RAY E. STOCKMAN AND SHIRLEY STOCKMAN, APPELLANTS,
v.
GEORGE T. BURKE AND JEAN E. BURKE, APPELLEES
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The court upheld a judgment on a promissory note with an acceleration clause triggered by the sale of mortgaged property. The court held that when a mortgage and note are executed contemporaneously and refer to each other, the mortgage terms become part of the note, and an acceleration clause conditioned on the property's sale is enforceable without requiring proof of mortgagee prejudice in a suit on the note itself.
Yes. When a promissory note and mortgage are executed contemporaneously and refer to each other, the mortgage terms become part of the note's terms. An acceleration clause conditioned on the sale of mortgaged property is enforceable in a suit on the note without requiring a showing that the mortgagee was prejudiced by the sale.
[1] A promissory note and a contemporaneously executed mortgage referring to each other become part of the same agreement.
[2] An acceleration clause in a mortgage, conditioned upon the sale of the mortgaged property, may be invoked when the property is sold.
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Join FLexlaw to unlock all legal intelligence“At the outset, the parties agree that the terms of the mortgage became part of the terms of the note where; as here, the two were executed contemporaneously and the instruments referred to each other.”
Establishes the foundational principle that mortgage terms are incorporated into the note when the instruments are contemporaneously executed and cross-reference each other.
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Join FLexlaw to unlock all legal intelligenceThe Stockmans executed a promissory note to the Burkes secured by a purchase money mortgage on real property. The mortgage contained an acceleration c…
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[*90] GRIMES, Judge.
This is an appeal from a judgment entered upon a promissory note against the defendants/appellants. The note was secured by a purchase money mortgage which contained an acceleration clause in the event the property covered by the mortgage was sold by the appellants. When the appellants sold the property without paying off the note, the mortgagees elected to accelerate and brought suit on the note for the full amount of the remaining unpaid principal and accrued interest.
The point posed by this appeal is whether a promissory note not otherwise in default which is secured by a mortgage containing an acceleration clause conditioned upon the sale of the mortgaged property can be accelerated when the property is sold.
At the outset, the parties agree that the terms of the mortgage became part of the terms of the note where; as here, the two were executed contemporaneously and the instruments referred to each other. Webster v. 759 Riverside Avenue, 1933, 113 Fla. 8, 151 So. 276; Brown v. Marion Mortg. Co., 1932, 107 Fla. 727, 145 So. 413; Grier v. M. H. C. Realty Corporation, Fla.App.4th, 1973, 274 So. 2d 21. Acknowledging that St. Martin v. McGee, Fla.1955, 82 So. 2d 736, and Schechtman v. Grobbel, Fla.App.2d, 1969, 226 So. 2d 1, did not involve acceleration clauses, the appellants cite these cases for the proposition that mortgages should not be foreclosed for “technical” defaults. However, both of these cases were mortgage foreclosures which involved the application of equitable principles.
The closest Florida case in point is Clark v. Lachenmeier, Fla.App.2d, 1970, 237 So. 2d 583, in which this court held that a mortgagee was not entitled to foreclose merely because of the noncompliance with a mortgage provision requiring consent of the mortgagee before the mortgagor could sell the property to a third party where it was shown that the mortgagee suffered no harm by reason of the conveyance. Yet that, too, was a mortgage foreclosure, and the court specifically observed that the clause in dispute did not, by its terms, accelerate maturity of the whole debt if the property was sold.
In this suit at law upon a promissory note, there was no more reason for the court to nullify the provision for payment upon resale of the property than there would have been to otherwise vary the time of payment which was agreed upon by the parties. The trial judge was correct in refusing to do so. We leave open until another day the question of whether a mortgage with a similar provision can be accelerated and foreclosed upon the sale of the property without a showing that the mortgagee has been prejudiced by reason of the conveyance to the new owner. Affirmed.
McNULTY, C. J., and BOARDMAN, J., concur.
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Stephen v. Kelly and Shirley Kelly, 449 So. 2d 1305 (Fla. 2d DCA 1984)…PER CURIAM. Affirmed. Stockman v. Burke, 305 So. 2d 89 (Fla. 2d DCA 1974). BOARDMAN, A.C.J., and DANAHY and LEHAN, JJ., concur.…
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Sims v. NEW Falls Corp., 37 So. 3d 358 (Fla. 3d DCA 2010)…la. 5th DCA 2003); Mellor v. Goldberg, 658 So. 2d 1162, 1164 (Fla. 2d DCA 1995); Collins v. Citrus Nat’l Bank, 641 So. 2d 458, 459 (Fla. 5th DCA 1994); Biersack v. Oaks Renting, [*365] Inc., 606 So. 2d 439, 442 (Fla. 2d DCA 1992); Stockman v. Burke, 305 So. 2d 89, 90 (Fla. 2d DCA 1974); Policastro v. Rudt, 180 So. 2d 472, 473 (Fla. 2d DCA 1965). “[W]here a note evidencing a debt and a mortgage to secure its payment are executed at the same time in one transaction, and the mortgage refers to the note, they s…
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Williams v. First Fed. Sav. & Loan Ass'n OF Arlington, 651 F.2d 910 (4th Cir. 1981)…s and Loan Association v. Wisconsin Wire Works, 71 Wis.2d 531, 239 N.W. 2d 20 (1976); First Commercial Title Inc. v. Holmes, 92 Nev. 363, 550 P. 2d 1271 (1976) ; Tidewell v. Wittmeier, 150 Ala. 253, 254-55, 43 So. 782, 783 (1907); Stockman v. Burke, 305 So. 2d 89 (Fla.App. 1975); People's Savings Association v. Standard Industries, Inc., 22 Ohio App.2d 35, 257 N.E. 2d 406 (1970); Shalit v. Investors Savings and Loan Association, 101 N.J.Super. 283, 244 A. 2d 151 (1968); Stith v. Hudson City Savings Instituti…
Authorities Cited
- L. Maxcy, Inc. v. Fed. Land Bank of Columbia, 111 Fla. 116 (Fla. 1933)
- Schechtman v. Gerard L. Grobbel et ux., 226 So. 2d 1 (Fla. 2d DCA 1969)
- Clark v. Lachenmeier, 237 So. 2d 583 (Fla. 2d DCA 1970)
- Webster v. 759 Riverside Ave., Inc., 113 Fla. 8 (Fla. 1933)
- ST. Martin v. McGEE, 82 So. 2d 736 (Fla. 1955)
- Brown v. Marion Mortg. Co., 107 Fla. 727 (Fla. 1932)
- Grier v. M. H. C. Realty Corp., 274 So. 2d 21 (Fla. 4th DCA 1973)