NAJAM, J.
. . . [T]he undisputed evidence shows that the sale was based upon a common, mistaken assumption about a vital fact regarding “the very nature of the thing.” . . . Both Tracy and Morell testified that they did not know that the tractor’s identification number had been altered. If Morell was ignorant that the tractor’s identification number had been altered, then he, like Tracy, was also mistaken about the tractor’s value. When the deal was struck, Morell agreed to sell and Tracy agreed to buy the tractor, free and clear of liens and encumbrances, for the sum of $12,500. Instead, both as a matter of fact and a matter of law, the tractor was altered property and was not marketable [footnote omitted] in any legitimate farm equipment market. The essential terms, including both the sale and the sale price, were based on a mutual mistake about a vital fact that Morell had good title and lawful authority to sell the tractor to Tracy free and clear. But a tractor with an altered identification number has no bona fide fair market value because it cannot be knowingly or intentionally sold without committing a crime. For that reason, Tracy has recourse against Morell without regard to fraud. There was a mutual mistake of fact between them that went to the heart of the bargain, to the substance of the whole contract, and, as such, there was no contract, as a matter of law.
The parties’ contract is also unenforceable because dealing in altered property violates public policy. . . . .
Our legislature has made it a crime to deal in altered property. . . . The tractor’s identification number was destroyed, and we can think of no lawful reason why the number was ground down, filled in with putty and painted over. Rather, the only purpose for concealing the true identity of the tractor was to move the property outside the stream of lawful commerce into a secondary or “black market.”
We decline to adopt a rule that someone may sell altered property with impunity and then claim ignorance as a complete defense in a civil action arising from the sale. Such a rule would violate public policy because in the sale of personal property, unless otherwise agreed, the seller’s ownership free and clear of liens and encumbrances is presumed. Here, the tractor was encumbered by an altered identification number. Whether or not a crime occurred, and whether or not statutory relief is available under the Crime Victim’s Relief Act, the law should not permit a seller to transfer property with an altered identification number without being held accountable for it.
The trial court found that Tracy is the “equitable owner” of the tractor. Appellant’s App. at 5. Apparently the trial court meant that until Tracy has paid the sale price in full, Morell remains the legal owner of the tractor while Tracy is the beneficial or equitable owner. This would be a correct finding if the transaction were not fatally flawed from its inception. But the finding is not supported by the evidence and is, therefore, clearly erroneous.
One incident of ownership is the owner’s right to convey the property he owns. An “owner” is one who has the right to possess, use, and convey something. Black’s Law Dictionary 1130 (7th ed. 1999). Now that Tracy has actual knowledge that the tractor has an altered identification number, he cannot sell the tractor without committing a crime. See I.C. § 35-43-4-2.3. Even if he were to pay the balance of the sale price in full, Tracy would never have the unqualified right of an owner to lawfully transfer ownership of the tractor to another. In other words, his equitable title would never merge into unqualified legal title. Under these circumstances, Tracy’s interest in the tractor is limited to the amount he has paid thus far on the promissory note, which he is entitled to recover. Given the mutual mistake of fact between the parties, the trial court erred when it found that Tracy is the “equitable owner” of the tractor because his ownership can never ripen into full, unqualified legal ownership.
Indeed, under these circumstances, it would be inequitable to foist the tractor upon Tracy. Thus, we are left with a firm conviction that a mistake has been made. . . . Here, the undisputed evidence demonstrates that there was a mutual mistake of fact, that there was no meeting of the minds on essential terms, and that Tracy is entitled to a rescission of the contract. . . . .
In sum, Tracy has shown prima facie error on appeal. He has shown that he is entitled to a rescission based upon a mutual mistake of fact. See Poppe v. Jabaay, 804 N.E.2d 789, 796 (Ind. Ct. App. 2004), trans. denied, cert. denied, 543 U.S. 1164 (2005); see also Franklin v. White, 493 N.E.2d 161 (Ind. 1986) (holding rescission of contract proper after determination of mutual mistake of fact). And the contract violates the public policy against dealing in personal property with an altered identification number. A rescission requires that we adjust the equities and return the parties to the status quo ante. . . . Here, in order to implement a rescission, we hold that Morell is the owner and is entitled to possession of the tractor, subject to any impoundment and storage charges, that the promissory note is null and void, and that Tracy is entitled to recover the amount he has paid on the promissory note.
The promissory note did not provide for interest, although interest income would be imputed to Morell for tax purposes. . . . Tracy is entitled to recover interest on the principal payments he made to compensate him for the loss of the use of those payments. . . . The dates and amounts of those seventeen $500 payments which total $8,500 are set out in Exhibit “A” to Tracy’s complaint, which was offered and admitted in evidence as Plaintiff’s Exhibit 2 at trial.
We reverse and remand with instructions that the trial court calculate prejudgment interest at the statutory rate from the date of each $500 payment to the date of judgment, add that sum to the $8,500 in principal, and enter a money judgment for Tracy and against Steve Morell and Pauline Morell, jointly and severally, plus court costs.
Friedlander, J., and Bailey, J., concur.