Zerkel v. Lindsey

• Decision Date: 21 November 1974
• Citation: 99 Adv.Sh. 2637,270 Or. 517,528 P.2d 1041
• Parties: Frank C. ZERKEL and Mildred E. Zerkel, husband and wife, Appellants, v. Jack LINDSEY and Carolyn Lindsey, husband and wife, Respondents.
• Court: Oregon Supreme Court

Page 1041

528 P.2d 1041

270 Or. 517

Frank C. ZERKEL and Mildred E. Zerkel, husband and wife, Appellants, v. Jack LINDSEY and Carolyn Lindsey, husband and wife, Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 5, 1974.

Decided Nov. 21, 1974.

Paul Jolma, Clatskanie, argued the cause and filed briefs for appellants.

Nicholas D. Zafiratos, Astoria, argued the cause and filed a brief for respondents.

Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE, HOWELL, BRYSON and SLOPER, JJ.

SLOPER, Justice (Pro Tempore).

This is an appeal by Frank C. Zerkel and Mildred E. Zerkel, husband and wife, as the sellers of certain real property, under a land sale contract, from a decree of the circuit court entered in favor of the defendant, Jack Lindsey and Carolyn Lindsey, husband and wife, buyers, dismissing plaintiffs' complaint and supplemental complaint. Plaintiffs' complaint seeks strict foreclosure for default in payment of the January 1973 installment which was delinquent prior to plaintiffs' election to declare the balance due on February 9, 1973. Plaintiffs' supplemental complaint included as a further ground for foreclosure an alleged breach that defendants had encumbered to a third party a mobile home covered by the lien of the contract. The answer of defendants admitted the execution of the contract and affirmatively alleged, first, that the contract was not in default at the time plaintiffs declared the contract to be in default; second, that plaintiffs had received full payment of current indebtedness under the terms of the contract subsequent to the commencement of the action and had waived their right to foreclose said contract by accepting said payments; and, third, that defendants were ready, willing and able to perform all terms and conditions of the contract and that plaintiffs are estopped to deny that defendants are not in default.

The trial court on August 3, 1973, in a memorandum opinion held that defendants had overpaid sufficiently on the contract and that, therefore, they were not in default on payments; and that defendants were entitled to a 10-day notice under the provisions of the contract concerning the encumbrance of the mobile home.

Thereafter, on August 13, 1973, plaintiffs filed a motion directing that certain exhibits, to wit: Exhibit 1: checks from defendants in the sum of $200 each and dated March 30, 1973, April 30, 1973, May 25, 1973, and June 26, 1973, and Exhibit 23: a $400 cashier's check payable to plaintiffs, be turned over to plaintiffs. An amended motion was filed on September 4, 1973, concerning the same exhibits and attempting to state unilaterally that the return of said exhibits would not be a waiver of any rights of plaintiffs in receiving and cashing the checks.

On September 20, 1973, the court entered findings and fact and conclusions of law, and on October 10, 1973, the court allowed the amended motion of plaintiffs, filed August 13, 1973, returning Exhibits 1 and 23, and specifically made no ruling as to whether the receipt and cashing of the exhibits would constitute a waiver or whether that action would in any way affect plaintiffs' rights on appeal. On October 26, 1973, the court entered a decree dismissing plaintiff's complaint and supplemental complaint with prejudice and denied foreclosure.

Plaintiffs' first assignment of error contends that the trial judge erred in ruling that defendants were not in default in payments on the contract at the time that plaintiffs declared the entire balance due on February 9 and commenced suit on February 12. The facts indicate that the total payments made by defendants prior to January 1973 exceeded the total of the mothly payments required to have been made under the terms of the contract. At the time of oral argument counsel advised this court that the amount of such overpayment as of February 9, 1973, was in the sum of $237.75. The trial judge concluded that these excess payments could be applied toward the January 1973 payment and, therefore, defendants were not at that time in default on the monthly payments. We hold that the trial judge was in error in this ruling and to affirm his action would in legal effect be rewriting the contract between the parties and ignoring the express provision in the contract which required a minimum monthly payment:

'* * * The purchase price will be paid at the rate of $50.00 or more per month, plus accrued interest, with the first monthly payment to be made on October 1, 1970 and a like payment on the first (1st) day of each month thereafter until the purchase price and interest have been paid in full. * * *.'

