Indiana Law Review


1992 Developments in Indiana Property Law

Walter Krieger*

I. Concurrent Ownership

A. Joint Bank Accounts

In 1976, Indiana enacted the Non-Probate Transfers Act to govern

multiple-party accounts. 1 The Act defines a "joint account' ' as a contract

of deposit established in a financial institution payable on request to

any one or more of the parties.2 During the lifetime of all the parties
the account belongs to the parties in proportion to each party's net

contributions to the sums on deposit, absent clear and convincing evidence

of a different intent. 3 Sums on deposit at the death of a party belong
to the surviving parties as against the estate of the decedent unless there

is clear and convincing evidence of a different intent at the time the

account was created.4 A case of first impression arose during this survey
period involving the right of survivorship where one party, prior to his

death, removed the name of the other party from a certificate of deposit
(CD) without her consent.

In Voss v. Lynd, 5 the husband (Willard) had his wife's (Lennice's)

name removed from five certificates of deposit (CDs) totalling $55,500,
after her admission to a health care center with Alzheimer's disease.

Willard went to the bank that had issued four of the CDs and orally
requested removal of Lennice's name. Following standard procedures,

the bank simply marked through Lennice's name. Lennice's name was
also crossed out on a CD issued by another bank. Willard died in
November 1989. 6 Lennice died in January 1990.

In May 1991, Lennice's estate filed a complaint asserting ownership
of the five CDs by right of survivorship. Willard 's estate cross-claimed
against the banks, alleging negligent failure to advise him of the proper

* Associate Professor of Law, Indiana University School of Law—Indianapolis.
A.B., 1959, Bellarmine College; J.D., 1962, University of Louisville; LL.M., 1969, George

Washington University.

1. Ind. Code §§ 32-4-1.5-1 to 15 (Supp. 1992). Fourteen of these 15 sections
were taken from Unif. Probate Code art. VI, 8 U.L.A. 520 (1983).

2. Ind. Code § 32-4-1.5-1(1), (4) (Supp. 1992).
3. Id. § 32-4-1.5-4 (Supp. 1992).

4. Id.

5. 583 N.E.2d 1239 (Ind. Ct. App. 1992).

6. Id. at 1240-41.



1114 INDIANA LAW REVIEW [Vol. 26:1113

procedure to change the form of the accounts. 7 The trial court ruled
that four of the CDs belonged to Lennice's estate and the attempt to
remove her name from the CDs was invalid.8 The trial court also
included the banks were not negligent in failing to advise Willard that

Indiana Code section 32-4-1.5-5 required a written order be given to a
financial institution to change the form of a joint account, and entered

judgments in their favor on Willard's estate's cross-claim. Willard's estate

appealed. 9

The court of appeals first discussed whether the banks were negligent

in not advising Willard to comply with Indiana Code section 32-4-1.5-

5. The trial court found that the request to remove Lennice's name was
not a "transfer" requiring a written order, and that the banks could

act on the oral instructions of any of the parties named on the certificate. 10

The court of appeals concluded that use of a written order to the banks

would not have changed the result of the case, even assuming arguendo

that a written order was required:

A joint account can be terminated only by mutual agreement
of the joint tenants. Moreover, one joint tenant of money in
a joint bank account cannot divest the other of his joint own-

ership by withdrawing the money without the other's knowledge
and consent. Neither joint tenant can dispose of the interest of
the other in life. It follows that the striking of one of the joint

tenant's names from the account is ineffectual.

Lennice's estate would still have acquired the CDs by right
of survivorship. The banks' failure to inform Willard to make
his request in writing did not cause the result of the CDs being
given to Lennice's estate. 11

Thus, the majority of the court concluded that the right of survi-

vorship cannot be destroyed by one party removing the other party's

name from the account or by withdrawing all the funds and closing the
account, unless the other party consents to the termination of the joint

ownership. 12

7. Id. at 1241. Indiana Code § 32-4-1.5-5 provides that rights of survivorship are

to be determined by the form of the account at the death of a party and that the form

of the account may be changed by a written order given by a party to the financial
institution.

8. Voss, 583 N.E.2d at 1241. The trial court found that one CD, originally issued
in Willard's name only, belonged to Willard's estate because Willard had deposited all
the money. This ruling was not appealed. Id.

9. Id. at 1241.

10. Id.

11. Id. at 1242 (emphasis added) (citations omitted).

12. Although the case involves only the removal of the name of a party from the



1993] PROPERTY LAW 1115

In a concurring opinion, Judge Sullivan disagreed with the majority's

conclusion that a written order pursuant to Indiana Code section 32-4-

1.5-5, without Lennice's consent, would have been ineffective to change

the form of the account. Judge Sullivan observed that because section
32-4-1.5-5 permits one party to change the form of a joint account by

a written order to the financial institution, and the right of survivorship

is determined by the form of the account at the death of a party, a

valid change in the form of the account is "a divestment of the sur-

vivorship interest held by the other joint tenant." 13

Finally, Judge Sullivan observed that the question of ownership rights

in joint accounts "is one deserving of the attention of our Supreme

Court
,,

because "I.C. 32-4-1.5-5, passed in 1976, rendered obsolete the

1948 holding in Clausen v. Warner (1948) 118 Ind. App. 340, 78 N.E.2d

551, or at least diluted it substantially." 14

Judge Sullivan's statement is correct—enactment of Indiana's Non-
Probate Transfer Act substantially altered Indiana law regarding joint

accounts. The Clausen decision, relied upon heavily in the majority
opinion, described the parties to a joint bank account as "joint tenants"

who hold "by the half and by the whole," and held that the husband's
withdrawal of the funds in the joint account without his wife's knowledge

or consent could not divest her of her "joint ownership." 15 The Act

takes a very different approach to the ownership interests of the parties

in a multiple-party account. Section 32-4-1. 5-3(a) provides: "A joint
account belongs, during the lifetime of all parties, to the parties in

proportion to the net contributions by each to the sums on deposit,

unless there is clear and convincing evidence of a different intent." 16

The Official Comments of the Indiana Probate Study Commission
indicate that the statute assumes the owners of such joint accounts intend

"no present change of beneficial ownership," and that the theory un-
derlying the joint account sections of the statute is that the holders of

such joint accounts, while alive, have individual ownership of "values

attributable to their respective deposits and withdrawals," so that the

right of survivorship to such an account "really is a right . . . which

the survivor receives for the first time at the death" of the other account

owner. 17 Thus, the right of survivorship arises only at the death of the

other party and is determined by the form of the account at death. No

account, the wording of the opinion suggests the same result would have been reached

if one of the parties had removed the funds from the account without the other's consent.

13. Voss, 583 N.E.2d at 1242-43 (Sullivan, J., concurring).

14. Id. at 1243.

15. Clausen v. Warner, 78 N.E.2d 551 passim (Ind. Ct. App. 1948).

16. Ind. Code § 32-4-1. 5-3(a) (1979).
17. Id. (Official Comments follow § 32-4-1.5-3).



1116 INDIANA LAW REVIEW [Vol. 26:1113

joint tenancy is created during the lives of the parties. However, ter-

mination of the account by the withdrawal of all the funds by one of

the parties without the consent of the other party does not destroy the

other party's individual interest in the funds. While parties to a joint

account have a right to remove their individual funds, if they withdraw

more than their moiety of the funds, the other party can bring an action

to recover their individual interest improperly withdrawn. 18

Finally, courts do not agree as to the legal effect of an attempt by

one party to terminate a joint account by removing the other party's

name or by withdrawing all of the funds. 19 Many decisions suggest that
such action ends the

'

'joint ownership" and destroys any right of sur-

vivorship. 20 Other decisions hold that one party's withdrawal of more

than their "interest" in the account is wrongful and as a result a right

of survivorship still exists in the funds removed.21 However, even in

these states, where a party does not remove more than their moiety

such action is not wrongful and the right of survivorship ceases as to

the funds removed.22

B. Conveyance of Real Estate to Unmarried Persons "as Husband
and Wife"

In Indiana, a conveyance to a husband and wife without limiting

words' creates a tenancy by the entirety. 23 However, a conveyance to

persons not husband and wife cannot create an estate by the entirety

because this form of ownership can exist only between husband and

18. See, e.g., Kleinburg v. Heller, 345 N.E.2d 592 (N.Y. 1976); In re Estate of

Kohn, 168 N.W.2d 812 (Wis. 1969).
19. "The law . . . has been in a state of morass, many of the cases which arise

being treated very much on an ad hoc basis." Kleinburg, 345 N.E.2d at 592. See also
In re Guardianship of Medley, 573 So. 2d 892, 902 (Fla. Dist. Ct. App. 1990). Part of

the problem has been the use of at least four different theories by the courts to sustain

such accounts. John E. Cribbet & Corwin W. Johnson, Principles of the Law of
Property 115-16 (3d ed. 1989).

20. Wiggins v. Parson, 446 So. 2d 169 (Fla. Dist. Ct. App. 1984) (The "better

rule" is that the withdrawal of all the funds by one of the parties destroys any right of

survivorship); see also McEntire v. Estate of McEntire, 590 S.W.2d 241 (Ark. 1979);

Bealert v. Mitchell, 585 S.W.2d 417 (Ky. 1979); Hoffman v. Vetter, 192 N.E.2d 249 (Ohio

Ct. App. 1962); In re Estate of Kohn, 168 N.W.2d 812 (Wis. 1969).
21. Wallace v. Riley, 74 P.2d 800 (Cal. Ct. App. 1938); In re Guardianship of

Medley, 573 So. 2d 892 (Fla. Dist. Ct. App. 1990); In re Will of Filfiley, 313 N.Y.S.2d

793, aff'd, 353 N.Y.S.2d 400 (1970); Gatewood v. Griffin, 549 P.2d 829 (Okla. Ct. App.

1976).

22. Medley, 573 So. 2d at 892; Kleinburg v. Heller, 345 N.E.2d 592 (N.Y. 1976).

23. Chandler v. Cheney, 37 Ind. 391 (1871); Hadlock v. Gray, 4 N.E. 167 (Ind.

1886).



