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. I think the cops are doing a great job locking up criminals. The Murder rates in the inner cities are skyrocketing and you think that too any people are being incarcerated. Maybe we need to lock up more of them. We have the ACLU, BLM, NAACP, Civil right Division of the DOJ, the innocent Project etc. We have court system with an appeal process that can go on for years, with attorneys supplied by the government. I'm confused as to how that translates into the idea that the defendants are not being represented properly. Maybe the attorneys need to do more Pro-Bono work

  2. We do not have 10% of our population (which would mean about 32 million) incarcerated. It's closer to 2%.

  3. If a class action suit or other manner of retribution is possible, count me in. I have email and voicemail from the man. He colluded with opposing counsel, I am certain. My case was damaged so severely it nearly lost me everything and I am still paying dearly.

  4. There's probably a lot of blame that can be cast around for Indiana Tech's abysmal bar passage rate this last February. The folks who decided that Indiana, a state with roughly 16,000 to 18,000 attorneys, needs a fifth law school need to question the motives that drove their support of this project. Others, who have been "strong supporters" of the law school, should likewise ask themselves why they believe this institution should be supported. Is it because it fills some real need in the state? Or is it, instead, nothing more than a resume builder for those who teach there part-time? And others who make excuses for the students' poor performance, especially those who offer nothing more than conspiracy theories to back up their claims--who are they helping? What evidence do they have to support their posturing? Ultimately, though, like most everything in life, whether one succeeds or fails is entirely within one's own hands. At least one student from Indiana Tech proved this when he/she took and passed the February bar. A second Indiana Tech student proved this when they took the bar in another state and passed. As for the remaining 9 who took the bar and didn't pass (apparently, one of the students successfully appealed his/her original score), it's now up to them (and nobody else) to ensure that they pass on their second attempt. These folks should feel no shame; many currently successful practicing attorneys failed the bar exam on their first try. These same attorneys picked themselves up, dusted themselves off, and got back to the rigorous study needed to ensure they would pass on their second go 'round. This is what the Indiana Tech students who didn't pass the first time need to do. Of course, none of this answers such questions as whether Indiana Tech should be accredited by the ABA, whether the school should keep its doors open, or, most importantly, whether it should have even opened its doors in the first place. Those who promoted the idea of a fifth law school in Indiana need to do a lot of soul-searching regarding their decisions. These same people should never be allowed, again, to have a say about the future of legal education in this state or anywhere else. Indiana already has four law schools. That's probably one more than it really needs. But it's more than enough.

  5. This man Steve Hubbard goes on any online post or forum he can find and tries to push his company. He said court reporters would be obsolete a few years ago, yet here we are. How does he have time to search out every single post about court reporters and even spy in private court reporting forums if his company is so successful???? Dude, get a life. And back to what this post was about, I agree that some national firms cause a huge problem.