BUSINESS LAW: FIRST FEDERAL SAVINGS BANK V. MCCUBBINS (SC 11/22/2006)

FIRST FEDERAL SAVINGS BANK V. MCCUBBINS
Business Law:  Discharge of obligation; summary judgment
2005-SC-000372-DG.pdf
PUBLISHED: AFFIRMING; WINTERSHEIMER
DATE RENDERED: 11/22/2006

The questions are whether the trial judge properly applied the summary judgment standard to a) whether a genuine issue of material fact existed with regard to whether First Federal intentionally and voluntarily discharged the obligations under the first and larger note, and b) whether genuine issues in material fact exist with regard to whether McCubbins paid off the first and larger note.

McCubbins and his wife, who is now deceased, entered into a mortgage with Bullitt Federal Savings & Loan Association in 1978. The loan was for a principal sum of $16,000 plus interest at a rate of 9 percent per annum for 25 years and was secured by a mortgage on real property.

Following a hearing and a review of the evidence in the record, the circuit judge granted the motion of McCubbins for a summary judgment. First Federal appealed to the Court of Appeals which affirmed the decision of the circuit judge and this Court accepted discretionary review.

As the Court of Appeals correctly noted, the decision in this case is based on whether a person who is entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation of striking out of the party’s signature, or the addition of words to the instrument indicating discharge.

First Federal contends that the discharge of the obligation was neither voluntary nor intentional and that consequently a disputed factual issue remains. SC did not agree.

Initially, it should be observed that First Federal has not claimed that any type of fraud or deceit was involved on the part of McCubbins. The posture of this case requires First Federal to meet its burden of bringing at least some affirmative evidence to challenge the evidence from McCubbins that the debt had been fully paid.

McCubbins provided the note and mortgage stamped "paid in full" that he received from First Federal as well as the deed of release. First Federal produced only an affidavit from a bank official whose role in the situation is not clear.

It is the decision of this Court that the summary judgment was proper. There was no genuine issue as to any material fact and McCubbins is entitled to a summary judgment as a matter of law. The decision of the Court of Appeals is affirmed .

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