Court Opinion

ID: 1052931
Source: CourtListenerOpinion
Date Created: 2013-10-08 20:35:03.247765+00
Date Added: 2024-06-11T11:49:46.433336
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                                   AT NASHVILLE
                                             July 12, 2006 Session

                 GEORGE JERLES, ET AL. v. MARGIE PHILLIPS, ET AL.

                     A Direct Appeal from the Chancery Court for Houston County
                       No. 6-154   The Honorable Robert E. Burch, Chancellor

                          No. M2005-1494-COA-R3-CV - Filed: August 22, 2006

         This case arises from a foreclosure on real property. The Appellants purchased the property
from Appellees. Appellees financed the property and the parties executed a promissory note and
deed of trust. The Appellants fell behind on their payments and the Appellees accelerated the debt
pursuant to the terms of the Note, and ultimately foreclosed on the property. The Appellants filed
suit for, inter alia, wrongful foreclosure. The trial court granted partial summary judgment in favor
of Appellees, and denied Appellants’ Tenn. R. Civ. P. 59.04 motion to alter or amend the judgment.
Upon disposal of all other claims, the Judgment became final. Appellants appeal. We affirm.

      Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS,
J. and HOLLY M. KIRBY , J., joined.

Joe Weyant of Clarksville, Tennessee for Appellants, George Jerles and Peggy Jerles

W. Sidney Vinson of Erin, Tennessee for Appellees, Margie Phillips and J. D. Phillips

                                                      OPINION

        On December 30, 1999, George Jerles and his wife, Peggy (together the “Jerleses,”
“Plaintiffs,” or “Appellants”) entered into a contract to purchase a parcel of land from J.D. Phillips
and his wife, Margie (together the “Phillipses,” “Defendants,” or “Appellees”). The Phillipses
agreed to provide financing; and, on January 21, 2000, the parties executed a Promissory Note (the
“Note”) in the principal amount of $45,000.00.1 The Note provides, in relevant part, as follows:

         1
              The purchase price for the property was $50,000.00. The Jerleses paid $5,000.00 in earnest money toward
that price.
                       The principal and interest due and payable on this note are due
               and payable as follows: This note is due and payable on an amortized
               basis with the principal and interest over one-hundred twenty (120)
               months with one-hundred nineteen (119) consecutive monthly
               payments, plus one (1) final balloon payment, to be made IN THE
               AMOUNTS AND IN ACCORDANCE WITH THE
               AMORTIZATION SCHEDULE ATTACHED HERETO AS
               “EXHIBIT A.” Each payment, including principal and interest,
               beginning on the 1st day of May, 2000, and continuing on the 1st day
               of each consecutive month thereafter until fully paid. Providing that
               in the event of the default of any payment, or any part thereof, the
               entire remaining unpaid balance may be declared immediately due
               and payable at the option of the holders hereof.

                       In the event of failure to pay the full amount of any one (1)
               monthly payment as set out above within thirty (30) days of its
               respective due date, the holders hereof may declare the unpaid
               principal and accrued interest of this note immediately due and
               payable, and for each day the full amount of any one (1) payment
               remains unpaid after ten (10) days, excluding the 1st installment
               payment....

               *                                  *                             *

                       Demand, notice and protest are expressly waived and if not
               paid in full at the time and in the manner above specified, then all
               principal and accrued interest shall, at the option of the legal holders
               hereof, become at once due and payable without notice....

(Emphasis in original).

       This Note was secured by a Deed of Trust on the real property being purchased. The Deed
of Trust contains the following, relevant, clauses:

               15. DEFAULT. The occurrence of any one or more of the following
               events shall constitute an Event of Default hereunder:

                       (a) Failure to Pay Note. If GRANTOR shall fail to pay any
               part of the Note secured by this Deed of Trust, whether principal or
               interest, promptly when the same becomes due, and within any grace
               period allowed by the Note or if the GRANTOR shall fail to pay any
               sum, necessary to satisfy and discharge taxes and assessments

                                                 -2-
                promptly when due, or to maintain insurance or repairs, or the
                necessary expense of protecting the Mortgaged Property.

