BENEFICIAL MORTG. CO. OF INDIANA v. POWERS

BAKER, Judge.

STATEMENT OF THE CASE

Plaintiff-appellant, Beneficial Mortgage Co. of Indiana (Beneficial), appeals a negative judgment entered in favor of defendant-appellees, Constance A. Powers (Constance), and James H. Young (Young), in a mortgage foreclosure action.

We affirm.

STATEMENT OF THE FACTS

The facts most favorable to the judgment reveal that Constance was married to Donald J.B. Powers (Donald) for over thirty years. With the exception of one year when she worked outside the home, Constance was a housewife during her entire married life. The Powers owned a home as tenants by the entireties encumbered by a mortgage in favor of Union Federal Savings Bank.

On four separate occasions in 1985, 1986 and 1987, Donald approached Beneficial seeking additional mortgages on the couple's real estate. On each occasion, Donald appeared alone at Beneficial's office and made excuses as to why Constance was unable to accompany him. After signing the documents in the presence of James Goodwin, Beneficial's manager, Donald took the documents to obtain Constance's signature. Donald would then return to Beneficial with the documents purportedly signed by Constance. The signatures on all of the documents were acknowledged by a notary; Young acknowledged the last three documents while the first document was acknowledged by a notary unrelated to the present case.

Donald obtained the acknowledgements by inviting Young to his home, leaving Young's presence to get Constance's signature, proceeding to a separate room where his wife was presumably located, and returning with the documents purportedly signed by Constance. Of the three documents acknowledged by Young, one did not contain his typed name, county of residence or commission expiration date. The other two documents contained this information, but it had been typed in by Beneficial subsequent to Young's affixing his signature. Young provided his acknowledgements as a favor for which he received no compensation.

Beneficial approved each of the additional mortgages and issued disbursement checks payable to Donald and Constance. Each check bore Donald's endorsement along with the purported endorsement of Constance. Each additional mortgage was designated confidential to accomodate Donald's request that all statements and correspondence be sent to a post office box rather than the Powers' home.

In June, 1987, Donald, together with some close family friends, approached Constance concerning, inter alia, the Beneficial mortgages. Just prior to this confrontation, Donald confessed his actions to Wilma Stevens, one of the couple's friends. Donald told Mrs. Stevens that he had forged Constance's signature on the loan documents and that he thought the loan officer knew he was doing so. Donald then told Constance he had forged her signature on the documents. For the first time, Constance was informed of the additional mortgages with Beneficial. She was also told that everything they owned was gone. In the ensuing days, Donald produced the forged loan documents confirming the situation to Constance. At Constance's insistence, their house was put up for sale. Constance testified at trial that she insisted on selling their house because she felt it was the only way to satisfy the large debt incurred by Donald.1 She explained that she believed she was partly responsible for Donald's obligations because she was married to him.

Shortly after Donald confessed his actions to Constance, he issued a check post-dated to July 31, 1987, payable to Beneficial. Constance knew their personal checking account did not contain sufficient funds to cover the check and she asked Donald not to deliver it to Beneficial. Donald delivered the check anyway.

On July 22, 1987, Donald died of a self-inflicted gunshot wound. Shortly thereafter, in late July, Constance stopped payment on the July 31 check to Beneficial, contacted an attorney and disavowed the mortgages and notes issued thereon. On July 31, 1987, the outstanding balance on the Beneficial mortgages was $41,403 plus interest at the rate of 14% per annum.

Beneficial subsequently brought a mortgage foreclosure action against Constance and an action for damages against Young. Following a trial, the trial court entered findings of fact, conclusions of law and a judgment in favor of Constance and Young. Beneficial appeals.

ISSUE

Beneficial raises several issues which may be succinctly stated as one:

DISCUSSION AND DECISION

Beneficial appeals a negative judgment. To be successful, Beneficial must establish that the judgment is contrary to law. Sherk v. Indiana Waste Systems, Inc. (1986), Ind. App., 495 N.E.2d 815, trans. denied. This court will set aside a negative judgment as contrary to law only when the evidence is without conflict and all reasonable inferences to be drawn therefrom lead to but one result and the trial court has reached a different one. Charles F. Broughton, D.M.D., P.C. v. Riehle (1987), Ind. App., 512 N.E.2d 1133. This court, in considering only the evidence most favorable to the judgment, will not reweigh the evidence or judge the credibility of the witnesses. Maddox v. Wright (1986), Ind. App., 489 N.E.2d 133. Where a party bearing the burden of proof receives a negative judgment, it will not be disturbed as long as any evidence or reasonable inferences arising therefrom support the judgment. Brand v. Monumental Life Ins. Co. (1981), 275 Ind. 308, 417 N.E.2d 297. Any conflicts in the evidence must be resolved by the trier of fact. Id. The specific findings and conclusions of the trial court will be affirmed unless clearly erroneous. Jay School Corp. v. Cheeseman (1989), Ind. App., 540 N.E.2d 1248, trans. denied.

Beneficial contends the trial court's findings and conclusions regarding whether Constance ratified Donald's actions were not supported by the evidence. Specifically, Beneficial assigns the following finding and conclusions as error:

Record at 304; 309.

Beneficial maintains that although no agency relationship existed between Constance and Donald, she nonetheless ratified his unauthorized acts. While we agree with Beneficial's assertion that an agency relationship is not a prerequisite for ratification, Lichtenberger v. Graham (1875), 50 Ind. 288, we agree with the trial court's finding that Constance did not ratify Donald's unauthorized acts.

