DEAN MARDIS v. ALLIANCE BANK
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RENDERED:
AUGUST 25, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-001592-MR
DEAN MARDIS
APPELLANT
APPEAL FROM RUSSELL CIRCUIT COURT
HONORABLE EDDIE C. LOVELACE, JUDGE
ACTION NO. 98-CI-00080
v.
ALLIANCE BANK
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
EMBERTON, McANULTY, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
Appellant, Dean Mardis, appeals from a summary
judgment finding him in default on a promissory note secured by a
mortgage.
Having determined that no genuine issue of material
fact exists and that appellee, Alliance Bank, is entitled to
judgment as a matter of law, we affirm the judgment of the
Russell Circuit Court.
On October 3, 1994, Dean Mardis (Mardis) executed a
promissory note with Alliance Bank, FSB (Alliance Bank), in the
amount of $22,000.00.
The note was secured by a mortgage on a
property located in Russell County, Kentucky.
It is undisputed
that appellant was frequently late in making his monthly
payments.
Mardis failed to pay the monthly payments for January
and February, 1998, and on March 7, 1998, Alliance Bank filed a
complaint in Russell Circuit Court, alleging that Mardis had
become delinquent in his payments and was in default from and
after January 23, 1998.
Alliance Bank stated that it was
exercising its option under the promissory note and mortgage to
declare the unpaid indebtedness, in the amount of $17,280.49 plus
interest from and after January 23, 1998, due and payable in its
entirety.
On March 10, 1998, Mardis paid $975.12 to Alliance
Bank, which represented payments due for January, February, and
March 1998.
Mardis states that at this time he had no knowledge
of the action filed against him by Alliance Bank.
Alliance Bank
accepted the payments, and as such, Mardis believed the note was
in good standing.
On April 14, 1998, Mardis made a payment on
the note of $316.00.
Mardis states that he still had no
knowledge of the legal action filed against him at the time, and
assumed the note was still in good standing based on the
acceptance of this payment and the past course of dealing by the
bank.
It is undisputed that Mardis did not make payments on
the note for May, June, and July, 1998.
On June 26, 1998,
Alliance Bank filed an amended complaint stating that Mardis was
in default from and after June 9, 1998 and that the unpaid
balance of $17,068.20 plus interest was due in its entirety.
On
August 20, 1998, still unaware of the legal action and believing
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the note was in good standing, Mardis brought $1,650.00 in cash
to Alliance Bank, as payment for the amounts due on the note for
May, June, July, and August, 1998, and as an "advance payment"
for September, 1998.
Approximately 10 days later Mardis
received a check from Alliance Bank for the amount of $1,650.00
along with a letter dated August 25, 1998 informing him of the
foreclosure suit, and stating that the bank would not accept
anything less than full payoff of the loan.
Mardis continued to
attempt to make monthly payments, but these were returned by
Alliance Bank.
On September 8, 1998, Alliance Bank filed a motion for
summary judgment.
On September 21, 1998 Mardis filed a response
to the motion, contending that he was never properly served with
the January 23, 1998 complaint or the June 26, 1998 amended
complaint.
Mardis further stated that Alliance Bank had accepted
his payment of $1,650.00, and therefore his account was paid
through September.
On September 21, 1998, Mardis also filed a
motion to dismiss on the grounds that the service of summons was
improper, as it was just left in his mailbox.
On October 14,
1998, Alliance Bank filed a renewed motion for summary judgment,
and on October 19, 1998, Mardis filed a renewed response.
On
October 19, 1998, the court granted Alliance Bank's motion for
summary judgment.
On October 22, 1998, Mardis filed a motion to
set aside the October 19, 1998 summary judgment and a renewed
motion to dismiss/quash summons.
In support of the motion,
Mardis included an affidavit from Charles Mann, Russell County
Deputy Sheriff, stating that he did not personally serve Mardis
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with summons, but left it in his mailbox.
In an order and
judgment entered on October 27, 1998, the court found Alliance
Bank to have a first lien upon Mardis's property in the amount of
$17,068.20 plus interest from and after June 9, 1998, and ordered
the property be sold at public auction.
On October 28, 1998,
Mardis filed a renewed motion to set aside the order and judgment
entered on October 27, 1998 and a renewed motion to dismiss/quash
service.
On November 5, 1998, the Master Commissioner of the
Court filed a Notice of Sale that Mardis's property would be sold
at public auction on November 21, 1998.
On November 16, 1998,
based on Deputy Sheriff Mann's affidavit that he did not
personally serve appellant with summons, the court granted
Mardis's renewed motion to quash service and set aside the
judgment and order of sale.
On January 27, 1999, Alliance Bank filed a renewed
motion for summary judgment, which was denied to allow Alliance
Bank the opportunity to answer interrogatories.
