Court Opinion

ID: 9595516
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:41:18.001574+00
Date Added: 2024-06-11T18:01:28.089967
License: Public Domain

STRUCKMEYER, Vice Chief Justice
(specially concurring) :
I concur with the court’s decision that the judgment of the Superior Court should be affirmed. However, I cannot agree with the reasons expressed for affirmance, being of the opinion that a trust is created by the language of the mortgage.
*175Certain of the undisputed facts important to the resolution of this case will be set out first.
On May 2, 1958, Walter J. Gray and Alva M. Gray entered into a mortgage agreement with the Valley National Bank. Ten years later, on the 24th of May, 1968, plaintiff, Charles R. Brooks, purchased the mortgaged property and assumed the obligations of the mortgage. The mortgage called for monthly payments of principal and interest and in this language required advance payments of sums equal to insurance, ground rents, taxes, and special assessments :
“ * * * the Mortgagor will pay to the Mortgagee, on the first day of each month * * * the following sums:
******
(b) A sum equal to the ground rents, * * * plus the premiums * * * on policies of fire and other hazard insurance * * * plus taxes and assessments * * * to be held by the Mortgagee in trust to pay said ground rents, premiums, taxes, and special assess-' ments.” (Emphasis supplied)
The practice of the Valley National Bank was to place the advance payments in demand deposit accounts, referred to by the litigants as impound accounts. During the time between their receipt and disbursement, the bank used the impound funds as its own for general investment purposes. The cost to the Valley National Bank of servicing the Brooks impound account averaged $8.27 per annum. This is typical of the costs attributable to impound accounts serviced by the bank. If interest had been paid on the average daily balance on the Brooks account at the prevailing rate of passbook servicing, the amount thereof in 1969 would have been $8.91, in 1970, $6.74, and in 1971, $6.68.1
There is no mystery as to why lending institutions require the advance of funds such as these. In 1933, 26.3% of the property taxes in the 200 largest cities of the United States were delinquent. Substantial numbers of foreclosures were caused by the inability of the mortgagor to pay annual taxes or assessments. As a result, lending institutions began to require monthly tax payments upon the theory that a homeowner would find it easier to pay in installments of Vi2 rather than meeting a single payment in an annual charge. Buchanan v. Brentwood Federal Savings and Loan Association, 457 Pa. 135, 320 A.2d 117, 121 (1974).
The majority have cited to ten lawsuits which have been brought against lending institutions in various courts of this country to compel reimbursement for the use of impound funds, or what is usually described as escrow funds. Because of the difference in the language used in the various instruments being construed, none can be considered as precedent for the holding here. They do, however, establish a usage, the customary practice by lending institutions in the United States. Without exception, interest was not paid nor were the earnings on the investment of the impound funds credited to the mortgagor.
I reject immediately the holding by the majority that the impound funds deposited with the Valley National Bank are not trust funds. If the impound funds ar.e not held pursuant to a trust and the mortgagee goes into bankruptcy, mortgagors would have no greater right to the impoundments than a general creditor. A court should not read out of the contract language which has a clear and obvious purpose, language which, as in the present case, is designed to secure and protect the mortgagor from a contingency against which he cannot otherwise protect himself.2
*176The mortgage in plain English provides that the impound funds are “to be held * * * in trust” to pay rents, insurance, taxes and special assessments. Simple, unambiguous language must be given its ordinary and usually accepted meaning. Sam Levitz Furniture Co. v. Safeway Stores, Inc., 105 Ariz. 329, 464 P.2d 612 (1970); Brady v. Black Mountain Investment Co., 105 Ariz. 87, 459 P.2d 712, 41 A.L.R.3d 1 (1969).
The ordinary, accepted meaning of the word “trust” as defined by Webster is “a property interest held by one person for another.” Webster, Third New International Dictionary (1965). Or as has been succinctly put:
“A trust is a relation between two persons, by virtue of which one of them as trustee holds property for the benefit of the other. * * * Every deposit is a trust, except possibly general bank deposits ; every person who receives money to be paid to another or to be applied to a particular purpose is a trustee * * Vosburgh’s Estate, 279 Pa. 329, 123 A. 813, 815 (1924).
