Opinion ID: 1865082
Heading Depth: 1
Heading Rank: 4

Heading: do genuine issues of material fact as to whether moe was in default preclude the granting of summary judgment?

Text: We recognized in First Nat. Bank of Black Hills v. Beug, 400 N.W.2d 893, 896 (S.D. 1987), that [t]he term `default' is not defined in the Uniform Commercial Code, thus we must look to other sources for a definition. Id. at 895. Then, we turned to hornbook law for a definition of default: `Default' triggers the secured creditor's rights under Part Five of Article Nine. But what is `default?' Article Nine does not define the word; instead it leaves this to the parties and to any scraps of common law lying around. Apart from the modest limitations imposed by the unconscionability doctrine and the requirement of good faith, default is `whatever the security agreement says it is.' Id. at 896 (quoting J. White & R. Summers, Uniform Commercial Code § 26-22 at 1085-86 (2d ed. 1980)). Several jurisdictions recognize that the determination of default is not a matter of law for the court to decide. Whether a breach or a default exists is a question of fact. Palmiero v. Spada Distributing Company, 217 F.2d 561 (9th Cir.1954). [I]t is equally well-settled that whether the parties' conduct constitutes a breach `presents a pure question of fact that the trier of fact alone may decide.' Concise Oil & Gas v. La. Interstate Gas Corp., 986 F.2d 1463, 1496 (5th Cir.1993) (quoting Turrill v. Life Ins. Co. of North America, 753 F.2d. 1322, 1326 (5th Cir.1985)); Town of Breckenridge v. Golforce, Inc., 851 P.2d 214 (Colo.Ct.App. 1993). In Breckenridge, the Colorado Court of Appeals stated, Whether there has been a breach of a contract is an issue for the fact finder. Breckenridge, 851 P.2d at 216. In Bator v. Mines Development, Inc., 513 P.2d 220 (Colo.Ct.App.1973), the court stated that a [d]etermination of whether a party has performed under a contract is ultimately a question of fact. Id. at 225 (citation omitted). Here, the promissory note provided a definition of default: The borrower shall be in default upon the occurrence of any one or more of the following events: (1) the Borrower shall fail to pay, when due, any amount required hereunder, or any other indebtedness of the borrower to the Lender of any third parties; (2) the Borrower shall be in default in the performance of any covenant or obligation under the line of credit or equivalent agreement for future advances (if applicable) or any document or agreement related thereto; (3) any warranty or representation made by the Borrower shall prove false or misleading in any respect; (4) the Borrower or any Guarantor of this promissory note shall liquidate, merge dissolve, terminate its existence, suspend business operations, die (if individual), have a receiver appointed for all or any part of its property, make an assignment for the benefit of creditors, or file or have filed against it any petition under any existing or future bankruptcy or insolvency law; (5) any change that occurs in the condition or affairs (financial or otherwise) of the Borrower or any Guarantor of this promissory note which, in the opinion of the lender, impairs, the Lender's security or increases its risk with respect to this promissory note or (6) an event of default shall occur under any agreements intended to secure the repayment of this promissory note. Unless prohibited by law, the Lender may, at its option, declare the entire unpaid balance of principal and interest immediately due and payable without notice or demand at any time after default as such term is defined in this paragraph. Technically, there was a breach of the security agreement and the promissory note when Moe did not make his payment on October 1, 1984, but instead paid it on December 3, 1984. One could find Moe in default, and under SDCL 57A-9-503, Deere would have had a right to repossess the tractor. However, Deere's right to a default or remedies under breach of contract can be modified or waived by the conduct of the parties. The trial court's memorandum opinion indicated that The terms of the written contract should control. Further the `course of dealing' between the parties is not persuasive. However, here there is a question of fact. Did the oral statements and conduct of the parties modify the written agreement? In Alaska Statebank v. Fairco Fin., 674 P.2d 288 (Alaska 1983), the issue was if the parties' oral statements and conduct between September 15, 1978 and November 6, 1978 modified the written agreement so that pre-possession notice was required. The court held: [M]odification of a written contract may be effected either through subsequent conduct or oral agreements. Whether a modification has occurred is a question of fact. The superior court found that the parties had agreed to such modification, [g]iven the course of dealings between the parties.... Id. at 292 (quoting Nat. Bank of Alaska v. J.B.L. & K. of Alaska, Inc., 546 P.2d 579, 586-87 (Alaska 1976)). See SDCL 53-8-7 (1990); See also South Dakota Pattern Jury Instruction No. 47-16 for Modification of a Written Contract by Subsequent Oral Agreement. The record reveals through affidavits and depositions that the oral statements and conduct of the parties herein between October 1, 1984 and July 30, 1986 appear to modify the written agreement. Deere sent notice to Moe that he had until March 20, 1986 to pay $6,389.48 including late charges. Moe admits that in May or the first week of June 1986 he agreed to pay the March installment in two parts. He agreed to pay $2,000.00 with the balance due in August 1986 when he commenced his wheat harvest. There was no date certain by which Moe was to pay the $2,000.00. In determining if there was a default on the part of Moe in complying with this contract, all statements and conduct of the parties are essential in determining whether there was an oral modification or waiver of the promissory note or security agreement by John Deere.