Carolina Commercial Bank v. Allendale Furniture Co., Inc., No. 0059
Court | Court of Appeals of South Carolina |
Writing for the Court | CURETON; GOOLSBY; SHAW; SHAW |
Citation | 312 S.E.2d 569,280 S.C. 247 |
Parties | CAROLINA COMMERCIAL BANK, Respondent, v. ALLENDALE FURNITURE COMPANY, INC., Bankers Trust of South Carolina, and WSCS, Inc., Defendants, of whom Allendale Furniture Company, Inc., is Appellant. |
Decision Date | 06 February 1984 |
Docket Number | No. 0059 |
Page 569
v.
ALLENDALE FURNITURE COMPANY, INC., Bankers Trust of South
Carolina, and WSCS, Inc., Defendants,
of whom Allendale Furniture Company, Inc., is Appellant.
[280 S.C. 248] Steven M. Anastasion, of Callison, Tighe & Rush, Columbia, for appellant.
Thomas O. Lawton, Jr., Allendale, for respondent.
Page 570
CURETON, Justice:
This is an action for foreclosure of a mortgage on real property brought by Carolina Commercial Bank, the mortgagee, against Allendale Furniture, Inc., the mortgagor, and two other defendants, a junior mortgagee and a judgment creditor. The case was tried before a Master who recommended foreclosure. The circuit court concurred and ordered the mortgage foreclosed.
The principal issues on appeal are (1) whether a mortgagee can invoke an acceleration clause without notifying the mortgagor of its intent to change a long-standing practice of accepting late payments, and (2) whether the mortgagee herein exercised its option to accelerate the note prior to receiving a late payment from the mortgagor. We hold that while the mortgagee was not estopped from invoking the acceleration clause of its note, its failure to do so prior to receipt of the one payment that cured the default prohibited its acceleration of the note. We therefore reverse.
On April 26, 1974, Allendale Furniture executed its note and mortgage in favor of Carolina Commercial Bank in the principal amount of $75,000.00, payable in one hundred twenty equal, consecutive, monthly installments of $919.99, the first payment being due on June 1, 1974. The mortgage encumbers [280 S.C. 249] certain real property in Allendale County as well as other property in Barnwell County.
The monthly payments under the note and mortgage were made on or near the first of the month from 1974 through September, 1976. From September, 1976 until February, 1980 however, payments on the mortgage were sporadic, some being made in the month in which they were due, but later than the payment date and sometimes running from as little as eight (8) days to several months late.
Despite the timing of these payments, the Bank never refused a late payment until February 22, 1980. It also never demanded payment of any delinquency charges prior to the institution of this action.
The monthly payment for February, 1980 was received from Allendale Furniture by the Bank on February 22, 1980. The latter returned the payment to Allendale Furniture with a letter informing it that the Bank's attorney would be "in touch." According to the Bank it placed the note and mortgage in the hands of its attorney with instructions to foreclose on February 14, 1980. On March 10, 1980, Allendale Furniture was served with the summons and complaint in this action. Between February 1, and March 10, no notice was given to Allendale Furniture of the Bank's intention to accelerate the maturity of the indebtedness.
By letter dated March 10, 1980, Allendale Furniture again tendered the February payment along with the March payment, but these were returned to it by the Bank on March 31, 1980.
The initial question for consideration is whether the Bank is estopped from exercising its option to accelerate by virtue of its established practice of accepting late payments. The loan note provided, inter alia:
(a) If default be made in the performance of or compliance with any of the covenants and conditions of this note or of the mortgage or any other instrument securing this note, then in any of said events, said principal sum with all accrued interest thereon shall become at once due and payable at the option of the holder hereof without further notice. [Emphasis added].
(b) Failure to exercise this option [default in payment or a breach of any covenant or condition] shall not constitute[280 S.C. 250] a waiver of the right to exercise the option in the event of any subsequent default. [Emphasis added].
The master found that from sometime in 1978 through December 1979 the bank records indicated some 26 telephone calls and eleven (11) letters to Allendale Furniture regarding the status of the loan. Allendale's president admitted to receiving some of these letters and telephone calls. It is apparent that Allendale Furniture was on notice that the Bank was less than satisfied
Page 571
with the manner in which payments were being made.We find the doctrine of equitable estoppel to be inapplicable to the facts of this case. The essence of equitable estoppel is that the party entitled to invoke the principle was misled to his injury. The essential elements are: "(1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance upon the conduct of the party estopped, and (3) action based thereon of such a character as to change [one's] position prejudicially." South Carolina State Highway Department v. Metts, 270 S.C. 73, 240 S.E.2d 816 (1978).
There is a lack of evidence that Allendale relied on the representations, acts or silence of the Bank or was misled in any way to change its position by reason of such. We therefore find that the Bank has neither waived, nor is it estopped from exercising its right to foreclose.
Aside from the question of waiver and estoppel, there still remains the question of whether the Bank in fact exercised its option to accelerate the balance due prior to the receipt of the February payment.
