Court Opinion

ID: 9632595
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:20:08.326158+00
Date Added: 2024-06-11T18:08:19.527925
License: Public Domain

Green, J.
(concurring)—I am constrained to concur because of Bellingham First Fed. Sav. & Loan Ass'n v. Garrison, 87 Wn.2d 437, 441, 553 P.2d 1090 (1976), where the court stated:
We find the reasoning of the California Supreme Court in Tucker v. Lassen Sav. & Loan Ass'n, [12 Cal. 3d 629, 526 P.2d 1169, 116 Cal. Rptr. 633 (1974)] persuasive authority. We therefore hold the due-on-sale clause before us to be an unreasonable restraint on alienation unless the respondent can show that the enforcement of the clause is necessary to protect the lender's security.
Tucker v. Lassen Sav. & Loan Ass'n, 12 Cal. 3d 629, 526 P.2d 1169, 1175, 116 Cal. Rptr. 633 (1974) held that reasonable restraints on alienation are valid if justified by the legitimate interests of the parties. See Bellingham, at 439. The California court, in a footnote, rejected the position *59urged by Lincoln stating:
We reject the suggestion that a lender's interest in maintaining its portfolio at current interest rates justifies the restraint imposed by the exercise of a "due-on" clause upon the execution of an installment land contract. Whatever cogency this argument may retain concerning the relatively mild restraint involved in the case of an outright sale ... it lacks all force in the case of the serious and extreme restraint which would result from the automatic enforcement of "due-on" clauses in the context of installment land contracts.
Tucker, at 639 n.10. Although the issue raised by Lincoln was not decided in Bellingham, the court's strong reliance upon Tucker leads me to believe that the only reasonable restraint approved in the Bellingham decision is to protect the lender's security. Here, the parties agree Lincoln's security is not impaired by the sale. Hence, my concurrence.
However, even though Bellingham was decided in 1976, perhaps that decision should be reconsidered in light of the following:
1. There has been a sharp fluctuation in interest rates which will continue into the foreseeable future. The high cost of money as compared with outstanding loans at substantially lower interest rates has caused many bank failures.
2. Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, _ U.S __, 73 L. Ed. 2d 664, 102 S. Ct. 3014 (1982) upheld a Federal Home Loan Bank Board regulation authorizing enforcement of due-on-sale clauses in mortgages issued by federal institutions. Here, Lincoln's mortgage was written on a uniform mortgage form issued by the Federal National Mortgage Association containing the due-on-sale clause approved in de la Cuesta. This form was used by Lincoln to enable it to sell the mortgage to raise new money for new loans. The evidence shows that in states where due-on-sale clauses are not enforceable, the Federal Home Loan Mortgage Corporation has refused to buy these mortgages.
3. In 1981, the Washington Legislature amended existing *60statutes governing state chartered mutual savings banks and savings and loan associations to grant them the same powers as the federal mutual savings banks and federal savings and loan associations. RCW 32.08.142; RCW 33.12-.012. This indicates a legislative intent to create uniformity between these state and federally chartered banks. To deny the right to enforce due-on-sale clauses to state banks impairs their ability to compete with the federal banks in the secondary mortgage markets and mitigates the policy pursued by the recent legislation.
4. If interest rates go below the rate in the mortgage, the uniform mortgage form allows the borrower to pay the balance without penalty. Where interest rates rise above the mortgage rate, the due-on-sale clause permits the bank, upon a sale of the property, to increase the interest rate or accelerate the mortgage. Thus the corresponding interests of the parties are balanced in a volatile interest rate market.
5. Finally, there has been a marked trend in a majority of the states to uphold enforcement of due-on-sale provisions. See Tierce v. APS Co., 382 So. 2d 485 (Ala. 1979); First Fed. Sav. & Loan Ass'n v. Lockwood, 385 So. 2d 156 (Fla. Dist. Ct. App. 1980); Dunham v. Ware Sav. Bank, _ Mass. _, 423 N.E.2d 998 (1981); Holiday Acres 3 v. Midwest Fed. Sav. & Loan Ass'n, 308 N.W.2d 471 (Minn. 1981); Occidental Sav. & Loan Ass'n v. Venco Partnership, 206 Neb. 469, 293 N.W.2d 843 (1980); Mills v. Nashua Fed. Sav. & Loan Ass'n, 121 N.H. 722, 433 A.2d 1312 (1981); Century Fed. Sav. & Loan Ass'n v. Van Glahn, 144 N.J. Super. 48, 364 A.2d 558 (1976); Crockett v. First Fed. Sav. & Loan Ass'n, 289 N.C. 620, 224 S.E.2d 580 (1976); Northwestern Fed. Sav. & Loan Ass'n v. Ternes, 315 N.W.2d 296 (N.D. 1982); Sonny Arnold, Inc. v. Sentry Sav. Ass'n, 615 S.W.2d 333 (Tex. Civ. App. 1981); Redd v. Western Sav. & Loan Co., 646 P.2d 761 (Utah 1982); United Va. Bank/Nat’l v. Best, 223 Va. 112, 286 S.E.2d 221 (1982), cert. denied, _ U.S. __. But see Nichols v. Ann Arbor Fed. Sav. & Loan Ass'n, 73 Mich. App. 163, 250 N.W.2d 804 *61(1977); State ex rel. Bingaman v. Valley Sav. & Loan Ass'n, 97 N.M. 8, 636 P.2d 279 (1981).