Court Opinion

ID: 9741469
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:56:17.692505+00
Date Added: 2024-06-11T07:24:24.313693
License: Public Domain

JUSTICE HAASE, dissenting: I respectfully dissent from the opinion of the court in this case. This transaction was governed by paragraph 17 of the mortgage, which reads in part as follows: “Transfer of the property; Assumption. If all or any part of the Property or an interest therein is sold or transferred by Borrower without Lender’s prior written consent, *** Lender may, at Lender’s option, declare all sums secured by this Mortgage to be immediately due and payable. Lender shall have waived such option to accelerate if, prior to the sale or transfer, Lender and the person to whom the Property is to be sold or transferred reach agreement in writing to the effect that the credit of such person is satisfactory to Lender and that the interest payable on the sums secured by this Mortgage shall be at such rate as Lender shall request. If Lender has waived the option to accelerate provided in paragraph 17, and if Borrower’s successor in interest has executed a written assumption agreement accepted in writing by Lender, Lender shall release Borrower from all obligations under this Mortgage and Note ***.” The language of paragraph 17 of the mortgage deals with two topics. The first, under the heading “Transfer of the Property,” is a due on sale clause. It gives the lender the right to declare all sums due and payable upon a transfer of the property. The next sentence of the paragraph provides for a waiver by the lender of the option to accelerate. Under that sentence, the waiver occurs if the lender and the buyer of the property reach agreement in writing that the credit of the buyer is satisfactory to the lender and that the interest payable on the sum secured shall be at such rate as lender shall request. That sentence states that such agreement is to occur prior to the sale or transfer. The agreement did not occur prior to the sale in this case. Therefore, the waiver did not occur precisely in accordance with the terms of paragraph 17 of the mortgage. However, the parties agree in their briefs that the lender’s action in continuing to accept payments and not accelerate the loan amounted to a waiver. The second portion of paragraph 17 deals with assumption agreements. Under that language, it says that if the lender has waived the option to accelerate, and if borrower successor in interest has executed a written assumption agreement accepted in writing by lender, lender shall release borrower from all the obligations under this mortgage and note. In this case, a waiver did occur, albeit not precisely in accordance with paragraph 17. Subsequent to the completion of the sale, the plaintiff and the buyer entered into a “Loan Modification Agreement.” The issue presented in this case was whether that loan modification agreement constituted an assumption agreement accepted by plaintiff in writing thereby releasing the Sills from liability. The loan modification agreement which was entered into between plaintiff’s predecessor, United Savings Association of Silvas, Hlinois, and defendants’ successors in interest, Paul and Cindy Williams, does several things. First, it recites the original obligation between Andrew Sill, Jean Rimkus, and United Savings Association in the amount of $19,000. It further recites that the parties (the Williams and United Savings Association) acknowledge mutual considerations to revise the terms of payment of said indebtedness. The agreement further sets forth the unpaid balance of $18,818.83 and recites that the borrowers promise to pay the indebtedness with interest at the rate of 10.75% upon the unpaid balance. That interest rate was less than the original interest rate. In the final paragraph the agreement states that “In all other respects said note and mortgage contract shall remain in full force and effect, and the undersigned promise to pay said indebtedness as hereinstated and to perform all of the obligations of said mortgage contract, as herein revised.” The majority opinion in this case reasons that it was “not unreasonable for plaintiff to have entered into a loan modification agreement with the Williams so long as the Sills would still be ultimately responsible for any liability that might arise in the future due to any default under the note and mortgage.” (221 Ill. App. 3d at 600.) I respectfully submit that the issue is not the reasonableness of the conduct of the bank, but rather whether under paragraph 17 of a mortgage document drafted by the bank and under a loan modification agreement drafted by the bank the legal effect of those documents is to release defendants Andrew and Jean Sill. It has long been the law that when a document is prepared by one party and not by the other, any ambiguities should be resolved in favor of the party who did not draft the document. Also, it seems clear that what a party who drafts a document calls it is not determinative of the issue. What is important is the language in the body of the document taken together with all of the facts of the case. The fact that the bank chose to call the agreement a “Loan Modification Agreement” merely shows one of its purposes in drafting the agreement, i.e., to reduce the interest rate and extend the time for payment which made the agreement more attractive to the new buyers. However, the bank was also obtaining the agreement of the Williams to pay the outstanding balance and comply with the rest of the terms of the original note and mortgage. Black’s Law Dictionary defines the legal term “ASSUMPTION” as: “The act or agreement of assuming or taking upon one’s self. The undertaking or adoption of a debt or obligation primarily resting upon another, as where the purchaser of real estate ‘assumes’ a mortgage resting upon it, in which case he adopts the mortgage debt as his own and becomes personally liable for its payment. The difference between the purchaser of land assuming a mortgage on it and simply buying subject to the mortgage, is that in the former case he makes himself personally liable for the payment of the mortgage debt, while in the latter case he does not. When he takes the conveyance subject to the mortgage, he is bound only to the extent of the property. Where one ‘assumes’ a lease, he takes to himself the obligations, contracts, agreements, and benefits to which the other contracting party was entitled under the terms of the lease.” Black’s Law Dictionary 123 (6th ed. 1990). In this case the new buyers promised to pay the balance of the sums owed on the original note and mortgage subject to the new interest rate and payment schedule and to perform all the obligations of the original mortgage contract. Very clearly they assumed the terms of the note and mortgage and are bound personally on the note and mortgage. The fact that the bank called the agreement a loan modification agreement is of no import. It is also significant that the bank used the term “assumption” in deficiency notices that it sent. A review of the record in this case shows that the bank believed that this was an assumption situation although it is also clear that the bank was not intending to release the Sills because they continued to send the Sills notices. Returning then to paragraph 17 of the mortgage, we have, by agreement of the parties, a waiver of the option to accelerate and we have an executed written assumption agreement which has been accepted in writing by the lender. Those two conditions having been met, the lender shall release the borrower from all obligations under this mortgage and note. The lender did not have to draft paragraph 17 in the way that it did. It could have included language that said that even on an assumption agreement, the lender shall release the original borrower from all obligations only for additional consideration, or that the lender shall release the borrower only upon application by the borrower, or that the borrower shall still be bound unless there is a specific release executed by the lender. No language of that kind appears in the mortgage at all. Therefore, I believe that all of the requirements of paragraph 17 have been satisfied and that the Sills should be released by operation of the language of paragraph 17 from any further obligation under the mortgage and note. Therefore, I respectfully dissent and would reverse the trial court’s order entering a deficiency judgment against the Sills.