1993] PROPERTY LAW 1117

wife. 24 At common law, a conveyance to two or more persons, not
husband and wife, without words limiting the estate was presumed to

create a joint tenancy.25 This presumption has been changed by statute

in most states, including Indiana, and today a conveyance to two or

more persons not husband and wife will create a tenancy in common
unless the instrument expressly states that the parties hold title as joint

tenants with right of survivorship, or the intent to hold title as joint

tenants manifestly appears from the tenor of the instrument.26 An in-
teresting problem arises when an unmarried man and woman take title
to real estate by a deed purporting to convey the land to them "as

husband and wife." Are these words sufficient to overcome the statutory

presumption of tenancy in common, i.e., are these words sufficient to
show an intent to create a right of survivorship?

In Perez v. Gilbert,21 Emma Perez and James Yocum took title to
residential property "as husband and wife" on July 8, 1959.28 While

James and Emma had been dating since 1958, and living together since
March 1959, at the time of the conveyance Emma was still married to
Joseph Perez, Sr. In 1960, Emma and Joseph were divorced, and Emma
married James. Emma died in 1990, and three of her children brought
this action to determine ownership of the real estate.29 The trial court
awarded James title in fee simple absolute. The children appealed. 30

The trial court concluded that because James and Emma intended
to hold the title as husband and wife, a joint tenancy with right of

survivorship was created. 31 The court of appeals reversed. Section 32-1-

24. Pittsburg, C, C. & St. L. Ry. Co. v. O Brien, 41 N.E. 528 (Ind. 1895); Eilts
v. Moore, 68 N.E.2d 795 (Ind. Ct. App. 1946).

25. Roger A. Cunningham et al., The Law of Property § 5.3 (1984).
26. Id. at 204. Indiana Code § 32-1-2-7 provides:

All conveyances and devises of lands . . . made to two (2) or more persons
[other than husband and wife], shall be construed to create estates in common
and not in joint tenancy; unless it shall be expressed therein that the grantees

or devisees shall hold the same in joint tenancy and to the survivor of them,

or it shall manifestly appear, from the tenor of the instrument, that it was

intended to create an estate in joint tenancy.

Ind. Code § 32-1-2-7 (Supp. 1992).
27. 586 N.E.2d 921 (Ind. Ct. App. 1992).

28. Id. at 923. James' and Emma's names also appeared on a mortgage on the
real estate as husband and wife. Id.

29. Id. James did not have any children by Emma, but James did adopt two of
Emma's children, James Petty and Pamela (Petty) Gilbert. The children who brought this
action are Joseph Perez, Jr., Susan Williams and James Petty. Pamela (Petty) Gilbert is

named as a defendant in the action. Id.
30. Id. at 923-24.

31. Id. at 923. The trial court found that at the time of the conveyance Emma
and James held the residence as tenants in common, but since they intended to hold as



1118 INDIANA LAW REVIEW [Vol. 26:1113

2-7 of the Indiana Code requires that the intent to create a joint tenancy

be expressly stated in the instrument or manifestly appear from the tenor

of the instrument. 32 James tried to distinguish several earlier Indiana

decisions which held a conveyance to unmarried persons "as husband

and wife" created a tenancy in common, on the grounds that the parties
in those cases did not subsequently marry.33 In refusing to find a

distinction, the court of appeals observed that the intent of the parties

must be determined from the actual language used in the deed, not

from their subjective intent. 34

James argued that use of the phrase "as husband and wife" was

sufficient to show an intent to create a right of survivorship, citing cases
from other jurisdictions holding that a conveyance to two persons not

legally married "as husband and wife" created a right of survivorship. 35

The court observed, however, that in addition to the phrase "as husband

and wife" the instruments in those cases included language indicating

that the grantees held "by the entireties" or "by the entireties with
rights of survivorship" or "by the entireties and not as tenants in

common." Such language was deemed sufficient to expressly indicate
an intent to create a joint tenancy with right of survivorship. Here the

deed contained no additional language from which the court could "glean

from the 'four corners' of the instrument" an intent to create a joint

tenancy. 36 Thus the trial court erred in concluding that James and Emma
had held title as joint tenants, and that James now held title in fee
simple absolute as the surviving joint tenant. The parties had held title

to the property as tenants in common, each taking a one-half interest
in the whole, and Emma's interest did not pass to James by right of
survivorship at her death. 37

II. Easements and Restrictive Covenants

A. Implied Easements?*

In Hvidston v. Eastridge, 39 the Hvidstons owned an apartment build-

ing, and Louis and Ann Eastridge and Charles Pedigo (collectively "the

husband and wife it became a joint tenancy. Id, It is not clear from the opinion what

circumstances caused the form of ownership to change after the time of the conveyance

from a tenancy in common to a joint tenancy. Possibly it was the subsequent marriage
that convinced the trial court of their intent to hold title as husband and wife.

32. Ind. Code § 32-1-2-7 (Supp. 1992).
33. Perez, 586 N.E.2d at 925.

34. Id. at 924-25.

35. Id. at 925.

36. Id.

37. Id. at 925-26. Other issues in the case unrelated to the type of ownership

created by the deed are not discussed.

38. An implied easement can arise in two distinct ways. First, it can arise from



1993] PROPERTY LAW 1119

Eastridges") owned a house and lot west of the Hvidstons' property.

The properties were once part of a larger tract. When the tract was
severed in 1937, a driveway ran north and south between the Hvidstons'

apartment building and the house on the Eastridge property. The bound-

ary line between the lots bisected the driveway. In 1977, the Eastridges'

predecessor in interest (Schaler) sued the Hvidstons to quiet title to the

driveway. The 1977 decision recognized an easement by necessity to

permit access to the garage at the rear of the Eastridges' property, and

granted the Hvidstons use of the easement for repair and maintenance

of the apartment building. In describing the dimensions of "the existing

driveway," the court relied chiefly on a 1974 survey, which did not

include a "disputed area" at the southeastern corner of "the existing

driveway."40

In 1985, the Hvidstons sued for damages and rescission of the

easement, and the Eastridges counterclaimed for damages. When the
Hvidstons failed to respond to the counterclaim, the trial court granted

the Eastridges' motion for a default judgment and dismissed the suit

with prejudice The present suit was filed by the Hvidstons in 1987 for

damages and to vacate the easement, claiming that the Eastridges and

their tenants had improperly expanded the use of the easement beyond

the scope of the 1977 decree. After obtaining a default judgment (ap-

parently because of inadequate service upon the Eastridges), Dean Hvid-
ston installed posts at the entrance to the driveway preventing access to

the garage. The Eastridges obtained an emergency order requiring Hvid-

ston to remove the posts. Hvidston complied, but a few months later

he erected fence posts and drove stakes in or near the easement.41

When the default judgment was set aside, the Hvidstons filed an
amended complaint and the Eastridges counterclaimed for damages.
Following a bench trial the court held that the driveway easement included

a prior use of the property, where, during the unity of title, a permanent and obvious

servitude was imposed on one part of the land for the benefit of the other, and at the

time of the severance its continued use is reasonably necessary for the enjoyment of the

dominant estate. E.g., John Hancock Mut. Life Ins. Co. v. Patterson, 2 N.E. 188 (Ind.

1885); Kruger v. Beecham, 61 N.E.2d 65 (Ind. Ct. App. 1945). For a discussion of the

implied easement based on prior use see Cunningham et. al, supra note 25, § 8.4.
Second, an implied easement can arise by way of necessity where there has been a severance

of the unity of ownership of a tract of land in such a way as to leave one part without

access to a public road except over the other portion of the tract conveyed or retained

by the grantor. E.g., Shandy v. Bell, 189 N.E. 627 (Ind. 1934); Dudgeon v. Bronson,

64 N.E. 910 (Ind. 1902). For a discussion of the implied way of necessity see Cunningham
et. al, supra note 25, § 8.5.

. 39. 591 N.E.2d 566 (Ind. Ct. App. 1992).

40. Id. at 567-68.

41. Id. at 568.



1120 INDIANA LAW REVIEW [Vol. 26:1113

the "disputed area" at the southern end of the driveway east of the

Eastridges' garage, and modified the 1977 decree to allow the parking

of vehicles on the easement. The court also prohibited the Hvidstons

from driving stakes or poles along the boundary of the easement or

performing any type of maintenance to the driveway. The Hvidstons
appealed.42

With regard to whether the easement included the disputed area,

Donald Pedigo testified that for as long as he could remember, tenants

of the Eastridge property had used the disputed area at the southeastern

corner of the driveway to turn their cars around. Photographs submitted

by the Hvidstons showed automobiles parked in the supposed unused

portion of the driveway. Nevertheless, the court held that the easement

did not include the disputed area. As the court observed, an implied
easement by necessity arises simultaneously with the conveyance severing

the larger tract into separate parcels because of circumstances then

existing. The 1977 decree stated that the driveway was the sole means

of egress to the garage and parking area at the rear of the Schaler

property and that Schaler and his predecessors had acquired a permanent

easement of necessity to use "the existing driveway" within the boundaries

of the Hvidstons' property. The 1977 decree did not create the easement

but "merely affirmed its existence and defined its boundaries" as it

existed when the tract was severed in 1937. Events occurring after 1937
were irrelevant in determining the size and extent of the easement by

necessity.43

Finally, the court rejected the Eastridges' contention that the tenants

will experience difficulty in turning their vehicles around unless the

disputed area is included in the easement. The court found that turning
could be accomplished without encroaching upon the disputed area,

either by increasing the number of turns or enlarging the parking area

by extending it to the west into the Eastridges' backyard.44

The second issue addressed by the court was whether the trial court

should have modified the decree to allow parking for reasonable periods

42. id.