                *                                       *                           *

                        (d) Nonperformance of Covenants. If there shall occur any
                default in GRANTOR’s covenants, warranties, agreements, liabilities,
                obligations and undertakings contained in this Deed of Trust, if such
                default is not cured within a period of ten (10) days following the date
                of written notice thereof by the BENEFICIARY or GRANTOR, or if
                there is another cure period specifically applicable to such default,
                within such applicable cure period.

                16. REMEDIES. If an Event of Default shall occur, BENEFICIARY
                may exercise any one or more of the following remedies:

                        (a) Acceleration. BENEFICIARY may declare all obligations
                secured by this Deed of Trust, principal and interest, immediately due
                and payable without notice or demand except as otherwise set forth
                herein or in the Note, the same being hereby expressly waived.

                       (b) Power of Sale. BENEFICIARY may require the Trustee,
                and the Trustee is hereby authorized and empowered, to enter and
                take possession of the Mortgaged Property and to sell all or part of the
                Mortgaged Property, at public auction, to the highest bidder....

        It is undisputed that the Jerleses made payments on the Note through April 3, 2003. It is also
undisputed that the Jerleses’ payments were often made late, and that the Phillipses accepted these
late payments. However, no payments were tendered after April 3, 2003; and, during the last week
of June, 2003, the Phillipses requested a meeting with the Jerleses to discuss their arrearage. No
resolution was reached as a result of this meeting. On or about July 3, 2003, the Jerleses were
notified by letter from the Phillipses’ attorney that the Note was in default and that the entire balance
was due within ten (10) days and, if not paid, foreclosure proceedings would begin. The letter reads,
in relevant part, as follows:

                        Margie Phillips has advised me that your promissory note to
                them in the original principal amount of $45,000.00 dated January 21,
                2000, plus interest accruing daily is in default because the payments
                are not being made. As provided in the note, the entire balance has
                been accelerated and called due by Mr. and Mrs. Phillips.

                *                                        *                           *

                                                  -3-
                          The current principal balance of the note is $38,908.61. Late
                  fees have accrued in the amount of $1,655.00. Interest since April 3rd
                  has accrued in the amount of $614.40 and continues to accrue at the
                  rate of $6.40 per day after today. The total balance of the note
                  including principal, attorney fees, late fees and interest is $41,617.61
                  as of July 3, 2003. If the note is not paid in full within ten (10) days
                  of the date hereof, foreclosure proceedings will begin...

The Jerleses made no payment in response to this acceleration letter.

       On August 26, 2003, the first foreclosure notice was published. On October 9, 2003, the
property was sold by the Trustee to satisfy the Jerleses’ debt. On October 6, 2003, the Jerleses filed
a Complaint in the Chancery Court for Houston County, which Complaint was amended on October
8, 2003. The causes of action alleged by the Jerleses in their Amended Complaint include breach
of contract for wrongful foreclosure, fraud, negligent misrepresentation, fraudulent
misrepresentation, slander of title, and violation of the Tennessee Consumer Protection Act (based
upon the Jerleses allegation that the Phillipses had fraudulently induced them to buy the property
based upon concealment of the fact that gasoline tanks had once been used on the property).2 The
Amended Complaint reads, in pertinent part, as follows:

                  9. [The Phillipses’] acceleration of the Note was premature, in that
                  the Deed of Trust provides for a ten-day period in which the
                  Petitioners may cure any default as to their performance on the Note.
                  Such ten-day period would have been preceded by written notice by
                  Respondents of the Petitioners’ rights. The acceleration and calling
                  due of the Note’s balance could rightfully follow, only after such ten-
                  day period allowing the Petitioners the opportunity to come current.3

On October 29, 2003, the Phillipses filed their Answer and Counterclaim for attorney’s fees. The
Phillipses’ Answer reads, in relevant part, as follows:

                  7. Defendants admit that Plaintiffs were late in making their
                  payments. Defendants admit that they accepted late payments but

         2
           On March 17, 2005, the Jerleses voluntarily dismissed their claims of fraud, negligent misrepresentation,
fraudulent misrepresentation, and violation of the Tennessee Consumer Protection Act. The claim for slander of title
was dismissed for failure to state a claim upon which relief can be granted under Tenn. R. Civ. P. 12.02(6). The claim
for breach of contract for wrongful foreclosure was dismissed by summary judgment, and this claim is the sole basis for
the present appeal.