Ratification is a question of fact and is defined as "the adoption of that which was done for and in the name of another without authority." State ex rel. Guaranty Bldg. and Loan Co. v. Wiley (1935), 100 Ind.App. 438, 441, 196 N.E. 153, 154. Knowledge of all the material facts by the person to be charged with the unauthorized acts of another is an indispensable element of ratification. See Allegheny Mut. Casualty Co. v. Franklin (1987), Ind. App., 513 N.E.2d 658, 659 ("A principal's knowledge of all material facts is indispensable to ratification of an agent's unauthorized acts."). A ratification does not occur unless it appears that the act was performed for and on behalf of another, and not on account of the actor himself. Bryan v. Pommert (1941), 110 Ind.App. 61, 37 N.E.2d 720. One may ratify another's unauthorized acts through silence and acceptance of the benefits attaching to such acts. Wright v. State (1977), 266 Ind. 327, 363 N.E.2d 1221 (citing 1 I.L.E. Agency § 121 et seq. (1957)).

Beneficial contends that Constance's intent to ratify Donald's unauthorized acts was evidenced by the fact that she knew of Donald's acts three and one-half to six weeks prior to his death and the fact she admitted that upon gaining such knowledge she insisted on selling the couple's home to satisfy Donald's debts. There was further testimony, however, that Constance thought she was required to attend to Donald's financial obligations because she was married to him. Furthermore, within nine days of Donald's death, Constance retained legal counsel and disavowed the note and mortgage.

The trial court was presented with conflicting evidence on the issue of Constance's purported ratification of Donald's unauthorized acts. It was reasonable for the trial court to infer from the evidence presented that Constance did not ratify Donald's unauthorized act of signing her name to the additional mortgages. Without reweighing the evidence or judging the credibility of the witnesses, we find the trial court properly found that Constance did not authorize or ratify Donald's acts.

Similarly, we reject Beneficial's argument that the trial court's finding relating to whether Constance derived any benefit from Donald's unauthorized acts was unsupported by the evidence. Beneficial presents an elaborate argument in its brief, complete with mathematical computations, as to how it perceives the loan proceeds were most assuredly used by the Powers. Beneficial is essentially rearguing the evidence on appeal and inviting this court to reweigh the evidence. We decline the invitation. As the trial court correctly pointed out, there is no evidence to support any extravagant spending that might have benefited Constance. We find no merit in Beneficial's argument that the evidence conclusively leads to a contrary result.

Beneficial next contends the trial court's following finding and related conclusion were not supported by the evidence:

Record at 307-08; 310. Beneficial argues that the trial court was in error because James Goodwin, Beneficial's manager, testified that he had no suspicion concerning the genuineness of Constance's signature. Beneficial is once again inviting this court to reweigh the evidence. We again refuse the invitation.

The record reflects that Beneficial did not once, in four instances, confirm Constance's participation in Donald's application for an additional mortgage. Furthermore, Beneficial knew that the confidential designation of the loans ensured that no notice of the transactions would be forwarded to Constance's residence. Wilma Stevens, a close family friend, testified that Donald told her he thought the loan officer knew of his forgeries. There is ample evidence in the record to support the trial court's finding that Beneficial knew or had reason to know of Donald's unauthorized acts.

The same evidence that supports the trial court's findings concerning Beneficial's actual or constructive knowledge of Donald's unauthorized acts also supports its findings with respect to Beneficial's equitable posture in bringing its actions against Constance and notary Young. On this issue, the trial court made the following findings of fact and conclusions of law:

Record at 305; 309-10.

Foreclosure lies solely within the equitable discretion of the trial court. Dorothy Edwards Realtors, Inc. v. McAdams (1988), Ind. App., 525 N.E.2d 1248. It is well settled that he who seeks equity, must do equity. Alber v. Standard Heating & Air Conditioning, Inc. (1985), Ind. App., 476 N.E.2d 507. A party seeking equitable relief must come before the court with clean hands. Id. "A plaintiff cannot seek relief against the wrong of another where he himself has engaged in the same wrong or a wrong with reference to the same matter." McKechnie v. McDermott (N.D. Ind. 1984), 595 F.Supp. 672, 676.

Beneficial had every opportunity to investigate Constance's purported signature. Beneficial participated in the questionable manner in which the documents were executed by filling in the notary information and by failing to confirm Donald's explanations for his wife's repeated absences. The circumstances surrounding the loan transactions were questionable. The evidence before the trial court concerning Beneficial's conduct during the loan transactions was sufficient to justify the trial court's finding. Beneficial may not conduct itself in the manner it did during the loan transactions and then expect equitable relief from the trial court. The denial of Beneficial's mortgage foreclosure action was proper.

Beneficial also argues the trial court erred in failing to find notary Young was at least negligent. "In order to recover on a theory of negligence, a plaintiff must establish that the defendant owed him a duty, that the defendant breached that duty, and that said breach proximately resulted in injury or loss for which damages are sought." Flott v. Cates (1988), Ind. App., 528 N.E.2d 847, 848. The trial court found that Young's conduct in acknowledging Constance's signature did not proximately cause Beneficial's loss. Rather, it was Beneficial's conduct when dealing with Donald in the loan transactions that caused its own loss. We have already discussed Beneficial's conduct in our discussion of the applicable equitable principles. This conduct, as evidenced in the record, is sufficient to uphold the trial court's determination that Young's conduct was not the proximate cause of Beneficial's loss.

Beneficial finally contends there was no evidence to support the trial court's findings on the issue of Beneficial's reliance on Young's acknowledgement of Constance's purported signature. The trial court found as follows:

Record at 304-06; 310. Beneficial's brief presents us with a reargument of the evidence. We will not reweigh the evidence or judge the credibility of the witnesses. The record contains sufficient evidence to support the trial court's findings on this issue.

Judgment affirmed.

SHIELDS, P.J., and ROBERTSON, J., concur.