Schrader v. Benton
Intermediate Court of Appeals of Hawaii
635 P.2d 562 (Haw. Ct. App. 1981)
The Bentons (defendants) owned a condo mortgaged to Amfac for $31,800, with the mortgage requiring Amfac's consent to any sale or acceleration of the balance. They agreed to sell the condo to Harder for $44,500 under a deposit-receipt contract calling for wrap-around financing, in which the Bentons would keep paying Amfac's mortgage while the buyer paid them installments at a better rate than an institutional loan, netting the Bentons $12,700 after payoff; Harder assigned his interest to the Schraders (plaintiffs). Amfac refused to consent to a sale free of its mortgage but would have allowed the Schraders to assume the loan, which the Bentons rejected. The Schraders sued for specific performance, and the trial court granted summary judgment for them, giving them the option to either pay cash or assume the loan while leaving the Bentons secondarily liable for two years; the Bentons appealed.
Whether courts may construe real estate agreements in a manner that deprives the parties of the full benefit of the substance or essence of their bargain.