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First Federal Bank of Midwest v. Greenwalt

Court of Appeals of Indiana

July 28, 2015

First Federal Bank of the Midwest, Appellant,
v.
Karen S. Greenwalt and Farm Credit Services of Mid-America, FLCA, Appellees

Appeal from the Fayette Superior Court. The Honorable Ronald T. Urdal, Judge. Cause No. 21D01-1108-MF-621.

ATTORNEY FOR APPELLANT: Ronald L. Cross, Boston Bever Klinge Cross & Chidester, Richmond, Indiana.

ATTORNEY FOR APPELLEE: Ray A. Cox, Dayton, Ohio,.

Brown, Judge. Crone, J., and Pyle, J., concur.

OPINION

Page 90

Brown, Judge.

[¶1] First Federal Bank of the Midwest (" First Federal" ) appeals the trial court's order entering partial summary judgment in favor of Karen Greenwalt (" Greenwalt" ) and dismissing its complaint.[1] First Federal raises two issues which we consolidate and restate as whether the trial court erred in granting summary judgment in favor of Greenwalt. We affirm.

Facts and Procedural History

[¶2] On February 22, 2000, David Greenwalt (" David" ), then husband of Karen Greenwalt, as president and sole owner of Great Lakes Ag. Supply, Inc. (" Great Lakes" ) executed a promissory note (the " Note" ) on behalf of Great Lakes, the maker of the Note, in favor of First Federal. The Note established a revolving line of credit up to a maximum principal amount of $300,000 and provided that Great Lakes was required to make interest only payments until maturity of the Note, upon which the outstanding principal would become due and payable in a single balloon payment. David executed a personal guaranty of the debt under the Note.

[¶3] As partial security for the Note, Greenwalt and David (referred to in the Mortgage together as " Grantor" ) contemporaneously executed a mortgage (the " Mortgage" ) granting First Federal a security interest in two parcels of land owned by the couple: a 121.110-acre parcel (" Tract One" ) and a 40.00-acre parcel (" Tract Two" ).[2] The Mortgage provided

Page 91

that " [t]he lien of this Mortgage shall not exceed at any one time $300,000.00." Appellant's Appendix at 17. The Mortgage provided in part:

REVOLVING LINE OF CREDIT. Specifically, in addition to the amounts specified in the Indebtedness definition, and without limitation, this Mortgage secures a revolving line of credit, under which Lender may make future obligations and advances to Borrower up to a maximum amount $300000.00 so long as Borrower complies with all the terms of the Note. Such future obligations and advances, and the interest thereon, are secured by this Mortgage whether such obligations and advances arise under the Note, this Mortgage or otherwise. This Mortgage also secures all modifications, extensions and renewals of the Note, the Mortgage or any other amounts expended by Lender on Grantor's behalf as provided for in the Mortgage.

Id. " Indebtedness" is defined in the Mortgage as:

[A]ll principal, interest, and other amounts, costs, and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantor's obligations or expenses incurred by Lender to enforce Grantor's obligations under this Mortgage, including, but not limited to, attorneys' fees, costs of collection and costs of foreclosure, together with interest on such amounts as provided in this Mortgage.

Id. at 25.

[¶4] In August 2000, Greenwalt and David divorced and, as part of the divorce settlement approved by the court, Greenwalt was awarded Tract One and David was awarded Tract Two.

[¶5] In the years after the Note and Mortgage were executed, Great Lakes executed renewal notes on a regular basis, which were comprised of separate promissory documents setting forth all of the terms of Great Lakes' promises to repay the loans extended under the line of credit, and were executed in substitution of the original note. Greenwalt was not notified of any of the renewals of the Note.

[¶6] In 2002, the Note was renewed in the principal amount of $300,000, and at the time the unpaid principal amount outstanding under the Note was $294,307.95. At this time, First Federal also extended to Great Lakes an " additional 'over line' credit facility . . . in ...


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