         3
           W e note that the Jerleses do not ask that the foreclosure be set aside in their Amended Complaint. W e assume,
therefore, that they are seeking damages for wrongful foreclosure. W e note, however, that no proof of damages, or
indeed any allegations of damages, have been asserted in the record. Nonetheless, we will address the issues raised in
this appeal.

                                                           -4-
                  deny that they were ever satisfied with Plaintiffs’ performance in that
                  regard. The other allegations of this paragraph are denied.4

                  8. Defendants admit that on July 3, 2003 they notified the Plaintiffs,
                  through their attorney, that the Note was in default and that the entire
                  balance had been accelerated and called due. It is also admitted that
                  the notice provided that failure to pay the balance within ten (10) days
                  would result in foreclosure. Such notice also provided an additional
                  thirty (30) days within which the Plaintiffs/Debtors could dispute any
                  portion of the debt.

                  9. Defendants...would show that the Promissory Note provides that
                  the entire balance may be called immediately due and payable when
                  a payment is more than thirty (30) days late which, in this case, was
                  more than ninety (90) days late. In fact, Plaintiffs have never
                  tendered any late payments to the Substitute Trustee under the Deed
                  of Trust within ten (10) days of the notice or to this date.

        The Jerleses filed their Answer to the Phillipses’ Counterclaim on December 1, 2003. On
May 26, 2004, the Phillipses filed a Motion for Partial Summary Judgment on the claim of breach
of contract for wrongful foreclosure, along with documentation in support of the Motion. On June
29, 2004, the Jerleses filed a Response to the Phillipses’ Motion for Partial Summary Judgment.
Following a hearing on September 2, 2004, the trial court entered its “Order Granting Partial
Summary Judgment” on November 3, 2004. This Order reads, in pertinent part, as follows:

                  ...[T]he Court finds that there is no genuine issue as to any material
                  fact concerning the issue of wrongful foreclosure and that the
                  Defendants are entitled to a judgment as a matter of law on that claim.

                        The legal grounds upon which the court grants the
                  Defendants’ motion are as follows:

                         First, on the question of whether or not the Deed of Trust
                  provides for a ten day written notice to the debtor to cure a default for
                  non-payment before the remedies are invoked, the Court finds no

       4
           This answer in the Phillipses’ Answer to the Jerleses’ original Complaint read:

                  Defendants admit that Plaintiffs made payments on the Note, the last payment being
                  on March 3, 2003, although every payment since August, 2002 was late, some as
                  much as two months and no payment has been received since April, 2003. It is
                  denied that Defendants were satisfied with the Plaintiffs’ performance, but
                  Defendants, nevertheless, showed remarkable patience in accepting the late
                  payments over and over.

                                                         -5-
               ambiguity in the language and finds as a matter of law that the debtors
               were not entitled under the Deed of Trust to a ten day written notice
               and right to cure for non-payment. Therefore, the foreclosure was not
               improper for this reason as asserted by the Plaintiffs.

                       Second, on the question of whether or not the repeated
               acceptance of late payments by the Defendants modified the written
               contract in such [a] manner as to prohibit foreclosure without first
               notifying the Plaintiffs that they were insisting upon the original
               terms, the Court finds that the doctrine of waiver is not applicable to
               the facts in this case. The Defendants had accepted late payments
               before, but the Plaintiffs have made no payments after April 3, 2003.
               At the time the foreclosure notice was published on September 9,
               2003, the Plaintiffs had not made a payment for over five months.
               Nothing in the record reflects that Defendants had ever accepted
               payments this late. Defendants never refused any offered late
               payments before foreclosure. This is a case of “no payment” rather
               than “late payment”. The doctrine of waiver does not apply.

