Title: FIRST FEDERAL SAV. AND LOAN, ETC. v. Lovett

State: south-dakota

Issuer: South Dakota Supreme Court

Document:

318 N.W.2d 133 (1982) FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF STORM LAKE, Plaintiff and Appellee, v. Jack H. LOVETT, Virginia M. Lovett, Robert L. Friessen, and Sharon R. Friessen, Defendants and Appellants, VBJ Investors and Minnehaha County, South Dakota, Defendants. No. 13444. Supreme Court of South Dakota. Considered On Briefs February 23, 1982. Decided April 14, 1982. Lawrence L. Piersol of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for plaintiff and appellee; Charles D. Gullickson of Davenport, Evans, Hurwitz & Smith, Sioux Falls, on brief. John L. Wilds, Sioux Falls, for defendants and appellants. HENDERSON, Justice. Appellants Jack H. Lovett, Virginia M. Lovett, Robert L. Friessen and Sharon R. Friessen appeal from a judgment of the trial court in favor of appellee First Federal Savings and Loan Association of Storm Lake. This judgment awarded appellee $390,075.42, said amount to be taken from the sale of certain property to which appellee was the mortgagee and appellants the mortgagor. We affirm. Appellee is a federally chartered savings and loan association located in Storm Lake, *134 Iowa. Appellants Jack H. Lovett and Robert L. Friessen undertook to construct and develop a "strip mall" on a certain section of property that they owned in Sioux Falls, South Dakota. Financing for this venture was provided by First Services Mortgage Corporation of Sioux Falls (First Services), which is a wholly owned subsidiary of appellee. First Services loaned appellants $400,000.00 to finance the mall and in return appellants, on January 20, 1978, executed to First Services a promissory note for $400,000.00 and a mortgage on the property where the mall was located. This mortgage contained the following provision: Also, prior to providing the financing for the mall, First Services sent to appellants Jack H. Lovett and Robert L. Friessen a written notice stating that the loan could not be assumed by a subsequent purchaser of the mortgaged premises without the prior written consent of First Services. The trial court specifically found that appellants were aware that the above-quoted "due on sale" clause was incorporated into the mortgage agreement prior to its execution and also knew the contents of said clause. On January 20, 1978, First Services assigned the aforementioned note and mortgage to appellee. This assignment was properly recorded. Appellants wrote to First Services on September 17, 1979, seeking its consent to the sale of the mortgaged property by a contract for deed. First Services received another letter from appellants on September 27, 1979, which also requested its consent to the sale. This letter was accompanied by unaudited and unrequested financial statements of VBJ Investors, the proposed purchaser; VBJ was a defendant at the trial court level. On September 28, 1979, appellants Jack H. Lovett and Robert L. Friessen, as tenants in common of the mortgaged property, sold the property to VBJ on a contract for deed. That same day appellants Jack H. Lovett and Robert L. Friessen entered into a contract with VBJ to sell the mall to VBJ. This contract contained a provision which provided that the sellers were obligated to legally contest any acceleration by First Services or appellee based on the sellers' failure to obtain prior written consent to the sale. On October 5, 1979, appellee wrote appellants informing them that it would not give its consent to the sale and that it would declare all sums secured by the mortgage immediately due and payable if the sale occurred. Because appellants proceeded with the sale, appellee on October 23, 1979, gave notice of default and intent to foreclose, thereby exercising its right to accelerate granted under the due on sale clause. Appellants refused to make payment in full on the note and mortgage and, consequently, appellee initiated this action. Appellants contend that appellee's noncompliance with SDCL 47-8-30 precludes *135 it from foreclosing the mortgage executed by appellants. SDCL 47-8-30 provides: This Court has held, however, that a note and mortgage relating to an out-of-state business enterprise, but securing property within the state, can be sued upon by the foreign corporation which has not complied with the statutory provisions relating to foreign corporations. Charles Friend & Son v. Schmidt, 57 S.D. 477, 233 N.W. 913 (1930); see Thurston v. Cedric Sanders Company, 80 S.D. 426, 125 N.W.2d 496 (1963); General Motors Acceptance Corp. v. Huron Finance Corp., 63 S.D. 597, 262 N.W. 195 (1935). Thus, under the situation presented here, appellee's failure to comply with SDCL 47-8-30 is not fatal to its foreclosure action. Secondly, appellants maintain that the contract for deed between themselves and VBJ did not constitute a transference of the mortgaged property and, accordingly, did not trigger the due on sale clause. We do not agree. The clause provided that "if all or any part of the property or an interest therein is sold or transferred" without the lender's consent, the lender may accelerate. This Court recently dealt with this issue in First Federal Savings & Loan Ass'n, Etc. v. Kelly, 312 N.W.2d 476, 481 (S.D.1981): In accord with Kelly, we hold that the contract for deed herein involved effectively triggered the due on sale clause found within the mortgage. Appellants further contend that appellee may not foreclose its mortgage without first proving that its security would be impaired due to the sale of the mortgaged property. Again, this same issue was raised in Kelly wherein we held: Id. at 479. Accordingly, under the mortgage presented here, we hold that no impairment of security need to be shown prior to appellee enforcing the due on sale clause. *136 All remaining issues proffered by the parties were either not raised at the trial court level, Weaver v. Boortz, 301 N.W.2d 673 (S.D.1981), are nonmeritorious, or need not be addressed due to the dispositive nature of our decision. The judgment of the trial court is affirmed. All the Justices concur.