Olfe v. Gordon

286 N.W.2d 573 (1980)

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Nature of the Case

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Facts

A verbal agreement was reached between P and Demman in which Demman was to purchase property for $87,000. P, after meeting with Demman and his attorney, decided she needed an attorney. P consulted D, telling him that she wanted a first mortgage. P testified that when she left the office D 'was going to go ahead with getting the documents ready to sign for a first mortgage.' P testified she had contact with D during which she was told that work was proceeding on obtaining a first mortgage for her. P, D, Demman, and Attorney C. J. Schloemer met with Demman's attorney at his office. Schloemer was D's law partner who was well versed in real estate matters. A second offer to purchase was prepared and presented to Schloemer who reviewed the document and handed it to D. d looked at the document and asked P to sign it. P asked: ''This isn't a second mortgage, is it?'' D gave no answer, and Schloemer said: 'It is second only to cost of construction.' P signed the offer to purchase. She testified she understood Schloemer's remark to mean 'that a second mortgage was only on the new building that was going to go up and that the land and the home on it was still under first mortgage.' P testified she did not read the document because 'I'm not very good at legal terms and that is the reason I hired an attorney to represent me to read it and to see that I was signing for a first mortgage.' P received about $22,500 of the purchase price, and the balance was to be paid in two equal installments during the two succeeding years. No subsequent payments were ever made. Continental Savings and Loan, the holder of the first mortgage, foreclosed. P discovered she had only a second mortgage on the entire property. A judgment of foreclosure was entered. Schloemer later negotiated a sale of her second mortgage interest to Continental Savings and Loan for $37,500. P sued D and his professional liability insurer to recover the difference between the unpaid principal balance on the mortgage note and the amount which she had received from Continental Savings and Loan. The trial court dismissed her claims in part for the lack of expert testimony as to the standard of care. P appealed.