First Federal Savings & Loan Ass'n of Toledo v. Perry's Landing, Inc.

463 N.E.2d 636, 11 Ohio App. 3d 135, 11 Ohio B. 215, 1983 Ohio App. LEXIS 11259
CourtOhio Court of Appeals
DecidedJune 3, 1983
DocketWD-83-4 and -83-11
StatusPublished
Cited by103 cases

This text of 463 N.E.2d 636 (First Federal Savings & Loan Ass'n of Toledo v. Perry's Landing, Inc.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First Federal Savings & Loan Ass'n of Toledo v. Perry's Landing, Inc., 463 N.E.2d 636, 11 Ohio App. 3d 135, 11 Ohio B. 215, 1983 Ohio App. LEXIS 11259 (Ohio Ct. App. 1983).

Opinion

Handwork, J.

This case is before the court on appeal from a judgment of the Wood County Court of Common Pleas.

I

The essential facts may be summarized as follows. In July 1975 and May 1976, two promissory notes in the respective principal amounts of $650,000 and $75,000 were executed by Perry’s Landing, Inc., an Ohio corporation and defendant-appellee herein. The notes were signed on behalf of appellee by its. president, William R. Wumer. Appellee Perry’s Landing was formed for the purpose of developing and managing a retail shopping center which was constructed on certain real estate located in Per-rysburg, Ohio. Appellee leased space within the shopping center to various retail merchants. Plaintiff-appellant, First Federal Savings & Loan Association of Toledo (hereinafter “First Federal” or “appellant”), was the lending institution involved in these transactions. The loans obtained from First Federal, for which the promissory notes were executed, were to be repaid from rental income accruing from the long-term commercial leases. Interest on each principal loan was set at ten percent per annum and each note was accompanied and secured by a mortgage covering said commercial property.

Paragraph 8 of each mortgage, which is commonly referred to as a “due-on-sale clause,” provides as follows:

“If there shall be any change in the ownership of the premises covered by this mortgage, made without the consent of the Grantee [appellant First Federal], the entire principal and interest accrued thereon shall become due and payable immediately at the election of the Grantee.” (Emphasis added.)

Appellee also obtained loans from two other lending institutions, First Federal Savings & Loan Association of Wood County and Sylvania Savings Bank. A mortgage agreement was executed in conjunction with each loan to secure its repayment.

In 1980, Wumer apparently decided that he no longer wished to manage commercial real estate. He began looking for a buyer who had experience in managing such property and who would be willing to make a commitment to purchase it within a specific time period.

In early January 1981, Wumer, through his attorneys, contacted John N. Waldvogel, who is an executive vice-president for First Federal. It was indicated to Waldvogel that Perry’s Landing intended to sell the secured commercial property to Perry’s Landing of Michigan, a Michigan general partnership unrelated to Wumer’s corporation of the same name. The conversation between Wumer’s attorneys and Waldvogel was apparently conducted over the telephone. The trial court’s finding with respect to this conversation is as follows:

“Mr. Waldvogel explained that [appellant] First Federal had never accelerated a mortgage based solely on the due-on-sale clause, but that that practice was currently under review by * * * [appellant’s] Board of Directors. Though * * * [appellant] had never accelerated a mortgage under these circumstances before, * * * [it] had also made it a practice to decline any waiver request concerning due-on-sale clauses.”

Appellee thereafter obtained from Sylvania Savings Bank and First Federal Savings & Loan Association of Wood County written waivers of their rights to enforce the due-on-sale clauses contained in their respective mortgage agreements. On January 12, 1981, Wumer’s attorneys hand-delivered a letter to Waldvogel which stated, in pertinent part:

“This is to advise you that Borrower [appellee Perry’s Landing] will enter into a land installment contract on January 12, 1981, for the sale of the mortgaged premises and more to a Michigan general *137 partnership. Counsel for the land contract vendee requested that we give you notice of the pending transaction. Mr. John N. Waldvogel, Executive Vice President, has informed us that the present attitude of First Federal has been not to accelerate a loan under the * * * [due-on-sale clause] in instances involving a land installment contract, and we are proceeding with the transaction on the basis of this conversation.”