In the instant case, the bank received the impound funds to be applied to the payment of taxes and insurance. A trust was created not alone because the word “trust” was used in the mortgage, but because the bank received money to be applied to a particular purpose.
A court may not fashion a new contract for the parties simply because it appears inconvenient to enforce the one the parties agreed upon. It is not within either the function or power of the court to alter, revise, modify, rewrite or remake a contract for the parties; its duty is confined to enforcing the contract which they have made for themselves. Goodman v. Newzona Investment Co., 101 Ariz. 470, 421 P.2d 318 (1966); Graham County Electric Cooperative, Inc. v. Town of Safford, 95 Ariz. 174, 388 P.2d 169 (1963); Young v. Border Broadcasting Co., 75 Ariz. 298, 255 P.2d 888 (1953); Valley National Bank of Phoenix v. Shumway, 63 Ariz. 490, 163 P.2d 676 (1945); Russell v. The Golden Rule Mining Co., 63 Ariz. 11, 159 P.2d 776 (1945).
The positive language by which the bank promised to hold the impound funds in trust should not be read out of the mortgage by the simple device of filing an affidavit by an officer of the bank that a trust relationship was not intended. If the word “trust” does not here mean trust, no legal instrument, however important, plainly written or carefully drawn, is safe from tinkering.
It is the appellant’s position that not only is a trust created, but, further, since the bank invested the impound funds, he should receive the benefits from their investment. The mortgage, however, does not contain a statement of the bank’s duty relative to the care of the impound funds, nor does it contain any language from which it can be concluded that the mortgagor is to receive the benefits from an investment of the funds. Brooks relies on the general rule of law that it is the duty of a trustee to protect the interests of the beneficiary of a trust by the exercise of reasonable care and diligence in the management of the trust property, Bulla v. Valley National Bank of Phoenix, 82 Ariz. 84, 308 P.2d 932 (1957), and the general rule that the trustee has a duty to invest the trust property so that it is made productive for the beneficiary. Restatement (Second) of Trusts, § 181 (1959). Where, however, a rule of law might otherwise be applicable to an agreement, custom or usage may make such rule of law inapplicable. Williston, Law of Contracts, § 648 (3rd ed. 1961).
The practice of requiring impound payments has existed since the early 1930’s. *177In every instance, without exception, where a suit has been brought to compel payment of interest or the earnings on the investment of the impound funds, the lending institution has not paid the mortgagor for the use of the impound funds. Nor is there anywhere, the slightest suggestion that the Valley National Bank or any lending institution ever paid for the use of impound funds.
While a few isolated instances will not prove a usage, one so firmly established for so many years nationwide should be controlling. A usage will be binding if it is uniform, long established, and so well known that it can be said that the parties contracted with reference to it and the failure to conform to it would be the exception. Cleveland etc. R.R. Co. v. Jenkins, 174 Ill. 398, 51 N.E. 811. Nor is a usage invalid because its effect is different from a general rule of law.
“It is well settled that a trade usage which is contrary to a statute or which contravenes public policy is invalid and may not be invoked; but where a rule of law is of a character that the parties may make it inapplicable to their contract by express agreement, they may likewise render it inapplicable by implied agreement or by usage.” Wolfe v. Texas Co., 83 F.2d 425, 431 (10th Cir. 1936).
I am therefore of the opinion that by banking usage neither interest nor earnings on investment was expected to be credited to the mortgagor.
For the foregoing reasons I would affirm the judgment of the court below.

. A survey of 1,141 savings and loan associations with total assets of 90.3 billion dollars establishes that similar figures prevail nationally. See The Tax Escrow Story, Savings and Loan News, pp. 106-109 (March, 1973).

. The recent insolvencies of such institutions as the Franklin National of New York, with *176assets of four billion dollars, the Hamilton National, the third largest failure in the United States banking history, the Lincoln Thrift Association in Arizona, with assets in excess of $38,000,000, and 13 bank failures in 1975, point up sharply the mortgagor’s need to be secure in his advance payments.