Gainer Bank v. Cosmopolitan National Bank of Chicago
Docket: No. 64A03-9105-CV-127
Court: Indiana Court of Appeals; September 18, 1991; Indiana; State Appellate Court
Gainer Bank and Bongi Cartage, Inc. appeal a summary judgment favoring Cosmopolitan National Bank in its mortgage foreclosure action, raising a consolidated issue regarding a mortgagee's implied duty to facilitate the sale of real estate before foreclosure. The court affirmed the judgment. Bongi Cartage executed a $750,000 promissory note secured by a mortgage from Gainer Bank, which acted as trustee of a trust where Bongi was the sole beneficiary. Bongi defaulted on the note, prompting the Bank to file for foreclosure on January 12, 1990. While Bongi admitted to default, it sought to delay the foreclosure, citing negotiations with The Nature Conservancy for the acquisition of an 80-acre tract of land affected by environmental violations and potential interest from the Gary Sanitary District. Bongi claimed that a lien release from the Bank was necessary for the sale to proceed, but the Bank refused. Despite these claims, the foreclosure continued, resulting in a summary judgment for the Bank on October 28, 1990. Bongi's subsequent motion to correct error was denied on January 7, 1991. In its appeal, Bongi contended that the Bank had a duty not to obstruct its ability to sell the property, referencing precedents related to equitable principles in other contexts. However, the court found these cases inapplicable, noting that the current situation involved a mortgage with an already defaulted mortgagor, which differed significantly from the cited cases.
In Indiana, a mortgagee is statutorily obligated to release a mortgage on real property only upon full payment by the mortgagor, as specified in Ind.Code 82-8-11-5. In this case, Bongi had not made full payment and was in default, thus the mortgagee had no duty to release the mortgage. The bank was acting within its rights to foreclose due to Bongi's default, as outlined in Ind.Code 84-1-58-1. The court found no error in this action and affirmed the decision. Additionally, the court noted that Bongi's legal brief was filed eight months after a relevant ruling, emphasizing the importance of proper legal verification for appellate review. The court acknowledged that the omission in Bongi's brief was likely unintentional. The foreclosure remedy in this case aligns with prior decisions, confirming that failure to release mortgaged property due to non-payment does not constitute a breach of contract.