                      IT IS, THEREFORE, ORDERED, ADJUDGED AND
               DECREED, that the motion of the Defendants for summary
               judgment on the issue of wrongful foreclosure be, and is hereby,
               granted, and that claim is hereby dismissed.

On December 2, 2004, the Jerleses filed a Motion to Alter or Amend the Judgment of the trial court.
Attached to this Motion was the Affidavit of George Jerles, which the Jerleses sought to have
admitted in support of their Motion. Following a hearing on March 17, 2005, the trial court entered
an Order, on April 5, 2005, denying the Jerleses’ Motion to Alter or Amend. The trial court
reasoned that:

               ...[T]he Motion for Partial Summary Judgment contained evidence of
               only one event whereby the Defendants had accepted payments
               beyond the month in which they were due; that no established course
               of dealing has been shown whereby late payments were accepted
               beyond the month within which they were due; that the doctrine of
               waiver does not apply since no late payment was tendered and refused
               and that the Plaintiffs’ explanation for not tendering any payments
               after April 3, 2003 is unacceptable....

By the April 5, 2005 Order, the trial court also ruled that the Affidavit of George Jerles “will not be
considered by the Court because the Court finds that it contains legal conclusions and that it was not
filed prior to the hearing on the Motion for Partial Summary Judgment and no good reason has been
shown why it was not, or could not, have been filed then.”

                                                 -6-
       The Jerleses appeal and raise five issues for review as stated in their brief:

               I. Whether the Deed of Trust executed among the parties contains
               ambiguity in two of its clauses.

               II. Whether the doctrine of waiver applies to this case in light of the
               established course of dealing among the parties regarding the tender
               and acceptance of late payments.

               III. Whether the court abused its discretion in its refusal to consider
               late filed Affidavits which were filed with the Plaintiffs’ Rule 59.04
               Motion to Alter or Amend.

               IV. Whether it was futile for Plaintiffs to offer any payment to the
               Defendants toward the Note debt in light of the letter from the
               Defendants’ attorney absolutely accelerating such debt.

               V. Whether, when considering, in toto, the aforementioned issues,
               the trial court erred in granting the Defendants’ Motion for partial
               summary judgment.

Affidavit of George Jerles

       We will first address the issue of whether the trial court erred in disallowing the Affidavit
of George Jerles, which was proffered as an attachment to the Jerleses’ Motion to Alter of Amend
the Judgment. In Robinson v. Currey, 153 S.W.3d 32 (Tenn. Ct. App. 2004), this Court also
addressed a trial court’s refusal to consider affidavits filed with the plaintiffs’ Tenn. R. Civ. P. 59
motion to alter or amend the judgment. In determining what standard this Court should apply in
reviewing these decisions, the Robinson Court reasoned as follows:

               In Schaefer v. Larsen, this Court stated:

                       when a summary judgment has been granted because
                       the case at that point presents no facts upon which a
                       plaintiff can recover, but prior to that judgment
                       becoming final, the plaintiff is able to produce by
                       motion facts which are material and are in dispute, the
                       motion to alter or amend the judgment should be
                       looked upon with favor, as the purpose of the
                       summary judgment procedure is not to abate the trial
                       docket of the Trial Court, but only to weed out cases
                       for trial in which there is no genuine issue of fact.

                                                 -7-
Schaefer v. Larsen, 688 S.W.2d 430, 433-34 (Tenn.Ct.App.1985).

       Thirteen years later, this Court further explained that
       although Schaefer v. Larsen expressed some
       inclination to relax the strict requirements associated
       with motions for new trial based on newly discovered
       evidence, no court has held that the issues of diligence
       and availability cannot or should not be considered
       when a party seeks to alter or amend a summary
       judgment using new evidence.

Bradley, 984 S.W.2d [929,] 933.

As we discussed in Bradley:

       Oftentimes, lawyers seeking to overturn a summary
       judgment after it has been granted overlook the fact
       that the trial courts may deny a Tenn. R. Civ. P. 59.04
       motion seeking to introduce new evidence if there is
       no particularized showing of due diligence or of the
       reasons why the new evidence could not have been
       discovered and presented prior to the initial
       consideration of the summary judgment motion.

