Summary
In Jacobs, however, the court of appeals identified the issue as whether "a grantor of a deed of trust may, under § 38-39-118, C.R.S. 1973 (1979 Cum. Supp.), cure a second default on the note [secured by] the deed of trust."
Summary of this case from Kern v. GebhardtOpinion
No. 79CA0879
Decided April 3, 1980. Rehearing denied April 24, 1980. Certiorari denied June 9, 1980.
In action concerning right of grantor to cure default in not securing deed of trust, the grantee of the deed of trust appealed from the judgment of the trial court granting the grantor's motion for summary judgment and dismissing grantee's request for injunctive relief.
Affirmed
1. MORTGAGES — Statute — Grantor — Deed of Trust — Cure Default — Unlimited Number of Times. Under 38-39-118, C.R.S. 1973 (1979 Cum. Supp.) a grantor of a deed of trust is not limited to curing a default on the note securing the deed of trust one time, but rather has an unlimited opportunity to cure.
Appeal from the District Court of El Paso County, Honorable Joe A. Cannon, Judge.
David C. Mise, for plaintiff-appellant.
Leonard Ripps, for defendant-appellee PRD Holdings, Ltd.
Charles E. Berry, for defendant-appellee The Public Trustee of El Paso County.
Plaintiff appeals from the judgment of the trial court granting defendant's motion for summary judgment and dismissing plaintiff's request for injunctive relief. Plaintiff contends that the trial court erred in allowing defendant to cure a second default on a note secured by a deed of trust. We affirm.
The sole issue on appeal is whether a grantor of a deed of trust may, under § 38-39-118, C.R.S. 1973 (1979 Cum. Supp.), cure a second default on the note securing the deed of trust. Section 38-39-118(3), C.R.S. 1973, provides:
"Nothing in this section shall constitute a waiver of any right accruing after a subsequent violation of any covenant of said note, deed of trust, or mortgage."
Plaintiff contends that the right referred to in subsection (3) is the creditor's right upon default to accelerate the indebtedness and foreclose the deed of trust and that, consequently, the grantor of the deed may cure only once. Defendant argues that the language provides unlimited opportunity to cure. We agree with defendant.
Subsections (1) and (2) of the statute establish the rights of the grantor of the deed of trust to cure defaults prior to foreclosure and to notice of this right to cure. In 1975, the legislature amended subsection (1) of the statute by, inter alia, substituting the plural form, "defaults", for the singular form, "default," which had appeared in the prior enactment of the statute, and, therefore, subsection (1) now provides that several defaults may be cured prior to foreclosure. In addition, this section does not limit the number of times a debtor can cure defaults. Thus, the debtor's right to cure defaults is not limited to the first of a series of defaults or to the debtor's exercising, only one time, the right to cure defaults. Subsection (3) of the statute protects the creditor from the allegation that he has waived his future right to accelerate and foreclose upon default because the debtor was able to cure defaults at an earlier time. However, the statute read in context has limited the creditor's common law right of acceleration and foreclosure upon default by creating the debtor's statutory right to cure the default prior to foreclosure. Foster Lumber Co. v. Weston Constructors, Inc., 33 Colo. App. 436, 521 P.2d 1294 (1974).
The statute must be interpreted to implement the legislative intent by limiting the right of acceleration and preventing foreclosure when the creditor's interest will not be jeopardized. Foster Lumber Co. v. Weston Constructors, Inc., supra. The interest of both parties will be furthered by allowing the grantor of the deed to cure subsequent defaults. If the grantor is able to cure the default, the adequate tender puts the creditor in the same position he would have been in without the default; hence, "[f]rom the creditor's point of view, it is as though a default had not occurred . . . ." Foster Lumber Co. v. Weston Constructors, Inc., supra. If the grantor is unable to cure, the creditor still may proceed to foreclosure, thereby protecting his rights. We therefore hold that § 38-39-118(3), C.R.S. 1973 (1979 Cum. Supp.), provides an unlimited opportunity to cure defaults and the right to cure is not limited to the first default only.
[1] Defendant urges that § 38-38-106, C.R.S. 1973, precludes the commencement of more than one foreclosure action within a twelve month period. However, this statute restricts the number of foreclosures on the deed of trust for only past due installments as if the deed of trust "were given to secure separately each of such past due installments." Section 38-38-106, C.R.S. 1973. See 55 Am. Jur. 2d Mortgages. This section applies only to the situation where there is a foreclosure for non-payment of an installment without any attempt to accelerate.
Plaintiff has not shown that he will be jeopardized by allowing the defendant to cure the second default or that defendant failed to tender adequate payment to protect plaintiff's interest. Accordingly, we conclude that the trial court properly dismissed plaintiff's request for injunctive relief.
In view of the conclusion we have reached, it is unnecessary to consider the other assignment of error.
Judgment affirmed.
JUDGE KELLY concurs.
JUDGE SMITH dissents.