On the same day that Waldvogel received the foregoing letter, January 12, appellee executed a land installment contract with Perry’s Landing of Michigan for conveyance of the mortgaged commercial property. The contract was subsequently recorded on January 13, 1981. The trial court appears to have concluded, implicitly, that the execution of the land contract constituted a “change in the ownership of the premises” so as to trigger the due-on-sale clause in Paragraph 8 of the First Federal-Perry’s Landing mortgage agreements. If in fact the trial court so concluded, it was correct. 1

Included in Section 7 of the land installment contract, entitled “Mortgage and Pending Orders of a Public Agency,” was the following provision:

“* * * In the event that First Federal Savings & Loan Association of Toledo should ever obtain a foreclosure judgment against Seller [appellee Perry’s Landing] under either of its mortgages, Buyer [Perry’s Landing of Michigan] may rescind this contract and recover the Three Hundred Thousand and 00/100 Dollar ($300,000.00) payment hereunder.”

Some two weeks after Waldvogel received appellee’s letter, First Federal’s attorney, in response, sent Wumer’s attorneys a letter (dated January 26,1981), which states, in pertinent part:

“Because of the transfer of ownership, we are hereby requesting a meeting with you and the land contract vendees [Perry’s Landing of Michigan]. The 'purpose of the meeting will be to discuss an increase in the [interest] rate on these two mortgages. As I am sure you and your clients are aware, at this period of high interest rates, when we are paying in excess of 14% to our depositors, we cannot afford, for a very long period, to have our money outstanding at 10V2%.
“In your letter [of January 12, 1981] you refer to a conversation with Mr. Waldvogel regarding First Federal’s policy on invoking the provisions of Paragraph 8 of our mortgage. However, let me advise you that Mr. Waldvogel *138 distinctly remembers telling you that the past policy was being discussed and considered and that he could give you no assurance that it would not change.” (Emphasis added.)

Upon receiving this letter, appellee’s attorneys telephoned First Federal’s attorney, Fred E. Henning, and stated that there was nothing to discuss or renegotiate with respect to the interest rate on the promissory notes. They consequently refused to meet with Henning. Between January 12, the date the land contract was executed, and April 2, the date appellant filed its complaint in this case, appellee continued to make monthly mortgage payments and First Federal continued to accept these payments. The trial court found that “up to the present time, * * * [appellee] has remained solvent and has at no time been in default of its obligation to * * * [First Federal].” The record indicates that First Federal accepted mortgage payments tendered on January 15, February 17, and March 16, 1981. First Federal concedes that ap-pellee has never breached any other condition of the mortgage agreements.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Third Fed. S. & L. Assn. of Cleveland v. Formanik
2016 Ohio 7478 (Ohio Court of Appeals, 2016)
CitiMortgage, Inc. v. Brown
2015 Ohio 5347 (Ohio Court of Appeals, 2015)
In re Guardianship of Mull
2015 Ohio 5440 (Ohio Court of Appeals, 2015)
Grand Key Condominium Unit Owners Assn., Inc. v. Hounshell
2014 Ohio 1355 (Ohio Court of Appeals, 2014)
Marietta College v. Valiante
2013 Ohio 5405 (Ohio Court of Appeals, 2013)
JP Morgan Chase Bank, Natl. Assn. v. Heckler
2013 Ohio 2388 (Ohio Court of Appeals, 2013)
MacDonald v. Auto-Owners
2012 Ohio 5949 (Ohio Court of Appeals, 2012)
Kunz v. Reisenfeld
2012 Ohio 5460 (Ohio Court of Appeals, 2012)
Puritas Metal Prods., Inc. v. Cook
2012 Ohio 2116 (Ohio Court of Appeals, 2012)
DeRosa v. Parker
2011 Ohio 6024 (Ohio Court of Appeals, 2011)
Smith v. Safe Auto Insurance
901 N.E.2d 298 (Ohio Court of Appeals, 2008)
Smith v. Safe Auto Ins. Co., L-07-1296 (11-7-2008)
2008 Ohio 5806 (Ohio Court of Appeals, 2008)
Abdallah v. Doctor's Assoc., Unpublished Decision (11-15-2007)
2007 Ohio 6065 (Ohio Court of Appeals, 2007)
U.S. Bank v. Stewart, 21775 (10-19-2007)
2007 Ohio 5669 (Ohio Court of Appeals, 2007)
Elliott v. Elliott
859 N.E.2d 575 (Ohio Court of Appeals, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
463 N.E.2d 636, 11 Ohio App. 3d 135, 11 Ohio B. 215, 1983 Ohio App. LEXIS 11259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-federal-savings-loan-assn-of-toledo-v-perrys-landing-inc-ohioctapp-1983.