Postal Sav. & Loan Ass'n v. Freel, 56238

• Decision Date: 14 December 1984
• Docket Number: No. 56238,56238
• Citation: 10 Kan.App.2d 286,698 P.2d 382
• Parties: POSTAL SAVINGS & LOAN ASSOCIATION, Appellee, v. Marion K. FREEL and Charlene A. Freel, Appellants.
• Court: Kansas Court of Appeals

Page 382

698 P.2d 382

10 Kan.App.2d 286

POSTAL SAVINGS & LOAN ASSOCIATION, Appellee, v. Marion K. FREEL and Charlene A. Freel, Appellants.

No. 56238.

Court of Appeals of Kansas.

Dec. 14, 1984.

Publication Ordered April 11, 1985.

Syllabus by the Court

1. Promissory notes and mortgages are contracts between the parties and the ordinary rules of construction applicable to contracts apply to them.

2. The terms of a promissory note are reviewed and it is held: (1) The anti-waiver provision of the note set forth in the opinion is clear and unambiguous; (2) no inference of waiver can be drawn when the unambiguous language of the note states a contrary intention; (3) in light of the anti-waiver provision, the trial court correctly held that the mortgagee did not waive its right to accelerate the payment of the note by its previous acceptance of late payments; and (4) there is substantial competent evidence to support the trial court's conclusion that the mortgagee did not waive its right to accelerate the note by accepting payments after default was declared.

Kenneth F. Crockett of Tilton, Dillon, Beck & Crockett, Topeka, for appellants.

J.H. Eschmann and Stanley E. Oyler of Ascough, Bausch, Eschmann, P.A., Topeka, for appellee.

MEMORANDUM OPINION

Before PARKS, P.J., BRISCOE, J., and JEROME HARMAN, Chief Judge Retired, Assigned.

PARKS, Judge:

Plaintiff Postal Savings & Loan Association brought this action to foreclose its mortgage against the defendants' residence. Defendants Marion K. Freel and Charlene A. Freel contend that plaintiff waived its right to foreclose. The trial court entered judgment allowing the foreclosure. Defendants appeal.

We first consider defendants' claim that plaintiff waived its right to accelerate the payment of the note and mortgage.

The plaintiff has always maintained that the letter of January 12, 1981, written when the defendants were two and almost three payments behind on their loan obligation, effected a declaration of default and acceleration of the entire balance owed. Defendants contend that because they had fallen behind in their payments before and default was never declared, plaintiff waived its right to do so in January.

It is generally accepted that a mortgagee's acceptance of a late or partial payment will effect a waiver of the right to declare default and accelerate a debt because of the lateness of that payment. Rawhide Farms v. Darby, 267 Ark. 776, 589 S.W.2d 210 (1979). In addition, a past practice of excusing defaults occasioned by late payments may under certain circumstances be construed as an implied waiver of an acceleration clause. See e.g., Smith v. Smith, 186 Kan. 728, 735, 352 P.2d 1036 (1960); Mariash v. Bastianich, 88 App.Div.2d 829, 452 N.Y.S.2d 190, 191 (1982). However, in the present case, the parties agreed to the following provision in the promissory note:

"... Any waiver of any payment hereunder or under the instrument securing this note at any time, shall not, at any other time, be taken to be a waiver of the terms of this note or the instrument securing it."

This provision clearly provides that the mortgagee's past waivers of default have no bearing on its rights to accelerate for subsequent delinquencies. It benefits the debtor by permitting the creditor to liberally forgive late or...