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COA reverses ruling in right of contribution case

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The Indiana Court of Appeals used common law today to reverse a judgment in favor of a man suing his business partner for failing to contribute to guarantee payments.

Frank Rogers co-owned two businesses with Equicor Development, in which Gregory Small is president – Plainfield Place and Patriot’s Place. In Plainfield Place, Equicor owned about 40 percent membership interests, Rogers had nearly 54 percent and another man had nearly 6 percent. Equicor and Rogers each owned a 50 percent membership interest in Patriot’s Place.

The men purchased property to develop and entered into loan agreements with Busey Bank on the Plainfield Place land and with Monroe Bank for the Patriot’s Place land. The men executed personal guaranties as security for the promissory notes.

They defaulted on the notes; Rogers paid some money to the banks, but Small did not. Rogers sued Small, asserting a “right of contribution” against him for the amount paid by Rogers in excess of his pro rata share and for the disproportionate benefit received by Small through Equicor’s management fees and real estate commissions. Both men filed for summary judgment; the trial court ruled in favor of Rogers, finding it wasn’t necessary for Rogers to have paid the liability in full and the law finds the right of contribution when one party pays more than his share of the common obligation. It awarded $43,050.47 in damages to Rogers.

But the trial court erred in ruling in favor of Rogers, the appellate court held in Gregory M. Small v. Frank A. Rogers, No. 29A02-1001-PL-30. Using common law because Indiana Code is silent as to the liability between co-guarantors, the Court of Appeals applied the same theory of contribution that has been applied to co-sureties – “the right of contribution operates to make sure those who assume a common burden carry it in equal portions.”  

In order to be entitled to contribution, Rogers had to have paid the debt or more than his proportionate share of it. But the evidence showed he only paid a portion of the amounts due under the promissory notes and far less than his share of the debts.

Judge Carr Darden wrote that Rogers’ reliance on Balvich v. Spicer, 894 N.E.2d 235, 243 (Ind. Ct. App. 2008), is misplaced. In Balvich, the banks reduced the co-guarantors’ debt to two judgments and the Spicers had paid more than their proportionate share, thereby satisfying the judgments. In the instant case, the debt owed by Rogers and Small hadn’t been reduced to judgment, so there can be no satisfaction of the judgment and no discharge of the debt, wrote Judge Darden.

“Rather, in this case, the debt still exists. Rogers did not discharge the debt, either by paying the debt or a judgment on the debt. Furthermore, the amounts paid by Rogers do not constitute more than his proportionate share of the more than $5,000,000.00 of debt incurred,” wrote the judge.

“To hold otherwise would result in a claim for contribution being asserted upon each and every payment made toward a debt until the debt is discharged,” he wrote in a footnote. “Of course, this is not to say that the amounts paid toward a debt cannot, or will not, be credited to the party asserting the right of contribution once the guaranteed debt is discharged.”
 

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  1. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  2. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  3. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  4. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

  5. Linda, I sure hope you are not seeking a law license, for such eighteenth century sentiments could result in your denial in some jurisdictions minting attorneys for our tolerant and inclusive profession.

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