Id. The standard expressed in Schaefer was not intended to provide
a second bite at the apple for a party who did not take a motion for
summary judgment seriously until the motion was granted. Summary
judgment standards are both well settled, as discussed above, and
difficult for the moving party to meet. Parties on both sides of a
summary judgment motion must heed those standards. The
non-moving party must fully oppose a motion for summary judgment
before it is granted rather than rely on Rule 59.04 to overturn a
summary judgment after only weakly opposing the motion.

         In Harris v. Chern, our Supreme Court in dealing with a
revision under Rule 54.02 of a partial summary judgment discussed
Schaefer and Bradley, but noted that “[t]he question of what standard
to apply in ruling on a Rule 59.04 motion to alter or amend, presented
in Schaefer and Bradley, is not directly at issue in [ Harris] and is
thus beyond our reach.” Harris v. Chern, 33 S.W.3d 741, 746 n. 4
(Tenn.2000). The Harris Court did, however, note that “many of the
same considerations discussed [in Harris] would be applicable when
a litigant submits additional evidence as part of a Rule 59.04 motion

                                 -8-
                to alter or amend a summary judgment.” Id. The Harris
                considerations require a trial court dealing with a Tenn. R. Civ. P.
                54.02 motion to revise a grant of partial summary judgment to
                consider:

                        1) the movant's efforts to obtain evidence to respond
                        to the motion for summary judgment; 2) the
                        importance of the newly submitted evidence to the
                        movant's case; 3) the explanation offered by the
                        movant for its failure to offer the newly submitted
                        evidence in its initial response to the motion for
                        summary judgment; 4) the likelihood that the
                        nonmoving party will suffer unfair prejudice; and 5)
                        any other relevant factor.

                Id. at 742. The standard set out in Bradley requiring, in a Rule 59.04
                motion, a particularized showing of due diligence or of the reasons
                why the new evidence could not have been discovered and presented
                prior to the initial hearing on the summary judgment motion takes
                into account several of the same factors considered in Harris.

Robinson v. Currey, 153 S.W.3d 32, 38-39 (Tenn. Ct. App. 2004) (citing Chambliss v. Stohler, 124
S.W.3d 116, 120-21 (Tenn. Ct. App. 2003)).

         In the instant case, the Affidavit of George Jerles contains testimony concerning the specific
dates when payments on the Note were allegedly made. It also contains Mr. Jerles’s understanding
of the status of his delinquency, as well as his reaction to receiving the notice of acceleration in light
of his understanding of the provisions of the Deed of Trust. As discussed above, the trial court’s
refusal to allow the Affidavit was based, inter alia, upon the trial court’s conclusion that the
Affidavit “was not filed prior to the hearing on the Motion for Partial Summary Judgment and no
good reason has been shown why it was not, or could not, have been filed then.” Tenn. R. Civ. P.
56.04 provides that affidavits in opposition to a motion for summary judgment should be filed “not
later than five days before the hearing [on the motion for summary judgment].” As discussed above,
a party seeking to introduce such evidence in support of a Tenn. R. Civ. P. 59.04 motion must make
a showing of due diligence or of the reasons why the new evidence could not have been discovered
or presented prior to the initial hearing on the motion for summary judgment. Robinson, 153
S.W.3d at 39 (citing Chambliss v. Stohler, 124 S.W.3d 116 (Tenn. Ct. App. 2003)). In this case,
the Jerleses presented a statement of undisputed material facts in opposition to the Philipses’ Motion
for Partial Summary Judgment, which statement of undisputed material facts did not include many
of the facts set out in Mr. Jerles’s Affidavit. There is, however, no indication in this record that the
information contained in Mr. Jerles’s Affidavit was unknown to the Jerleses prior to the hearing on
the motion for partial summary judgment. In fact, when asked at oral argument if there was any
reason why the Affidavit was not filed prior to the summary judgment hearing, the Jerleses’ attorney

