## Facts

- Joseph I. Askren sold a two-acre parcel in Indianapolis to Cardinal Industries for $250,000.
- Cardinal paid $125,000 in cash at closing; the remaining $125,000 was due in two equal annual installments with 9% interest.
- The purchase agreement stated that Askren’s “Security” for the unpaid balance would be a Cardinal promissory note, which Askren received at closing.
- Cardinal obtained construction financing secured by a mortgage on the property; that mortgage was later assigned to Third Savings and Loan.
- Cardinal defaulted on the promissory note and failed to pay either installment.
- Askren sued in diversity to foreclose an implied vendor’s lien on the property, which would compete with Third’s mortgage interest.
- The district court granted summary judgment for Third, holding Askren waived any implied vendor’s lien by accepting the promissory note as the specified “security.”

## Issues

1. Whether, under Indiana law, a seller waives an implied vendor’s lien as a matter of law by accepting the buyer’s promissory note for the unpaid purchase price where the contract labels the note as the seller’s “security.”
2. Whether summary judgment was proper on the theory that the contract language and note conclusively showed intent to surrender the implied vendor’s lien.

## Decision

- The Seventh Circuit reversed and remanded.
- The court held Askren did not waive the implied vendor’s lien as a matter of law merely by taking Cardinal’s promissory note, even where the contract described the note as his “security.”
- The contract’s “security” language was at most ambiguous on waiver and did not justify resolving intent against Askren on summary judgment.

## Legal Principles

- Under Indiana law, when a seller conveys real estate without full payment at closing, an equitable vendor’s lien arises by operation of law for the unpaid portion of the purchase price.
- A vendor’s lien may be waived, but waiver is not presumed; it requires conduct showing an intent to rely exclusively on other security inconsistent with retaining the equitable lien.
- Acceptance of the buyer’s promissory note for the unpaid balance generally documents the debt and does not, without more, extinguish the vendor’s lien.
- In disputes involving later mortgagees, equitable considerations and notice-related facts can matter; a lender may be expected to inquire where transaction circumstances suggest the seller may not have been fully paid.

## Conclusion

The court held that the seller’s acceptance of the buyer’s promissory note—described in the contract as the seller’s “security”—did not conclusively establish waiver of Indiana’s implied vendor’s lien, making summary judgment for the mortgagee improper and requiring further proceedings.


Askren v. 21st St. Inn, 988 F.2d 38 (7th Cir. 1993)