Stroh-Mc Investments v. Bowens, STROH-M

• Decision Date: 03 April 1986
• Docket Number: No. 84CA0041,STROH-M,84CA0041
• Parties: c INVESTMENTS, Plaintiff-Appellee, v. Tommie Lee BOWENS, Jr., Defendant and Third-Party Plaintiff-Appellant, v. Ronald STROH, Daniel L. McCracken, Warren F. McCracken and Donald F. McCracken, individually and d/b/a, various business entities including Stroh-Mc Investments and McCracken Investments Company, Third-Party Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 33

725 P.2d 33

STROH-Mc INVESTMENTS, Plaintiff-Appellee, v. Tommie Lee BOWENS, Jr., Defendant and Third-Party Plaintiff-Appellant, v. Ronald STROH, Daniel L. McCracken, Warren F. McCracken and Donald F. McCracken, individually and d/b/a, various

business entities including Stroh-Mc Investments and

McCracken Investments Company, Third-Party Defendants-Appellees.

No. 84CA0041.

Colorado Court of Appeals, Div. II.

April 3, 1986.

Rehearing Denied May 1, 1986.

Certiorari Denied (Stroh-Mc) Sept. 29, 1986.

Stutz, Dyer, Miller & Delap, Charles A. Miller, F. James Donnelly, Denver, for plaintiff-appellee and third-party defendants-appellees.

Douglass B. Auer, Denver, for defendant and third-party plaintiff-appellant.

BABCOCK, Judge.

Tommie Lee Bowens, Jr., (Bowens) appeals the judgment in favor of Stroh-Mc Investments (Stroh-Mc) on his claim for breach of contract. The dispositive issue on appeal is whether a provision in an all-inclusive deed of trust, in which the beneficiary is obligated to pay prior notes secured by the property "as and when the same becomes [sic] due and payable," creates a duty upon the beneficiary to pay in full one such note which was accelerated for violation of a due-on-sale clause rather than for default in installment payments. We hold that here there was such duty and, therefore, reverse.

On May 31, 1979, Stroh-Mc conveyed real property to Bowens under a promissory note secured by an all-inclusive deed of trust, a so-called "wrap-around" mortgage. By the terms of the note and deed of trust, Bowens was to make installment payments to Stroh-Mc, and Stroh-Mc agreed to pay according to the language quoted above three prior notes which were secured by deeds of trust on the same property. Within a short period of time, Bowens sold the property to another under an installment land contract, and, within a period of two years thereafter, the property was twice sold under successive installment land contracts.

In accordance with its agreement with Bowens, Stroh-Mc made all monthly payments on the prior notes in a timely manner. In spite of this, however, a prior lienor foreclosed on the property in October 1981, claiming violation of a due-on-sale clause contained in his deed of trust.

At the foreclosure sale the property was purchased by McCracken Investments Co., a partnership consisting of three of the four persons who also owned Stroh-Mc. Neither the owner of the property nor any of the lienors, including Bowens and Stroh-Mc, redeemed, and a public trustee's deed was eventually issued to McCracken Investments Co. The result of Stroh-Mc's failure to pay the accelerated note prior to foreclosure was that Bowens' junior lien was wiped out, along with that of Stroh-Mc, when neither party redeemed following the foreclosure sale.

Bowens asserts that the trial court erred as a matter of law in concluding that the contract between the parties created no duty upon Stroh-Mc to pay in full the accelerated note of the prior holder before the foreclosure sale. We agree.

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