                                                   -9-
indicated that there was “no reason” because the evidence contained and referenced in the Affidavit
was in existence and known to Mr. Jerles prior to the hearing. Consequently, we cannot conclude
that the trial court erred in disallowing Mr. Jerles’s Affidavit.
Ambiguity in the Deed of Trust

        We now turn to the issue of whether the Deed of Trust at issue in this case contains an
ambiguity between two of its clauses. Specifically, the Jerleses contend that Paragraph 15(d) of the
Deed of Trust entitles them to ten (10) days, following written notice, to cure their default on the
Note before the Phillipses may exercise their remedies.5 The Phillipses assert that no such ten day
period to cure the default was implied in the Deed of Trust, as they rely upon default pursuant to
Paragraph 15(a) of the Deed of Trust.6 We first note that it is well settled that the language used in
a contract must be taken and understood in its plain, ordinary, and popular sense. Bob Pearsall
Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578 (Tenn.1975). In construing
contracts, the words expressing the parties' intentions should be given the usual, natural, and ordinary
meaning. Ballard v. North American Life & Casualty Co., 667 S.W.2d 79 (Tenn.Ct.App.1983). If
the language of a written instrument is unambiguous, the Court must interpret it as written rather
than according to the unexpressed intention of one of the parties. Sutton v. First Nat'l Bank, 620
S.W.2d 526 (Tenn.Ct.App.1981). A contract is not ambiguous merely because the parties have
different interpretations of the contract's various provisions, Cookeville Gynecology & Obstetrics,
P.C. v. Southeastern Data Sys., Inc., 884 S.W.2d at 462 (citing Oman Constr. Co. v. Tennessee
Valley Authority, 486 F. Supp. 375, 382 (M.D.Tenn.1979)), nor can this Court create an ambiguity
where none exists in the contract. Cookeville P.C., 884 S.W.2d at 462 (citing Edwards v. Travelers
Indem. Co., 201 Tenn. 435, 300 S.W.2d 615, 617-18 (1957)). Courts cannot make contracts for
parties but can only enforce the contract that the parties themselves have made. McKee v.
Continental Ins. Co., 191 Tenn. 413, 234 S.W.2d 830 (1950). The interpretation of a written
contract is a matter of law and not of fact. See Rainey v. Stansell, 836 S.W.2d 117
(Tenn.Ct.App.1992).

       5
           As set out above, this section of the Deed of Trust reads:

                  (d) Nonperformance of Covenants. If there shall occur any default in GRANTOR’s
                  covenants, warranties, agreements, liabilities, obligations and undertakings
                  contained in the Deed of Trust, if such default is not cured within a period of ten
                  (10) days following the date of written notice thereof by the BENEFICIARY or
                  GRANTOR, or if there is another cure period specifically applicable to such
                  default, within such applicable cure period.

       6
           As set out above, this section of the Deed of Trust reads:

                  (a) Failure to Pay Note. If GRANTOR shall fail to pay any part of the Note secured
                  by this Deed of Trust, whether principal or interest, promptly when the same
                  becomes due, and within any grace period allowed by the Note or if the GRANTOR
                  shall fail to pay any sum, necessary to satisfy and discharge taxes and assessments
                  promptly when due, or to maintain insurance or repairs, or the necessary expense
                  of protecting the Mortgaged Property.

                                                         -10-
         A motion for summary judgment should be granted when the movant demonstrates that there
are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter
of law. Tenn. R. Civ. P. 56.04. The party moving for summary judgment bears the burden of
demonstrating that no genuine issue of material fact exists. See Bain v. Wells, 936 S.W.2d 618, 622
(Tenn.1997). On a motion for summary judgment, the court must take the strongest legitimate view
of the evidence in favor of the nonmoving party, allow all reasonable inferences in favor of that
party, and discard all countervailing evidence. Summary judgment is a preferred vehicle for
disposing of purely legal issues. See Byrd v. Hall, 847 S.W.2d 208 (Tenn.1993); Bellamy v. Federal
Express Corp., 749 S.W.2d 31 (Tenn.1988). Because the construction of a written contract involves
legal issues, construction of the contract is particularly suited to disposition by summary judgment.
Browder v. Logistics Management, Inc., 1996 WL 181435, 1996 LEXIS Tenn.App. 227
(Tenn.Ct.App.1996); see also Rainey, at 119. Because only questions of law are involved in this
issue, there is no presumption of correctness regarding the trial court's grant of summary judgment.
Bain at 622. Therefore, our review of the trial court's grant of summary judgment is de novo on the
record before this Court. Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn.1997).