43. Id. at 568-69. In another case decided during this survey period involving an

implied easement arising by necessity, Tippmann v. Stoutland Associates, 594 N.E.2d 515

(Ind. Ct. App. 1992), the court reaffirmed the rule that an implied easement by necessity

arises simultaneously with the severing conveyance "because of the circumstances then

existing, e.g., inaccessibility," and not from circumstances occurring subsequent to the

conveyance. Id. at 517 (quoting Hvidston, 591 N.E.2d at 566). In Tippmann the court,

in denying a request for a preliminary injunction, found that an alteration in a structure

on the alleged dominant estate subsequent to the severance of the two tracts created the

accessibility problem. At the time the property was severed there was no need for an

easement. Tippmann, 594 N.E.2d at 517.

44. Hvidston, 591 N.E.2d at 572.



1993] PROPERTY LAW 1121

of time on the easement, provided someone was available to move the
vehicle upon the request of the other party. The court found no change

of circumstances which would justify amending the 1977 decree to permit

parking. On the other hand, the court made it clear that this opinion
should not be' construed to prohibit the parties from stopping their

vehicles in the driveway to unload groceries, pick up or drop off a

tenant, or unload materials used to repair the apartment building.45

The third issue addressed on appeal was the trial court's prohibition

against the Hvidstons installing or maintaining stakes or poles of any

kind along the eastern boundary of the easement. While agreeing that

the Hvidstons should be allowed to place guard rails or similar structures

on their property to prevent harm, the court concluded that it was not

error for the trial court to enjoin the Hvidstons from erecting stakes

or poles in the easement or along its boundaries that would obstruct,

interfere with or impede the use of the easement. 46

Finally, the Hvidstons objected to the trial court's ruling that only

the Eastridges could maintain the easement, and argued that they should

have a right to make reasonable repairs, alterations and improvements.
In rejecting this contention, the court of appeals noted that the Eastridges

and their tenants are the primary users of the easement and that the

"improvements" envisioned by Dean Hvidston had to do with improve-

ment of the dominant estate and not with the use of the easement.47

The court of appeals affirmed the portion of the trial court's decree

prohibiting placement of stakes or poles interfering with the use and

enjoyment of the easement and vesting maintenance responsibilities solely

in the Eastridges. However, the court reversed the judgment to the extent

it held that the disputed area was part of the easement and that the

parties could park on the easement.48

In Whitt v. Ferris,49 the court addressed the "necessity" requirement

for an implied easement. In 1968, the Kumpfs, who owned approximately
eighty acres of land, subdivided most of the land, calling the subdivision

45. Id. at 572-73 n.7. The court felt compelled to articulate this distinction in view

of the animosity between the parties and the fear that further hostilities or confrontations

would take place unless these rights were clarified. Id.

46. Id. at 573. See Hunter v. McDonald, 254 N.W.2d 282, 286 (Wis. 1977) (holding
that the owner of the servient estate could not place rocks and posts alongside a ten foot

wide easement to prevent vehicles from occasionally straying beyond the narrow boundaries).

47. Hvidston, 591 N.E.2d at 573-74. Evidence at the trial revealed Dean Hvidston

had threatened to "bulldoze" the easement and had once ordered his apartment manager

to dig trenches in the direction of the Eastridges' property to carry water away from his

building. This may explain the court's reluctance to allow Hvidston to "repair" or
"improve" the easement. Id. at 574.

48. Id.

49. 596 N.E.2d 230 (Ind. Ct. App. 1992).



1122 INDIANA LAW REVIEW [Vol. 26:1113

Beechwood County Estates (Beechwood). One of the platted roads,
"Tulip Drive/ ' was planned as a street 60 feet wide and 1050 feet long,

but only a strip 20 feet wide was graded, with 20 foot strips of grass

^m each side. For tax reasons, the Kumpfs vacated all the platted lots
and streets except lots 1 through 6, which abut a public road, "Kings

Road." Kings Road runs north and south and lots 5 and 6 abut the
intersection of King Road and the former Tulip Drive on the northwest
and southwest corners, respectively. Lot 7 abuts lot 6 to the west and

lot 8 abuts lot 5 to the west and both lots 7 and 8 abut Tulip Drive,

but neither lot is part of Beechwood Subdivision as currently platted.
Ferris owns Lots 5 and 8, Jones owns Lot 6 and Stettler owns Lot 7.

The disputed parcel is the 20 foot wide dirt and gravel road and the

20 foot wide strips of grass on each side now owned by Whitt. In 1982,
Stettler began using the road on the disputed area as his only means

of ingress and egress to Lot 7. Jones also uses the road for access to

the back of Lot 6, and Ferris, Jones and Stettler have all used the

grassy area for parking. Whitt constructed a fence along the disputed

area and the appellees brought suit to prevent Whitt from interfering

with their use of the disputed area. The trial court granted each of the
appellees an implied easement 60 feet wide and 380 feet long to be used

in the same manner as a public road, and Whitt appealed. 50

With regard to the way of necessity the court of appeals observed
that a way of necessity arises where the severance of the unity of
ownership of land occurs in such a way as to leave one part of the
land without access to a public road. Lot 7 was at one time a part of

a larger tract of land which included the disputed area, and the disputed

area has been used for ingress and egress since the severance. However,

the court found that the trial court erred in granting a sixty-foot-wide

easement because easements should be limited to the purpose for which

they are created. The court limited the easement to the twenty foot
roadway and sufficient footage over the grassy area to allow access to

Stettler 's driveway. 51 Whitt argued that a way of necessity does not exist
where the terms of the conveyance show the parties did not intend the

grantee to have an easement over the grantor's property. The court

appears to have conceded that parties can explicitly exclude a way of
necessity from the conveyance, but found the language in the Brown
and Stettler deeds stating that "access to this parcel is not included in

the above description," was ambiguous and extrinsic evidence indicated

that the words were "merely cautionary" and did not prevent the court

from finding a way of necessity in favor of Lot 7. 52

50. Id. at 232-33.

51. Id. at 233-34.

52. Id. The drafter of the deed to William Brown testified that the language was



1993] PROPERTY LAW 1123

The court next addressed the issue of whether an easement was

created by reference to the plat map and observed that the portion of
the plat which included the disputed area had been vacated before any

of the lots were sold. Under the then-existing statute the vacation de-

stroyed the force and effect of any part of the plat declared to be

vacated. Thus, at the time the lots were sold the Kumpfs held fee simple
title to the disputed area free of any easements.53 Any reference to the
old subdivision in the deeds was for the purpose of showing the location

of the lots and not to reinstate the vacated plat or recreate easements

to roads in the nonexistent part of the old subdivision. 54

Finally, the court addressed the issue of whether an implied easement

existed based on a use of the land at the time of the severance. The

court observed that:

[A]n easement will be implied where (1) there was common
ownership at the time the estate was severed, (2) the common
owner's use of part of his land to benefit another part (a quasi-

easement) was apparent and continuous, (3) the land was trans-

ferred, and (4) at severance it was necessary to continue the

preexisting use of the benefit of the dominant estate. 55

While the "necessity' ' is not the strict necessity required to create

a way of necessity, the court noted that some necessity is still required
and that one seeking an access easement in Indiana "when only a portion
of the land is inaccessible, faces a heavy burden. ,>56 Here lots 5 and 6

abut a public highway and there is no need to use the easement. When
lots 5 and 8 were transferred to Ferris, access to lot 8 was reasonably

accomplished from Lot 5. The garage and driveway on lot 8 were built
after the severance from the disputed area. 57 Thus, the trial court was

reversed in part and affirmed as to the way of necessity across lot 7. 58

B. Restrictive Covenants—Unenforceability Caused by Changed
Character of Surrounding Area and Acquiescence

In Hrisomalos v. Smith, 59 the Smiths were interested in purchasing

lots 7 and 8 located on the southern edge of Hillsdale First Addition

used to inform the purchaser that there was no public access included within the description.

Id.

53. Id. (citing Ind. Code Ann. § 48-901 (Burns 1963) (current version at Ind.
Code § 36-7-3-10 (Supp. 1992)).

54. Whitt, 596 N.E.2d at 234-35.

55. Id. at 235.

56. For a discussion of the "necessity" required to create an implied easement

based on prior use see Walter W. Krieger, Recent Developments in Property Law, 25
Ind. L. Rev. 1375, 1380-83 (1992).

57. Whitt, 596 N.E.2d at 236.

58. Id.

59. 600 N.E.2d 1363 (Ind. Ct. App. 1992).



1124 INDIANA LAW REVIEW [Vol. 26:1113

(Hillsdale) to operate a dentist's office on the property. The Smiths

brought this action for declaratory judgment asking that a covenant

limiting the use of structures in Hillsdale to single family dwellings be

declared invalid as to lots 7 and 8. The owner of lots 7 and 8 later

joined in the petition the Petitioners referred to collectively by the court

as the "Smiths"). Several neighbors (Intervenors) opposed the Smiths'

petition. The trial court found the covenant unenforceable with regard

to lots 7 and 8 and the Intervenors appealed. 60

The trial court found the covenant unenforceable on two grounds:

first, the restrictive covenant was invalid because of radical changes

within and surrounding the subdivision; and second, the Intervenors were

barred from enforcing the covenant under the doctrine of acquiescence.

Both issues were addressed on appeal.

