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FOR PUBLICATION

ATTORNEY FOR APPELLANT: JILL SISSON Valparaiso, Indiana

ATTORNEY FOR APPELLEE: MITCHELL A. PETERS Richard A. Miller & Associates Merrillville, Indiana

IN THE COURT OF APPEALS OF INDIANA
BRIAN L. BENNETT, Appellant-Plaintiff, vs. CAROLE BRODERICK, Appellee-Defendant. ) ) ) ) ) ) ) ) )

No. 64A04-0606-CV-332

APPEAL FROM THE PORTER SUPERIOR COURT The Honorable David L. Chidester, Judge Cause No. 64D04-0511-SC-6268

December 27, 2006

OPINION - FOR PUBLICATION

NAJAM, Judge

STATEMENT OF THE CASE Brian Bennett appeals from a small claims judgment in favor of Carole Broderick on his breach of contract claim. We address two issues on review: 1. Whether a binding contract was formed when Bennett tendered a postdated check as payment of the security deposit when he executed a residential lease with Broderick. Whether Broderick repudiated the lease.

2.

We reverse and remand with instructions. FACTS AND PROCEDURAL HISTORY On June 20, 2005, Bennett and his wife met with Broderick to execute a twentyfour-month residential lease agreement ("the lease") to begin August 1, 2005. The parties met at Broderick's rental property in Valparaiso, negotiated a slight change to the lease, 1 and then executed the lease. The lease provides, in relevant part: 3. [Bennett] agrees to pay [Broderick], as rent for the above described premises, the sum of Nine Hundred and 00/100 ($900.00) Dollars per month, payable in advance of the 1st day of each month beginning on August 1, 2005[,] and continuing to each month thereafter for the term of the Initial Lease Agreement. . . . 4. [Bennett] has on deposit with [Broderick] the sum of Nine Hundred and 00/100 ($900.00) Dollars. Said sum shall be a security deposit to secure [Bennett's] performance of this Agreement, and to compensate [Broderick] for any unpaid rent, utility bills, or repairs to the premises, except for repairs resulting from reasonable natural wear and tear to the premises. . . . *** 14. Any of the following acts or omissions shall constitute a material breach of this Agreement by [Bennett]:

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The negotiated change dealt with the end term of the lease and is not material to this appeal.

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(a) [Bennett's] failure to pay any rent or other sum payable under this Agreement on the date it becomes due. (b) [Bennett's] nonperformance or breach of any term, covenant, condition, or provision of this Agreement. *** 15. In the event that [Bennett] commits a material breach of this Agreement, as defined in Paragraph 14 hereof, [Broderick] may, in addition to any other legal or equitable remedies that may be available to [Broderick]: *** (b) Terminate this Agreement and [Bennett's] right to possession of the premises in the manner provided below, and commence an action against [Bennett] to recover possession of the premises and for such damages as may be available at law. Appellant's App. Tab 4 at 5, 8. At their meeting on June 20, Bennett delivered a personal check to Broderick for $1800. The lease required a $900 security deposit to be paid when the lease was signed and $900 monthly rent to be paid by the first day of each month. Bennett meant the check to cover the security deposit and the first month's rent. At the same meeting, Bennett informed Broderick that he and his family planned to take an extended vacation, and he provided Broderick with cell phone contact numbers and his address in West Lafayette. After Bennett had left the meeting, Broderick noticed for the first time that the check was written for an amount in excess of the security deposit required by the lease and that the check was postdated. She took the check to her bank that afternoon, where a teller told her that the check could not be "accept[ed,]" "deposit[ed,]" or "cash[ed]"
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because it was postdated. Transcript at 29, 30. That same day, Broderick attempted to reach Bennett on his cell phone regarding the check. She left a message on his voicemail, but she received no reply. On June 25, 2005, Broderick sent a letter to Bennett via priority mail with delivery confirmation requested. With the letter, Broderick returned the postdated check and asked what the check was intended to cover. She also reminded Bennett that the security deposit was due when he signed the lease, and she asked him to inform her by July 1, 2005, whether he intended to pay the security deposit. The letter provided: "No response from you will be considered a refusal to pay and the agreement should be considered null and void." Appellant's App. Tab 4 at 23. Bennett did not reply by July 1, 2005, to Broderick's message on his cell phone or to Broderick's letter. Bennett first received Broderick's letter on July 21, 2005, when he and his family returned to Indiana from their vacation. He had not received her cell phone message because he had lost his phone. Bennett immediately telephoned

Broderick upon receiving her letter on July 21. When he inquired about the status of the lease, Broderick informed him that she "no longer considered the lease to be valid." Appellee's Brief at 3. Bennett filed a breach of contract action against Broderick in small claims court, seeking to recover the costs incurred in finding another residence. After a hearing, the small claims court made special findings and entered judgment for Broderick. Bennett appeals.

