined that the value of the Real Estate
was $303,000. On appeal, Husband argues that the trial court erred in relying
on the appraiser’s valuation because the valuation was based on a fee simple
interest that could be sold in an unrestricted sale. Husband maintains that his
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 13 of 16
interest in the Real Estate is restricted because the Contract does not permit him
to prepay the purchase price or sell or assign his interest without the Sellers’
consent, and he has no current ability to leverage or liquidate any equity that he
may have. He also asserts that under the terms of the Contract, his interest in
the Real Estate could be forfeited.
[17] We observe that Husband submitted the appraisal he now takes issue with and
called the appraiser as a witness but did not question her as to how the Contract
provisions affected the value of his interest in the Real Estate. Other than the
appraisal and Wife’s valuation evidence, Husband directs us to no evidence in
the record assigning a value to the Real Estate. We conclude that the trial
court’s valuation of the Real Estate is supported by the evidence and therefore
find no abuse of discretion.
Section 3 – The trial court did not abuse its discretion in
excluding evidence.
[18] Finally, Husband asserts that the trial court erred in excluding testimony from
Hoover (one of the Sellers) and corresponding exhibits. We review a trial
court’s decision to admit or exclude evidence for an abuse of discretion. Reed v.
Bethel, 2 N.E.3d 98, 107 (Ind. Ct. App. 2014). A trial court does not abuse its
discretion unless its decision is clearly against the logic and effect of the facts
and circumstances before it. Id. Any error in a ruling to admit or exclude
evidence does not constitute reversible error unless it affects a substantial right
of the party. Ind. Evidence Rule 103.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 14 of 16
[19] At trial, Husband attempted to elicit testimony from Hoover “to illuminate
certain conditions of the [C]ontract” and to explain “why she, as Seller, would
not allow [Husband] to sell or assign his interest in the [C]ontract and would be
deemed reasonable in reaching such a decision.” Appellant’s Br. at 16. At this
point, the Contract had already been admitted. Wife objected to the proposed
testimony and the corresponding exhibits on the grounds that the terms of the
Contract spoke for themselves, the trial court could interpret the Contract
within its four corners, and parol evidence was inappropriate. The trial court
sustained the objection and excluded the evidence.
[20] Husband submitted exhibits 226 and 247 as offers of proof. Second Amended
Ex. Vol. 6 at 3, 5-6. Exhibit 247 is a list, prepared by Hoover and Husband’s
trial attorney, of reasons that Husband’s sale of the Real Estate would be
unreasonable. Apparently, Husband wanted to establish how difficult it would
be to obtain Sellers’ consent for him to sell his interest. The extreme difficulty
in obtaining such consent, according to Husband, affects the value of his
interest. Husband asserts that the evidence bore only on valuation and not the
interpretation of the Contract. We disagree. The evidence clearly was meant to
show Hoover’s interpretation of the Contract provision that prohibited Sellers
and Husband from selling or assigning their interests in the Contract and Real
Estate without written consent of the other, provided, however, that “any
consent shall not be unreasonably withheld.” Amended Ex. Vol. 3 at 73.
[21] “Interpretation and construction of contract provisions are questions of law.”
John M. Abbott, LLC v. Lake City Bank, 14 N.E.3d 53, 56 (Ind. Ct. App. 2014).
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 15 of 16
The four corners rule states that where the language of a contract
is unambiguous, the parties’ intent is to be determined by
reviewing the language contained within the “four corners” of
the contract, and “parol or extrinsic evidence is inadmissible to
expand, vary, or explain the instrument unless there has been a
showing of fraud, mistake, ambiguity, illegality, duress or undue
influence.”
Id. (quoting Adams v. Reinaker, 808 N.E.2d 192, 196 (Ind. Ct. App. 2004)).
Based on the four corners rule, we conclude that the trial court did not abuse its
discretion in excluding exhibit 247 and any testimony based on it. Aside from
the four corners rule, we observe that Hoover’s reasons justifying her opinion
that Husband’s sale of the Real Estate would be unreasonable are purely
speculative, since no sale of any kind was under consideration and the
circumstances surrounding any possible future sale are unknown.
[22] Exhibit 226 purports to be a list of some of the provisions in the Contract.
Exhibit 226 offered nothing that was not already in the Contract. As such, the
trial court did not abuse its discretion in excluding exhibit 226 and testimony
based on it.
[23] Based on the foregoing, we affirm the trial court’s order.
[24] Affirmed.
May, J., and Pyle, J., concur.
Court of Appeals of Indiana | Opinion 19A-DC-1517 | December 18, 2019 Page 16 of 16