Court Opinion

ID: 9655468
Source: CourtListenerOpinion
Date Created: 2023-08-23 19:11:25.275688+00
Date Added: 2024-06-11T18:13:18.769074
License: Public Domain

HARRIS, Justice
(dissenting).
I dissent from division II and the result. I think the mortgage instrument has plainly provided a waiver of any deficiency judgment.
This was an action brought in equity to foreclose a real estate mortgage and for in personam judgments against the mortgagors. In the same proceeding the trial court entered the declaratory judgment which is the subject of this appeal. In submitting the declaratory judgment question the parties stipulated the property had been abandoned. The trial court found, among other things, “[tjhat the defendants [mortgagors] abandoned mortgaged premises in February of 1983.” The majority states that the “waiver is not triggered by the act of abandonment but rather by a finding of abandonment made by the court in connection with a shortening of the redemption period to sixty days.” Whatever the borrowers’ rights under the statute might be, it seems to me that the mortgage *789instrument accords them a waiver of any deficiency upon the finding of abandonment.
A lending institution should not be permitted to escape the effect of language it places in a mortgage instrument. For this reason the law has placed a number of obstacles, in the form of rules of construction, designed to prevent just what Banco now contends. Banco’s contention comes down to asserting that the statute prevents paragraph 11 from being construed in accordance with its evident meaning.
In Freese Leasing, Inc. v. Union Trust & Savings Bank, 253 N.W.2d 921, 924 (Iowa 1977), we said:
A mortgage is subject to the principles of interpretation and construction which govern contracts generally. These principles are designed to assist in identifying the intention of the parties. [Authority.] The object of interpretation is to learn the meaning of words used in the contract. The goal of construction is to determine the legal effect of those words. [Authority.]
In searching out that intent we should apply the rule that ambiguous language in a contract is strictly construed against the party which drafts or furnishes the instrument, unless the contract was prepared under scrutiny of legal counsel for both parties. Kinney v. Capitol-Strauss, Inc., 207 N.W.2d 574, 577 (Iowa 1973). Here, the mortgage agreement was furnished by Banco and the veterans administration.
The provision should be read with borrower’s glasses, not banker’s. In C & J Fertilizer, Inc. v. Allied Mutual Insurance Co., 227 N.W.2d 169, 172, 176 (Iowa 1975), we adopted the following rule:
Courts in construing and applying a standardized contract seek to effectuate the reasonable expectations of the average member of the public who accepts it.
The borrowers here, reading the instrument, could surely be expected to seek the adjudication of abandonment in the manner that they did. It does not seem reasonable to require that the application be brought in some other manner, or by some other party, as the majority now has in mind.
The parties argue the significance of the contrasting schemes set out in paragraph 10 and 11 of the mortgage. The trial court commented on these arguments. The majority, however, brushes aside the comparison, stating that only paragraph 11 is involved. I think the comparison of the two provisions cannot be so easily dismissed. Paragraph 10 implements Iowa Code section 628.26, which authorizes mortgage provisions in which the borrower accepts a redemption period reduced to six months and the lender waives the deficiency judgment.
Paragraph 11 was undoubtedly drawn with an eye to Iowa Code section 628.27, which authorizes further mortgage provisions to deal with situations when the property has been abandoned. The borrower accepts a redemption period reduced to sixty days and the lender waives any deficiency judgment.
I think it is most enlightening to contrast the language used in this mortgage to implement the two statutes. Paragraph 10 contemplates an intention to act within the foreclosure proceedings. It states:
It is further agreed that in the event of foreclosure ... said mortgage foreclosure proceedings ... shall be reduced to six months, provided the mortgagee waives in said foreclosure proceedings any rights to a deficiency judgment ....
(Emphasis added).
Paragraph 11 contains no similar language. It expresses an unconditional promise by which the mortgagee waives its right to a deficiency judgment in the event of a finding by the court in the foreclosure proceeding that the real estate has been abandoned. There has been that finding of abandonment. According to paragraph 11 the waiver of deficiency has already taken place.
The path taken around these construction principles is unwarranted. I would reverse.
REYNOLDSON, C.J., and McGIVERIN, J., join this dissent.