Judgment Granted To Lender Despite Absence Of Signature On Promissory Note
March 26, 2010
Has your lending institution failed to maintain an original or copy of an executed promissory note? Similar to the case discussed in my February 7, 2009 post No Signatures, No Promissory Notes, No Problem, the Indiana Court of Appeals in Baldwin v. Tippecanoe Land & Cattle, 2009 Ind. App. LEXIS 1491 (Ind. Ct. App. 2009) (.pdf) upheld a summary judgment for the plaintiff lender even though the lender could not produce the signed promissory note.
Procedural history. Lender filed a claim to foreclose its second mortgage and attached to the complaint a promissory note that was not signed. (The mortgage did, however, appear to contain the borrower’s signature, and the unsigned note referred specifically to the accompanying mortgage.) In his response to the lender’s claim, the borrower entered a “general denial” pursuant to Indiana Trial Rule 8(B). The lender later filed a motion for summary judgment that the trial court granted.
The borrower’s contentions. The borrower argued that the mortgage was unenforceable because the note was not signed by him.
The lender’s contentions. The lender’s theory to get around the absence of the signature rested upon Ind. T. R. 9.2(B), which states:
When a pleading is founded on a written instrument and the instrument or a copy thereof is included in or filed with the pleading, execution of such instrument . . . shall be deemed to be established . . . unless execution be denied under oath in the responsive pleading or by an affidavit filed therewith.
The lender’s point was that the execution of the note was deemed to be established pursuant to this trial rule.
Rule 8(B) versus 9.2(B). The Court of Appeals analyzed the technical requirements of Trial Rules 8(B) and 9.2(B), as well as Rule 11(A) dealing with signatures on court filings. Those rules, collectively, “mean that the attorney’s signature on a general denial [per Rule 8(B)] rejects the assertions in the claim, but does not constitute an oath by which the pleader denies the execution of an instrument attached to a claim [per 9.2(B)].”
Must deny under oath. Because the borrower failed to deny, under oath, the execution of the subject note, the Court affirmed the summary judgment granted in favor of the lender:
As [lender] attached the Note and Second Mortgage to its cross-claim, execution of both would be deemed to be established, by operation of Trial Rule 9.2(B), unless [borrower] denied under oath that they were executed. [Borrower], himself an attorney, filed a general denial. He signed it as “respectfully submitted.” He omitted to include a statement that his general denial was truthful and made under penalty for perjury. Thus, [borrower] failed to deny under oath the execution of the Note. We therefore conclude that execution of the Note was deemed to be established . . ..
As was the case with the Bonilla opinion, which was the subject of my February 7, 2009 post, Indiana law seemingly allowed the lender in Baldwin to dodge a bullet in order to obtain a pre-trial judgment in its favor.