With regard to the change in the character of the area surrounding

Hillsdale, the court of appeals agreed with the trial court that there had

been extensive commercialization of the area and a substantial increase

in traffic on a street bordering Hillsdale. However, the court of appeals

did not concur in the trial court's conclusion that there had been a

dramatic and compelling change within Hillsdale itself of such a weight

as to preclude enforcement of the covenant. Despite considerable com-

mercialization outside Hillsdale, only two activities within Hillsdale itself

were not in conformity with the covenant. In 1953, a church bought

and began operating on property within Hillsdale with the unanimous

consent of- those then owning lots in Hillsdale. The court questioned

whether this use violated the covenant because the church was built

pursuant to an agreed modification of the covenant between it and the

landowners. The second nonconformity was the operation of a chiro-
practic office by Dr. Norman Houze on his property on the southern
edge of Hillsdale. No lot owner opposed Dr. Houze's use of his land. 61

The court observed that changes in the character of a neighborhood

will not invalidate a restrictive covenant unless the "original purpose of

the covenant has been defeated."62 In determining whether such radical

changes have occurred, little weight should be given to changes outside

the subdivision. The focus should be upon the effect of the changes on

the purpose of the covenant. 63 The trial court's own findings refuted

60. Id. at 1365.

61. Id. at 1365-67.

62. Id.

63. Id. In support of this position the court cited Cunningham v. Hiles, 395 N.E.2d

851 (Ind. Ct. App. 1979), order modified on reh'g, 402 N.E.2d 17. In Cunningham the

court held that a residential covenant prohibiting commercial activities within the subdivision

was still enforceable despite commercialization outside the subdivision which had caused

a dramatic increase in the traffic on the border of the neighborhood. The only change



1993] PROPERTY LAW 1125

the claim that the change was so radical in nature as to defeat the

purpose of the covenant:

Although there has been considerable commercialization outside

the addition, residents within the Addition have steadfastly main-

tained their residential way of life. Within the addition neighbors
still gather, and children still play, all in keeping with the

residential mandate imposed by the covenant. 64

The court next addressed the acquiescence theory relied upon by the

trial court in finding the covenant unenforceable as to lots 7 and 8.

The trial court determined that the Intervenors, by allowing the chi-

ropractic office to operate without protest or action since 1985, had

acquiesced in the violation of the restrictive covenant. Those seeking to

enforce a restrictive covenant "must do so immediately and consistently."

The trial court did not find the consent to the operation of the church

to be a waiver or acquiescence of the covenant: "[B]ecause the church

was built pursuant to an agreed modification of the restrictive covenant

between it and the landholders, it was to be considered a change outside

the area covered by the restrictive covenant.'

'

65 The court of appeals

agreed with the trial court that the church property was not a factor

in this case. It was dissimilar to, and a less substantial violation than,

the operation of a professional office.66

Thus, the question of acquiescence turned upon the Intervenors'

failure to object to Dr. Houze's office. The court found three factors
significant to the analysis:

1) the location of the objecting landowners relative to both the

property upon which the nonconforming use is sought to be
enjoined and the property upon which a nonconforming use has

been allowed, 2) the similarity of the prior nonconforming use

to the nonconforming use sought to be enjoined, and 3) the

frequency of prior nonconforming uses. 67

The court observed that while Dr. Houze's office and the use
4

proposed by the Smiths were virtually indistinguishable, Dr. Houze's

within the subdivision itself was an office building that protruded into one corner of the

subdivision causing an increased amount of traffic within that corner. Id.

64. Hrisomalos, 600 N.E.2d at 1365.

65. Id. at 1367 n.2.

66. Id. at 1368. The court cited Cowling v. Colligan, 312 S.W.2d 943 (Tex. 1958),
holding that the operation of a church in violation of a restrictive covenant limiting the

use of the land to residential purposes was so trivial that failure to complain was not a

waiver of the right to enforce the covenant against subsequent business or commercial

development. Hrisomalos, 600 N.E.2d at 1369.

67. Id. at 1368.



1126 INDIANA LAW REVIEW [Vol. 26:1113

office was not in the same block as the lots in issue or any of the

property owned by the Intervenors, whereas there was a close proximity
between the lots in issue and the land of the Intervenors. In addition,

this subdivision did not have a long history of multiple and long-standing

noncompliance with the covenant. Instead, there was but a single similar

act of nonconformity in a different area. The failure of the Intervenors
to object to the more distant nonconforming use did not induce reasonable
reliance on the part of others that the covenant would not be enforced,

nor was there a lack of benefit in the enforcement of the more proximate

nonconforming use. The court of appeals reversed the trial court with
direction that judgment be entered for the Intervenors.68

III. Land Contracts

A. Contractual Rights and Duties

The installment land contract is an alternative to the more traditional

method of conveying real estate. 69 Under the traditional method, the

contract for sale anticipates a transfer of legal title within a few months

(time for the buyer to obtain financing and the seller to produce evidence

of good title). Normally, the buyer makes a downpayment when the
contract is signed and agrees to pay the balance of the purchase price

at the closing. In most cases the buyer needs to obtain a loan to pay

the balance at the closing. The buyer will sign a promissory note and

execute a purchase money mortgage on the real estate. At the closing,
the seller will convey title to the real estate by deed and the buyer will

pay the seller the balance. The deed and the purchase money mortgage
are then recorded and the buyer becomes the legal owner of the land

subject to the lender's security interest.

Under the installment land contract, legal title remains in the seller

until all contract payments are made (often fifteen or twenty years). If
the land contract is silent, the seller is not required to produce marketable

title until the installment contract is completed. Thus, the prudent buyer

should insist that the seller produce evidence of the status of the title

before signing the land contract. The purchaser should also insist upon
a provision in the contract providing that any liens on the property

maintained by the seller shall not exceed the unpaid installments under

the contract.

68. Id. at 1369.

69. For a more complete discussion of the installment land contract see Grant S.

Nelson & Dale A. Whitman, Installment Land Contracts—The National Scene Revisited,
1985 B.Y.U. L. Rev. 1.



1993] PROPERTY LAW 1127

The status of the seller's title at the signing of the land contract,

the seller's right to place or maintain a mortgage on the real estate,

and the duty of the real estate agent at the signing of the land contract

were all raised in McAdams v. Dorothy Edwards Realtors, Inc.. 10 The
Parnells, the sellers under a land contract, had borrowed $31,000 (ap-

parently a purchase money mortgage) from First Federal Saving and
Loan Association of Kokomo secured by a note and a mortgage con-
taining a due-on-sale clause.71 In November 1980, the Parnells entered

into an exclusive listing agreement with Dorothy Edwards Realtors, Inc.

to sell the property. Gary Taylor, the principal owner of Edwards

Realtors, was the Parnells' real estate agent. Through Taylor, the Parnells

and the McAdamses entered into a purchase agreement on June 12,
1981, which provided for a sale of the property on an installment land

contract for $72,500. The McAdamses were to pay $40,000 down and
the balance of $32,500 in monthly installments of $500. The purchase

agreement provided that "title shall be subject to easements, and res-

trictions of record, if any, and free and clear of all other liens and

encumbrances except as herein stated." First Federal's mortgage was not

listed.

Before the signing on June 24, 1981, First Federal orally agreed to

the sale and did not declare the unpaid balance due and owing. Taylor

delivered an abstract of title to the McAdamses' attorney, who issued
a title opinion. The opinion concluded that the Parnells had marketable

title and indicated that the two existing liens would be satisfied and

released at the closing. 72 The McAdamses' attorney and real estate agent

70. 591 N.E.2d 612 (Ind. Ct. App. 1992). After the survey period had ended, the

Indiana Supreme Court granted transfer, set aside the court of appeals opinion, and

affirmed the trial court judgment in favor of Dorothy Edwards Realtors. McAdams v.
Dorothy Edwards Realtors, 604 N.E.2d 607 (Ind. 1992). The court opined that "this case

turns on the question of the duty owed to a buyer by the seller's broker," and concluded

that no authority could be found "for the proposition that the seller's agent owes a buyer

a duty to act in the buyer's best interest." Id. at 611. Thus, an agent who negligently
fails to perform duties owed the principal is not liable for harm caused to a third person.

Id. at 612. This simplistic approach to the duty of the real estate broker at the closing

appears to overlook the custom (common practice) in Howard County where real estate
brokers rather than attorneys attend and apparently preside over closings, and where

attorneys give title opinions directly to the broker rather than to their clients. Id. at 609.

The fact that the broker placed the downpayment into the "Edwards Realtors trust

account," Id. at 609, further indicates that the broker had assumed duties beyond those

of the seller's agent. Attorneys, lenders and others dealing with real estate brokers in

matters involving real estate closings should reconsider current practices in light of this

decision, which will be discussed fully in next year's Survey issue.

71. If the Parnells sold the property without the bank's consent First Federal could

declare the note immediately due and payable. Id. at 614.

72. The court is using the term "closing" to indicate the formal signing of the



1128 INDIANA LAW REVIEW [Vol. 26:1113

were not present at the closing. However, Taylor was present at the

closing and was aware that the mortgage should have been released.

Taylor placed the $40,079.68 down payment into the Edwards Realtors'
trust account and used $6000 to satisfy another lien on the real estate. 73

One day after the closing, the Parnells paid $10,000 on their debt to
First Federal and the terms of the remaining $20,000 loan were modified.

The interest rate was increased and the Parnells agreed to make payments
of $400 a month beginning July 1981. However, no payments were made
under this agreement until April 1983 and First Federal never notified

the McAdamses that the Parnells were in default on the loan. The
McAdamses discovered in February 1 984 that the balance of the mortgage
exceeded the balance due on the land contract. 74 First Federal declared

the Parnells in default in July 1984, and the McAdamses filed suit against
the Parnells, Edwards Realtors and First Federal in October 1984.75

The trial court awarded First Federal the balance on the land contract
which the McAdamses had deposited with the court ($6,248.69) and
ordered that this amount would discharge First Federal's lien, in effect
finding the mortgage subordinate to the McAdamses' interest. Further,
the trial court entered judgment for the McAdamses against Edwards
Realtors and First Federal in the amount of $7500 for attorney fees

and costs. However, while the trial court concluded that Taylor had

acted improperly as the Parnells' agent, and as the real estate broker

closing the transaction, the trial court did not award a judgment against

Edwards Realtors for the misapplication of trust funds. Both Edwards

Realtors and First Federal appealed. 76

On the first appeal the award of attorney fees was reversed and the
court of appeals held that the trial court had erred in refusing to allow

First Federal to foreclose on the mortgage. The case was remanded with

instructions to direct an order of foreclosure in favor of First Federal.

