Court Opinion

ID: 9791761
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:17:05.235347+00
Date Added: 2024-06-11T07:37:38.322208
License: Public Domain

Schroeder, J.,
dissenting: The construction of the subordination agreement by the court permits the perpetration of a fraud by the lessee on the facts in this case.
Here the subordination agreement contemplated by its language but one mortgage "for the purpose of financing the improvements to be placed upon” the real property. The memorandum of the lease filed with the register of deeds referred to “said mortgage, however, not to exceed $560,000.00 in principal amount. (Emphasis added.) Here two mortgages were already executed in the total sum of $30,000 and construction had not commenced.
None of the funds advanced changed the nature of the real property in the slightest particular. They were all expended for purposes which may be described as “water” insofar as any tangible improvement to the property is concerned.
Some of the specific items found by the trial court to have been paid from the proceeds of the two notes are clearly not incidental to the construction of improvements on the land — for example, the payments to J. W. Burge, which the record discloses were for living expenses. Another example is the funds paid to the Hinderliters in the sum of $8,400 for rent. Another questionable item is the payment in full of $10,000 for a motel franchise before there was any assurance that a motel would be constructed.
In my opinion it was the intention of the parties to the subordination agreement, if a mortgage was to be executed, that the landlord approve the mortgage in writing. This is found in the provision that "the landlord agrees to execute necessary instruments to accomplish subordination of the fee title.” It is conceivable the builder on the premises could improve the property by erecting a motel without resort to mortgage financing. If it was unnecessary to resort to mortgage financing then, of course, the landowner would not be asked to execute such instruments. For this reason I feel the court has placed too much reliance upon the provision that the agreement of the landlord to execute the necessary instruments to accomplish subordination of the fee title be conditioned upon the request that the landlord be asked to do so.
*331It is respectfully submitted the judgment of the lower court should be reversed.
Fatzer and O’Connor, J. J. join in the foregoing dissent.