First Sav. and Loan Ass'n of Cent. Indiana v. Treaster, 1-285A47

Citation490 N.E.2d 1149
Case DateApril 07, 1986
CourtCourt of Appeals of Indiana

Page 1149

490 N.E.2d 1149
FIRST SAVINGS AND LOAN ASSOCIATION OF CENTRAL INDIANA,
Plaintiff-Appellant,
v.
Carol C. TREASTER, Wince Covher, Pearl Covher, James F.
Pesicka, Kon Pesicka, Greenfield Banking Company,
Carpenter Better Homes and Gardens, John
Wolfe, and Lawrence M. Lunn,
Defendants-Appellees.
No. 1-285A47.
Court of Appeals of Indiana,
First District.
April 7, 1986.

Page 1150

James E. Freeman, Jr., Jonathan R. Builta, Sansberry, Dickmann, Freeman & Builta, Anderson, for plaintiff-appellant.

Ronald R. Pritzke, Briane M. House, Lineback, Lewis, Pritzke & Davis, Greenfield, for defendants-appellees.

STATEMENT OF THE CASE

RATLIFF, Judge.

First Savings and Loan Association of Central Indiana appeals the trial court's denial of its motion for summary judgment and the granting of summary judgment in favor of Carol C. Treaster, et al. upon its determination that a clause contained in the mortgage executed between the two parties was an assumption clause which was not violated. We affirm.

FACTS

On December 14, 1976, Carol C. Treaster (Treaster), along with her parents Wince and Pearl Covher (the Covhers), executed a promissory note and real estate mortgage in favor of First Savings and Loan of Central Indiana (First Savings) to purchase a home for Treaster. The note and mortgage were signed to secure a loan of $29,700.00. The mortgage agreement, prepared by one of First Savings' attorneys, contained a clause which provided:

"This mortgage is executed by the mortgagor and accepted by the mortgagee with the understanding that, in the event of a sales or transfer of the real estate covered by this mortgage, the purchaser or transferee shall not assume this mortgage unless such mortgage shall become immediately due and payable in its entirety forthwith.

"This condition shall not apply so long as the hereinabove named mortgagor shall retain title and the essentials of ownership, nor shall it apply in the event of the death of the mortgagor, nor in case of the change of legal entity as the result of an ordinary business reorganization."

Record at 14. The Covhers executed a quitclaim deed giving their interest to Treaster on June 6, 1980. On April 7, 1981, Treaster listed the premises for sale with Century 21 Accent Realty.

On September 4, 1981, Treaster entered into three agreements with James and Kon Pesicka (the Pesickas) consisting of a residential lease, real estate mortgage, and purchase agreement for the premises. The lease was to run for three years from September 4, 1981, with a security payment of $5,000.00. The lease required Treaster to give the Pesickas a mortgage to secure repayment of the security payment. The lease further provided for rental payments, commencing October 1, 1981, of $525.00 per month and provided Treaster with the

Page 1151

right to retake the premises should the Pesickas fall behind in their rent payments. In addition, the Pesickas were required to pay the taxes and insurance and make any necessary repairs not covered by the insurance. The purchase agreement obligated the Pesickas to purchase the premises for $57,000.00, on or before September 4, 1983, with the warranty deed held in escrow until closing.

Upon learning of these agreements, First Savings brought suit alleging the lease/purchase agreement constituted a sale and that the parties were attempting to circumvent what First Savings asserted was a due on sale clause found in First Savings' mortgage. First Savings, therefore, sought recovery on the promissory note and foreclosure of the real estate mortgage as well as a declaratory judgment that due on sales clauses are valid in Indiana. Cross motions for summary judgment were filed, and on November 6, 1984, the trial court ruled in favor of Treaster. The court found that the quitclaim deed from the Covhers to Treaster and execution by Treaster of the lease/purchase agreement and mortgage on September 4, 1981, did not constitute a sale or transfer of the mortgaged real estate, an assumption of the mortgage or a relinquishment of title or the essentials of ownership within the meaning of the note and mortgage executed by Treaster and First Savings and, therefore, did not constitute default. Holding that the terms of First Savings note and mortgage called for payment in...

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26 cases
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    • United States
    • Court of Appeals of Indiana
    • July 8, 1987
    ...Mechanical and Electrical, Inc. v. First National Bank (1986), Ind.App., 495 N.E.2d 233, trans. denied; First Savings and Loan Ass'n. v. Treaster (1986), Ind.App., 490 N.E.2d 1149, trans. denied. Summary judgment is a procedure for applying the law to the facts when no factual controversy e......
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