Downing v. Dial
Indiana Court of Appeals
426 N.E.2d 416 (1981)
The Dials (defendants) bought a restaurant from Thomas Downing (plaintiff) under a conditional-sale contract requiring Downing's consent to any assignment. The Dials assigned their interest to Watkins, who later assigned it again to two other people; Downing consented to every assignment along the way. When the final assignee defaulted, Downing sued the Dials and Watkins. The assignment document from the Dials to Watkins stated Watkins was taking on the Dials' contract obligations as if she had been an original party. The trial court found this language, plus Downing's failure to seek payment from the Dials before default, his consent to later assignments, and his receipt of an extra $12,000 from Watkins, showed the parties intended a novation that fully released the Dials. Downing appealed.
Whether a novation occurs only if both original contract parties specifically agree that a new party is taking over the obligations of one of the original parties.