Wellenkamp v. Bank of America
California Supreme Court
21 Cal. 3d 943 (1978)
- Written by Daniel Clark, JD
Facts
Fred Mans and Dorothy Mans took out a loan from Bank of America (bank) (defendant) in exchange for a promissory note. To secure the note, the Manses executed a deed of trust in favor of the bank on their property. The deed of trust contained a standard due-on-sale clause, which provided that the bank could elect to make the entire outstanding balance on the note due immediately if the Manses sold the property. The Manses then sold the property to Cynthia Wellenkamp (plaintiff). Under the sale, Wellenkamp paid the Manses cash equivalent to the Manses’ accumulated equity in the home and agreed to assume the debt owed to the bank. When Wellenkamp mailed her first check to the bank, the bank returned it. The bank demanded that Wellenkamp agree to an increased interest rate and informed Wellenkamp that it would enforce the due-on-sale clause if Wellenkamp refused. Wellenkamp filed a lawsuit seeking to enjoin the bank from enforcing the due-on-sale clause. The trial court held that the bank could enforce the clause, and Wellenkamp appealed.
Rule of Law
Issue
Holding and Reasoning (Manuel, J.)
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