Staley v. Stephens

404 N.E.2d 633 · Indiana Court of Appeals · 1980

Facts

Paul R. and Suzanne B. Staley (Sellers) contracted to sell their home to Paul L. and Carolyn A. Stephens (Buyers). Buyers tendered $1,000 as earnest money, and the agreement required Sellers to provide marketable title. The property was located in a subdivision with a restrictive covenant mandating an 8.5-foot side yard setback. A survey revealed that a portion of Sellers’ house was only 8.4 feet from the side line, violating this ordinance. The subdivision's covenants allowed other lot owners to enforce violations through injunctive relief or damages. Buyers requested Sellers obtain waivers from other landowners for this violation, but Sellers refused. Consequently, Buyers deemed the title unacceptable and refused to complete the purchase.

Issue

The court must determine whether a slight infringement on a side line setback requirement renders a title unmarketable as a matter of law. Additionally, the court must address whether the trial court erred in denying Buyers’ counterclaim before they had the opportunity to present any evidence.

Holding

The court affirmed the trial court's decision that the title was unmarketable, granting Buyers’ motion for judgment on the evidence regarding Sellers’ complaint. However, the court reversed the trial court's decision against Buyers on their counterclaim and remanded it for a new trial.

Rule

A marketable title is one that has no defects of a serious nature, does not affect the owner's possessory title, and leaves no room for reasonable doubt or probable litigation. A court will not compel a purchaser to accept a doubtful title or one likely to involve litigation, even if it might ultimately be adjudged good. Even a small defect that creates a cloud on the title and exposes buyers to potential litigation, such as a side line setback violation enforceable by other landowners, renders the title unmarketable. Furthermore, a motion for judgment on the evidence (Trial Rule 50(A)(1)) can only be granted after the party with the burden of proof has completed the presentation of their evidence.

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