         Although Paragraph 15(d) of the Deed of Trust does allow for a ten (10) day time to cure
following written notice, this cure period is not absolute. Paragraph 15(d) also allows for another
cure period, to wit: “...if such default is not cured within a period of ten (10) days following the date
of written notice thereof by the BENEFICIARY to GRANTOR, or if there is another cure period
specifically applicable to such default, within such applicable cure period.” (Emphasis added).
In this case, there is “another cure period specifically applicable” to the default of failure to pay the
Note, which cure period is specifically outlined in the Note.

      As discussed by our Supreme Court in Ferguson v. Peoples Nat. Bank of LaFollette, 800
S.W.2d 181 (Tenn. 1990):

                The original note and the deed of trust, the instruments executed
                when the parties entered into the contract, must be construed together
                to ascertain the intention of the parties. Fox v. River Heights, 22
                Tenn.App. 166, 118 S.W.2d 1104 (1938), 55 Am.Jur.2d Mortgages
                § 176, at 303 (1971); 4 S. Williston, A Treatise on the Law of
                Contracts § 628, at 915 (3d ed. 1961).

                      The generally accepted rule is stated in 55 Am.Jur.2d
                Mortgages § 176, at 303, 304 (1971):

                        Although there is contrary authority, it is a widely
                        accepted general rule that a mortgage or deed of trust
                        and a note or bond secured by it are to be deemed
                        parts of one transaction and construed together as
                        such; the provisions of both should be given effect, if
                        possible, and the intention of the parties as determined

                                                  -11-
                       from an examination of both, not from one separately,
                       must prevail.... Where, however, there is an
                       irreconcilable difference between notes or bonds and
                       mortgages or deeds of trust given to secure them, the
                       former control.

Id. at 183.

        Even if we concede that Paragraph 15(d) of the Deed of Trust is not reconcilable with either
Paragraph 15(a) of the Deed of Trust or with the Note, under the above guidance, we must rely upon
the Note to determine the intent of the parties. The Note, as set out above, specifically states that
“[d]emand, notice and protest are expressly waived,” and that the full amount of principal and
interests shall become at once due and payable “at the option of the legal holders [of the Note].”
Viewing the Deed of Trust and the Note as the same transaction, we conclude that the intention of
these parties was to bypass any notice requirements.

Course of Dealing

         The Jerleses argue that, even if the Deed of Trust did not entitle them to a ten day period in
which to cure their default, the Phillipses were, nonetheless, estopped from suddenly exercising their
right to accelerate the debt based upon the parties’ course of dealing. In Lively v. Drake, 629 S.W.2d
900, 903 (Tenn.1982), which the Jerleses rely upon, our Supreme Court held that "as a result of a
course of dealing between parties [to a contract], the holder of an indebtedness may be deemed to
have waived the right [to declare a default] without giving prior notice to the debtor of his intention
to do so." Id. at 903. In Lively, appellants executed a promissory note on August 15, 1972, payable
in monthly installments and the note was secured by a deed of trust upon the appellants' residence.
Id. at 901. Appellants made regular payments until November 1976 at which time appellants missed
one payment. Id. at 902. This payment was later made, but beginning in February 1977 payments
were irregular. Id. A pattern of irregular payments continued through 1977 and the entire calendar
year 1978. Id. On January 3, 1979, appellee delivered the note to the trustee under the deed of trust
and called upon the trustee to commence foreclosure. Id. Actual notice of the decision to accelerate
the note and foreclose, as authorized by the terms of the note and deed of trust, was not
communicated to appellants until January 18, 1979. Id. In the meantime, unaware of the decision to
accelerate and foreclose, and in accordance with the practice which by this time had become
established, appellants mailed appellee a check for two monthly payments. Id. The two payments
were credited on the debt and the checks were deposited into appellee's account. Id. The Tennessee
Supreme Court noted that "[i]t is thus established that four days after foreclosure notice had been
mailed to appellants, appellee received and unconditionally accepted a partial payment on the
arrearage. He credited it as he had been doing for almost two years and did not communicate further
with appellants." Id. The Court held that:

