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Judges find certain property not included in sheriff's sale

October 31, 2011

The Indiana Court of Appeals relied on a decision from Colorado to rule on a case involving the sale of business personal property at a sheriff’s sale when the notice only mentioned the sale of real property.

Lorenzo and Joette Surrisi appealed the Marshall Circuit Court order that said their real and business personal property were sold to James Bremner at a sheriff’s sale. The Surrisis owned City Tavern in Culver and lived on the premises. Bremner loaned the couple money in return for a security interest in their alcohol beverage permit and a real estate mortgage, security agreement and fixture filing – all of which granted in the case of a default, a mortgage on the property and security interest in all personal property and fixtures, including those owned by the Surrisis for their personal use.

The Surrisis defaulted and the parties agreed that the real property and personal property would be sold at a sheriff’s sale. But the praecipe for sheriff’s sale and the notice posted about the sheriff’s sale only mentioned real property. Before the sale, the Surrisis removed all their personal property. Bremner was the highest bidder at the sale.

At a hearing, the trial court judge found that the sale of the business personal property was adequately supported by the agreed judgment, the post-judgment agreements of the party and the bill of sale issued by the sheriff.

In Lorenzo Surrisi, Individually and d/b/a City Tavern and Joette Surrisi, Individually and d/b/a City Tavern v. James D. Bremner, No. 50A04-1102-MF-83, the appellate court agreed with the Surrisis that the bill of sale was faulty because according to the praecipe of sale, notice of sale and tax documentation, only the real property was subject to the sheriff’s sale. The judges couldn’t find an Indiana case with similar facts, so it turned to the Colorado appellate court decision Van Egmond v. Horsman, 10 P.3d 715 (Colo. App. 2000). Just as in the instant case, those parties agreed that the real and personal property used to secure a promissory note would be sold at a sheriff’s sale, but only the real property was every listed. The highest bidder, Van Egmond, argued that the personal property subject to the settlement agreement was sold as part of the sheriff’s sale, but the Colorado Court of Appeals disagreed because no notice of sale was given with respect to the personal property.

“The Surrisis knew their personal property could be subject to a sheriff’s sale, but the notice of this sale listed only the real property. Nothing in the settlement agreement requires that the real and personal property be sold at the same sale, so a person reading the Notice, even one aware of the Agreed Judgment, would presume that only the real property was to be sold,” wrote Judge Melissa May.

The COA remanded for the vacation of the portion of the court order indicating that the sheriff’s sale included the business personal property. The COA told the court to determine the amount of compensation due to the Surrisis for the loss of their business personal property since Bremner had sold the restaurant and business personal property to a third party.
 

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