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Justices: Agreement was impermissibly modified

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A LaPorte Superior judge made an impermissible modification to a divorced couple's settlement agreement by giving the bank's lien on the family farm priority over the ex-wife's lien, the Indiana Supreme Court ruled today.

In their dissolution agreement, Robert Johnson agreed to pay Gina Johnson her interest in a family farm through a series of lump sums and installment payments until 2013. To operate the farm, Robert would take out a loan at the bank every April 15 to finance seasonal expenses, which is repaid after fall harvest. The line of credit is secured by an all-assets security agreement that is cross-collateralized with all other collateral with the bank as well as personal guarantees from the farm's owners. The bank requires first position on all assets securing the farm's debt.

The bank required Robert to get an agreement from Gina ensuring her interests in the farm wouldn't subordinate its own. Gina refused so Robert sought a declaratory order subordinating her lien, which the trial court granted.

The Supreme Court reversed in Gina Johnson v. Robert Johnson, No. 46S04-0907-CV-346. At issue is whether Gina agreed to waive her priority on lines of credit entered into after the settlement only up to the amount taken out for the farm's operations in the past or whether she waived her priority without limit. Robert attempted to take out money to cover the farm expenses as well as covering the payments he needed to make to Gina.

The agreement is silent on this issue, but the Supreme Court found the agreement undeniably assumes for the farm's continued operation in the manner Gina had grown accustomed, which requires renewing the lines of credit at issue in the case.

But the funds for Robert to pay Gina aren't implied as necessary to the agreement. Gina may have impliedly agreed to a subordinate position when it comes to the continuing operating expenses of the farm, but she wouldn't have assented to Robert taking on a large amount of debt to finance his payments to her. That would offer her little protection if he defaulted, wrote Chief Justice Randall T. Shepard.

"An order declaring Gina's judgment lien subordinate to the lien securing the annual line of credit would not constitute a modification but an enforcement because it implies the continued financing of the farm's operations," he wrote. "Conversely, an order subordinating her lien to the bank's for amounts over and above such an amount would constitute an impermissible modification."

The justices also noted that if Robert's declarations about the state of his finances are accurate, he may have trouble repaying Gina without financing higher debt on the farm. The justices suggested they negotiate an agreement allowing Robert to meet his obligations and encouraged them to avoid further litigation on the issue.

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  1. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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