Court Opinion

ID: 9632628
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:20:35.312449+00
Date Added: 2024-06-11T18:08:20.063666
License: Public Domain

OPALA, Justice,
concurring in part and dissenting in part:
I concur in the court’s holding that a due-on-sale mortgage clause under consideration herein does not effect an impermissible restraint on alienation; I dissent from *930that part of the court’s pronouncement by which that due-on-sale clause is declared not to violate Oklahoma’s statutory version of the Chancery rule against “clogging” the equity of redemption. 42 O.S.1981 § 11 and 46 O.S.1981 § 1. Coursey v. Fairchild, Okl., 436 P.2d 35 [1967], A clause that so drastically fetters a borrower’s capacity to transfer the lien-encumbered title to his land passes to the lender an essential ingredient of the owner’s ius disponendi. It is hence a “clog” in the sense of the rule-prohibited “collateral advantage” to the lender.1 Coursey v. Fairchild, supra. The burden it imposes by automatically accelerating the obligation on sale is not related to a specific security-impairing event. The clause is also a violation of the equitable theory of mortgages codified in 42 O.S.1981 §§ 5 and 10. Coursey v. Fairchild, supra, and Rives v. Mincks Hotel Co., 167 Okl. 500, 30 P.2d 911 [1934],
A mortgage provision by which any incident of the borrower’s title is surrendered— however slightly — to the will of the lender — directly or obliquely — must be deemed to contravene all the basic concepts applied in equity to a land security transaction. These are: (a) a lender is not allowed to exact a greater interest in his borrower’s estate than a lien to be impressed as security for the debt, 42 O.S.1981 § 5; Balduff v. Griswold, 9 Okl. 438, 60 P. 223 [1900] and Moore v. Beverlin, 186 Okl. 620, 99 P.2d 886 [1940]; and (b) “[notwithstanding an agreement to the contrary”, a borrower retains in his lien-encumbered estate all the incidents of ownership free and clear of any title claim of the lender, 42 O.S.1981 § 10 and 46 O.S.1981 § 1; Coursey v. Fairchild, supra; Hunter v. Murphy, 124 Okl. 207, 255 P. 561 [1927] and Kinch v. Pierson, 97 Okl. 109, 223 P. 144 [1924]. Because a due-on-sale clause does in fact invest the lender with power to prevent or impair alienation of the lien-encumbered land, it transfers to him an incident of the borrower’s title. This is clearly offensive to our statutory scheme of regulations that govern real estate security transactions. That scheme requires strict adherence to the equitable theory of mortgages. Rives v. Mincks Hotel Co., supra, and Sanders v. Hall, 74 F.2d 399 [10th Cir.1934], cert. denied 295 U.S. 739, 55 S.Ct. 653, 79 L.Ed. 1686 [1935],

. Osborne, Law of Mortgages, p. 144 [2nd ed.] and Jacoway, Mortgages — A Catalogue and Critique on the Role of Equity in the Enforcement of Modern-Day “Due-On-Sale” Clauses, 26 Arkansas Law Review 485, 490 [1973],