Court Opinion

ID: 9673747
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:17:31.564026+00
Date Added: 2024-06-11T18:16:23.836481
License: Public Domain

Heffernan, J.
(dissenting in part). The appellant savings and loan association argues incorrectly that the issue in this case is whether sec. 215.21 (3) (b), Stats., permits multiple interest increases. It ignores the issue on which the trial judge correctly considered the litigation.
Unfortunately, the majority opinion of the court follows this false path of statutory construction, rather than confining itself to the controlling threshold question of the construction of the mortgage contract between the parties. The path taken is not the one which the facts and the law require that this court follow.
The construction of the statute (sec. 215.21 (3) (b)) was never in issue in the trial court. Only the provision of the mortgage and note was the subject of the parties’ litigation or the trial court’s judgment.
That this is true is demonstrated by the trial judge’s opinion, in which he said that the “interest escalation clause” (not the statute) plainly permitted but a single increase in interest. Moreover, the trial judge never questioned the statutory power of the Association to include in the mortgage and note provision for multiple and successive increments of interest. He only questioned whether the Association had contractually exercised its statutory power to make multiple rate increases. He concluded that the power had not been exercised and said that the Association “could easily have included *192terminology providing for the escalation of interest more than one time.”
This case has nothing to do with the interpretation of sec. 215.21 (3) (b), Stats. It is irrelevant to the threshold question before us, the only question considered by the trial judge — did the mortgage and mortgage note allow multiple increases in the rate of interest? Only if that question is answered affirmatively is the interpretation of the statute an issue. The question here is not what interest increases the statute would allow, but what increases the parties had bargained for.
The Association does not justify its alleged right to multiple increases of interest rates on the basis of the note and mortgage. Rather, it argues that the statute would permit such an increase; and, hence, even in the absence of a contractual provision exercising that right, the creditor was entitled to the multiple rate increases.
This reasoning is bizarre, for sec. 215.21 (3) (b), Stats., grants a power to a savings and loan association which must be contractually exercised to be effective. The statute provides:
“(3) Mortgage and Mortgage Note, (a) Every mortgage loan shall be . . . evidenced by a mortgage note.
“(b) The mortgage or mortgage note may provide that the interest rate may be increased after 3 years . . . .” (Emphasis supplied.)
It is thus obvious that the increased interest clause is not mandatorily a part of every savings and loan mortgage, but may be included or omitted by the provisions of the mortgage and note as bargained for by the parties.1
*193The question to be decided by this court is simply: Did the parties intend to provide for more than one increase in the mortgage rate? If that is permitted by the statute, it was incumbent upon the Association, the scrivener of the instrument, to make clear that such was the bargain to which the debtor bound himself. The Association acknowledges the ambiguity of the mortgage provisions and, therefore, ignores them, relying instead upon the theory that, because the statute authorizes multiple increases, that must have been the intent of the parties.
The fact that the mortgage provisions are ambiguous is fatal to the Association’s contention. An ambiguous provision must be resolved against the scrivener — in this case, the Association. Moran v. Shern (1973), 60 Wis. 2d 39, 49, 208 N. W. 2d 348. Hence, the most that we can determine with certainty from the mortgage is that an increase in the interest rate is to be permitted. Under this ambiguous and inartful contract, that is all that can be permitted the Association.
While the meaning of the statute may be ambiguous, as the majority opinion states, it is unambiguous in requiring that the interest acceleration provision be set forth in the note or mortgage.
While there are cases where the legislatively expressed public concern is so clear that the police power of the state may impose conditions on contracting parties that they did not contemplate (State ex rel. Building Owners & Managers Assn. of Milwaukee, Inc. v. Adamamy (1974), 64 Wis. 2d 280, 294, 219 N. W. 2d 274), here, the legislative policy expressed in sec. 215.21 (3) (a) and (b), Stats., required the contractual understanding *194concerning accelerated interest rates to be set forth in the mortgage or mortgage note. A lacuna therein cannot be supplied by a statute which requires implementation by separate and specific contractual provisions. The power conferred by statute upon a savings and loan institution to bargain with a debtor for future interest rate increases must be exercised unambiguously in the instrument which the lending institution drafts.
Only if the contract — the mortgage or the mortgage note — unambiguously permits multiple increases in the interest rates do we face the problem of whether more than one interest rate increase is statutorily permissible. It is the contract that initially controls the rights and obligations of the parties, not the statute. Since the contract is admittedly ambiguous, under every rule of law it must be construed against the Security Savings and Loan Association; and only one increase is permissible. The trial court’s judgment in this respect should be affirmed.
I am authorized to state that Mr. Chief Justice Wilkie and Mr. Justice Beilfuss join in this dissent.

 The Milwaukee Journal, January 4, 1976, in an article summarizing current real estate lending practices, pointed out that it is the general practice in Milwaukee for savings and loan institutions to omit the provision for an interest increase in exchange for a guaranteed rate, at a slightly higher figure, for *193the entire term of the mortgage. It is evident that this practice reflects the state of the law — that the right to an interest increase, or multiple increases, results only from the contractual exercise of the power conferred by the statute.