*1 849 Dan T. et al v. TUCKER PULASKI FEDERAL
SAVINGS & LOAN Association
Edward con- This Harris, litigation Chief Carleton Justice. mort- in a contained clause of a certain validity cerns alia, the maturity inter which provieds, gage mortga- “If the may accelerated indebtedness secured all or convey) to sell contracts (or sells or gor conveys the writ- without Premises Mortgaged any part Tucker, a Dan note”. holder said ten oonsent purchased Rock, Decem- in late of Little white resident *2 property Street of located at West ber 17th property a three that the was Little Rock. Tucker testified unit apartment, two. rented lived in one unit and and he evidence, property According time, was to the at neighborhood neighborhood. The located in an all white gradually had that he black and Tucker testified became agency keeping was able A rental trouble renters.1 stayed renter, and who a few months obtain but one moved Consideration paid year. property remaining off, vacant for a being purchase $2,000 $25,000, for the was being his and note executed Tucker and down a Savings $23,000 Loan father for with Federal and Pulaski Association, also exe- hereinafter called Pulaski. Tucker mortgage purchased property to secure cuted payment. on in the
Tucker endeavored to sell his interest pur- eventually, through realtor, and found couple. chasers, Belcher, Mr. and Mrs. Vassie a black approve Pulaski would not a transfer to the nontheless, $1,500 and but executed a deed to them after, Tucker sold his interest for
subject mortgage. to the There- April against 14, 1970, on Pulaski instituted suit wife, Tucker and his father and Belcher and wherein stating out, the that because of the violation of this clause was set Pulaski aforementioned provision the mort- of unpaid principal gage, balance the secured of entire payable prayed it was due and was note declared company judgment $20,243.18 in the sum of that the have attorney’s judgment interest, with fees, for costs and 10% mortgage property, and sale of the foreclosure extinguishment possession lands, and the of of property. interest of the in the The Tuckers Belchers capricious, asserting answered, that the acceleration restraint arbitrary, oppressive, unconscionable and an right freely convey equity re- of Tucker to demption mortgaged property; provision in the that said was invalid A filed as and void. counterclaim was also similarly class action on behalf of from situated borrowers Pulaski wherein it was asserted that Pulaski charge attempted regulation by to assert a which it would fee; the Belchers a sum of as a transfer that such $100.00 agree, emphasize, that there are no racial overtones 1Appellants and we this case. inequitable charge against public policy and was an power to sell his effort to interfere with property owner freely adequate It was consideration. levying enjoined appellee asserted that should be from charge. part counterclaim, Also, as a it such alleged requires pay it,
that Pulaski a borrower agent, money month, in as escrow a sum of each addition pur- mortgage, payments for the on the note to the payments pose premiums; taking of taxes and insurance care paid are funds and that said monies so trust profit personal cannot be used for the association; benefit of money is invested with the that the escrow company profit pro- it, which makes a from but retains the *3 practice fiduciary itself, in fit for that is violation of its relationaship. adopted The Belchers the answer and coun- appropriate prayed re- terclaim of the Tuckers and for testimony, taking trial, lief. and after the of the court On findings following pertinent made the issues on which are to the appeal litigation: in this para- provision mortgage “1. The set forth gives graph plaintiff findings above, of fact which right payment the the to accelerate mortgage mortgaged property upon debt sale or transfer of secured plaintiff’s consent, is
without against public policy. valid, andi is not enforceable validly right Plaintiff exercised the to declare 2. payable mortgage once. entire debt to be due and at obligation justify Plaintiff its refusal 3. has no mortgaged property to consent to the sale of to the Belchers. obliga- any Notwithstanding 4. the absence of such plaintiff tion, for with- had valid business reasons mortgaged holding its consent sale of property to the Belchers. sum indebted to Plaintiff
5. The Tuckers are per plus $20,327.44 an- interest at the rate of 6% February April 24, 1, 1970, until num from plus per from interest at the rate of 10% annum April 24, 1970. for indebted to Plaintiff
6. The Tuckers are also attorney’s $2,000.00 costs. fee of mortgage to foreclosure of its Plaintiff is entitled 7. judicial lands. sale said monetary The 8. injunctive counterclaim defendants by plaintiff earnings relief as to made and transfer fees is not a valid class escrow accounts action. any, by plaintiff earnings, if on escrow made 9. accounts are not payable indivi- to defendants either dually or as members of class.” findings, judgment ren- In accordance with these judgment dered and the ordered sold if said days, given paid within 10 and the Tuckers judgment against plain- portion the Belchers for judgment against remaining unpaid tiff’s the Tuckers crediting judgment after ceived from the sale of the re- the Pulaski with amounts
property. so From decree bring appeal. entered the Tuckers and Belchers For points upon, reversal four are relied viz:
"I permitting Savings The Chancellor erred in & mortgage Loan Association to accelerate the to forclose the debt and mortgage, because the acceleration provision public against policy and void.
