Court Opinion

ID: 5173682
Source: CourtListenerOpinion
Date Created: 2022-01-02 05:14:50.989271+00
Date Added: 2024-06-11T08:26:11.755624
License: Public Domain

BAKES, Justice,
concurring specially:
I concur in the majority opinion which affirms the trial court’s decision that the Brunos in this case have no cause of action against First Federal. At first glance this case looks similar to our recent case of O’Boskey v. First Federal Savings & Loan Ass’n, 106 Idaho 339, 678 P.2d 1112 (1984). The note and deed of trust involved in this case is the same as that involved in O’Boskey. However, the circumstances are different.
In O’Boskey, the owner of the land in question, O’Boskey, entered into a sale agreement with one Kemp who, pursuant to the sale agreement, assumed the obligation under O’Boskey’s note and deed of trust (except the higher interest rate demanded by First Federal). When the purchaser Kemp refused to pay an additional 2% interest increase over the amount set out in O’Boskey’s note and deed of trust, together with a loan origination fee, First Federal served notice of acceleration pursuant to the due on sale clause and demanded payment of the entire principal and interest remaining due on the loan. When no payment was forthcoming, First Federal gave notice of a trustee’s sale based on the due on sale clause. This Court in O’Boskey, while acknowledging that under Lake v. Equitable Savings & Loan Ass’n, 105 Idaho 923, 674 P.2d 419 (1983), “a due-on-sale clause in a deed of trust is not an unreasonable restraint on the alienation of property and is enforceable according to its terms and conditions,” held that the wording of the particular due on sale clause in O’Boskey “itself limits the due-on-sale clause to those cases necessary to protect the security.” 106 Idaho at 341, 678 P.2d at 1114. Accordingly, this Court affirmed the trial court’s conclusion “that the defendant cannot- invoke the due on sale clause unless it shows that the transfer will impair its security.” 106 Idaho at 341, 678 P.2d at 1114.
This case differs from O’Boskey in that here First Federal has not demanded the entire principal and interest due under the note and deed of trust which it entered into with the Reeses, Brunos’ predecessors in *1109interest. Nor has First Federal invoked the notice and sale provision of the deed of trust. Rather, First Federal has merely been accepting the payments voluntarily made to it by the Brunos pursuant to the assumption agreement.
The Brunos, rather, are seeking to recover a portion of the interest which they have paid to First Federal pursuant to the assumption agreement which they entered into with First Federal. In that agreement they agreed to assume the liabilities of the Reeses under their note and deed of trust, and further agreed to pay interest at a rate 2% higher than the Reese note had provided for. The only contractual arrangement which the Brunos have with First Federal is the assumption agreement. That agreement establishes the contractual rights and obligations between the Brunos and First Federal. Unlike the O’Boskey case in which First Federal was making demands and taking actions which were contrary to its written obligation with the O’Boskeys, in this case First Federal is not making any demands or taking any action which is inconsistent with its written agreement with the Brunos. It is the Brunos who are asserting a claim in this lawsuit inconsistent with their only written agreement with First Federal, the assumption agreement. The Brunos are contending that they are not obligated to pay the 11% interest which they agreed to pay in paragraph 2 of their assumption agreement with First Federal. They argue that they are only required to pay the 9% interest contained in the agreement which First Federal had with Brunos’ predecessors in interest, the Reeses. Thus, this case is factually quite different from and not controlled by óur decision in O’Bos-key.
If the Reeses had brought this action contending that First Federal was threatening to assert its due on sale clause if the Reeses concluded a sale to the Brunos without the Brunos entering into an assumption agreement and agreeing to pay a higher rate of interest, then the Reeses would have had a cause of action against First Federal which would have been identical to that claimed in the O’Boskey case. However, the Reeses have declined to join in any claim against First Federal in this action.
The record reflects that the Brunos, who were conversant with real estate financing and due on sale clauses, entered into the assumption agreement voluntarily, knowing that the assumption agreement called for an 11% interest rate, 2% higher than the Reese note called for. After making payments pursuant to that assumption agreement for three years, they brought this action.
The Brunos’ contractual rights with First Federal are fixed by the assumption agreement, not by the agreement which the Reeses had with First Federal. The Bru-nos have neither alleged nor proved any breach of the assumption agreement by First Federal. The district court held that any claim which the Brunos have against First Federal must be based upon their own agreement with First Federal, the assumption agreement. The majority opinion correctly concludes that “the Brunos, not being a party of the Reese-First Federal loan agreement, cannot assert the rights which the Reeses have refused to assert in this action.” Since there is no allegation or proof that First Federal has breached its written agreement with the Brunos, the district court correctly entered summary judgment in favor of respondent First Federal.