Court Opinion

ID: 9741943
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:04:37.777708+00
Date Added: 2024-06-11T07:24:27.436846
License: Public Domain

Todd, Justice
(concurring in part, dissenting in part).
I concur in that portion of the majority opinion which indicates that under the peculiar facts of this case and the existing contract situation FCM is entitled to subrogation to the rights of the fee holder and to a conveyance of the real estate title from the bank. This occurs solely because the contract that the insurance company provided to the insureds, in which the bank was a named party in interest, specifically provided for such a *206conveyance. We must be careful to note that an insurance company does not insure the land but only the improvements thereon and that absent specific contractual language, it has no> right to transfer of title based upon its policy of insurance.
I further agree with that portion of the majority opinion which indicates, under the facts of this case, that the amount held in escrow must be offset against the face amount of the note. The right of offset, of course, being a contractual right of the bank, must be exercised as a matter of equity.
However, I must respectfully dissent from that portion of the majority opinion which indicates that there is a possible defense of usury in this case. If we were to grant to FCM all the rights of the insureds and presume that all of the evidence that it might offer would be received and decided in its favor, there still would not be an issue of usury in this case. The best that could be established is that a loan was made that created an obligation by the mortgagors to the bank and that some of the funds were placed in escrow to guarantee payment of certain obligations. It must be understood that at that point those funds were no longer assets of the bank but rather represented assets of the mortgagors which were being held by the bank: and were a liability of the bank to the mortgagors. An analogous situation would be if the attorney for the mortgagors at the time of the making of the mortgage had been designated as the escrow agent for the funds and the funds were placed in his trust account, which he happened to maintain in the bank. The funds themselves physically would remain with the bank but nobody would raise the question that there was an issue of usury. The fact that the funds remained escrowed by the bank does not change the character of the funds. Since the funds are the property of the mortgagors, they are obligated to pay interest on these funds. I would decide as a matter of law that there can be no issue of usury in this case.