Bakker v. Empire Savings, Building & Loan Ass'n

634 P.2d 1021

• Court: Colorado Court of Appeals
• Decided: October 19, 1981
• Docket: 80CA1037
• Status: Published

Opinions

STERNBERG, Judge.

In proceedings involving a deed of trust executed on February 25, 1969, the district court granted the plaintiffs’ motion for a preliminary injunction preventing a lender, Empire Savings, Building & Loan Association from proceeding with a public trustee’s foreclosure sale of certain real property. Empire was seeking to foreclose because of the unauthorized sale of the property to plaintiffs by an installment land contract, allegedly in violation of the terms of the deed of trust. Empire appeals the granting of the injunction, contending that the “due-on-sale” provision in its deed of trust permitted the foreclosure action. We reverse.

Because the differences between the language in the deed of trust in Krause v. Columbia Savings & Loan Ass’n, Colo.App., 631 P.2d 1158 (1981), and this case are not significant, Krause is controlling.

The due-on-sale clause in Krause reads in pertinent part as follows:

“In the event of the sale or transfer of the real property herein described, at the election of the [lender], the entire balance of the note may become due and payable.” (emphasis supplied)

In the instant case, the due-on-sale clause in the deed of trust provides that:

“[Sjhould the property covered by this Deed of Trust be conveyed by the party of the first part, his successors or assigns to any third party without the written consent of the holder, then, at the option of the holder of the note, the whole sum of principal and interest payable under the note secured hereby shall become immediately due and payable.” (emphasis supplied)

While the due-on-sale provision here is triggered by the use of the words “be conveyed,” rather than by the words “any sale or transfer” used in Krause, we consider an installment land contract to be, nevertheless, a conveyance of the property; hence, this is a distinction without a difference.

We have reviewed the complaint and allegations in support of the motion for preliminary injunction to determine whether other issues are raised upon which there could be a probability that the plaintiffs would succeed on the merits of their case. For this reason, although the issue was not raised in the briefs, it is necessary to consider whether acceptance of monthly installment payments by Empire constitutes a waiver of the due-on-sale clause. We conclude that the following paragraph contained in the deed of trust would preclude a holding that acceptance of payments does constitute a waiver:

“No waiver, express or implied, in the performance of any obligation, agreement or covenant hereof, shall be deemed or taken to imply or constitute a waiver of any succeeding or other breach hereunder, and failure of the holder to insist upon the strict performance of the terms, covenants and agreements herein contained, or any of them, shall not constitute or be construed as a waiver of relinquishment of the holder’s right to thereafter enforce any such term, covenant, agreement or condition, but the same shall continue in full force and effect.”

Also, in the clause immediately preceding the due-on-sale clause, language of similar import concerning waiver appears.

We disagree with plaintiffs’ interpretation of Malouff v. Midland Federal Savings & Loan Ass’n, 181 Colo. 294, 509 P.2d 1240 (1973). In our view, Malouff holds that a due-on-sale clause is not an unreasonable restraint on alienation and does not require a case-by-case factual determination by trial courts whenever an effort is made to enforce a due-on-sale clause. To adopt a contrary construction of Malouff would be to require a judicial foreclosure in all such cases and clog the courts with actions that otherwise could be handled expeditiously by C.R.C.P. 105 actions.

For the reasons stated above, we conclude that there was no probability that the plaintiffs would succeed on the merits of their case and, therefore, it was error to enter a preliminary injunction.

The judgment is reversed.

PIERCE, J., concurs. TURSI, J., dissents.