Alderman v. Davidso

954 P.2d 779 (Or. 1998)

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Nature of the Case

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Facts

D purchased 120 acres of land from P in 1989. D signed a note for the $24,000 purchase price, under which she agreed to pay $200 on the ninth of each month, and an additional $500 every other month on the twentieth of that month until the purchase price was paid in full. D entered into a trust agreement to which she agreed timely to pay the sums set forth in the note to an escrow agent and 'to pay all taxes, assessments and other charges that may be levied or assessed upon or against said property before any part of such taxes, assessments, and other charges become past due or delinquent and promptly deliver receipts therefor to [seller]. The trust agreement provided that time was of the essence with respect to all payments and performances required of D under the agreement. It granted seller the right to accelerate the balance due under the note and to initiate foreclosure proceedings in the event of a default by D in the payment of any indebtedness secured by the trust agreement or in the performance of any other agreement required in that document. P had the right under the trust agreement to elect to pay the taxes herself and to add that amount to the balance due under the note. Payment of an amount equal to the overdue taxes then would be due and payable immediately without notice and, at P's option, Dr's failure to pay immediately could itself be considered a default and would be grounds for accelerating the entire balance due under the note. From the very first payment D was late. P complained by letter but still accepted the late payments. D neglected to pay taxes on the property for the years 1990, 1991, 1992, and 1993. P sent a letter that D was in arrears on the installment payments and in the payment of taxes and that both arrearages constituting defaults under the trust agreement. P accelerated the payments. P paid the taxes eventually and during this period, D sent four installment payments and brought the account current on May 9, 1994, a few days before P filed for foreclosure. P held the checks from the escrow agent and then cashed them after the foreclosure was filed. D sent a payment for the tax arrearage but not until about two months after being served with the complaint. The assessor issued a refund check to P, which P then cashed. The trial court held that P waived her right to foreclose by accepting payments after the notice of foreclosure. P appealed. The Court of Appeals held that P had waived the 'time is of the essence' for timely installment payments by accepting late payments over the years and, therefore, was obligated to give buyer a reasonable time to cure the default. The time of the essence provisions for the taxes and payments were distinct, and P never waived the tax provision. P thus had the right to initiate the foreclosure action when she did. D appealed.