II Savings escrow The funds are held the & Loan fiduciary, Association as a and the Chancellor erred permitting the Association retain its own profits investing fiduciary the realized from the funds.
III. The amount costs or services the of transfer fee is not related
performed by Association, the and permitting the Chancellor erred in the Association charge it. IV rejecting testimony The Chancellor erred in the closing agent, acting the loan ap- while within the parent scope authority, closing of his at the Association’s loan to Dan Tucker assured the Tuck- ers that the would stand for the loan.”
I passing upon litigation,2 very quickly In this we agree appellants appellee cannot, state that we with simply quoted clause, on the basis of the accelerate payable, note, declare the indebtedness due and and fore upon property. procedure close countenanced decision This cannot equity. a court of There is no Arkansas
governing issue, have circumstances at grant but we equity against attempted said will relief inequitable Crone acceleration for conduct. See v. John reasoning son, Ark. 403 S.W. like the We 2d 738. Appeals Arizona, 1, Department District the Court of Company A, in the Baltimore v. case of Insurance Life Hugh al, L. Harn et was de 486 P. 190. This case 2d July 30, 1971, 8, 1971, re cided on hearing amended June September 10, There, denied the Harns 1971. mortgage, money borrowed and executed a note containing following provision: note payable under this note and “All sums due and *** securing mortgage mortgages same, shall or up- payable notice forthwith without due become conveyance any portion all or of title to vesting mortgaged premises property, or in, than to thereof other manner one other Mortgagor named therein.3” language: mortgage contained hereby secured,*** mortgage and all sums
“This
option
payable
Mort-
at the
become due
shall
*5
might
pro
may
by
2It
be mentioned that this transaction
well be covered
a
vision of the Uniform Commercial Code codified as Ark.
Ann.
85-1-208
Stat.
§
(
of said or in upon vesting the such titles manner persons Mortgagor.” than, with, or entities other Subsequently conveyed mortgaged pro- the Hams perty persons. appellant to other The asserted that these conveyances were in direct violation of the contractual agreement, gave appellant right and thus to accelerate trial court contrary held foreclose. to this view appeal, appellant urged and on that the violation quoted of the clause entitled it to acceleration fore- holding adversely appellant, closure. In said: to court underlying “The reason for an acceleration clause type responsible before us is to insure that a party possession, protecting mortgagee is in thus unanticipated from risks.
[3] The acceleration clause this case is clearly mortgagors’ ability dispose restraint on the property. long their We believe that so as an accelera purport absolutely tion clause does not to restrict mortgagor’s ability dispose of their type there is not the of restraint on alienation that would render the clause void. It follows that grounds invocation of the clause must be based on that are reasonable on their face.
