Court Opinion

ID: 9451088
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:06:17.279509+00
Date Added: 2024-06-11T17:32:34.234200
License: Public Domain

PAHY, Circuit Judge
(concurring in part and dissenting in part) :
Appellant bought the property in November, 1958, for $35,000. It gave a note of that amount payable to the order of American Ice Company, now appellee American Consumer Industries, Inc., requiring monthly payments of $350 on the 25th day of each month, with interest at 5%, with the usual acceleration clause. The note was secured by a deed of trust. Appellant paid, though irregularly, all installments due through July 25, 1963. Thus, when another payment fell due on August 25, 1963, appellant had paid all interest then due and had reduced the principal of the note from $35,000 to approximately $22,000. There was then also due by appellant a small amount of back real estate taxes.1 Appellant failed to meet the August 25, 1963 installment on its due date. It claims its check for that installment was mailed August 26, but it is fairly clear the check was not mailed until September 18. In the meantime, under date of September 12, ap-pellee corporation advised appellant by letter that it elected to declare the entire unpaid balance of “$22,181.18 together with interest thereon at the rate of 5% per annum from July 25, 1963 to be due and payable.”
I accept the view of appellees that the August installment was not received until September 20. It having been received then I think the payment should have been accepted, with the effect of precluding acceleration. My reason is that by the operation of equity the course of conduct of the parties had brought about a modification of their strict legal rights and obligations as set forth originally in the deed of trust. Not only had the amount due on the purchase price been reduced some $13,000 by appellant but appellee corporation had continuously accepted late payments. In the circumstances this created a waiver of its right to accelerate without at least explicitly giving prior notice of its intention to do so should default again occur. Anno., 97 A.L.R.2d 997, 999; see Edwards v. Smith, 322 S.W.2d 770, 776 (Mo.); Let-*788tieri v. Mistretta, 102 N.J.Eq. 1, 4-5, 139 A. 514, 516; Parker v. Mazur, Tex.Civ.App., 13 S.W.2d 174, 175. And see Fant v. Thomas, 131 Va. 38, 45, 108 S.E. 847, 850, 19 A.L.R. 280 2 In any event, the issue of waiver and whether appellant was lulled into believing no acceleration would result from subsequent late payments were issues which should not have been disposed of by summary judgment.
Appellant tendered not only the August payment but also those falling due in September, October and November; so that before the sale took place all payments which, if accepted, would have brought the note to current status, had been tendered. In this situation the validity of the sale was not so clear as matter of law as to support summary judgment for appellees.3
In suing to set aside the sale, however, appellant failed to join as a party the purchaser at the sale. If not indispensable the purchaser was at least a necessary party. Realizing this possibility appellant suggests that if its appeal fails for this reason, insofar as it involves appellant’s effort to have the sale set aside, the case should be remanded with leave to amend to make the purchaser a party. This would entail the exercise of a discretion we are not required to authorize at this late stage of the proceedings. I agree that the sale should not be disturbed.
As to appellant’s cause of action for alternative relief against appellee corporation, however, the case is different. The purchaser need not be a party to that aspect of the litigation; and since in my view the sale appellee corporation brought about as a consequence of accelerating the note is not shown to have been validly authorized, appellant’s cause of action for damages alleged to have been caused to it by such action should be permitted to be pursued.
It follows that I would affirm insofar as the action of the District Court amounts to a rejection of the complaint to set aside the sale, but I would remand the case for reinstatement of the complaint insofar as it seeks damages from appellee note holder due to the sale made by the trustee at its direction.

. The deed of trust does not authorize acceleration for delinquency in taxes.

. The fact that notice of election to accelerate was given prior to receipt of the August installment does not satisfy the requirement. Notice that the next default would mean acceleration was required after the appellee corporation last accepted late payments in August of 1963. True, appellee corporation protested when it accepted late payments and even threatened foreclosure. But before a forfeiture such as this is upheld equity should require an explicit notice.

. The learned trial judge I think was indeed mistaken in his view that a default for only one day enabled appellee corporation to accelerate the note. This overlooked the part equity had come to occupy in the relationship between the parties arising from their conduct. So minor an infraction would not be the basis for such major consequences.