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DISCUSSION AND DECISION Standard of Review In the appellate review of claims tried by the bench without a jury, the reviewing court shall not set aside the judgment unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses. City of Dunkirk Water and Sewage Dep't v. Hall, 657 N.E.2d 115, 116 (Ind. 1995) (stating standard of review in appeal from small claims court). In determining whether a

judgment is clearly erroneous, we will not reweigh the evidence or determine the credibility of witnesses but will consider only the evidence that supports the judgment and the reasonable inferences to be drawn from that evidence. Id. Small claims actions are "informal, with the sole objective of dispensing speedy justice between the parties according to the rules of substantive law." Ind. Small Claims Rule 8(A). Although the court here made special findings, the formal entry of special findings is "contrary to the policy announced in Small Claims Rules 8 and 11," which provide that small claims trials are informal and require only that small claims judgments "shall be reduced to writing." Bowman v. Kitchel, 644 N.E.2d 878, 879 (Ind. 1995) (quoting Ind. Small Claims Rule 11(A)). Thus, the special findings entered below do not guide our review. Here, because Bennett had the burden of proof at trial on his breach of contract claim, he appeals from a negative judgment. See Harbours Condominium Ass'n v. Hudson, 852 N.E.2d 985, 989 (Ind. Ct. App. 2006). When a party appeals from a negative judgment, he must demonstrate that the evidence points unerringly to a
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conclusion different from that reached by the trial court. Mominee v. King, 629 N.E.2d 1280, 1282 (Ind. Ct. App. 1994). We will reverse a negative judgment only if the decision of the trial court is contrary to law. Id. In determining whether a trial court's decision is contrary to law, we must determine if the undisputed evidence and all reasonable inferences to be drawn therefrom lead to but one conclusion and the trial court has reached a different one. Id. Because we will not reweigh the evidence or judge the credibility of witnesses, the question presented is whether the judgment against Bennett is contrary to law. When a question of law is dispositive, we owe no deference to the trial court. Kopetsky v. Crews, 838 N.E.2d 1118, 1123 (Ind. Ct. App. 2005). Formation of Contract Broderick contends that a binding contract was not formed. "An offer,

acceptance, consideration, and manifestation of mutual assent establish the existence of a contract." Indiana Dep't of Corr. v. Swanson Servs. Corp., 820 N.E.2d 733, 737 (Ind. Ct. App. 2005) (citation omitted). "There must be mutual assent or a meeting of the minds on all essential elements or terms in order to form a binding contract." Id. (citation omitted). Broderick alleges that Bennett's payment of $1800 with a postdated check is evidence that there was no meeting of the minds and that the postdated check did not constitute consideration for execution of the lease. We cannot agree. Indiana Code Section 26-1-2.1-113(a) provides: "An instrument may be

antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after that date. Except as provided in [Indiana Code Section] 26-1-4-401(c), an instrument payable on demand is not payable before the date of the
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instrument." And Indiana Code Section 26-1-4-401(c) provides, in relevant part, that a bank "may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty." 2 Thus, although payment of a postdated check is not due

until the date indicated, Indiana Code Section 26-1-4-401(c) allows a bank to ignore the postdate and honor 3 a customer's check when it is presented. Here, Broderick offered to lease the rental property in Valparaiso to Bennett for twenty-four months beginning August 1, 2005. Bennett accepted that offer, and the parties met on June 20, 2005, to execute the lease. Upon signing the lease, Bennett gave Broderick a check in the amount of $1800 to cover the security deposit and the first month's rent. Broderick accepted but did not inspect the check. Thus, the elements of offer and acceptance have been met. But Broderick argues that "there was no mutual agreement and meeting of the minds regarding when and how Bennett was to pay Broderick, and what amount of money he was to pay her." Appellee's Brief at 7. As evidence, she notes first that Bennett paid more than required at the execution of the lease. But the lease did not limit payment upon execution to only the security deposit. Bennett paid $1800, an amount
Historically, a postdated check was deemed a promise to pay as of the postdate. Nedderman v. State, 198 Ind. 87, 152 N.E. 800, 800 (1926). Indiana Code Section 26-1-4-401(c) was added in 1993 because the automated check collection system cannot accommodate postdated checks. Ind. Code

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