[4] An action to accelerate and foreclose a mortgage proceeding, [citing being equitable it is cases], allege merely enough that the acceleration not allegation that Absent an violated. has been clause being respect cir purpose is in some of the clause jeopar security mortgagee’s that the cumvented or equitable re plaintiff dized, entitled to cannot be powers equitable of the trial lief. Otherwise the court^ penalty impose on a an extreme invoked to would be showing mortgagor he has violated no with is, agreement, he would substance make a security. impair conveyance would *6 allegation complaint the contained no note that We they payments be- had been that there default plain- argument came due and at oral counsel for point, question responding to this to a directed tiffs, payments. had been no missed that there affirmed ap- allegation place pleading does an At no in plaintiffs pear way jeopar- security inis that the emphasis]” dized. [our mortgagee certainly why course,
Of we can see a object mortgagor, transfers; permit- would to some a if equity ted, property could sell his and transfer the indebt- person operating edness to a a who had been convicted of bawdy operating gambling illegally house, house, a or selling whiskey drugs, naturally mortgagee or a accept person, realizing would not desire to such a property person could be used for a similar purpose. might The same be true of an who individual persistently pay obligations, had failed to his who job, permitting proper- a or who had a without record of ty to deteriorate. frequently happens, hand, a
On other and this job mortgagor transferred from his could be to another persons and, if location to whom he desired to sell arbitrarily disapproved by could be the loan position company, being he could be in forced great sell to someone at sacrifice.4 be This could well paid. The might though be three-fourths a loan even true validity mortgagor requirement leave a would of such n Accordingly, mortgagee. mercy we at the much are agreement decided court with the in full grounds re- legitimate must be that there case dted con- particular accept individual a transfer to fusal cern. premise being This established, let us examine the litigation facts before us to determine whether appellee company grounds reject reasonable pertinent A Belchers. fact is that the record reflects Vassie part Belcher Esther, and wife in the latter questioned provision 4 Tucker that he did not testified know the was in the contract. purchased home, financing 1966, purchase through Pulaski, $8,211.09. in the amount of This loan was to repaid commencing 1966, February monthly with payments per month for a little over sixteen $65.00 *7 years. company testimony trial, In the at the the various officers of Gullev, Pulaski, testified. W. P. President of Tr.. trans for the disapproving the Belchers in that testified payment the Belchers’ considered fer, committee loan report already existing loan, a credit and on the record appear obtained on the It Belchers. does not that he ever positively payment stated that the Belchers’ record loan disapproved. was considered the loan was One before other officer testified that the Belcher loan was referred meeting in of the loan committee. Two other company dy, Guy officers, Maris, III, and Howard E. Bod payment
stated that the record of the Belchers on the by prior loan was original not considered them to the dis approval, already and that the loan had been down turned 4-a before this Boddy matter was checked. Mr. stated he did not even know that the Belchers had a loan with Pu rejection, laski at the time of and Maris stated that the before he examined the assumption rejected had been say company course, loan record. Of this is not to that the not was determining entitled to consider all information obtained loan,
the fitness of the Belchers to assume the appear may disapproval but it does somewhat that the predicated payment not have been on record entirely logical Belchers. This seems since the Belchers delinquent, they i.e., had never been much as had never been thirty days making monthly payment. late in paid The record reflects that the Belchers had on their they period, during had loan for months and that 42 pay paid months, before the due date nine one month exactly date, ment was on the due months 32 they paid averaging days date, had after the due 12 (from date). late the due The other stated reason for disapproving report. the Belchers was a credit We do given not think consideration should be 8 although items, paid (late) except one, all of these repossession. which was an all automobile These items approved original occurred before Pulaski loan ever apparently payments to the so these late could concern._ not have caused much testimony 4-a This by deposition.
857 through September 1966 listed from are items Six repossession including of an automobile. 1968 paid; how- items were the other reflects record being paid. As to the past before due ever, repossession, items were difficulty great he stated that Belcher perform satis- automobile; never it would with the company getting the factorily; not succeed that he did finally in. it, it back he turned fix company did never might mentioned that the It occupancy on inspect investigate Belchers accordingly mortgage, could property under being properly known whether have is current reflects that Belcher taken care of. The record original payments loan, payments his being to Pulaski his undisputedly, per month, ten- he has $65.00 *8 payments month as on the dered the sum of property each $198.41 purchased payments fromTucker, these have but accepted. during offered not been Belcher trial monthly payments open make all due court.
