Alderman v. Davidson

Brief Fact Summary.

Plaintiff commenced foreclosure proceedings after Defendant continuously sent late payments and failed to pay taxes and send receipts to Plaintiff as agreed. The trial court held that Plaintiff had waived her right to foreclose. The court of appeals reversed on the issue of the tax payments, holding that while Plaintiff had waived timely installment payments, she did not waive timely tax payments. Defendant appealed.

Synopsis of Rule of Law.

A party’s conduct that is inconsistent with the party’s exercised right to strict performance of a contract is relevant in an inquiry into whether the party’s waiver of a right to enforce one provision of a contract constitutes a waiver of the party’s rights to enforce other provisions of the same contract.

Facts.

Plaintiff contracted for the sale of property with Defendant where Defendant would pay for the property in installments. Defendant was also required to pay for taxes and send the receipts to Plaintiff. The contract provided that Plaintiff could commence foreclosure proceedings if Defendant defaulted. Defendant frequently sent payments to Plaintiff late and Plaintiff accepted them. Additionally, Defendant failed to pay taxes for the years of 1990, 1991, 1992, and 1993, and therefore did not send receipts to Plaintiff. In January 1994, Plaintiff sent a letter to Defendant indicating that Defendant was in default on the installment payments and tax payments, but Defendant never got the letter. Meanwhile, between January and May 1994, Defendant sent four installment payments to Plaintiff and Plaintiff’s escrow agent accepted those payments on Plaintiff’s behalf. Later in May 1994, Plaintiff commenced foreclosure proceedings.

Issue.

Whether a party’s waiver of a right to enforce one provision of a contract constitutes a waiver of the party’s rights to enforce other provisions of the same contract if the party’s conduct is inconsistent with the party’s exercised right to strict performance of the contract.

Held.

Yes. The court of appeals’ ruling is affirmed in part and reversed in part and the case is remanded.

Discussion.

Plaintiff’s conduct as a whole over the course of the performance of the contract was inconsistent with her exercised right to strict performance of the contract. Plaintiff waived her right to enforce timely payments of not only the installment payments, but also the taxes. While accepting Defendant’s late installment payments—even after sending the letter of default—on its own is not sufficient to constitute a waiver of timely tax payments. Given Defendant’s non-payment of taxes from 1990 to 1993, Plaintiff clearly did not receive payment receipts as was required in the contract, and she seemingly did not have a problem with this until 1994. When this is combined with Plaintiff’s acceptance of late installment payments, the court deems Plaintiff’s collective conduct inconsistent with Plaintiff’s insistence on strict performance. This conduct constitutes a waiver of Plaintiff’s right to bring foreclosure proceedings based on non-payment of taxes without notice to Defendant and reasonable opportunity to cure.