Yudkin v. Avery Federal Sav. and Loan Ass'n

• Decision Date: 15 March 1974
• Citation: 507 S.W.2d 689
• Parties: Franklin S. YUDKIN, Appellant, v. AVERY FEDERAL SAVINGS AND LOAN ASSOCIATION, Appellee.
• Court: United States State Supreme Court — District of Kentucky

Page 689

507 S.W.2d 689

Franklin S. YUDKIN, Appellant, v. AVERY FEDERAL SAVINGS AND LOAN ASSOCIATION, Appellee.

Court of Appeals of Kentucky.

March 15, 1974.

John E. Wise, Louisville, for appellant.

Washer, Kaplan, Rothschild & Aberson, Louisville, for appellee.

CULLEN, Commissioner.

Franklin S. Yudkin appeals from a summary judgment dismissing his action against Avery Federal Savings and Loan Association in which action, suing for himself and seeking to represent a class of other persons similarly situated, Yudkin sought to require the association to pay interest on money the association requires mortgagors to pay monthly into 'escrow accounts' to provide funds with which to pay taxes and insurance on the mortgaged property.

It is our conclusion that the defendant was entitled to judgment as a matter of law, on the pleadings. Therefore, we pass consideration of various procedural issues argued by the parties.

The complaint alleged that the association holds a mortgage on Yudkin's real estate; the association requires him to make monthly tax and insurance payments to it, which it keeps in an 'escrow account;' the association fails to pay Yudkin interest on the money so paid in and kept; and this deprives Yudkin of property in violation of his constitutional rights. The complaint further set forth allegations undertaking to show the existence of a class of other persons situated similarly to Yudkin, whom it would be proper for him to represent.

The only relief sought in the complaint was an order 'requiring the defendant to pay interest, by implied contract, at current savings account rates, on the money it requires mortgagors to pay to the Defendant for taxes and insurance and kept by the Defendant in escrow accounts, and that said interest should be retroactive to the beginning of each mortgage.'

It will be noted that there is no allegation in the pleadings that the association has used or is using the escrowed funds to its own profit, and there is no claim for recovery of profits made by the association.

Questions as to the respective rights of the parties in moneys which a lending institution requires a mortgagor to pay to it monthly to provide funds for payment of taxes and insurance have been reaching the courts, in recent times, with considerable frequency. Most prominent among the reported decisions are First Federal Savings & Loan Association of Lincoln v. Board of Equalization, 182 Neb. 25, 152 N.W.2d 8 (1967); Sears v. First Federal Savings & Loan Association of Chicago, 1 Ill.App.3d 621, 275 N.E.2d 300 (1971); Carpenter v. Suffolk Franklin Savings Bank, Mass., 291 N.E.2d 609 (1973); Richman v. Security Savings and Loan Association, 57 Wis.2d 358, 204 N.W.2d 511 (1973); Tucker v. Pulaski Federal Savings & Loan Association, 252 Ark. 849, 481 S.W.2d 725 (1972), and Umdenstock v. American Mortgage and Investment Company, 363...