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Downing v. Dial

Indiana Court of Appeals
426 N.E.2d 416 (1981)


James and Nidrah Dial (defendants) bought a restaurant from Thomas Downing (plaintiff) under a contract of conditional sale. The following year, the Dials assigned their interest in the restaurant to Patricia Watkins (defendant). Watkins later assigned her interest in the restaurant to two other people. The original Dial-Downing contract stated that the agreement could only be assigned with Downing’s consent, and Downing consented to all the assignments. Eventually, the final assignee defaulted on the payments owed to Downing. At that point, Downing informed the Dials that they were in default and sued the Dials and Watkins. The trial court ruled that Watkins owed Downing. However, the document assigning the Dials’ interest to Watkins said that Watkins agreed to take on the original contract’s obligations as though Watkins had been an original contract party. The trial court found that this language suggested that the parties intended to make a novation substituting Watkins for the Dials and completely relieving the Dials of their contract obligations. The trial court found relevant: (1) Downing’s failure to look to the Dials for payment until default, (2) Downing’s consent to the other assignments, and (3) Downing’s receipt of an additional $12,000 with one of the assignments from Watkins. Downing appealed.

Rule of Law


Holding and Reasoning (Neal, J.)

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