Judges find wired payment timely

Judges on the Indiana Court of Appeals declined to expand upon language in a forbearance agreement between a bank and business owner, finding the business owner timely made his final payment to the bank when he wired the money the day it was due, even though the bank did not receive it until the next day.

Fifth Third Bank, which made loans to Rick Singleton and companies affiliated with him, sought to foreclose on mortgages held by the Singleton parties. The bank and Singleton entered into a forbearance agreement, which stated Singleton would “make payments toward the outstanding Indebtedness owing to Lender under their respective Obgligations” by dates set forth in a schedule in the agreement.  The final payment of $350,000 had a due date of June 30, 2011.

A dispute between the parties as to when the bank must receive the funds led to a judge determining that the dates in the agreement, based on the language of it, means that a payment must be made by that date, not that the bank must receive the payment by that date.

On June 30, 2011, Singleton and his attorney were contacted by Michael Watkins of Fifth Third Bank to remind them that the final payment was due that day. Singleton’s attorney, Randall Arndt, asked Watkins how the money should be paid. Watkins directed Arndt to make a wire transfer as was done in the past. Singleton wired the money June 30, and Fifth Third received it the next day.

The bank then sought to renew its motion for entry of agreed final judgment, arguing the payment was untimely. Singleton filed a cross-motion to enforce the forbearance agreement. The judge ruled in favor of the bank, finding that Singleton had control of when and where to make the final payment, and chose a method that could delay payment.

In Rick Singleton, et al. v. Fifth Third Bank, 71A04-1202-MF-83, the Court of Appeals reversed based on the language of the forbearance agreement. The agreement doesn’t expressly provide for a particular method of payment, nor does it spell out when the money would be deemed paid if used by a funds-transfer system.

“[T]he parties’ intent is determined from the four corners of the document,” Judge Elaine Brown wrote. “We are not at liberty to supply omitted terms while professing to construe a contract.”

Singleton’s action of issuing an order to wire the funds for the final payment on June 30, 2011, constituted making payment under the agreement and did not constitute a termination event under the forbearance agreement, the judges ruled. They ordered further proceedings on the matter.