Morris v. Granger

MAUS, Judge.

In this declaratory judgment action the parties seek the construction of an installment note secured by a deed of trust. The printed portion of the note was in usual form, including a provision providing for acceleration in the event of default in the payment of any installment. In addition, there was typed on the face of the note the following phrase: “This note non-transfer-rable without written consent.” The plaintiff, holder of the note, contends this is a “due on sale” clause providing for acceleration of the note upon the sale of the real property securing the note. The trial court so declared. One of the makers and the vendees of the real property appeal.

It must be noted, the parol evidence rule, State Bank of Fisk v. Omega Electronics, 634 S.W.2d 234 (Mo.App.1982), has not been interposed as a bar to the reception or consideration of evidence to expand the meaning of the quoted phrase. Rather, the parties have introduced evidence of statements and understandings as bearing on the construction of that phrase. They urge the resolution of that issue on that basis. It will be so considered by this court. However, this opinion should not be construed as necessarily determining the parol evidence rule could not be held applicable. J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261 (Mo. banc 1973).

The following is a summary of the evidence. The plaintiff listed her home in Springfield for sale. Through a realtor, the Grangers submitted a written offer to purchase contingent on the sale of their home in Kansas City. The plaintiff, acting through her son, by a telephone conversation, rejected that offer. Alternate terms were negotiated during that long distance conversation between the son and the husband, Lance Granger. As a result of this conversation, a new contract was prepared by the son’s office. This contract was signed by the plaintiff and the Grangers. This contract provided for a sale with the plaintiff to carry a substantial part of the purchase price evidenced by a promissory note. The note was to be payable in monthly installments with the unpaid balance due in 25 years. It was to be secured by a deed of trust on the property. The contract also provided: “Seller reserves right to approve any transfer of loan that might occur.” Husband Granger recalled no mention of that subject during the telephone negotiations. When he read that provision he determined to ask its meaning at the time of closing. The realtor, who heard the son’s end of those negotiations, recalled no conversation on the subject. The son testified the contract phrase was consistent with the negotiations.

Approximately twelve weeks later, the transaction was closed in the son’s office. The son had been in the real estate business thirty years. The closing warranty deed, note and deed of trust were prepared at his direction by his experienced assistant. Husband Granger testified he asked the meaning of the typed phrase. He said, the son replied it meant the seller would want to approve someone else being on the note. The son testified Granger asked no question about the phrase. The seller testified to the same effect. The realtor remembered the question and testified Gran-ger was told it was to be sure the loan was secure.

Approximately three years later, husband Granger proposed to sell the home to defendants Smead. The same realtor, on behalf of Granger, contacted the seller to see if the defendants Smead could assume the loan. She was told no. Granger and the defendants Smead then entered into a contract for sale. In general, under that contract the defendants Smead were to make monthly payments to Granger, who was to make monthly payments to the seller according to the terms of the disputed note. A deed was placed in escrow. Gran-ger continued to be liable on that note. The plaintiff, contending the disputed phrase was a “due on sale clause”, alleged that contract was a violation thereof and declared the balance of the note to be due.

Even considering that phrase to be ambiguous to be construed in the light of this evidence, its meaning must be determined within the limitations of well defined legal principles. These principles include a fundamental precept applicable to contracts in general this court must follow in construing the note. That is, in interpreting contracts, courts must be guided by the well established rule that they cannot make contracts for the parties or insert provisions by judicial construction, and they are to determine what the parties intended by what they said and not by what they might have said or what perhaps they should have said. L & K Realty Co. v. R.W. Farmer Const. Co., 633 S.W.2d 274 (Mo.App.1982); Johnston v. First Nat. Bank & Trust Co., Etc., 624 S.W.2d 500 (Mo.App.1981); Ennis v. McLaggan, 608 S.W.2d 557 (Mo.App.1980).

It is generally considered that the acceleration of the maturity of an installment note is a harsh remedy. Joy Corp. v. Nob Hill North Properties, Ltd., 543 S.W.2d 691 (Tex.Civ.App.1976). Requirements for the language of an acceleration clause have received the following expressions. “Moreover, to be effective, acceleration clauses in notes should be clear and unequivocal, and where there is a reasonable doubt as to the meaning of the terms employed, preference should be given to that construction which will avoid forfeiture and prevent acceleration of maturity.” Purnell v. Follett, 555 S.W.2d 761, 764 (Tex.Civ.App.1977). “A right to accelerate, in order to be effective, should be clear and unequivocal, and if there is a reasonable doubt as to the meaning of the terms employed preference should be given to the construction which will avoid the forfeiture and prevent acceleration of maturity.” Weber v. Swenson, 207 Neb. 35, 295 N.W.2d 688, 693 (1980). However, the requirements are not always said to be so stringent. Annot., Acceleration Clause — Transfer of Property, 69 A.L.R.3d 713 (1976). This court has stated: “It may be noted here that an express provision therefor in the contract between the parties is necessary to accelerate the maturity of a bill or note.” McDown v. Wilson, 426 S.W.2d 112, 119 (Mo.App.1968) (Emphasis added). Authorities to the same effect are collected in Continental Fed. Sav. & Loan Ass’n v. Fetter, 564 P.2d 1013 (Okl.1977).

The trial court construed the disputed phrase as a due on sale acceleration clause. In doing so, it concluded Granger realized his successors could not move in and assume the loan. In reaching this conclusion, emphasis was placed upon the realtor’s inquiry if the defendants Smead could assume the loan. However, that conduct does not create an express provision for acceleration. It is consistent with any mortgagor wanting to be released from the liability on a note. According to the testimony of Granger and the realtor, this motive prompted that inquiry.

The language of the note is contrary to the plaintiffs position. In the event of default in payment of any installment, there is clear and express provision for acceleration. The prohibition against the transfer of the note, however that phrase be construed, is not accompanied by an express provision for acceleration. The familiar maxim expressio unius est exclusio alterius, which means that the express mention of one thing, person or place implies the exclusion of another, must bear heavily against any implication of such a provision. State ex rel. Goldberg v. Barber & Sons Tobacco Co., 649 S.W.2d 859 (Mo. banc 1983); City of Hannibal v. Minor, 224 S.W.2d 598 (Mo.App.1949). This is particularly true as the note was drafted on behalf of the plaintiff by one long experienced in real estate loans and familiar with an express provision for acceleration. Continental Fed. Sav. & Loan Ass’n v. Fetter, supra; John Deere Co. v. Hensley, 527 S.W.2d 363 (Mo. banc 1975). When asked if he stated to Granger if he sold any interest in the land, the note would become accelerated, the son replied, “That isn’t the way I stated it.” He was then asked, “What you stated was that the loan was non-transferable?” and he answered, “On the sale of the property.” This court has carefully reviewed the written and spoken language of the parties. Certainly the written language contains no due on sale acceleration provision. There is also a total absence of any evidence of a verbal express agreement or understanding providing for acceleration on sale.

Under McDown v. Wilson, supra, and the other authorities cited, this court must hold the plaintiff has not established a right to accelerate the maturity of the note because of the sale of the property. The judgment of the trial court is reversed. The cause is remanded for the entry of a judgment against the plaintiff and for the defendants upon the petition and counterclaim in accordance with this opinion.

HOGAN, PREWITT and CROW, JJ., re-cused. GREENE, C.J., dissents and files opinion. TITUS and FLANIGAN, JJ., concur.