Let it be remembered that Dan Tucker is still liable irrespective course, note, of the transfer. Of Tucker state, which would make enforcement to there is could leave nothing though difficult, in the record more leaving. any thought appellant has of indicate that However, on the There father is also liable note. Tucker’s security; purchased yet additional Tucker residents, Keck Mrs. Dessie Patrick from two Little Rock daughter. Koon, In and financing Doris Marie mother Mrs. purchase, applied for a to Pulaski Tucker Koon, $23,000 a matter loan. Mrs. Keck and Mrs. as agree- inducing loan, into an Pulaski to make the entered put security (for performance up ment to as additional by Tucker) savings obligations account of the assumed agreement $5,500. The held with Pulaski in the amount of deposit provides portion $5,500 for a of a release principal the loan. $1,000 for each reduction Gulley released, the $1,000 been Mr. testified that obligated company being $1,000 for each to release $500 agreement provides principal. even on the reduction deficiency, that, in a in case of a foreclosure which results agree they to Pulaski that are indebted the indemnitors up to the pledge amount of taking their care of deficiency judgment. all, All appear it would that Pu- adequately laski is secured. filing In judgment suit for on the foreclosure, note and only Pulaski ground, sets out viz, one Tucker, that with- out the consent Pulaski, conveyed sold and the mort- gaged lands to Belchers; appellee then declared unpaid principal entire payable.5 balance due and extremely We think it would be unfair to hold that they the Belchers are a bad risk when are not current original loan, in the likewise but have tendered the month- ly payments property purchased from each month on the Tucker.
Accordingly, erred, first, we hold that the chancellor holding plaintiff obligation justify in its refusal to consent to the sale of the had no
mortgaged pro- perty holding to the further erred in withholding Pulaski had valid business reasons for its consent.
II agree appellants point. do not At We with on this might filing outset, it stated class action entirely beyond scope a counterclaim seems to be (Repl. the counterclaim § statute. Ark. Stat. Ann. 27-1121 *9 1962) Paragraph provides pleadings the that defendant’s any contain, shall “A statement of new matter constitu- ting ordinary defense, set-off, counterclaim or in and very language, repetition.” concise nitely appears without This defi- personal evi- to be a statute. There is no appellee dence in this record that coerces its borrowers accounts; fact, to establish escrow in the present pay any loan, their do not monies into an escrow Actually, in account. the escrow account results a service responsibility borrower, to the for it him of the absolves exhibit copy appellees is made an 5A of a letter for counsel to Tucker assumption complaint, stating because the this that Pulaski declined to letter pay “extremely report” extremely of Vas and "the bad record of the bad credit existing mortgage with our client”. sie and Esther Belcher on an A mort- the taxes insurance. paying and trouble the he knows to in a where position is be entitled gagee otherwise, his sec- paid, will be taxes and insurance course, taking much in Of very urity jeopardy. would the items a bit of time quite care of these requires in loans reflects The record also clerical employees. or the Vet- the Housing Authority Federal guaranteed by Administration, is eran’s there a requirement which maintained for those loans escrow must be account inAll property. exceed 80% all, value appraised in this contention. we are unable to see merit Ill by was
Here this contention advanced again, class, was of a and what for the benefit counterclaim in this is equally applica- said Point II relative to phase, course, ble here. Pulaski a transfer fee of Of charges $100.00. Belchers have never fee they transfer because paid transfer, for the tender did approved although they in liti- Since Belchers are prevailing $100.00. will arise. gation, legitimately question undoubtedly There one loan other testimony building $100.00, testi- Pulaski company County charges mony that one bank There no evidence charges $50.00. as to made other charges and loan associa- building tions, or other This is lending proof institutions. all in the record. While Mr. some extent detailed to Gulley transfer, the work involved in there is making nothing in the record which reflects the between relationship words, work involved the amount other charged; stated, there is no “time analysis”.6 question As not, because of in- the nature the pleading volved, before us at this time.
