Reformation: How A Mortgage With An Erroneous Legal Description Can Be Foreclosed
Trustees Have Authority To Foreclose For Trusts

Standing: Bank Merger Rule Same For Corporate Entities

The Court in Beneficial Financial v. Hatton, 998 N.E.2d 232 (Ind. Ct. App. 2013), the case I discussed last week, applied a version of the bank merger rule about which I wrote on 01/25/13 and 09/19/14

Motion to dismiss.  The borrower in Beneficial sought dismissal of the lender’s foreclosure complaint on the theory that the subject promissory note and mortgage were not executed by the plaintiff but rather by its predecessor-in-interest.  The borrower claimed that the law required the lender to attach loan assignment documents to establish standing and thus proceed. 

Merger rule.  The Court concluded that the borrower’s argument was without merit.  Pursuant to Ind. Code § 23-1-40-6(a)(2), when a corporate merger takes effect, title to all real estate and other property owned by each corporate party to the merger is vested in the surviving corporation.  So, a surviving corporation assumes the assets of the assumed corporation as a matter of law.  “This obviates the necessity of creating a separate instrument reflecting the change in ownership of each such . . . asset.” 

No assignments needed.  In Beneficial, no loan assignment document, such as an endorsement, an allonge or an assignment of mortgage, existed.  But the lender was not required to supply such documentation, apart from some proof of the corporate merger itself.  The lender attached to its complaint a certificate of merger issued by the Indiana Secretary of State establishing, among other things, that the lender was the surviving entity, which the Court concluded was sufficient to prove the lender’s interest in the mortgage. 

Beneficial is a slightly different spin on the bank merger rule previously addressed in this blog, but the result is the same.  Assignment documents are not required to establish standing by a successor corporation.