Bowman Agri-Corp v. First Farmers National Bank , 1990 Ind. App. LEXIS 1443 ( 1990 )

HOFFMAN, Presiding Judge.

Defendant-appellant Bowman Agri-Corp appeals the trial court's grant of summary judgment to First Farmers National Bank.

The facts relevant to this appeal disclose that Bowman Agri-Corp is a family farming operation that was organized in the mid-1970's. Over the course of the years, Bowman constructed a grain elevator to augment its farming business. The elevator is used primarily by Bowman in its farming operation for grain drying and storage but excess storage is, from time to time, made available to neighboring farmers for their grain.

Norman Hill, now deceased, and Steve Hill conducted a family farming operation under the name of "Hill Farms." Hill Farms borrowed money from First Farmers National Bank for many years. In 1982, Hill Farms defaulted in its obligations to First Farmers. A promissory note was executed in the amount of $489,-485.30, which was a renewal of prior loans to Hill Farms.

By the spring of 1985, Hill Farms was without funds with which to put out a crop for the 1985 crop year. First Farmers declined to advance any further funds to Hill Farms.

In April 1985, Norman Hill approached Charles Bowman and requested assistance in the form of sufficient chemical and fertilizer to enable Hill Farms to put out a crop. Bowman contends that Hill Farms agreed to pay Bowman for the supplies advanced out of the proceeds from the sale of the 1985 crops. Although Bowman advanced the chemical and fertilizer, Bowman did not receive a written security agreement from Hill Farms nor did it file a financing statement. However, according to Charles Bowman, he spoke with Max Custer at First Farmer before loaning Hill Farms the chemical and fertilizer and was assured First Farmers did not have a lien on Hill Farms' 1985 crop; First Farmers would not advance additional funds to Hill Farms; and First Farmers would not take a lien on Hill Farms' 1985 erop.

Two days later, Charles Bowman stated that he again phoned Max Custer at First Farmers and Custer again confirmed that First Farmers did not have a lien on Hill Farms' 1985 crops, and again confirmed that First Farmers would not seek a lien on that crop. Bowman then provided the chemical and fertilizer to Hill Farms.

However in May 1985, Max Custer of First Farmers presented the option to Hill Farms of either executing a security agreement for the 1985 crop as further security for the existing debt or have its equipment repossessed and a foreclosure action initiated on its real estate. Hill Farms executed the security agreement and First Farmers recorded the financing statement.

In May and October of 1985, First Farmers sent letters notifying Bowman of its lien and directing Bowman to issue joint checks to Hill Farms and First Farmers for any payment for Hill Farms' grain. In the fall of 1985, the crops were harvested and delivered to Bowman's grain elevator. Bowman settled its account with Hill Farms on March 26, 1986 by giving Hill Farms a credit and paying the surplus to Mark Hill. After First Farmers learned that Bowman had failed to recognize its lien on the Hill Farms' 1985 crops, it filed suit.

Because of our decision, one issue is dis-positive of this appeal: whether the trial court erred in granting summary judgment when a genuine issue of material fact exists on Bowman's claim of promissory estoppel.

Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavit and testimony, if any, show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Creighton v. Caylor-Nickel Hosp., Inc. (1985), Ind.App., 484 N.E.2d 1303, 1305-1306.

There are four elements in the doctrine of promissory estoppel. The doctrine applies where there is (1) a promise, (2) which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character, (8) which does, in fact, induce such action or forbearance, and (4) injustice can only be avoided by enforcement of the promise. Tipton County Farm Bureau Co-op v. Hoover (1985), Ind.App., 475 N.E.2d 38, 41. This doctrine is applicable in cases involving commercial transactions as well as those involving gratuitous promises. Lyon Metal Prod., Inc. v. Hagerman Const. Corp. (1979), 181 Ind.App. 336, 391 N.E.2d 1152.

Clearly the above-stated facts raise a question as to whether First Farmers made a promise to Bowman that it would not take a lien on Hill Farms' 1985 crop. If the answer to that question is in the affirmative, it must be decided (1) whether First Farmers should have reasonably expected Bowman to loan the chemical and fertilizer to Hill Farms and forego perfecting its security interest, (2) whether the promise did, in fact, cause Bowman to act as it did, and (8) whether injustice can only be avoided by enforcement of First Farmers' promise. Whether each of these elements is fulfilled is a question of fact for the trier of fact to decide. Therefore, the trial court's grant of summary judgment is reversed and this case is remanded for trial.

Reversed and remanded.

BAKER, J., concur. GARRARD, J., dissents with opinion.