Court Opinion

ID: 7873792
Source: CourtListenerOpinion
Date Created: 2022-09-08 20:58:28.355164+00
Date Added: 2024-06-11T16:31:19.884826
License: Public Domain

MORGAN, Justice
(concurring specially).
I would hold that, notwithstanding Fidelity Federal Sav. & Loan Ass’n v. de la Cuesta, - U.S. -, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982), the enforcement of a due-on-sale clause remains subject to equitable defenses — including unconscionability. The issue before the Court in de la Cuesta was whether the federal regulations preempted California law — that the lender must show impairment of security to accelerate the due-on-sale clause. The statement that Justice Fosheim refers to in his special concurrence merely points out the distinction between the regulation and California law; it is not a holding that these restrictions are the only defenses to a due-on-sale clause.
In de la Cuesta, the California law under consideration provided that because a due-on-sale clause is a restraint on alienation, the lender must prove impairment of security interest. Restraint on alienation, however, is a property principle, Restatement of Property § 404(l)(b) (1944), rather than an equitable defense. See 27 Am.Jur.2d Equity §§ 59-64 (1966); 30 C.J.S. Equity § 58 n. 25.10 (1965). I would perceive that where the Court addressed restraint on alienation it dealt only with that subject and not with the broad topic of equitable defenses.
Mortgage foreclosure is an equitable action, Tilden v. Beckmann, 203 Neb. 293, 278 N.W.2d 581 (1979); Freese Leasing Inc. v. Union Trust & Sav. Bank, 253 N.W.2d 921 (Iowa 1977); Wisconsin Brick & Block Corp. v. Vogel, 54 Wis.2d 321, 195 N.W.2d 664 (1972) and, as such, mortgage foreclosures are subject to equitable defenses. Holiday Acres No. 3 v. Midwest Fed. Sav. & Loan Ass’n, 308 N.W.2d 471 (Minn.1981); Redding v. Gibbs, 203 Neb. 727, 280 N.W.2d 53 (1979); Wisconsin Brick & Block Corp. v. Vogel, supra. I do not see de ¡a Cuesta as changing the precedents of the many courts that have recognized that equitable defenses may bar enforcement of due-on-sale clauses, including our recent decision in First Fed. v. Kelly, 312 N.W.2d 476 (S.D.*8641981).1 I agree with the majority’s conclusion that the trial court’s determination that the contract was not unconscionable was not clearly erroneous.

. See, e.g., Holiday Acres No. 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); Mutual Fed. Sav. & Loan Ass’n v. Am. Medical Services, 66 Wis.2d 210, 223 N.W.2d 921 (1974); Mutual Fed. Sav. & Loan Ass’n. v. Wisc. Wire Works, 58 Wis.2d 99, 205 N.W.2d 762 (1973) aff’d, 71 Wis.2d 531, 239 N.W.2d 20 (1976); Miller v. Pacific First Fed. Sav. & Loan Ass’n, 86 Wash.2d 401, 545 P.2d 546 (1976); Crockett v. First Fed. Sav. & Loan Ass’n, 289 N.C. 620, 224 S.E.2d 580 (1976); Baker v. Loves Park Sav. & Loan Ass’n, 61 Ill.2d 119, 333 N.E.2d 1 (1975).