Redwood County District Court File No. C0-01-236
Considered and decided by Harten , Presiding Judge, Schumacher, Judge, and
Minge , Judge.
1. A contract for deed provision that the vendee cannot sell, transfer, or assign the property without the written permission or consent of the vendor is not ambiguous.
2. A contract for deed provision that the vendee cannot sell, transfer, or assign the property without the written permission or consent of the vendor will void the vendee's assignment of the contract for deed absent the written permission or consent of the vendor.
3. A contract for deed provision that a vendee cannot sell, transfer, or assign the property without the written permission or consent of the vendor will not void the vendee's mortgage of the property even though the vendor has not given written permission or consent.
The opinion of the court was delivered by: Harten, Judge
Affirmed in part, reversed in part, and remanded Harten, Judge
The district court granted summary judgment canceling a contract for deed between respondents, vendors and vendees of farmland, after determining that the contract for deed provisions voided both the assignment of the contract for deed and the mortgage on the farmland securing the vendees' debts to appellant, a bank. The district court also determined that appellant bank was not entitled to an equitable mortgage on the property. Because we conclude that the assignment of the contract for deed is precluded, we affirm on that issue; because we conclude that mortgage is not precluded, we reverse and remand that issue for proceedings not inconsistent with this opinion.*fn1
In 1993, respondents Jerome and Marion Lipetzky, owners of farmland, entered into a contract for deed with their son, James Lipetzky, and his wife, Tamara Lipetzky, by which they conveyed farmland for $72,000, a sum less than its market value.*fn2 Jerome Lipetzky added to the contract for deed a clause providing, "Buyer agrees they [sic] cannot sell, transfer or assign this property without written permission or consent of the seller."
In 1997 and 1998, James and Tamara Lipetzky secured their indebtedness to appellant Bank Midwest, Minnesota, Iowa, N.A., by mortgaging their contract vendees' interest in the property, first for $110,000, then for $215,000 (collectively, the mortgage). In 1998, they also executed an assignment of the contract for deed to appellant. Jerome and Marion Lipetzky were not initially aware of the mortgages or the assignment, but learned of those transactions in March 2001, when appellant commenced a mortgage foreclosure action. They then served James and Tamara Lipetzky and appellant with a notice of cancellation of contract for deed. Appellant obtained a temporary injunction to halt the cancellation proceedings. In April 2001, James and Tamara Lipetzky filed for bankruptcy.
Appellant brought the instant action against Jerome, Marion, James, and Tamara Lipetzky, seeking an injunction to halt the cancellation of the contract for deed and a declaratory judgment that the mortgage and the assignment of the contract for deed were valid and enforceable, or, in the alternative, that appellant had an equitable mortgage on the property. Appellant moved for summary judgment; Jerome and Marion Lipetzky filed a cross-motion for summary judgment.
Following a hearing, the district court denied appellant's motion and granted Jerome and Marion Lipetzky's motion. Appellant ...