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Money Store Investment Corp. v. Summers2/9/2005
llips.
Money Store directs us to language of the August 2, 1995 mortgage that limits the reach of the dragnet clause to the principal amount of the mortgage - $42,000. However, we do not find the August 1995 mortgage language to be dispositive.
The mortgage earlier executed on October 2, 1992 states that the mortgage secures "payments of any and all other . . . obligations of [Summers] to Mortgagee, direct or indirect, due or to become due, now existing or hereinafter contracted . . . ." (App. 312). Similarly, the mortgage executed August 30, 1993, states that it "secure the payment of any and all other . . . obligations of [Summers] to the Mortgagee, direct or indirect, due or to become due, now existing or hereafter contracted . . . ." (App. 114). Money Store argues that because no further obligations were "'contracted' by Summers," these dragnet clauses cannot serve to secure Summers' obligation to Phillips. Money Store's Br. at 12. We disagree. The language of the foregoing two mortgages of 1992 and 1993 is broad in referring to future obligations of Summers, and it is undisputed that Summers entered into a written settlement agreement with Phillips wherein he acknowledged certain financial obligations to her. Therefore, the designated evidence of the mortgage dragnet clauses supports the trial court's conclusion that the monetary judgment resulting from Summers' failure to comply with his written settlement agreement was, after Phillips acquired the mortgage through assignment by National City, "secured by" the dragnet mortgages. (App. 357).
Money Store next argues that the trial court erred in tacking the assigned mortgages because such "subverted the settled role of Indiana law that a mortgage, to be effective, must 'describe and identify the indebtedness it is intended to secure.'" Money Store's Br. at 15, quoting Bowen v. Ratcliff, 140 Ind. 393, 39 N.E. 860, 861 (1895). This limitation, Money Store argues, precludes a dragnet clause being construed to encompass "all debts owed to any future assignee," id., lest the mortgage be "a mere cover for the perpetration of fraud upon creditors." See New v. Sailors, 114 Ind. 407, 16 N.E. 609, 610 (1888).
This argument most expressly conveys the gravamen of Money Store's preceding assertions of trial court error in tacking Phillips' judgment to her assigned mortgage interest: that Money Store was somehow victimized by a practice that the law cannot condone. We acknowledge that, consistent with New, there may be limitations to the coverage of a dragnet clause as applied in various factual scenarios. But here, we are dealing with a sophisticated party. As indicated at the hearing on Money Store's motion to correct error, Money Store had been doing business as First Union, which had "been purchased by Wachovia Bank," constituting "the second largest bank merger in the history of the country." (Tr. 4). The litigation between Phillips and Summers was a matter of public record. The National City mortgages on Summers' property that contained dragnet clauses were all properly recorded. These recorded mortgages were notice to Money Store that inquiry should be made of National City concerning any additional obligations accrued by Summers subsequent to those mortgages. Yet, no designated evidence indicates that Money Store ever asked National City to indicate "all indebtedness" of Summers and Mangy Moose to the bank. Moreover, had such inquiry been made and funds given to National City to fully pay Summers' indebtedness, the difficulty of which Money Store now complains would have been avoided. Further, the indebtedness of which Money Store was informed was not fully repaid. Moreover, no designated evidence indicates that Money Stor
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