Rusch v. Kauker , 1991 S.D. LEXIS 187 ( 1991 )

MILLER, Chief Justice

(concurring specially).

For reasons stated by the majority, Kaukers’ objections to the contract for deed were unreasonable. As further support for that position, I feel compelled to state that, in my opinion, the clause in the mortgage (be it called a “due on sale” or “callable on sale” clause) is not applicable here.

That clause, in salient part, provides:

Mortgagors further covenant and agree that.... conveyances or other transfer of all or any part of the interest of mortgagors, or any of them, in all or any part of said premises whereby the title becomes vested in any other person, without obtaining in such instance, the written approval of mortgagee shall give to mortgagee the right, at its option, of declaring the unpaid principal balance of such principal note and interest thereon together with all the sums advanced hereunder immediately due and payable without notice. (Emphasis added.)

It is important to note that legal title does not vest by virtue of a contract for deed. Admittedly, equitable title passes; however, legal title does not vest until execution of the deed contracted for. First Federal Sav. & Loan Ass’n, Etc. v. Wick, 322 N.W.2d 860 (S.D.1982); Tarpinian v. Wheaton, 79 S.D. 473, 113 N.W.2d 472 (S.D.1962). See also Buhl v. Bak, 400 N.W.2d 903 (S.D.1987) (Sabers, J., dissenting). Therefore, in my opinion, Bank would not have had authority to “call” this loan merely through Ruschs’ entry into a contract for deed with Kaukers. I am convinced that the clause’s plain language mandates that conclusion.

I recognize that the mortgage does put an encumbrance on the title to the property. It is important to note that Ruschs did not hide this encumbrance; but rather, they specifically disclosed it in the proposed contract for deed and bound themselves therein to satisfy it prior to the time Kauk-ers were required to make the final payment. Based upon the authorities cited by the majority, this does not create a defect to the title. See specifically, Wolken v. Wade, 406 N.W.2d 720 (S.D.1987); Renner v. Crisman, 80 S.D. 532, 127 N.W.2d 717 (1964); and Riley v. Wheat, 45 S.D. 320, 187 N.W. 425 (1922).