United Virginia Bank/National v. Best, 790777
| Decision Date | 22 January 1982 |
| Docket Number | No. 790777,790777 |
| Citation | 223 Va. 112,286 S.E.2d 221 |
| Parties | UNITED VIRGINIA BANK/NATIONAL, et al. v. Stephen L. BEST, et al. Record |
| Court | Virginia Supreme Court |
John H. Rust, Fairfax (Thomas J. Cavuto; Rust, Rust & Pratt, Fairfax, on briefs), for appellants.
Randolph W. Church, Jr., Fairfax (Richard B. Chess, Jr., Fairfax, Chess, Durette & Roeder, Fairfax, on brief), for appellees.
Before CARRICO, C. J., COCHRAN, POFF, COMPTON, THOMPSON and STEPHENSON, JJ., and HARRISON, Retired Justice.
In the companion case of Lipps v. First American Service Corporation, 223 Va. 131, 286 S.E.2d 215 (this day decided), we held that a due-on-sale acceleration clause in a security deed of trust is not an unreasonable restraint on alienation in Virginia. The lower court in this case decided to the contrary and held that the lender did not have the option to activate the acceleration clause unless it could prove that the security for its obligation was impaired. We disagree with that conclusion and reverse the judgment of the trial court.
In August, 1972, Edward and Anna Firth (Borrowers) acquired property in Fairfax County. To obtain the requisite purchase money, Borrowers executed a promissory note, dated September 25, 1972, payable to United Virginia Bank/National (Lender) for the amount of $66,800, with interest thereon at the rate of seven-and-one-half percent per annum. Borrowers also executed a deed of trust conveying the subject property to secure payment of that note. The deed of trust provided in pertinent part:
And the said parties of the first part, in order more fully to protect the security of this Deed of Trust, do hereby agree as follows:
....
7. The maker of the note covenants and agrees that he will not assign or transfer the property secured by this deed of trust without prior approval of the noteholder. [Emphasis added.]
The deed of trust also provided that "[s]hould there be a failure to keep and perform the aforesaid covenants, or any of them ... then the indebtedness hereby secured, both principal and interest, shall immediately become due and payable."
On March 21, 1978, Stephen and Letty Best (Purchasers) contracted to purchase the property. On March 23, the Purchasers wrote the Lender requesting consent to the transfer as per the deed of trust and requesting information on an assumption. Lender replied on March 29, 1978, that it would consider an assumption but not at a seven-and-one-half percent interest rate. Lender notified Purchasers by letter dated April 24, 1978, that it would allow an assumption at nine-and-one-quarter percent. On May 31, 1978, Borrowers, without Lender's approval, conveyed the subject property by deed "subject to a note secured by a deed of trust." Purchasers notified Lender of the transfer and tendered the June installment. Lender returned Purchasers' check by letter on June 21, 1978, and offered the Purchasers the nine-and-one-quarter percent assumption with a one point assumption fee, leaving the offer open until July 10, 1978. On July 21, 1978, Lender notified the Borrowers that "under the terms of the Deed of Trust the balance is due in full."
On July 3, 1978, Purchasers filed a bill for declaratory judgment in the lower court seeking judgment that (1) the provision in the deed of trust requiring approval by noteholder of the transfer be declared null and void; (2) alternatively, if said provision be valid, that consent not be unreasonably withheld and that the requirement as condition to approval of...
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...223 Va. at 140, 286 S.E.2d 215. (Emphasis supplied.) The other Virginia case decided the same day as Lipps was United Va. Bank/Nat. v. Best, 223 Va. 112, 286 S.E.2d 221, cert. denied 459 U.S. 879, 103 S.Ct. 175, 74 L.Ed.2d 144 (1982). In United Va. Bank the same result as Lipps was achieved......
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...615 S.W.2d 333 (Tex.Civ.App.1981); Redd v. Western Sav. & Loan Co., 646 P.2d 761 (Utah 1982); United Virginia Bank/Nat'l v. Best, 223 Va. 112, 286 S.E.2d 221 (1982) (U.S. appeal pending). But see Nichols v. Ann Arbor Fed. Sav. & Loan Ass'n, 73 Mich.App. 163, 250 N.W.2d (1977); State ex rel.......
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