Appellant-Plaintiff Peoples Bank & Trust Co. ("Peoples") brings this interlocutory appeal of the denial of its motion for summary judgment in its lawsuit based on three promissory notes executed by Appellee-Defendant Henry J. Price ("Price"). We reverse.
The dispositive issue may be restated as whether Peoples is entitled to summary judgment in its action to collect on three promissory notes executed by Price.
The operative facts are undisputed. In 1995, Price and Timothy Luther ("Luther") entered into an arrangement to finance the purchase of luxury automobiles that Luther thought he could resell at a profit. (R. 89). Price would execute a promissory note to Peoples, obtain a check payable to both Price and Luther, and then endorse the check and provide it to Luther for the purchase of a car. (R. 89-90). When Luther sold the car, he was to apply the proceeds to pay off the note and split the profits with Price. (R. 90).
Beginning in August of 1995, Price borrowed a total of $148,200.00 from Peoples under the terms of three promissory notes styled "Fixed Rate Consumer Note, Disclosure and Security Agreement," each representing the purchase of a Mercedes automobile. (R. 14, 18, 22). Price was the only person who signed the notes and signed in the capacity of "borrower." (R. 14, 18, 22). Each note provided that it would be secured by the particular Mercedes automobile to be purchased and specified by the serial number or vehicle identification number ("VIN") of that car. (R. 14, 18, 22). The notes contained the following covenants:
(R. 15, 19, 23). The promissory notes provided that in the event of default, Peoples had the right to accelerate all payments and demand all amounts owing, including the costs of collection and reasonable attorney fees. (R. 15, 19, 23).
In conjunction with the closing of this type of loan, the bank officer would complete a form styled "CONSUMER LOAN APPROVAL CHECKLIST." (R. 95). These checklists read as follows:
_√_ PURCHASE: Check payable to customer and dealer with restrictive endorsement stamp.
___ REFINANCE: Title application form 44049, ST-108 or ST-108Em $5.00 title fee and title.
_√_ VERIFICATION OF VEHICLE IDENTIFICATION NUMBER
_√_ VERIFICATION OF WHO IS THE DEALER/SELLER
EVIDENCE THAT THE ABOVE CONDITIONS ARE MET MUST BE INCLUDED IN THE LOAN PACKAGE.
(R. 95). The bank officer would note on the checklist that the loans were "ready to close." (R. 95).
Upon the execution of each note, Peoples would provide Price with a check payable to both Price and Luther. (R. 41-43). Each of the three checks contained a restrictive endorsement
Luther made sporadic payments on the notes with checks issued from his business known as "Jim Britts Motorsports, Inc." (R. 97-111). However, in the later part of 1996, it was discovered that the cars which purported to secure the notes were fictitious. (R. 91). As there was no collateral securing the notes, Peoples accelerated the balance due and ultimately filed the present lawsuit against Price to enforce its rights under the notes. (R. 10).
Price answered the complaint denying any liability under the notes. (R. 31-32). Price raised affirmative defenses including his argument that the proximate cause of People's damages was its failure to obtain the titles to the vehicles in question or to ascertain whether the VINs listed in the notes actually existed. (R. 32). Price counterclaimed against Peoples alleging that it was liable to him for the damages he incurred due to Peoples' negligence in failing to verify the existence of the identification numbers. (R. 34).
Peoples moved for summary judgment on its claims under the notes as well as upon Price's counterclaim. Price made the following assertions by affidavit:
13. Peoples' negligence in ascertaining that the titles' claimed vehicle numbers were false and that the vehicles therefore
The trial court denied Peoples' motions for summary judgment finding in pertinent part as follows:
Discussion and Decision
A. Standard of Review
As stated in Stevenson v. Hamilton Mutual Insurance Company, 672 N.E.2d 467, 470-71 (Ind.Ct.App.1996), trans. denied:
B. Freedom to Contract
Our supreme court has recently confirmed its commitment to advancing the public policy in favor of enforcing contracts. See Trimble v. Ameritech Publishing, Inc., 700 N.E.2d 1128, 1129 (Ind.1998) (citing Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1129 (Ind.1995)). Indiana courts recognize that it is in the best interest of the public not to unnecessarily restrict persons' freedom to contract. Id. Thus, as a general rule, the law allows competent adults the utmost liberty in entering into contracts which, when entered into freely and voluntarily, will be enforced by the courts. Federal Kemper Ins. Co. v. Brown, 674 N.E.2d 1030, 1033 (Ind.Ct.App. 1997), trans. denied. Nevertheless, despite the very strong presumption of enforceability, courts have refused to enforce private agreements that contravene statute, clearly tend to injure the public in some way, or are otherwise contrary to the declared public policy of Indiana. Continental Basketball Ass'n, Inc. v. Ellenstein Enterprises, Inc., 669 N.E.2d 134, 139 (Ind.1996).
C. Interpretation of Contracts
Construction of the terms of a written contract is a pure question of law for the court; thus, our standard of review is de novo. George S. May International Co. v. King, 629 N.E.2d 257, 260 (Ind.Ct.App.1994), trans. denied. The unambiguous language of a contract is conclusive upon the parties to the contract and upon the courts. Turnpaugh v. Wolf, 482 N.E.2d 506, 508 (Ind.Ct. App.1985). If the language of the instrument is unambiguous, the intent of the parties is determined from the four corners of that instrument. Id. If, however, a contract is ambiguous or uncertain, its meaning is to be determined by extrinsic evidence and its construction is a matter for the fact finder. Bicknell Minerals, Inc. v. Tilly, 570 N.E.2d 1307, 1310 (Ind.Ct.App.1991), trans. denied.
Parol or extrinsic evidence is inadmissible to expand, vary, or explain the instrument unless there has been a showing of fraud, mistake, ambiguity, illegality, duress or undue influence. Turnpaugh, 482 N.E.2d at 508. The existence of express terms in a valid written contract precludes the substitution of any implied terms regarding the subject matter covered by the express terms. Keystone Carbon Co. v. Black, 599 N.E.2d 213, 216 (Ind.Ct.App.1992), trans. denied. This principle is especially true in Indiana because our courts will zealously defend the freedom to contract. Id.; Fresh Cut, 650 N.E.2d at 1129.
Under the express terms of the notes and the restrictive endorsements of the checks as discussed above, the responsibility to ensure that the notes were kept secured by the cars in question fell squarely upon Price, and not Peoples. Price promised to insure the cars and keep them at his own address. By endorsing the checks, Price guaranteed that the titles would show that Peoples maintained a first lien securing its loans. Price cannot justify his breach of express contractual obligations on the basis that Peoples may have failed to verify the existence of the automobiles for itself. Nor can Price justify his breach of express contractual terms by stating that he had understood that Peoples had assumed the responsibility for perfecting its security interest in the cars. See Woodall v. Citizens Banking Co., 503 N.E.2d 427, 428-30 (Ind.Ct.App. 1987) (where the express terms of the mortgage required the homeowner to warrant and defend the title against mechanics liens, the homeowner would not be heard to argue that the bank had voluntarily assumed the duty to discharge mechanics liens), trans. denied. Accordingly, Peoples is entitled to summary judgment on the notes.
Therefore, we must reverse and remand with instructions that the trial court enter summary judgment in favor of Peoples and conduct any further proceedings necessary to determine Price's liability thereunder.
STATON, J., and ROBB, J., concur.