Following the first appeal, the McAdamses entered into an agreement
with First Federal. In exchange for the McAdamses' payment of $46,565.32

and their agreement not to seek a transfer to the Indiana Supreme Court,

First Federal agreed not to execute upon an order of foreclosure entered

by the trial court.77

land contract, the delivery of the downpayment and the releases of the liens, and not

the legal closing on "law day" when the deed is to be delivered and legal title transferred

to the purchaser upon completion of the land contract.

73. The facts indicate that part of the money in the trust account was used to
pay the Parnells' unsecured obligations to Edwards Realtors and others, and that the

remaining funds were paid to the Parnells. Id. at 615, 618.

74. Each month that the Parnells did not make a payment, First Federal capitalized
the interest and added it to the outstanding balance. Id. at 615.

75. Id. at 614-15.

76. Id. at 615-16.

77. Id. at 616.



1993] PROPERTY LAW 1129

On remand, the McAdamses moved the trial court to enter judgment
against Edwards Realtors in the sum of $40,316.63 ($46,565.32 mortgage
lien less $6,248.69 deposited with the court). The trial court, however,

entered judgment for Edwards Realtors and against the McAdamses. 78

On appeal by the McAdamses several issues were raised. First, the
McAdamses argued that the trial court had committed reversible error
by not entering judgment of foreclosure on First Federal's mortgage.

Apparently, they were concerned that an order of foreclosure might be

viewed as a prerequisite to establishing damages against Edwards Realtors.

However, the remark by the court of appeals that the McAdamses were
not prejudiced by the failure of the trial court to enter the order

foreclosing the mortgage, and the remand to the trial court to determine

the damages arising from the agent's misapplication of trust money,

indicate that the court viewed the agreement with First Federal as trig-

gering the right of the McAdamses to assert their claim against Edwards
Realtors.79 Furthermore, the opinion clearly contemplates that upon re-

mand the trial court will find Edwards Realtors liable to the McAdamses
for the $46,565.32 paid to First Federal together with interest thereon. 80

Edwards Realtors contended that the McAdamses had waived their
claim to damages by failing to challenge in the first appeal the trial

court's denial of a judgment against Edwards Realtors sufficient to

satisfy the mortgage. In rejecting this contention, the court observed

that the trial court had found Taylor in breach of his duty to disburse

trust account monies in a manner that would comply with the Parnells'

obligations under the purchase agreement. However, when the first judg-
ment held First Federal's mortgage was satisfied by payment of the

contract balance owed by the McAdamses, there was no need to enter
judgment against Edwards Realtors for misapplication of trust funds.

But, when the judgment was reversed and foreclosure of the mortgage
ordered, it then became necessary to determine the amount of Edwards

Realtors' liability. 81

Next, the court addressed Edwards Realtors' contention that in this

second appeal it could still challenge the trial court's determination that

its agent had a duty to apply the trust funds to satisfy the First Federal

mortgage and that it misapplied the funds by paying them to the Parnells.

The court found it had not yet "determine[d] whether the finding of
a misapplication of trust funds was supported by the evidence," and

that Edwards Realtors was not barred by the law of the case from

challenging the finding as supported by insufficient evidence. 82

78. Id. at 617.

79. Id. at 617-18, 622-23 (Sullivan, J., concurring).

80. Id. at 623 (Sullivan, J., concurring).

81. Id. at 618-19.

82. Id. at 620-21. However, as Judge Sullivan points out, the court then proceeds



1130 INDIANA LAW REVIEW [Vol. 26:1113

The court then addressed the issue of "[w]hether the trial court's
original determination that Edwards Realtors' agent misapplied trust and

the realty company should account for that misapplication, was supported

>y sufficient evidence."
83 The trial court originally found the Parnells

had a duty to convey title free of First Federal's mortgage because both

the Exclusive Right to Sell Agreement and the Purchase Agreement

required the Parnells to furnish an abstract prior to closing showing

merchantable title in the Parnells free and clear of all mortgage liens.

Further, the trial court determined that the Parnells' duty was transferable

to Edwards Realtors and that, as the Parnells' agent and the real estate

agent closing the transaction, Taylor had the duty to disburse monies

from the trust account in a manner that would accomplish the per-

formance of the Parnells' obligations under the Purchase Agreement. 84

Edward Realtors argued that this conclusion was in error because
the Purchase Agreement incorporated by reference Paragraph 13 of the

land contract which provided that: "The seller may, at his election,
place or maintain a mortgage on said premises for an amount not in

excess of the then unpaid balance of the sale price." The McAdamses
pointed out, however, that Paragraph 13 provided substantial protection

to the buyer. Should the seller "hereafter elect to place such a mortgage

on the premises he shall before the execution thereof" give written notice

to the buyer containing the name of the mortgagee, the principal amount
and the rate of interest and the buyer at his election may reduce the
unpaid balance under the contract to the unpaid balance of the mortgage

and demand a warranty deed requiring the buyer to assume the mortgage.
These protections could be circumvented if Paragraph 13 were interpreted

to allow the sale of the property with pre-existing mortgages. The

McAdamses also contended that the order in which the words "place
or maintain" appear in Paragraph 13 is significant. Use of the word

"place" before "maintain" indicated that the title had to be free from

mortgage liens at the time of the execution of the contract. The majority

of the court agreed with the McAdamses' interpretation of Paragraph
13 and concluded that the reference to the seller's right to place or

maintain a mortgage on the premises can have reference only to mortgages

placed or maintained on the premises subsequent to the closing. 85

to make this determination in issue four, thus making the holding in issue three moot.

Id. at 623 (Sullivan, J., concurring).

83. Id. at 621.

84. Id.

85. Id. at 621-22. Judge Sullivan did not agree with the majority's interpretation

of paragraph 13. In his opinion, the words "place or maintain" were clear and unambiguous

and did not indicate that the seller was limited to "maintaining" mortgages created only

after the execution of the land contract. Nevertheless, Judge Sullivan observed that the



1993] PROPERTY LAW 1131

The court ordered the judgment vacated and that upon remand the

trial court should hold a hearing to determine the amount Edwards

Realtors owes the McAdamses for its agent's misapplication of the trust
funds. 86

B. Spouse of Purchaser Acquiring Vendor's Interest at Tax Sale

If the land contract is silent, the purchaser has the duty to pay

taxes on the real estate. 87 However, the seller still must make certain
that the purchaser is paying the taxes, or the land might be sold at a

tax sale for nonpayment of taxes. A rather unusual situation arose in
Kettery v. Heck, 8* where the buyer failed to pay the taxes and the

buyer's wife subsequently acquired title to the property from the purchaser

at a tax sale. The question became whether the buyer and his wife

should be allowed to take the property free and clear of the land contract.

In Kettery, Terry and Karen Kettery and Julie Heck agreed in 1981

to exchange real estate. Heck received the Ketterys' residence in Indi-
anapolis and the Ketterys received Heck's residence and one acre of

land in Shelby County. The Ketterys also agreed to purchaser another

4.13 acres of Shelby County land from Heck by land contract. In 1982,
the Ketterys were divorced and Terry purchased Karen's interest under

the land contract. Terry was unable to make the balloon payment due
in 1985, and Heck and Terry negotiated a new land contract. The new
contract provided that Terry would pay all real estate taxes. Terry failed

to do so, and the notice of tax delinquency and tax sale was sent to

Heck at her old address. The land was purchased by the Kochers at a
tax sale in 1985. In 1986, Terry married Lisa Kettery and in October

1987, Lisa purchased the 4.13 acres from the Kochers. In November

1987, the Ketterys' attorney notified Heck of the tax sale and that the
Ketterys no longer considered themselves bound by the contract because
Heck no longer held title to the land. The letter also demanded restitution

of the payments made under the contract since Heck could no longer
perform her obligations. Heck responded by filing a two count complaint.

parties intended that an existing mortgage could be maintained only so long as it did not

exceed the amount due under the contract and that on remand the trial court might well

find that the growth of the mortgage was at least in part due to the failure of Edwards

Realtors to properly apply the trust moneys. In addition, there was evidence from which

the trial court could have found an obligation to apply the trust fund money to satisfy
the mortgage "premised upon the title opinion which directed that the mortgage lien

'should be satisfied and released of record upon payment at closing.'" Id. at 623-24

(Sullivan, J., concurring).

86. Id. at 622-23.

87. E.g., Stark v. Kreyling, 188 N.E. 680 (Ind. 1934).

88. 587 N.E.2d 1365 (Ind. Ct. App. 1992).



1132 INDIANA LAW REVIEW [Vol. 26:1113

Count I alleged breach of the land contract and sought to foreclose a

mortgage on the one acre tract. Count II alleged a conspiracy to defraud

on the part of Terry and Lisa by intentionally concealing from her the

fact that the real estate taxes had not been paid and by deeding the

property to Lisa, making it impossible for Heck to perform under the
contract. The trial court found in favor of Heck for $22,304.92 reduced

by the amount Lisa had paid to the Kochers. The Ketterys appealed. 89

Terry alleged the trial court was in error when it concluded that
his failure to pay the taxes was the proximate cause of the real estate

being sold at the tax sale. Instead he argued that under the contract

Heck had a duty to "forward or cause to be forwarded to Purchaser

a copy of all statements for real estate taxes on the Real Estate payable

by Purchaser, as received.' ' Terry contended that he was to pay the

real estate taxes only "as received'' from Heck. The court, however,

refused to impose upon Heck a duty to obtain the tax statements, and
concluded that the words "as received" referred to the statements actually

received by Heck. Since she had received no tax statements, she had

breached no contractual duty. Further, the court found Terry had breached

his contractual duty to pay "the real estate taxes due and payable on

November, 1981, and all installments of taxes payable thereafter." 90

With regard to Count II, the Ketterys claimed there was no evidence

of any fraud or conspiracy to support a legal or equitable theory for

relief. The court disagreed. Terry and Lisa made no attempt to notify
Heck of the tax sale or the tax deed to the Kochers until after Lisa

had obtained the Kochers' interest. The court cited by analogy a number

of cases holding that a mortgagor in possession or those occupying a

position of trust and confidence can not acquire title through a tax

deed, particularly where the party is under a duty to pay the taxes. 91

The court concluded that since Lisa was able to purchase the property

because Terry had failed to pay the taxes in breach of his contractual

duty, it would be unconscionable to allow Lisa to keep the property.