piration believe operations computer comes increase, surance tion card procedure 6From I policy, changing card plus alluded must be cards Gulley’s testimony: “I have such us incident file. The we we over, to the calls that go through make changed. changing getting policy I to a a tax believe There is them must not as far conveyance payment heading something a new generally as explained, quite investigating the card. mailing on the often a be property. like 25 a loan We maintain changed, I think, ledger card, change officer must This changing person’s credit earlier sheet, changing our clerical has continued insurance an insurance insurance.” in some handle changes in tire in *10 expira and I detail ex IV signed Tucker, Troy Tucker, also Dan who father of Abstract & note, he went to the Beach testified that the Guaranty questions agent, closing Company, and asked Testimony closing that was offered the loan officer. property would told the Tuckers officer deficiency judg- and there would no stand for itself ment in this accept The court refused to of foreclosure. case correctly testimony, there was think so since and we Abstract of Beach that the officer no evidence to show anything any authority close other than to do authority, Certainly, had no Beach Abstract the loan. apparent, oral statements Pulaski real or to bind the written instruments. contradiction of said, decree as In accordance with what has been through findings (including one I is reversed to Point Savings seven) & Loan Federal that Pulaski and we hold Association was not refusing justified sale to the consent mortgaged property to the from the Tuckers accept accordingly transfer; other to the must affirmed, re- points, cause the decree is three Chancery (Second County Court Pulaski manded to the Division) entry with of a decree not inconsistent for the opinion.
It is so ordered.
Fogleman, dissents. J., dissenting. I would affirm A. Justice, Fogleman, John chancery every agree respect. decree of the court in I majority opinion except with all of the the treatment of the factual situation with reference to the acceleration specific findings in this case. The chancellor made appellee validly right exercised the to declare the entire mortgage payable debt due and and that it had valid withholding business reasons for its consent to the sale mortgaged property agree of the with to the Belchers. IWhile appellants they showing had the burden appellee’s accept purchasers refusal the Belchers as *11 inequitable, I submit capricious unreasonable, was agree I that they burden. also to meet this failed that majority’s proper re- than the they trospective rather of the test stated believe, I reasonableness. determination § Ann. in however, Ark. Stat. the rule stated that UCC govern. 1961) (Add. to does intended 85-1-208 stated, may be not, the test does however it or or Whether clear, of the test statement section is concise applied. words, should the courts In other should direct inquiry whether a determination their toward good option faith to was exercised the the accelerate prospect performance was payment or that the of belief good establishing impaired of and the of lack burden party against power the whom the been has faith exercised. Appellants’ argument point addressed to consist mainly of these assertions their brief: that the associa- paid security involved, tion no the attention to to given property by other in- care the Belchers or to their punishment brought come; to others that foreclosure was purchasers object seller and and as lesson to Tucker sold to the Belchers with the associa- because approval, that the association established tion’s has not objective granting withholding standards for its con- sent, ap- mortgagor; which can be ascertained pellee’s payment remote; fears are that the record Belchers’ bad; was not that the association’s record at the time application incomplete, for transfer was made be- did cause it his former not reflect the divorce of Vassie Belcher from remarriage
wife, present his or the financial stability employed. of both whom are support any does not lend that the I submit evidence clearly assertations, not and that it does of these to some finding against preponderate the chancellor’s many are of these assertions submit I further event. inquiry. di- subject shall appropriate I to under per- question my most that is die rect attention opinion, majority i.e., were tinent, in view of the validity appellee’s exer- findings as to the chancellor’s appellee’s validity right its accelerate cise against clearly withholding its to the sale consent preponderance of the evidence? reviewing equity requires evidence, that,
In while looking appellee, over shoulder of the we officers of try gain perspective, their not as the their caretakers of money, guardians savings many peo- own but as ple, orphans. respon- some of whom are widows and great they up- sibilities of these officers are are called judgment gained many on to exercise their best from *12 years experience lending people’s money in the of other possible in a manner that will insure best to return appellee’s imperative investors. It is also that we remem- right property ber that Tucker’s to sell his to whomever chose, questioned risk, he at his own is not The here. only question appellee required accept is whether to any purchaser primary obligor, and, he chose as its put it, appellants in its refusal to whether consent resulting appellee acceleration, capriciously acted or whimsically.