Generally, a tender of arrears due on a mortgage note containing an acceleration clause will prevent foreclosure if made before the mortgagee has exercised its option to declare the entire amount of the debt due. Florance v. Friedlander, 209 Va. 520, 165 S.E.2d 388 (1969); Hiller v. Prosper Tex, Inc., 437 S.W.2d 412 (Tex.Civ.1969); River Holding Co. v. Nickel, 62 So.2d 702 (Fla.1952); Lee v. O'Quinn, 184 Ga. 44, 190 S.E. 564 (1937); Clark v. Paddock, 24 Idaho 142, 132 P. 795 (1913); Lee v. Security Bank and Trust Co., 124 Tenn. 582, 139 S.W. 690 (1911); Gunby v. Ingram, 57 Wash. 97, 106 P. 495 (1910); 59 C.J.S. Mortgages Section 495(6)(b); 55 Am.Jur.2d Mortgages Section 389; 11 Am.Jur.2d[280 S.C. 251] Bills and Notes Section 296; Annot., 41 A.L.R. 732. The basis of this rule is that after a tender, there is no longer any default which is the prerequisite of the right to exercise the option.
It is well settled that a provision in a note accelerating the maturity on nonpayment of installments at the option of the holder, requires some affirmative, unequivocal act on the part of the holder, calculated to effectively apprise the maker of his election to take advantage of the accelerating provisions, and until such action has been taken the provision has no operation. In other words, some positive action on the part of the holder is an essential condition of the exercise of the option, and an...
To continue reading
Request your trial-
In re Demoff, Bankruptcy No. 87-61378.
...Builtland Partners, 99 A.D.2d 705, 471 N.Y.S.2d 854, 856 (1984) (default on lease); Carolina Commercial Bank v. Allendale Furniture Co., 280 S.C. 247, 312 S.E.2d 569, 571-72 (1984) (default on mortgage loan); Chesterton State Bank v. Coffey, 454 N.E.2d 1233, 1237 (Ind.App.1983) (using cure ......
-
Clark, Matter of, No. 83-2269
...Builtland Partners, 99 A.D.2d 705, 471 N.Y.S.2d 854, 856 (1984) (default on lease); Carolina Commercial Bank v. Allendale Furniture Co., 280 S.C. 247, 312 S.E.2d 569, 571-72 (1984) (default on mortgage loan); Chesterton State Bank v. Coffey, 454 N.E.2d 1233, 1237 (Ind.App.1983) (using cure ......
-
Howard v. South Carolina Nat. Bank, No. 0671
...of January 27, 1983 ..." 5 Regarding the estoppel argument, we invite attention to Carolina Commercial Bank v. Allendale Furniture Co., 280 S.C. 247, 312 S.E.2d 569 (Ct.App.1984) rev'd on other grounds, 284 S.C. 76, 325 S.E.2d 530 (1985) and Caulder v. Lewis, 338 S.E.2d 837...
-
Allendale Furniture Co., Inc. v. Carolina Commercial Bank, No. 22209
...CHANDLER, Justice: [284 S.C. 77] This petition is from a decision of the Court of Appeals, reversing a judgment of the Circuit Court. See 280 S.C. 247, 312 S.E.2d 569 We reverse and affirm the original judgment. This action involves a $75,000.00 note and real estate mortgage given by Allend......
-
In re Demoff, Bankruptcy No. 87-61378.
...Builtland Partners, 99 A.D.2d 705, 471 N.Y.S.2d 854, 856 (1984) (default on lease); Carolina Commercial Bank v. Allendale Furniture Co., 280 S.C. 247, 312 S.E.2d 569, 571-72 (1984) (default on mortgage loan); Chesterton State Bank v. Coffey, 454 N.E.2d 1233, 1237 (Ind.App.1983) (using cure ......
-
Clark, Matter of, No. 83-2269
...Builtland Partners, 99 A.D.2d 705, 471 N.Y.S.2d 854, 856 (1984) (default on lease); Carolina Commercial Bank v. Allendale Furniture Co., 280 S.C. 247, 312 S.E.2d 569, 571-72 (1984) (default on mortgage loan); Chesterton State Bank v. Coffey, 454 N.E.2d 1233, 1237 (Ind.App.1983) (using cure ......
-
Howard v. South Carolina Nat. Bank, No. 0671
...of January 27, 1983 ..." 5 Regarding the estoppel argument, we invite attention to Carolina Commercial Bank v. Allendale Furniture Co., 280 S.C. 247, 312 S.E.2d 569 (Ct.App.1984) rev'd on other grounds, 284 S.C. 76, 325 S.E.2d 530 (1985) and Caulder v. Lewis, 338 S.E.2d 837...
-
Allendale Furniture Co., Inc. v. Carolina Commercial Bank, No. 22209
...CHANDLER, Justice: [284 S.C. 77] This petition is from a decision of the Court of Appeals, reversing a judgment of the Circuit Court. See 280 S.C. 247, 312 S.E.2d 569 We reverse and affirm the original judgment. This action involves a $75,000.00 note and real estate mortgage given by Allend......