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COA: Tractor sale contract not enforceable

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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.

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  1. Im very happy for you, getting ready to go down that dirt road myself, and im praying for the same outcome, because it IS sometimes in the childs best interest to have visitation with grandparents. Thanks for sharing, needed to hear some positive posts for once.

  2. Been there 4 months with 1 paycheck what can i do

  3. our hoa has not communicated any thing that takes place in their "executive meetings" not executive session. They make decisions in these meetings, do not have an agenda, do not notify association memebers and do not keep general meetings minutes. They do not communicate info of any kind to the member, except annual meeting, nobody attends or votes because they think the board is self serving. They keep a deposit fee from club house rental for inspection after someone uses it, there is no inspection I know becausee I rented it, they did not disclose to members that board memebers would be keeping this money, I know it is only 10 dollars but still it is not their money, they hire from within the board for paid positions, no advertising and no request for bids from anyone else, I atteended last annual meeting, went into executive session to elect officers in that session the president brought up the motion to give the secretary a raise of course they all agreed they hired her in, then the minutes stated that a diffeerent board member motioned to give this raise. This board is very clickish and has done things anyway they pleased for over 5 years, what recourse to members have to make changes in the boards conduct

  4. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  5. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

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