First, totally I should like to note that the record is appellee’s pun- devoid of evidence that officers acted itively. Only any seeking one to reach that result could find testimony
inference from the on which to base such finding. a Even if such a strained inference could certainly preponderance drawn there is no of evidence to support finding, greater such a and there is even a cer- tainty contrary findings the chancellor’s are not clearly against preponderance In evidence. reviewing the evidence it must be remembered that two separate judgment occasions for the exercise of and dis- by appellee’s cretion officers arose. The first was whether to consent to the transfer. The second to was whether accelerate. In point to order evaluate the matter from the sincere, view of a loan savings conscientious officer of a association, background pertaining a review of the to this loan imperative. at the time of the first decision is property, apartment
The a West three-unit at 2010 Rock, Street in Little 17th was sold to Tucker on Decem- 22, 1965, daughter ber Mrs. Patricia Keck and her appraisal Mrs. $25,000. Doris Marie Koon for for by appellee property loan $23,500 indicated a value of Appellee usually $24,000. to restricted its to loans 70% appraised unwilling or value. It was make a 75% to and with security, as the with the property loan Tucker, unmarried, as the only person Dan 24-year-old $23,000 made on the note. The loan liable on 1965, to conveyance the date of December Tucker, borrower, Tucker, signed of Dan after father Troy comaker, $5,500, and the sellers pledged the note as a appellee, was in the form of a account with savings which to induce indemnity, appellee as additional security, me that this was make the It seems obvious to loan. loan from marginal very beginning. testified that: he bought property,
Tucker When he lived one it was an “all white” neighborhood; and rented the others for a rental adequate apartment loan installments pay and enable him “rent- to live free”; the neighborhood gradually changed “colored” and the event- difficulty obtaining renters keeping resulted in ually full property vacant remaining year; efforts of a real estate to sell the agent *13 months, unsuccessful for several after which a estate real found the agent received; who made the offer Tucker only $1,500, he sold his to them for equity even $4,000 $5,000. though he to had it be worth to thought had Tucker’s grantors deposit by The indemnity per- which $4,500, to the agreement pursuant shrunk to for each $1000 to withdraw $500 the indemnitors mitted At time the application the loan principal. on paid transfer, only of the approval was made for appellee’s Thus, of because $2,000 paid. had been of the principal $2,000 $1,500 for his trend, only received Tucker $2,000 payment. loan principal his and cash payment had to security appellee the value This meant i.e., $2,500 reduction $3,500, by diminished already indemnity. of $1,000 reduction and value property of a value this sale had of on the basis The property, 100% virtually became the loan $21,500, and $21,000 to value. property prob- serious had observed officers The association time At the their loans. of with some lems connection case, having were they in made the decisions of They found, per how- average ever, had month. of 10 transfers delinquency on assumed loans of that the rate becoming posing problem high, alarmingly progressively which was a causing appellee’s serious, con- more and point intensify. rate reached This cern it to about higher approximately on than those 50% where it was original which the remained in the borrower. Little title historically savings Rock loan associations have among permitting been property the most liberal in transfers money mortgages. they on which have As the competitive, market has have While more become these associations
attempted analyze carefully. to their businesses more
appellee formerly requirements relating to no investigation purchasers, transfers, and no made as the delinquency increased, on rate assumed loans its officers began give approach to attention to its to the matter. servicing delinquent significant The cost of accounts is a concern, expensive cause for lender, and makes such loan a great by a because deal of time must be devoted bringing up ap- date, someone in pellee again such accounts process usually repeated has found that the must again. July 1, appellee procedures Around started give existing more attention to sales where an appellee loan was to be assumed. Since time in- has vestigated purchasers Appellee adopted all in such cases. policy separately evaluating involving each case assumption purchasers accepting loan those who satisfactory appli- credit risks. The examination of committee, cations to transfer made loan Among which members several officers the association served. *14 Gulley, president of the committee P. were W. years previously and chief officer executive for 11 and secretary, president assistant director, vice and D. John Greenway, department, of head the loan who is now exe- president previously cutive president vice and a vice eight years, Boddy, more than Howard an assistant vice president, manager, is who now a branch a but was pertinent loan controversy, all officer at times to this employed by and who had been the association for 1/27 years, Guy III, five-year employee Maris who anwas president assistant vice and loan officer in 1969and charge delinquent Giddings and was in and Mr. members of accounts. A Mr. Byrd, identified, not also who are further are kept of this committee. No minutes of meetings and attendance The these was recorded. approval required at of least four members was before a loan could made. pro- procedure required application