This type of provision in a land sale contract has not previously been subject to judicial interpretation by this court. However, appellate courts in other jurisdictions have interpreted such provisions and have uniformly held that where the buyer has the option of making larger payments than the minimum under the contract, such excess payments may not be applied toward future minimum monthly payments. The buyer must make the minimum required monthly payments or be in default. McBride v. Stewart, 68 Utah 12, 249 P. 114, 48 A.L.R. 267 (1926):

'That the plaintiff was in default in making the payments as provided in the contract appears affirmatively from the allegations of the complaint. The total amount of payments made before the re-entry by defendants was equal to or greater than the sum of $30 per month the minimum provided by the contract. The contract, however, was that the plaintiff should pay $30 or more per month. The payment of $675 in August 1920, did not relieve the plaintiff of the duty, under her contract, to pay $30 each and every month thereafter.' 68 Utah at 15, 249 P. at 116.

In the case of Harman v. Walsh, 102 Cal.App.2d 608, 228 P.2d 333 (1951), which involved a land sale contract providing for payments of $100 or more per month, payments in excess of that required were made for several months and then the payments fell below that sum, the court stated:

'The appellants' contentions are without merit, and the record discloses no reversible error. As pointed out in respondents' brief, the agreement of sale is clear and unambiguous; it means exactly what it says. By express terms the contract obligates the buyers to pay '$100.00 or more Dollars per month on the 1st day of September, 1945 and the first day of each succeeding month thereafter.' Nowhere in the instrument is there any suggestion that in the event appellants should pay more than $100 in one month, later monthly payments should be reduced by the excess. Appellants' only privilege was to pay 'more' than the stipulated sum on the first of any month; no privilege to pay 'less' than $100 in any one month is granted. To read such a provision into an explicit written contract would amount to imposing upon the sellers additional terms not mentioned in the written instrument and in effect would negative the provision that 'time is of the essence of this contract.'" 102 Cal.App.2d at 610--611, 228 P.2d at 335.

Harman v. Walsh, supra, 102 Cal.App.2d 608, 228 P.2d 333, was cited with approval in Smith v. Renz, 122 Cal.App.2d 535, 265 P.2d 160 (1954), and the court went on to say:

'In the absence of agreement to the contrary, it is undoubtedly the rule in installment cases providing for the payment of a specific amount Or more at fixed intervals, that an excess payment made prior to or on one installment date is not effective to reduce the amount of or obviate the necessity of paying subsequent installments as they fall due according to the agreed schedule.

'* * *.

'We are aware of no law or binding precedent to the contrary, and therefore hold that consistent with what we deem to be the intent of the parties the.$23,500 must be considered as an advance payment of the first installment of $500 Or more, but that it does not in any wise affect the remaining schedule of installments provided in the note, other than to lessen the principal sum by that amount and consequently reduce the number of installments remaining to be paid.' 122 Cal.App.2d at 539--540, 265 P.2d at 163.

And in DeVilliers v. Balcomb, 79 N.M. 572, 446 P.2d 220 (1968), a similar case of excess payment, the court held:

'* * * An overpayment in one period by one who has purchased real estate under a contract obligating him to pay a specified sum Or more each period does not relieve him of the duty of paying the specified amount on each and every payment date thereafter. * * *.' 79 N.M. at 573, 446 P.2d at 221.

Plaintiffs' second assignment of error contends that the trial court erred in not granting a decree of strict foreclosure. The court made such ruling, of course, for the reason that he did not find that defendants were in default under the terms of the contract. Having just determined that the court was in error in so ruling, because defendants were, in fact, in default on February 9, 1973, at which time plaintiffs elected to declare the entire unpaid balance due and payable, and gave both oral and written notice of such intention, we must proceed to determine if there was any waiver by plaintiffs of their right to strict foreclosure. Under the terms of the contract, the grace period of 30 days for payment of the January 1973 payment expired on January 31, 1973. The complaint for foreclosure in this case was filed on February 12, 1973. The evidence indicates and the trial court found that after the notice on February 9 and before the complaint was filed on February 12, defendants tendered to plaintiffs the past-due January payment, as well as the February payment. Defendants also continued to tender to plaintiffs' attorney the subsequent four monthly payments. These four monthly payments are in addition to a cashier's check in the sum of $400 tendered by defendants on or about February 13, 1973, for the January and February payments. Defendants' counsel was advised by plaintiffs' counsel on February...