The trial court's decision was affirmed. 92

IV. Landlord and Tenant93

A. Scope of Covenant to Repair

In Quebe v. Davis, 94 the Quebes leased a commercial building to

Paul Parks in July 1986. The parties were aware that the roof leaked,

89. Id. at 1366-67.

90. Id. at 1367-68.

91. Id. at 1368-69.

92. Id. at 1369-70.

93. During this survey period three decisions were issued involving the landlord's



1993] PROPERTY LAW 1133

and the lease required Parks to repair the roof to the satisfaction of

the Quebes by August 1, 1986. Parks assigned the lease to Lloyd and

Thomas in March 1987, and they assigned the lease to Davis in November
1988. Davis was aware of the leaking roof at the time of the assignment

and attempted to make repairs. However, the attempts to repair proved
unsuccessful and Davis was advised that the roof needed to be "re-

placed." The leaky roof damaged Davis' property, and he was forced

to vacate part of the building. Davis filed suit against the Quebes for

damages caused by their failure to replace the leaking roof. The Quebes

counterclaimed for damages for breach of the lease, claiming the lease

obligated Davis to maintain the roof. The trial judge found for Davis

and awarded $12,170 damages and $1000 in attorney fees. The Quebes

appealed. 95

The trial court ruled that it must assume the provision requiring

the original tenant to repair the roof to the satisfaction of the Quebes

had been complied with on August 1, 1986. In addition, the trial court

concluded that "repair and maintenance is different from construction

or replacement especially in the case of major structural items and [the

Quebes] are responsible for the roof replacement."96 The Quebes argued

that the trial court erred in describing the work to be done on the roof

as a "replacement" chargeable to the lessor rather than a "repair"

chargeable to the lessee, noting that the term "replacement" was never

used in the lease and that "repair" can include "restoration to a sound

or good state after decay, dilapidation, injury, loss, waste, etc." 97 Thus,

they contended that the problem with the roof was covered by the

tort liability for injuries resulting from defective conditions on the leased premises: Pitcock

v. Worldwide Recycling, Inc., 582 N.E.2d 412 (Ind. Ct. App. 1991) (business invitee of

tenant injured on raised portion of floor); Houin v. Burger, 590 N.E.2d 593 (Ind. Ct.

App. 1992) (infant fell through a window in a second-floor apartment); Rogers v. Grunden,

589 N.E.2d 248 (Ind. Ct. App. 1992) (lessee's employee injured when he came in contact

with uninsulated electric line on landlord's property). All three decisions continued to

follow the common law rule that the landlord is immune from tort liability for injuries
caused by defective conditions on the leased premises where the landlord has surrendered

complete control and possession of the premises to the tenant. See generally Olin L.

Browder, The Taming of a Duty— Tort Liability of Landlords, 81 Mich L. Rev. 99 (1982).
For a discussion of the landlord's tort immunity in Indiana see Walter W. Krieger, Recent
Developments in Property Law, 24 Ind. L. Rev. 1065, 1085-90 (1991).

94. 586 N.E.2d 914 (Ind. Ct. App. 1992).

95. Id. at 916.

96. Id. at 917 (quoting from trial court record).

97. Id. at 916, 919. Although the Quebes made much to do about the meaning
of the term "repair" in part 4 of the lease, the court observed that the term is also used

in part 5 of the lease in defining the lessor's duty to "repair and restore" premises

"damaged or destroyed by fire or other cause." Thus the Quebes' argument on "the

scope of 'repair' turns back on them." Id. at 919.



1134 INDIANA LAW REVIEW [Vol. 26:1113

' 'repair' ' language in part 4 of the lease that: "Tenant shall make all
repairs necessary to maintain the Leased Premises in the same condition

as they are now. . . . Tenant shall not be obligated ... to repair any

injury to the Leased Premises resulting from fire or other casualty. " 98

Davis argued that the problem was covered by part 5 of the lease:

If the Leased Premises should be damaged or destroyed by fire
or other cause . . . [and] the cost of repairs and restoration is

less than thirty (30%) percent [of the building's replacement

cost], then this Lease shall not terminate and the Landlord shall

at its expense promptly repair and restore the Leased Premises

to substantially the same condition they were in prior to the

damage or destruction."

In ruling against the Quebes, the court determined that the total

replacement of the roof made necessary by its deterioration over time
was not a "repair" under part 4 of the lease. The court also rejected

the Quebes' argument that destruction under part 5 of the lease applied

only to damages caused by a single occurrence. Instead the court found

that a roof can be damaged or destroyed by exposure "to the blistering

sun of some twenty or thirty Augusts, the ice and snow of as many
Januarys, and the rainfalls of April upon April." 100 Thus, it was not

error for the trial court to conclude that the Quebes had breached the

lease.

The court also addressed the question of whether the trial court

erred in ruling that the provision requiring Park to repair the roof must

be presumed to have had been complied with on August 1, 1986. 101 In

upholding the trial court's ruling, the court of appeals observed that,

in the absence of a specific agreement to the contrary, an assignee is

not liable for breaches occurring prior to the assignment or for obligations

due under the lease before the assignment. The court found that Davis'

promise in the assignment agreement to make all payments and perform
all covenants and conditions in the lease was not a specific undertaking

to assume an obligation which the original lessee was required to perform

more than two years before the assignment. 102

98. Id. at 917-18.

99. Id. at 918.

100. Id. at 919.

101. Although the Quebes had not directly challenged this ruling, they had alleged

all parties were aware the roof leaked at the time the lease was executed and that Parks

was obligated under the lease to repair the roof to the satisfaction of the Quebes by

August 1, 1986. Thus the court decided to address this issue since it was "raised to some

degree." Id. at 918.

102. Id.



1993] PROPERTY LAW 1135

The Quebes also contended that the damages awarded by the trial

court were excessive because they included the cost of repairing the roof,

which the lessee was not obligated to pay. In rejecting this contention,

the court observed that while the amount of damages awarded by the

trial court was identical to the bid from McGath Construction to replace
the roof, ceiling and carpet ($12,170), the damages were "sustainable

under a theory of loss of rental value. ,,,()3 Davis, who operated a tavern
on the leased premises, was forced to vacate the half of the building

containing a stage and dance floor seating 120. Davis continued to pay

the full amount of the rent, which totalled $25,000 from the date of

the abandonment to the date of trial. The Quebes could have requested

special findings of fact and conclusions of law and expressed their

perception of error through a motion to correct errors. Since they did

not, the court refused to reverse the award of damages "based on no

more than an inference from a coincidence." 104

Finally, the Quebes argued that Davis should not be awarded damages

for the cost of replacing the ceiling and carpet because these were

consequential damages that the tenant could have avoided. The Quebes

quoted Sigsbee v. Swathwood, for the rule that: "[D]amages for injury

to the tenant or his property from continued failure to make repairs
cannot ordinarily be recovered because under the rule of avoidable

consequences the tenant should have made the repairs himself and re-
covered their cost from the landlord. ,,,()5 In response, Davis cited T &
W Building Co. v. Merrillville Sport & Fitness, Inc., which held that:
"[WJhere the party whose duty it is (o perform has equal opportunity

for performance and equal knowledge of consequences of nonperform-

ance he cannot, while the contract is subsisting, be heard to say that

plaintiff might have performed for him." 106

In affirming the judgment, the court of appeals observed that Sigsbee

involved "minor repairs at 'slight expense,' such as replacing 'a few

window panes/ not replacing a major component of a building, such
as an entire roof." 107 Under the circumstances the court found "the rule

from T & W Bldg. Co. more appropriate than that from Sigsbee." 108
Where a dispute of this nature arises, the court found it more reasonable
to hold that the party with the greater interest in the property, the

103. Id. at 920.

104. Id. at 919-20.

105. Id. at 920 (quoting Sigsbee v. Swathwood, 419 N.E.2d 789, 798 (Ind. Ct. App.

1981)).

106. Quebe, 586 N.E.2d at 920-21 (quoting T&W Bldg. Co. v. Merrillville Sport
& Fitness, Inc., 529 N.E.2d 865, 867 (Ind. Ct. App. 1988), trans, denied.

107. Quebe, 586 N.E.2d at 921.

108. Id.



1136 INDIANA LAW REVIEW [Vol. 26:1113

lessor, should step forward to prevent further deterioration. The judgment

was affirmed. 109

B. Security Deposits Act

Indiana enacted a Security Deposits Act in 1989. 110 The centerpiece
of the Act is the notice provision, requiring the landlord, within forty-

five days after termination of the rental agreement and delivery of

possession, to give written notice to the tenant if the landlord is holding

any portion of the security deposit. 111 Failure of the landlord to comply

with the written notice of damages requirement constitutes an agreement

by the landlord that no damages are due, and the landlord must remit

the full security deposit to the tenant. 112 Two decisions during this survey
period addressed the landlord's duty to provide written notice of reasons

for not returning the tenant's security deposit.

In Skiver v. Brighton Meadows^ the court of appeals concluded
that the failure of the landlord to comply with the notice of damages

provisions of the Security Deposits Act barred the landlord's recovery

of past due rent. The tenant (Skiver) signed a one-year lease ending

April 30, 1991. Skiver gave the landlord (Brighton Meadows) a security

deposit of $250 and an additional $100 pet security deposit. In June

1990, Skiver vacated the premises, paying only $100 for the month of

June and nothing thereafter. Brighton Meadows kept the security deposit
but did not send Skiver the required written notice listing the obligations

to which the security deposit was being applied. The landlord filed suit
in a small claims court in November 1990, for back rent and attorney
fees, and requesting judgment for $3000 (the jurisdictional limit of the

court). The trial court awarded the landlord $2650 ($3000 minus the

$350 security deposit). The trial court concluded that the landlord was

not required to send the written notice of damages since the landlord

had not alleged any damage to the apartment unit. 114

In reversing the trial court, the court of appeals concluded that the

forty-five day notice to the tenant was required. Section 14 of the Act

provides:

109. Id.

110. Ind. Code §§ 32-7-5-1 to -19 (Supp. 1992).
111. Id. § 32-7-5-12 (Supp. 1992). Such notice shall include an itemized list of

damages claimed for which the security deposit is being applied, including the estimated

cost of repair for each damaged item. The list must be accompanied by a check for the

difference between the damages claimed and the amount of the security deposit held by

the landlord. Id. § 32-7-5-14 (Supp. 1992).