The the posed purchaser. applicant required meet The give personal with a loan officer and information and references as addi- and information to the transaction. In past personal performance, tion to the credit association applicant’s considers the of the assumed, income in relation to cost the monthly payments house, the of to be amount the maintenance, estimated cost of utilities and the proposed occupancy applicant’s the occu- and manner of pancy living expenses relationship applicant’s maintenance, the of length income, employed
to his of time job, type applicant’s in his current the amount of applicant’s income, and, extent, to a lesser net worth. major past performance stability items are credit earnings. application made, of After the loan officer report to whom it is made obtains credit from the Re- usually by telephone. Bureau, reports tail Credit which inauguration procedures, Since the these associa- approval pur- proposed tion has withheld one chaser other than the but case the seller in that withdrew from the transaction. This is the first case which the out sale carried without consent association. application containing
The Belchers made their personal financial statement other information Boddy promptly 3, 1969, Howard on December who ob- report. tained a credit isIt clear that loan committee reject application upon decided to Bel- basis of past performance, cher’s credit and never other reached might weighed factors it have had it found this one satis- factory. Discrepancies testimony the officers past to whether Belcher’s record with the association was along report, considered with the credit and as to the iden- tity acting of the loan committee members are attributable largely Boddy apparently to the fact a de- arrived at *15 report dsion as soon as he saw the credit the fact actually made, i.e., two decisions were whether to approve transfer, and whether to It is clear accelerate. approve the decision not the transfer was un- among participated, regard- animous the members who makeup group. less of the Boddy application, took the loan file and credit re- port meeting. to the loan committee He that no said meeting final action was taken at the first and that the eventually Greenway ultimate him, decision was left to Gulley, agreed and not be all of whom that the Belchers should approved report because the credit was unsatisfac- tory Boddy under the association standards. said occasionally things association overlooked such as an ac- days count 30 every- overdue or collection, if $5 $10 thing appeared else that, favorable. His recollection was Belcher, the case of there were numerous bad items— probably 10 or ques- more. He was the first to raise the tion approved. whether the transfer should be He did not having knowledge recall performance of Belcher’s on previous disapproval loan at the time of the assumption by Belcher, of the loan and his decision was anything except report. based on the credit
Greenway stated that the association made no record passing of all of the members of the loan committee application, keep but did a record as to two of them. Greenway felt that the committee did refer to Belcher’s previous payment record on a loan made to him rejection association upon and that the was based report, and the credit but admitted that the loan record might possibly brought have been to his attention on the day. following report He said that the credit reflected 15 items, unfavorable seven of which were turned over agency collection, another repos- two of which were sessions, appeared paid two of which to have been after being turned over to someone for collection and two of paid which becoming delinquent. Greenway after said that the actually committee’s action was a recommend- ation and up Gulley. that the final decision was
Gulley upon reached his decision basis of
867 report previously unsatisfactory and the credit account of Belcher with the He association. classified as “bad any charge items” ferred to an account re- or balance that had been
attorney agency collection, or collection any delinquent payment debt, suit to collect a on existing appellee’s debt. He an learned from bitter testified that officers
experience that when one has been delinquent past, frequently delinquent in the he is in the Gulley actually future. made and said that these decisions were by by Greenway, committee, the loan and in this case reported himto for his concurrence or confirma- Gulley tion. said he considered the record on Belcher’s existing According loan, or one that had been him. assumed Gulley, assumption by the loan Belcher disapproved January day 12, 1970, on or within a disapproval or two thereafter. The names recorded on the assumption Greenway Boddy. were those of Gulley report considered several items on the credit un- satisfactory, among which were items on which two and payments, respectively, past due, three were re- and a possession. items, numerous, He said that small when ignored were not to be as indicative of attitude toward prompt payment. disapproved,
