ILNews

COA: Tractor sale contract not enforceable

Back to TopCommentsE-mailPrintBookmark and Share

The Indiana Court of Appeals says it’s against public policy to uphold any civil contract that’s based on an illegal action, and so the court says it won’t create a rule allowing that transaction agreement to be enforced.

An 18-page ruling came May 19 in James S. Tracy v. Steve Morell, et al., No. 59A01-1009-PL-488, affirming in part and reversing in part an Orange County judge’s decision about a tractor transaction where the identification number appears to have been illegally removed.

This case involves a fraud and counter-claim stemming from the 2002 sale of a used Ford Holland farm tractor with an altered identification number, which James Tracy agreed to buy for $12,500 and set up payments on. Tracy paid $8,500, but stopped making payments in 2003 and left about $4,000 outstanding. A few months after that, prosecutors charged Steve Morrell with four counts of receiving stolen tractors and farm equipment. Tracy learned of the situation and contacted the Orange County Sheriff’s Office to inform them of the tractor he’d purchased and had been paying on. Police inspected the tractor and found the ID number had been illegally altered, but after impounding it they closed that investigation because of prohibitive costs in determining who might have owned the tractor. Morrell pleaded guilty to the pending felony stolen property counts that also involved altered numbers, but it didn’t involve Tracy’s tractor.

That led to Tracy’s fraud allegations, and a counter-claim by Morrell that Tracy had defaulted on the promissory note the two had exchanged as part of the sale. Following a bench trial, Circuit Judge James Blanton dismissed Tracy’s complaint with prejudice for failing to meet his burden of proof on fraud and concluded that he owed Morrell $4,000 because it was an enforceable contract.

On appeal, the three-judge appellate panel determined enough evidence existed for the trial judge to rule on the merits and that there was no reason why he should have dismissed Tracy’s claim. Though Judge Blanton didn’t err when he held Tracy failed to meet his burden of proof on the fraud claim, the appellate court found that the contract is unenforceable because of a mutual mistake of fact between the parties and the contract violates public policy.

Specifically, the appeals judges looked to Indiana Code 35-43-4-2.3 that made it a crime to deal in altered property. Even though the state abandoned its attempt to prove that Morrell had stolen the specific tractor at issue here and Tracy didn’t prove to the trial court’s satisfaction that a crime had been committed or that there had been a violation of the Crime Victim’s Relief Act, the court said that doesn’t end the inquiry about whether this contract is enforceable.

“The tractor’s identification number was destroyed, and we can think of no lawful reason why the number was ground down, filled in with putty and painted over,” Judge Edward Najam wrote. “Rather, the only purpose for concealing the true identity of the tractor was to move the property outside the stream of lawful commerce into a secondary or ‘black market.’ We decline to adopt a rule that someone may sell altered property with impunity and then claim ignorance as a complete defense in a civil action from the sale. Such a rule would violate public policy because in the sale of personal property, unless otherwise agreed, the seller’s ownership free and clear of liens and encumbrances is presumed. Here, the tractor was encumbered by an altered identification number. Whether or not a crime occurred, and whether or not statutory relief is available under the Crime Victim’s Relief Act, the law should not permit a seller to transfer property with an altered identification number without being held accountable for it.”

The appellate court ordered that Tracy has no further obligation on the promissory note and he’s entitled to a rescission of the tractor sale contract and monetary judgment in the amount he’d paid with interest.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  2. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

  3. This outbreak illustrates the absurdity of the extreme positions taken by today's liberalism, specifically individualism and the modern cult of endless personal "freedom." Ebola reminds us that at some point the person's own "freedom" to do this and that comes into contact with the needs of the common good and "freedom" must be curtailed. This is not rocket science, except, today there is nonstop propaganda elevating individual preferences over the common good, so some pundits have a hard time fathoming the obvious necessity of quarantine in some situations....or even NATIONAL BORDERS...propagandists have also amazingly used this as another chance to accuse Western nations of "racism" which is preposterous and offensive. So one the one hand the idolatry of individualism has to stop and on the other hand facts people don't like that intersect with race-- remain facts nonetheless. People who respond to facts over propaganda do better in the long run. We call it Truth. Sometimes it seems hard to find.

  4. It would be hard not to feel the Kramers' anguish. But Catholic Charities, by definition, performed due diligence and held to the statutory standard of care. No good can come from punishing them for doing their duty. Should Indiana wish to change its laws regarding adoption agreements and or putative fathers, the place for that is the legislature and can only apply to future cases. We do not apply new laws to past actions, as the Kramers seem intent on doing, to no helpful end.

  5. I am saddened to hear about the loss of Zeff Weiss. He was an outstanding member of the Indianapolis legal community. My thoughts are with his family.

ADVERTISEMENT