Opinion ID: 405399
Heading Depth: 2
Heading Rank: 2

Heading: Twin City Federal Savings & Loan Association v. Gelhar

Text: 15 This consolidated case has a very similar background. The plaintiff in this case is Twin City Federal Savings & Loan Association. Twin City issued a mortgage to Joseph and Pamela Gelhar in December 1977, securing a loan of $49,400 and concerning land in Hastings, Minnesota. The interest rate on the loan was nine percent per annum and the note had a term of thirty years. 16 In March 1981, the Gelhars conveyed the property to Robert McDonough and Diane M. Fuhr without Twin City's consent. The mortgage contained a due-on-sale clause which was substantially the same as the examples given above. 17 Twin City also issued a similar mortgage to Kenneth and Margean Hoeg securing a note for $52,000 at twelve percent per annum with a thirty-year term. It was secured by property in Maple Grove, Minnesota. At one time, the Hoegs entered into a purchase agreement to sell the property securing the promissory note. 18 Twin City filed nearly identical complaints against the Gelhars, McDonough and Fuhr in one suit and the Hoegs in another. The plaintiff prayed for a declaratory judgment determining that federal law exclusively governs the validity    of the subject acceleration clause    ; that (the plaintiff) is entitled to accelerate the balance due on the promissory note    and to initiate foreclosure proceedings. The validity of due-on-sale clauses in Minnesota has been called into question as a result of a statutory provision and case law. See Holiday Acres No. 3 v. Midwest Federal Savings & Loan Association, 308 N.W.2d 471, 475 n.1 (Minn.1981). 19 Just as in the Arkansas case, the defendants filed motions to dismiss claiming that the court lacked subject matter jurisdiction. The district court 5 considered the two suits in a single memorandum and concluded that the claim of federal preemption in this context is defensive in nature and as such will not support federal jurisdiction. Twin City Federal Savings & Loan Association v. Gelhar, 525 F.Supp. 802, 804 (D.Minn.1981). 6