Opinion ID: 485541
Heading Depth: 2
Heading Rank: 2

Heading: Effect of Acceptance of Late Payments

Text: 21 Papo never claimed plaintiff to be in default during the lease period for late rent payments, but at trial argued that the no waiver clause, paragraph 17 of the lease agreement, precluded exercising the option to acquire the leasehold equipment and improvements. Papo claims that his conduct did not waive invocation of the no waiver clause. The district court, however, ruled that this claim of default was an afterthought by defendant. 22 A lessor may waive a nonwaiver clause in a lease agreement by a persistent course of conduct in accepting late payments. Westinghouse Credit Corp. v. Shelton, 645 F.2d 869, 873-74 (10th Cir.1981); Dillingham Commercial Co. v. Spears, 641 P.2d 1, 7-8 (Alaska 1982). The question whether Papo did in fact waive his right to rely on Olga's default in making late payments is one of fact. See, e.g., Westinghouse Credit Corp., 645 F.2d at 873-74; Jefpaul Garage Corp. v. Presbyterian Hospital, 61 N.Y.2d 442, 462 N.E.2d 1176, 474 N.Y.S.2d 458, 461 (1984). 23 We do not find error under these circumstances in the district court's holding. A lessor may by its conduct waive not only the timeliness of lessee's performance, but also the no waiver clause itself. See, e.g., Westinghouse, 645 F.2d at 874, and Jefpaul, 474 N.Y.S.2d at 458-61. As in Dillingham, Papo acquiesced in late payments by Olga's throughout almost the entire five year lease arrangement. The correspondence between the parties about the exercise of the option, moreover, manifests Papo's waiver of the nonwaiver clause. Instead, Papo sought fair market value for the equipment. When Papo finally rejected Olga's proposal by the June, 1983, letter, it did so solely on the basis that the amount was insufficient, rejecting at the same time on the basis of default Olga's exercise of a similar option to purchase equipment in a San Jose restaurant.