Young v. Hawks, 5379
| Citation | 624 P.2d 235 |
| Decision Date | 24 February 1981 |
| Docket Number | No. 5379,5379 |
| Parties | Marie T. YOUNG, Appellant (Plaintiff), v. Audrey A. HAWKS, a/k/a Audrey Hankins, Kerdie J. Hawks, and the unknown spouse of each such defendant, if any; Edward R. Brandt and Sharon M. Brandt; and Edward L. Ryan, Jr. and JoAnn Ryan, Appellees (Defendants). |
| Court | Wyoming Supreme Court |
Donald R. Winship, Winship & Feeney, P. C., Casper, for appellant.
Hugh M. Duncan, Casper, for appellees Brandt.
Before ROSE, C. J., * and McCLINTOCK, RAPER, ** THOMAS and ROONEY, JJ.
This case concerns an attempt by the successor in interest of a second mortgagee to accelerate and foreclose the second mortgage against the grantee of the mortgagor. We shall affirm the district court and hold: (1) absent a contractual prohibition against an assignment of the mortgage by the mortgagor, the mortgagee may not object to such an assignment; (2) under the facts of this case a late payment did not constitute a default; and (3) summary judgment was properly awarded.
The facts in this case are peculiar in that Marie T. Young, the plaintiff-appellant, claims interests in the property under both the mortgagor and the mortgagee of the second mortgage. The second mortgage was originally undertaken between the Hawkses, defendants-appellees, as mortgagors, and nonparty Citicorp Person-to-Person Financial Center as mortgagee. The Hawkses then sold the property to the Brandts, also defendants-appellees. The sale was by warranty deed dated August 17, 1977. The sale was recorded and the Brandts are still the record owners of the property. The warranty deed did not mention the second mortgage but the Brandts orally agreed to assume it.
Only a few days later the Brandts granted the Ryans, also defendants-appellees, a "contract for deed." In September of 1978 the Ryans purported to assign their interest in the property to Ms. Young. Ms. Young took possession of the property and in January of 1979 purchased the second mortgage from Citicorp. Between the time the Brandts purchased the property from the Hawkses and the time that Ms. Young purchased the second mortgage from Citicorp, the Brandts made the monthly second-mortgage payments to Citicorp without incident and by drawing checks on the account of their closely held corporation.
The Brandts deny that they are obligated to ultimately convey the property to the Ryans, or to the Ryans' grantee, Ms. Young. A separate lawsuit is pending concerning that dispute. For purposes of the instant case we need only recite that the Brandts are the legal owners of the property and The instant case was initiated when Ms. Young filed a complaint in district court. She filed it against the Hawkses, the Brandts and the Ryans, and asked for payment in full of the second-mortgage balance from the Hawkses and for foreclosure of the second mortgage. Although the suit was directed primarily against the Hawkses, she explains that she included the Ryans and the Brandts as "statutory defendants." In actual fact, this case appears to be a contest between the Brandts and Ms. Young. These are the only parties to have submitted briefs to this court.
that Ms. Young asserts an equitable interest in the property.
It is Ms. Young's contention that Citicorp had the right to call the second mortgage due in its entirety when the Hawkses sold the property to the Brandts; Ms. Young contends that she may assert whatever rights Citicorp had. We shall resolve this issue by contradicting the first half of Ms. Young's compound contention.
Our review of the case law in this area shows that the mortgagee often attempts to resolve such an issue in advance by insisting on a "due-on-sale" clause under which the loan for which the mortgage is given must be repaid in full immediately upon the sale of the property securing the mortgage. E. g., Tucker v. Pulaski Federal Savings & Loan Association, 252 Ark. 849, 481 S.W.2d 725 (1972); Mutual Federal S & L Assn. v. Wisconsin Wire Works, 58 Wis.2d 99, 205 N.W.2d 762 (1973). Often such due-on-sale clauses are enforced, e. g. the Wisconsin case just cited, but sometimes they are not, e. g., the Arkansas case just cited. We deem it significant that in the contract in dispute in this case there is an acceleration clause for failure to timely make any required payment, but no due-on-sale clause.
In Andrews v. Holloway, 140 Ga.App. 622, 231 S.E.2d 548, 549 (1976), the court said, "Powers of sale in security deeds shall be strictly construed and enforced as written." Applying this rule we must conclude that it would be improper for us to imply a due-on-sale clause, where none exists, in order to justify a foreclosure.
The Supreme Court of Oklahoma has said,
" * * * an action to accelerate and foreclose a mortgage is an equitable proceeding, and the equitable powers of the court will not be invoked to impose an extreme penalty on a mortgagor with no showing that he has violated the substance of the agreement." Continental Fed. Sav. & Loan Ass'n v. Fetter, Okl., 564 P.2d 1013, 1018 (1977).
In the absence of a due-on-sale clause, we do not see how the Hawkses-Brandts assignment was a violation of the agreement.
Other courts which have refused to enforce due-on-sale clauses or which have construed them strictly include: Tucker, supra, and Lane v. Bisceglia, 15 Ariz.App. 269, 488 P.2d 474 (1971).
In view of these authorities and the lack of a due-on-sale clause in the mortgage, we are persuaded that Ms. Young's contention that she had the right to accelerate the debt and foreclose the mortgage because of the Hawkses-Brandts transaction is erroneous.
Ms. Young purchased the mortgage from Citicorp on January 26, 1979. The first payment after this transfer was due on February 10. However, on January 23, Citicorp had sent a statement of account concerning the February 10 payment to a post office box used by the Brandts' corporation and addressed to Audrey Hawks. On February 6, Mrs. Brandt mailed a check for the February 10 payment to Citicorp. She left town on February 14 and returned on February 19 to find two items in her mailbox.
One was the check which Citicorp had returned. The other was a notice from Ms. Young concerning her purchase of the mortgage. The next day Mrs. Brandt mailed a check to Ms. Young for the February 10 payment, but Ms. Young refused to accept it.
In opposing Ms. Young's motion for summary judgment, Mrs. Brandt filed an affidavit stating that she never received actual notice of Young's purchase of the mortgage until February 19. This sworn claim by Mrs. Brandt is not contradicted by Ms. Young. 1
The Brandts argue that they were not obligated to make any payments to Ms. Young until they received notice of the assignment. In endorsing this sensible position, we need only discuss the Wyoming Uniform Consumer Credit Code. The promissory note which was assigned to Ms. Young states that it is subject to the provisions of the Uniform Consumer Credit Code. Section 40-14-337, W.S.1977, provides:
This language makes it entirely clear that the Brandts were not obligated to make payments to Ms. Young instead of to Citicorp until they received notice that Citicorp had assigned the note to Ms. Young.
We find no merit in Ms. Young's contention that the Brandts defaulted on the second mortgage.
Ms. Young moved for summary judgment. She asked for the amount due on the second mortgage from the Hawkses as well as some seven thousand dollars she claimed to have spent making payments on the first mortgage and making repairs on the property in order to protect her second-mortgage interest. 2 She also asked for a judgment of...
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