COA affirms addition of farmland contractual interests in marital estate

The Indiana Court of Appeals has affirmed the dissolution of a man’s marriage, finding the inclusion of his contractual interests in purchased farmland in the marital estate was not an abuse of discretion.

Following the dissolution of his marriage, John Henderson appealed the Hamilton Superior Court’s findings of fact, conclusions and judgment dividing the marital estate with his wife, Tina Henderson. John, a farmer, had purchased 37.93 acres in Tipton for $189,650 and paid sellers Deborah Hoover and Ruthanne Bowser $1,000 as a down payment. His wife was not a party to the contract.

During the dissolution proceedings, the trial court found the real estate to be valued at $303,600, with $139,000 still owed. It ultimately included the value of the real estate and the amount due on the contract in the marital estate and calculated the marital estate’s net worth to be $903,261.03. John was awarded 55% of the marital estate and Tina 45%, leaving him solely responsible for the remaining balance owed on the contract and leaving him to receive the contractual interest.

John appealed, contending that any interest he has in the real estate is an equitable interest and, pursuant to In re Marriage of Dall, 681 N.E.2d 718, 722 (Ind. Ct. App. 1997), an equitable interest should not be included in the marital estate.

In affirming the trial court, the Indiana Court of Appeals found no error in including John’s contractual interest in the real estate in the marital estate after observing that he did not acknowledge a footnote in Dall stating that “the rule does not apply where the real estate is titled in a third-party, and husband and/or wife are the contract purchaser.”

Unlike Dall, the appellate court concluded that John and the sellers executed a written contract for his purchase of the real estate and that John’s equitable interest in it was not indeterminate, but derived from the contract.

“He will obtain title to the Real Estate upon his full performance with and payment of the amount due under the Contract. As such, the general rule announced in Dall, that an equitable interest in real property titled in a third party should not be included in the marital estate, does not apply to the circumstances present in this case,” Judge Terry Crone wrote for the court.

The appellate court also found no abuse of discretion in the trial court’s valuation of real estate, finding the submitted appraisal of $303,000 was supported by evidence. Nor, it found, did the trial court abuse its discretion in excluding John’s attempted elicited testimony from one of the sellers regarding why they would not allow him to sell or assign his interest in the contract.

“Apparently, Husband wanted to establish how difficult it would be to obtain Sellers’ consent for him to sell his interest. The extreme difficulty in obtaining such consent, according to Husband, affects the value of his interest. Husband asserts that the evidence bore only on valuation and not the interpretation of the Contract. We disagree,” the appellate panel wrote.

“The evidence clearly was meant to show Hoover’s interpretation of the Contract provision that prohibited Sellers and Husband from selling or assigning their interests in the Contract and Real Estate without written consent of the other, provided, however, that ‘any consent shall not be unreasonably withheld,’” it continued.

Ultimately, the appellate court concluded that the exclusion of the evidence was not an abuse of discretion and therefore affirmed in John Henderson v. Tina Henderson, 19A-DC-1517.