the unpaid principal sum if payment is made during the sixth year of amortization. In subsequent years, the prepayment consideration percentage declines annually by 1/2 of 1% until it reaches 1%, where it remains for the remaining term of the loan.
Since the mortgage was originally executed by Pennsylvania citizens on property located in Pennsylvania, the parties are agreed, and the Court concurs, that Pennsyvlania [Pennsylvania] law shall apply to the resolution of the dispute. A Pennsylvania statute provides that residential mortgage obligations (obligations of $50,000.00 or less, which are secured by a lien on property containing two or fewer residential units) contracted for after 1974 may be prepaid at any time without any penalty or other charge for the prepayment. 41 Pa.Cons.Stat.Ann. §§ 401 & 405 (1984 supp.). However, no such provision governs the prepayment of commercial or non-residential mortgage obligations.
Despite the clear and unambiguous language of the mortgage instruments in this case, plaintiff contends that the terms of the mortgage authorize a partial prepayment without obligation to pay the prepayment consideration. However, the conditions under which prepayment is authorized are specifically set forth in the mortgage. Therefore, the cases relied upon by plaintiff are not controlling. In Beth-June, Inc. v. Will-Avon Merchandise Mart, Inc., 211 Pa. Super. 5, 233 A.2d 620 (1967), where the mortgage instrument as modified did not specifically address the issue of prepayment, the Court held that the words "if not sooner paid" contemplated prepayment in whole or in part. In Mahoney v. Furches, 503 Pa. 60, 468 A.2d 458 (1983), the Court held that where a mortgage note is silent on the subject of prepayment, the mortgagor has a presumptive right to obtain a release from the mortgage upon payment of the principal balance and interest thereon. As the Mahoney Court recognized, the issue of the mortgagor's right to prepay the loan and alienate the land does not arise in the current institutional mortgage, which customarily exacts a substantial consideration as a condition of accepting prepayment. See 503 Pa. at 63-64, 468 A.2d at 460-61. And even in the case of a private mortgage, the Court noted that specific language may rebut the presumption of a right to prepayment or qualify the terms upon which prepayment is permitted. See id.
It is well-settled that a contract must be interpreted as a whole and effect must be given to all of its provisions. See, e.g., Woytek v. Benjamin Coal Co., 300 Pa. Super. 397, 446 A.2d 914 (1982). In other words, a contract must not be construed so as to render any of its terms meaningless. See, e.g., Girard Trust Bank v. Life Ins. Co. of North America, 243 Pa. Super. 152, 364 A.2d 495 (1976). The plaintiff in this case entered into a mortgage contract that afforded two options: (1) monthly payments of principal and interest calculated to fully amortize the mortgage debt, if maintained until the end of the contract; or alternatively, (2) prepayment of the entire outstanding principal balance, provided that if such prepayment takes place in the seventh year, it must be accompanied by a 4 1/2% prepayment consideration. Plaintiff would have this Court insert into the contract a third payment option which would authorize prepayment of a substantial part of the principal balance (but less than the entire outstanding principal balance) without the obligation of paying the prepayment consideration. Reading such a provision into the mortgage instruments would render meaningless the specific terms providing for a prepayment consideration in that this interpretation would require the mortgagee to accept payment of the entire principal balance less one dollar without the benefit of the bargained-for prepayment consideration.
Since there are no ambiguities in the terms of this mortgage, the Court must give effect to the intent of the parties as it is set forth within the four corners of the agreement. It is not the function of the Court to redraft an agreement more favorable to a given party than that which he chose for himself. See Harris v. Dawson, 479 Pa. 463, 388 A.2d 748 (1978). Accordingly, this Court has determined that the language in question cannot be construed to allow a partial prepayment of the principal balance without a payment of the prepayment consideration, for to do so would render the prepayment clause a nullity.
For the reasons stated above, this Court has determined that defendant's motion for summary judgment will be granted, and that plaintiff's motion for summary judgment will be denied.
AND NOW, this 16th day of May, 1985, for the reasons states in this Court's Memorandum of May 16th, 1985,
IT IS HEREBY ORDERED:
1. Plaintiff's motion for a summary judgment is DENIED.
2. Defendants' motion for summary judgment is GRANTED, and declaratory judgment is ENTERED in favor of the defendant, Albany Savings Bank, and against the plaintiff, First Philadelphia Realty Corporation, declaring that the mortgage instruments in issue do not authorize the mortgagor to make or require the mortgagee to accept a partial prepayment without the prepayment consideration provided in the contract.
3. Judgment is ENTERED in favor of the defendant, Albany Savings Bank, and against the plaintiff, First Philadelphia Realty Corporation, for the sum of $37,221.22 plus interest thereon at the mortgage rate of 9 3/4% from December 16, 1983 until the date of this judgment, said interest amounting to $5,141.18, making the total amount of this judgment, $42,362.40.
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