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. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  4. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  5. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.