112. Id. § 32-7-5-15 (Supp. 1992).

113. 585 N.E.2d 1345 (Ind. Ct. App. 1992).

114. Id. at 1345-46.



1993] PROPERTY LAW 1137

In case of damage to the rental unit or other obligation

against the security deposit, the landlord shall mail to the tenant,

within forty five (45) days after the termination of occupancy,

an itemized list of damages claimed for which the security deposit

may be used as provided in section 13 of this chapter. 115

Because the landlord failed to provide written notice to the tenant, "no

damages are due, and the landlord must remit to the tenant immediately

the full security deposit." 116

While this decision may come as a shock to landlords who have
not read the Security Deposit Act closely, the decision appears to follow

both the letter and spirit of the Act. The entire security deposit is to

be returned to the tenant except for any amount applied to obligations

against the security deposit as itemized in a written notice delivered to

the tenant together with a check for the amount due the tenant within

forty-five days after termination of the rental agreement and delivery

of possession. 117 Since this was not done, the tenant was entitled to the

return of his full security deposit and the landlord was not entitled to

any damages. 118

One problem not addressed by the court is the variation in the
wording of the sections of the Act with regard to when the forty-five
day period for giving the notice to the tenant begins to run. Under

section 12(a) the forty-five day period begins upon "termination of the
rental agreement and delivery of possession. " In sections 14 and 15 it

begins at "termination of occupancy, " and in section 16 it begins at

"termination of the tenancy." 119 If written notice must be given to the

tenant within forty-five days after termination of occupancy, then it is

possible that the landlord would be required to give notice within forty-

five days of the abandonment of the premises by the tenant. On the
other hand, if the written notice is not required until forty-five days

after "termination of the rental agreement" or "termination of the

tenancy," then it can be argued that the unilateral action of the tenant

in vacating the premises prematurely should not start the forty-five day

period running. Non-payment of rent or abandonment by the tenant

does not automatically terminate a rental agreement. 120

115. Ind. Code § 32-7-5-14 (Supp. 1992) (emphasis added). One of the obligations
for which the landlord may withhold the security deposit is "all rent in arrearage under
the rental agreement, and rent due for premature termination of the rental agreement by

the tenant." Ind. Code § 32-7-5-13 (Supp. 1992).
116. Ind. Code § 32-7-5-15 (Supp. 1992).
117. Id. § 32-7-5-12(a) (Supp. 1992).

118. Skiver, 585 N.E.2d at 1347.

119. Ind. Code §§ 32-7-5-12, -14-16 (Supp. 1992).
120. See, e.g., Cunningham et al., supra note 25, at 278-80.



1138 INDIANA LAW REVIEW [Vol. 26:1113

In the second decision, Duchon v. Ross, 121 the tenants (Duchon and
Mcllvenna) leased a house from the landlords (Ross and Harris) for a

term of one year and paid a $490 security deposit. The tenants dealt

ilmost exclusively with Ross with regard to the house. 122 They negotiated

the lease with her, sent her the rental payments, and contacted her when
problems arose. The tenants were notified by Ross that when the lease
expired on February 28, 1991, it would not be renewed. The tenants

vacated and advised Ross to send all future correspondence to Duchon'

s

business address. On March 8, 1991, Ross sent Duchon a letter stating
that a carpet needed to be shampooed, that the locks had been re-

keyed, that a washer and dryer were missing, and that the backyard

had been damaged by vehicle parking and needed to be reseeded. The
letter advised the tenants that once the costs were ascertained they would

receive a final accounting. A dispute arose as to the damages, and the
tenants filed suit to recover their security deposit, attorney fees and

court costs. The landlords counterclaimed for damage to the house. The
tenants moved for summary judgments based on the landlords' failure
to comply with the notice requirement of the Security Deposit Act. The

trial court denied the motion and certified the denial of the summary
judgment for interlocutory appeal. 123

On appeal, the court observed that this was the first time the
sufficiency of the written notice had been questioned. The court began
with a discussion of the duties of the landlord to return the security

deposit to the tenant under the Act. It observed that the landlord must

return the entire security deposit except for any amount applied to the

payment of accrued rent, damages that the landlord has or will reasonably

suffer by reason of the tenant's noncompliance with the law or the

rental agreement, and unpaid utility or sewer changes the tenant is

obligated to pay under the rental agreement: "all as itemized by the

landlord in a written notice delivered to the tenant together with the

amount due within forty-five (45) days after termination of the rental

agreement and delivery of possession." 124

With regard to damages to a rental unit or any ancillary facility

that are not the result of ordinary wear and tear, the notice is to include

the estimated cost of repair for each damaged item and the amount the

landlord intends to assess the tenant. The itemized list must be accom-

panied by a check for the difference between the damages claimed and

121. 599 N.E.2d 621 (Ind. Ct. App. 1992).

122. Id. at 622. The facts indicate that both Duchon and Ross are attorneys at

law. Id. n.l.

123. Id. at 622-23.

124. Ind. Code § 32-7-5-12(a) (Supp. 1992).



1993] PROPERTY LAW 1139

the amount of the security deposit held by the landlord. 125 The landlord's

failure to comply with the notice of damages requirement
*

'constitutes

agreement by the landlord that no damages are due" 126 and the landlord

is liable to the tenants for the amount of the security deposit withheld

together with reasonable attorney fees and court costs. 127

Next, the court examined Ross' letter of March 8, 1991, because it

was the only letter sent within forty-five days after termination of the

tenancy, to see if it complied with the statute. The tenants point out

that the letter did not include the estimated cost of repair for each

damaged item and was not accompanied by a check for the difference

between the damages claimed and the security deposit. The court agreed

that the statute is clear and unambiguous, and that the letter failed to

provide the itemized estimated costs of repair and payment of the excess

deposit. The court refused to accept the landlords' defense that the

dispute over the cost of repairs relieved them of this statutory duty. 128

In addition, the landlords argued that section 12 does not prevent the

landlord or tenant from recovering "other damages" to which either is

entitled. However, the court observed that under section 15 there are

no "other damages" unless the security deposit is returned or the statutory

notice is sent to the tenant. The judgment was reversed with directions

to the trial court to enter summary judgement for the tenants and to
assess costs and attorney fees. 129

V. Mortgagee: Contractual Duties

In Wehling v. Citizens National Bank, 130 the Wehlings purchased a

parcel of property in Upland, Indiana, and financed the purchase through

the United Bank of Upland, Citizens National Bank's predecessor in
interest. The Wehlings paid the bank a fee to record the deed. The

Bank recorded the deed, but failed to place the Wehlings' mailing address
in the transfer book. Instead, it listed the address of the property. After

paying the May 1981 real estate taxes in May 1982, the Wehlings assumed
the Bank had set up an escrow account and was paying the real estate
taxes as indicated by the terms of the mortgage. In fact, the Bank had
not set up an escrow account nor had it paid the real estate taxes. A
notice of delinquency was mailed by the Grant County Auditor to the

address listed in the transfer book, and, in July of 1984, a notice of

125. Id. § 32-7-5-14 (Supp. 1992).

126. Id. § 32-7-5-15 (Supp. 1992).

127. Id. § 32-7-5-16 (Supp. 1992).

128. Duchon, 599 N.E.2d at 625.

129. Id. at 624-25.

130. 586 N.E.2d 840 (Ind. 1992).



1140 INDIANA LAW REVIEW [Vol. 26:1113

tax sale was sent by mail to the address of the property and the address

of the former owner. The Wehlings did not receive either of these

notices, and the property was subsequently purchased at a tax sale on

August 13, 1984. There was no indication that the Wehlings were aware

a tax deed had been executed by the county auditor on October 28,

1986. Apparently, the Wehlings first became aware in 1987, when they
attempted to sell the property, that the property had been sold for

nonpayment of taxes. The Wehlings then filed a complaint attempting

to quiet title against the tax sale purchasers and to set aside the deed.