After the transfer was Mr. Belcher and attorney presented Belcher, his February Tucker’s deed to dated Guy
18, 1970, III, Maris who informed them disapproved. that the transfer had been Maris was fami- past by appellee liar with Belcher’s record on a loan be- collecting delinquent payments. cause of activities in He was unable to recall whether he had communicated that information to other members of the loan committee presented before the deed was to him. Because of past record, record and the credit Maris concurred in the subsequent apparently decision to accelerate the debt. He payment did not consider the Belcher loan in de- record termining his fitness to assume the loan. Gulley particulars relating Maris and stated the delinquencies previous on the
Belcher’s thought loan. Maris delinquency he first called Belcher about a counts were turned over to him as Ac 1966. delinquent non after payment days, depending upon for either or 30 15 868 Gulley
persistency previous delinquency. that the testified had been books Belcher loan association’s during monthly payments months, for made on or which 42 occasions, but the due date on 10 before payments days payments averaged later overall late 12 days payment averaged re late. A check for a September He said that at the end turned twice 1969. year pay the of the property. had to taxes on association no
Maris found “first second” records *17 delinquency five in tices of to the He found Belchers. days payments stances where than late. were more 30 experience unsatisfactory, but association considered this though warranted, did not feel that foreclosure was even payment it considered more a loan default when a days than 30 overdue.
There is that no doubt this record was known participated those who in the decision to accelerate. This was the first such decision the association had been upon adoption procedures, called to make after of its new as this was the first time a transfer had been made with- out association consent. This decision must have been deliberation, arrived at after be- as several weeks intervened presented tween the date the deed was to Maris and Gulley, institution of foreclosure. Maris advised with Gulley rested, whom the final fied that he acted decision deed. testi- upon Greenway the recommendation of Boddy, supplied by and and information the Belchers Greenway says that disclosed association records. that Gulley however, act, he recommended acceleration.' did not Greenway, until he discussed matter with with Kath- Mackey Williamson, Faulkner, erine and treasurer and association, assistant treasurer of the with directors Wright, Joseph Sheph- Edward L. B. Hurst and Joshua Gulley marginal erd. stated that a borrower’s account expensive handle, even if there is never a foreclosure. wheth- a decision with was confronted The association questionable credit 58-year-old accept with man er to previous unsatisfactory performance aon and an record always mar- obligor that primary on a loan loan Further, while promises to be. ginal to continue jobs, recently unemployed, had Belcher held two he been employment principal only months, held his person had been divorced and remarried. While such a might be as a carried borrower without foreclosure easy why might loan, one small it is to see he be an not acceptable risk on two. There was evidence that the asso- guidelines payments ciation FHA followed should monthly income, not exceed of the borrower’s 20% price dwelling of a should exceed times 2 1/2 testimony borrower’s annual There income. was also prohibit person FHA and VA future loans when one would at a have effect more than one loan assumed time.
Clearly, arbitrary, the decision arrived at was not capricious any judicial It or whimsical. is not for us or pass judgment tribunal to on the business whose those experience gives insight long matters, them into such so require as there are factors alter- between choice dependent upon natives which are the exercise of judgment support and there are would reasons that clearly recognized by the choice made. This was *18 say possible chancellor, and I do not see how it is clearly findings. preponderated against the evidence his say It is no answer to that the are liable Tuckers still anticipates and that there is no evidence that leav- either ing mobility place, In state. the first the current society high percentage population our and the of our every year change residences are do who matters of com- knowledge every mon into businessman should take Despite present intentions, account. collection from problem during Tuckers could become life a serious spite loan their lack of bad faith on part. place, questionable may In next it well be either Belcher or the loan. elder Tucker will survive the against
I think the decree should be affirmed as not preponderance of the evidence I think because do not judgment supersede that the collective of this should court that of the association officers.