               We are of the opinion that the course of dealing between the parties
               over a period of almost two years was such that appellants had been

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               led to believe that irregular payments would be accepted without
               acceleration. Under those circumstances appellee should not be
               permitted to foreclose on the note without first calling attention of
               appellants to the fact that he was insisting upon the original terms,
               and that no further irregular payments would be accepted. He should
               have afforded them an opportunity to make current any arrears, if
               such existed.

Id. at 904.

        Although the facts in Lively closely resemble the ones of the case at bar, there is one crucial
distinction. Whereas the Lively appellants tendered payment on their debt at fairly regular intervals
(although those intervals did not correspond to the agreed upon terms), by the time the Jerleses
received the acceleration letter, they had not made a payment in nearly three months. As the trial
court correctly notes, the case at bar is more a scenario of non-payment than irregular payment.
Furthermore, in order to establish waiver based upon a course of dealing, “it must first be shown that
an accepted course of conduct or dealing had been established by the parties and, secondly, that
appellant had relied on that course of conduct.” Dacus v. Weaver, 1988 WL 138918 (Tenn.Ct.App.
Dec. 28, 1988). Here, the parties had established a course of dealing in that the Phillipses accepted
late payments without protest. However, it cannot reasonably be said that the Jerleses relied upon
the Phillipses’s acceptance of late payments when making no payment at all. It is true that on at least
one occasion the Phillipses accepted payment for three months, which had not been paid. However,
this single acceptance does not create a course of dealing. In any event, the record clearly shows that
the Phillipses expressed their displeasure with the non-payment at the “porch meeting” in the last
week of June. In his deposition testimony, Mr. Jerles described this meeting as follows:

               Q [to Mr. Jerles]. Okay. After you made your payment on April the
               3rd, 2003, have you spoken to or had any communication at all with
               Mr. and Mrs. Phillips? Was that the last time that you talked to
               them?

               A. No. There was one other time after that that I went to their house.
               I think they called me to come over there because the payments had
               gotten behind again. And they left me with the impression, after our
               conversation, that they were going to have another conversation with
               you as their attorney, and they would let me know what they were
               going to do. That was my last conversation with them.

               *                                          *                        *

               Q. And what did they [the Phillipses] say?

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                A. Well, Margie asked me at that point if I would deed them the
                property back, and save a lot of expense. And I told Margie I
                couldn’t do that....

                *                                         *                           *

                Q. During this conversation, did Mr. Phillips say anything?

                A. Yes, sir.

                Q. What did he say?

                A. We’ll just foreclose on it and resell it.

The content of this meeting was sufficient to put the Jerleses on notice that the Phillipses were
dissatisfied with the Jerleses’ servicing of their debt. Nonetheless, the Jerleses made no effort to
make any sort of payment following this meeting. On appeal, the Jerleses contend that their
continued non-payment was due to their perception that any attempt to pay the debt, or any portion
thereof, would be futile given the acceleration letter. We cannot address this contention as there is
nothing in the record from which we could determine how the Phillipses would have reacted to an
attempt by the Jerleses to make some sort of payment either after the meeting or after receiving the
acceleration letter. Any attempt by the Jerleses to pay some portion of their debt may, indeed, have
saved this property from foreclosure, but that we will never know.

       From the entire record before us, we conclude that the trial court did not err in its finding that
no course of conduct had been established so as to waive the Phillipses right to accelerate the debt
under the terms of the Note.

        For the foregoing reasons, the judgment of the trial court is affirmed. Costs of this appeal
are assessed to the Appellants, George Jerles and Peggy Jerles, and their surety.

                                                __________________________________________
                                                W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

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