The Bank was added in an amended complaint alleging negligent recording
of the deed and failure to escrow and pay the taxes. The trial court
entered a summary judgment in favor of the Bank, finding that it had
breached no duty to the Wehlings. The court also granted a summary
judgment in favor of the purchaser at the tax sale. 131

The court of appeals affirmed the summary judgment in favor of
the Bank on the ground that the statute of limitations had run on the
Wehlings' claim. The Indiana Supreme Court granted transfer. On the
statute of limitations issue the court of appeals concluded that the

applicable six year statute of limitation132 had expired between the re-

cording of the deed and the filing of the complaint. The supreme court,

however, agreed with the Wehlings' contention that the "discovery rule"

applied and the statute begins to run when the resultant damage of a
negligent act is "susceptible of ascertainment." 133 The court concluded

that the "discovery rule" does not differ from the "ascertainment rule"

announced in earlier Indiana decisions, and that "the cause of action

of a tort claim accrues and the statute of limitations begins to run when
the plaintiff knew or, in the exercise of ordinary diligence, could have
discovered that an injury had been sustained as a result of the tortious

act of another." 134

With regard to the summary judgment issue, the trial court had
held that the duty to provide the county auditor with the correct mailing

address rested solely with the owner. The supreme court disagreed,

holding that the trier of fact could reasonably find that when the Bank
contractually agreed to record the deed for a fee, this duty included

providing the county auditor with the Wehlings' correct mailing address

by placing it in the transfer book. Furthermore, the court determined

that the question of negligence in failing to escrow money for the payment
of the real estate taxes was a question of fact. Language in the mortgage

131. Id. at 840-41.

132. Ind. Code § 34-1-2-2(1) (Supp. 1992).
133. Duchon, 586 N.E.2d at 842-43.

134. Id. at 842-43.



1993] PROPERTY LAW 1141

specifically provided for such an escrow arrangement. Thus these factual

issues precluded the entry of summary judgment. The opinion of the
court of appeals was vacated and the case was remanded to the trial

court. 135

VI. Real Estate Closings: Contractual Duties136

In Lawyers Title Insurance Corp. v. Pokraka, 137 Joseph and Joan

Pokraka (collectively "Pokraka") sold a two flat apartment building to

Dwaine Paradis. Pokraka agreed to accept back a mortgage which would

be secondary to a $5000 first mortgage needed by Paradis to finance

part of the purchase price. The $5000 was to be paid to Pokraka

immediately following the closing. Employees of Lawyers Title Insurance

Corporation, including Antonovitz, handled the closing. Sometime prior

to the closing, Paradis asked Lawyers Title to delay the recording of

Pokraka's mortgage for a period of ninety days. Antonovitz authorized

the delay. During this period Paradis obtained a mortgage in the principal

amount of $15,000 from a commercial lender which was recorded before
the Pokraka mortgage. When Paradis stopped making payments on the
commercial mortgage Pokraka was forced to obtain a commercial mort-

gage to pay off the one taken by Paradis. Pokraka then filed this suit,

and the trial court awarded a judgment against Antonovitz and Lawyers

Title of $18,985.34 compensatory damages and $50,000 punitive dam-

ages. 138

In a memorandum decision, the court of appeals reversed the trial
court's judgment against Lawyers Title. The court found no misrepre-

sentation of past or existing facts which amounted to fraud, that Pokraka

had no right to rely on the representations, and that no damage was

sustained as a result of any misrepresentation because Pokraka had

agreed to take a second mortgage. The supreme court granted transfer

because it concluded Pokraka is entitled to the judgment. 139

Lawyers Title argued that the trial court's conclusions were contrary

to law because neither theory was properly pleaded, no duty was breached,

and the elements of fraud or breach of contract were not proven. The

supreme court observed that allegations of fraud appeared in the com-

plaint and that Pokraka's pre-trial ''contentions" made specific reference

135. Id. at 841-43.

136. In addition to the case discussed under this topic, two other decisions discussed

earlier also involve the contractual duties of the parties at a real estate closing. See supra

text accompanying notes 70-85, 130-35.

137. 595 N.E.2d 244 (Ind. 1992).

138. Id. at 245-46.

139. Id.



1142 INDIANA LAW REVIEW [Vol. 26:1113

to an oral contract which obligated Lawyers Title to follow the customs

of title companies in northwest Indiana when acting as a closing agent.
Thus, contract and fraud were part of Pokraka's case. 140

The court first examined the question of whether Lawyers Title was

obligated to promptly record Pokraka's mortgage. Expert testimony

established that it was customary for title insurance companies in northern

Indiana to record as soon as possible after closing all legal documents

requiring recordation. Thus, the trial court found it was Lawyers Title's

duty to promptly record the mortgage or notify Pokraka of any delay.

The court also rejected Lawyers Title's contention that since Pokraka

had agreed to a second mortgage no damages resulted from the delay.

Pokraka had agreed to a first mortgage in the amount of $5000, not

$15,000. Had the mortgage been recorded immediately, Pokraka would
have been protected from a superior mortgage in excess of $5000. Because

the relationship between Lawyers Title and Pokraka was contractual, its

failure to fulfill its obligations gave rise to an action for breach of

contract. 141

The court agreed with Lawyers Title that the trial court had er-

roneously concluded that fraud occurred. There was no evidence that

Antonovitz acted with the intent to mislead Pokraka. Nevertheless, Pok-

raka was still entitled to judgment because the trial court's judgment

may be affirmed under any legal theory supported by the findings even
if different than the one used by the trial court. Here the trial court's

findings support the conclusion that Lawyers Title breached its oral

contract to record the mortgage promptly or to advise Pokraka of the

delay. 142

Finally, the court reversed the award of punitive damages, noting

that punitive damages generally are not recoverable for breach of contract.

There was no finding that Antonovitz acted maliciously, fraudulently,

oppressively or with gross negligence. 143

VII. Riparian Rights

The natural resources and scenic beauty of Indiana are a public

right. The public has a vested right to the preservation and protection

of all public freshwater lakes in their present state and the right to use

such waters for recreational purposes. The state has full power and

control of all public freshwater lakes in trust for the recreational use

of all its citizens, and no person owning lands abutting a public freshwater

140. Id. at 247-48.

141. Id. at 248.

142. Id. at 249.

143. Id. at 250.



1993] PROPERTY LAW 1143

lake has an exclusive right to use such waters or any part thereof. 144

At the same time, Indiana recognizes riparian rights of owners of lands

bordering freshwater lakes. 145 These competing interests of the riparian

landowner and the right of the public to use the waters often conflict.

Such a conflict occurred during this survey period and the court provided

additional guidelines for resolving future disputes.

In Zapffe v. Srbeny, 146 the owners of land adjacent to Bass Lake

(the Zapffes) sought an injunction to prevent the defendants (collectively

referred to as "Srbeny") from interfering with their riparian rights. The

trial court enjoined Srbeny from installing a pier on the Zapffes' riparian

tract, but refused to rule with regard to the legality of Srbeny' s boat

mooring devices located in the lake beyond the Zapffes' pier. This was

more than a dispute between two riparian owners—it involved the rights
of the public to use freshwater lakes for recreational purpose. The State

of Indiana, through its Department of Natural Resources (DNR), should

make the first determination regarding the public right to use Indiana's
freshwater lakes for recreational purposes, including the location of boat

moorings and no judgment should be issued on this point without the

State being made a party. 147

The trial court defined the Zapffes' riparian rights as an extension

of their boundary line "to a distance of fifty (50) feet out from the

meander line of Bass Lake into the waters of Bass Lake." The facts

indicate that none of the boat moorings are closer than 100 to 120 feet

from the shore. In affirming the decision of the trial court, the court

of appeals observed that in Bath v. Courts ™% the court recognized that

the onshore boundaries of the riparian owner extend into the lake in

a line perpendicular to the shore where the shoreline approximates a

straight line and that, should the lake naturally recede, title to the new

land would vest in the riparian owner by the extension of their shore

boundaries. While the court in Bath did not indicate how far into the
lake the riparian rights extend, in Stoner v. Rice,*49 it was held that

riparian rights do not extend to the middle of the lake. The court agreed
with Srbeny' s position that Bath proscribes the extension of the riparian

144. Ind. Code § 13-2-11.1-2 (1988).
145. E.g., Stoner v. Rice, 22 N.E. 968 (Ind. 1889); Bath v. Courts, 459 N.E.2d

72 (Ind. Ct. App. 1984). Indiana Code § 32-4-2-5 allows riparian owners to build "piers,

wharves, docks or harbors in aid of navigation and commerce" on the riparian owners

premises or "upon the submerged lands beneath the waters." Ind. Code § 32-4-2-5 (Supp.
1992).

146. 587 N.E.2d 177 (Ind. Ct. App. 1992).

147. Id. at 178.

148. 459 N.E.2d at 72.

149. 22 N.E. at 968.



1144 INDIANA LAW REVIEW .[Vol. 26:1113

tract to a point where it would interfere with the use of the lake by

others. However, the court of appeals observed that the Bath decision

does not suggest the location of the "finite point.

'

,15°

The Zapffes argued that the riparian tract should be extended to
the five foot level of the lake because the five foot level would be

necessary to safely navigate some boats belonging to the Zapffes' guests.

In rejecting this contention, the court noted that there was no evidence

in the record to support this claim. The claim is even more questionable
in light of the fact that the Zapffes currently do not maintain a pier. 151

The Zapffes next argued that the riparian rights should extend 200

feet from shore, noting that Indiana Code section 14-1-1-29 requires
that no person operate a motorboat within 200 feet of the shoreline of

a lake or channel 500 feet or more wide except for trolling or for leaving

or approaching a dock, pier, wharf or the shore of such lake or channel. 152

The court was quick to point out, however, that the statute does not

totally prohibit a boat from operating within 200 feet of shore, and

extending riparian rights 200 feet from the shoreline would clearly in-

terfere with other persons' use of the lake. 153

Instead of a rigid formula for determining the exact location of

riparian rights by distance or depth, the court indicated that a "rea-

sonableness" test might be employed, taking into consideration such

factors as water level, number of riparian owners, purpose of the pier,

and effects on other users. The court observed that in this case other

riparian owners had installed piers, none of which extended more than

fifty feet into the lake. Therefore, the court concluded that under a

reasonable use test the trial court did not err in fixing the boundary

of the Zapffes' riparian tract at a length of fifty feet from the meander

line of Bass Lake. Thus, the boat moorings did not encroach upon the

Zapffes' riparian rights. 154

Finally, the court refused to address the Zapffes' claim that Indiana

Code sections 13-2-4-5 and 13-2-1 1.1 -2 155 prohibit non-riparian owners
from maintaining piers or boat moorings in the lake bed. Only the State,

acting through the DNR, has the authority to enforce these statutes.
The court expressed no opinion on whether the Srbenys' boat moorings

encroached upon the public's rights in the waters of Bass Lake since

the Zapffes lacked standing to raise this issue. 156

150. Zapffe, 587 N.E.2d at 179-80.

151. Id. at 180.

152. Ind. Code § 14-1-1-29 (Supp. 1992).
153. Zapffe, 587 N.E.2d at 180-81.

154. Id. at 181.

155. Ind. Code §§ 13-2-4-5, -11.2-2 (1988).
156. Id.