Peoples Bank had allowed the Funks to use a room at the bank for the final signing of papers on this deal. It was not until the fall of 1984, when Pommier was informed by Crest Savings that the first mortgage was in default, that he discovered that the Funks had executed a sales agreement, with a limited partnership known as Horizon Ventures, in November 1983 that purported to transfer all of the Funks' interest in the apartment buildings. One clause in the agreement prohibited sale of the property or of the Funks' rights under the contract to anyone without the agreement of Pommier, through the trustee. The SBA accepted the payment, and remitted 10% to Peoples Bank towards payment of its share of Pommier's outstanding debt. Peoples Bank, acting as a collection agent for the SBA, forwarded the entire payment from Crest to the SBA.
Crest Savings deducted its monthly payment, and sent the balance to Peoples Bank. The Funks sent their monthly payment to Crest Savings, holder of the first mortgage on the property. Although not explicit on the face of the agreement, the arrangement provided for payment of Pommier's debts to three lenders. Under the contract the Funks made a down payment of $42,000, and monthly payments of $4800 per month, with the balance due within ten years. The Funks and the trustee (on behalf of Pommier's trust) executed "Articles of Agreement" which were essentially a conditional land sale contract. In 1974 Pommier, with the agreement of the SBA and Peoples Bank, directed the trustee of the land trust to sell the apartment building to the Funk family for $615,000.
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