Alliance Bank
filed a second renewed motion for summary judgment on April 28,
1999, to which Mardis filed a response on May 11, 1999.
On May
25, 1999, the court entered an order granting Alliance Bank's
motion for summary judgment.
The order allowed Mardis to present
further evidence that Alliance Bank should be estopped from
pursuing the action and that Mardis was current on his account.
On May 26, 1999, Mardis filed a motion to alter, amend or vacate
the summary judgment entered on May 25, 1999.
On June 22, 1999,
the court entered an order denying the motion, finding that
Mardis owed Alliance Bank the sum of $17,068.20 on the promissory
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note plus interest from and after June 9, 1998 and ordering the
property be sold.
This appeal followed.
On appeal, Mardis argues that Alliance Bank accepted
the payment of $1,650.00 which he tendered on August 20, 1998,
which included payments for the past due months of May, June,
July, and August, and an advance payment for September.
Mardis
contends that, because Alliance Bank took possession of the
payment and did not return it to him for approximately 10 days,
the payment was accepted, making Mardis current on the note and
thus, not in default.
A review of the record indicates that Mardis was
clearly in default on the note and that the bank did not accept
Mardis's $1,650.00 payment, thus summary judgment was proper.
The promissory note states, in pertinent part:
7.
BORROWER'S FAILURE TO PAY AS REQUIRED
....
(B) Default
If I do not pay the full amount
of each monthly payment on the date
it is due, I will be in default.
(C) Notice of Default
If I am in default, the Note Holder
may send me a written notice telling
me that if I do not pay the overdue
amount by a certain date, the Note
Holder may require me to pay
immediately the full amount of
principal which has not been paid and
all the interest that I owe on that
amount. That date must be at least
30 days after the date on which the
notice is delivered or mailed to me.
(D) No Waiver By Note Holder
Even if, at a time when I am in
default, the Note Holder does not
require me to pay immediately in full
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as described above, the Note Holder
will still have the right to do so if
I am in default at a later time.
It is undisputed, and the record clearly shows, that
Mardis did not make payments on the note for the months of May,
June, July, nor a timely payment for August.
Thus, by the terms
of section 7(B) of the note, Mardis was in default.
We further disagree with appellant that the bank
accepted Mardis's payment of $1,650.00, thus curing the default.
The record indicates that Mardis brought $1,650.00 in cash to
Alliance Bank on August 20, 1998, and that Alliance Bank issued a
check for that amount to Mardis dated August 21, 1998.
The check
was sent to Mardis accompanied by a letter dated August 25, 1998,
informing him of the foreclosure proceedings.
The bank clearly
did not "retain and use" the payment, but returned it promptly to
Mardis, and as such, there was no acceptance so as to cure
Mardis's default.
See, Equitable Life Assurance Society of the
United States v. Brewer, 225 Ky. 472, 9 S.W.2d 206, 207 (1928).
(When payment of insurance premium was tendered after grace
period had expired, the company was not required to accept it;
but if company chooses to accept the premium, it must make
insured aware of conditions under which it is accepting.
Insurance company could not receive, retain and use payment and
deny liability under the policy).
See also, White-Branch-
McConkin-Shelton Hat Co. v. Carson & Co., 77 S.W. 366, 25 Ky. La
Rep. 1230 (1903).
(Goods arrived late.
Buyer found not to have
accepted the goods as he did not exercise any acts of ownership
over them and promptly returned them to seller.
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Court stated
what constitutes an acceptance is a mixed question of law and
fact, and is usually for the jury to determine in view of the
particular circumstances of the case.)
Mardis further argues that Alliance Bank breached the
terms of the Mortgage securing the promissory note by failing to
notify him that a default had occurred and giving him an
opportunity to cure the default.
The Mortgage states, in
pertinent part:
2. Acceleration; Remedies. Lender shall
give notice to Borrower prior to acceleration
following Borrower’s breach of any covenant
or agreement in this Security
Instrument . . . The notice shall specify:
(a) the default; (b) the action required to
cure the default; (c) a date, not less than
30 days from the date the notice is given to
Borrower, by which the default must be cured;
and (d) that failure to cure the default on
or before the date specified in the notice
may result in acceleration of the sums
secured by this Security Instrument,
foreclosure by judicial proceeding and sale
of the Property. The notice shall further
inform Borrower of the right to reinstate
after acceleration and the right to assert in
the foreclosure proceeding the non-existence
of a default or any other defense of Borrower
to acceleration and foreclosure.
However, as appellant did not raise this issue before the trial
court, it was not preserved for our review.
"The Court of
Appeals is without authority to review issues not raised in or
decided by the trial court."
Regional Jail Auth. v. Tackett,
Ky., 770 S.W.2d 225, 228 (1989).
Appellant's final argument is that the "non-waiver
clause" in the promissory note is not enforceable, based on the
prior course of dealing and past conduct of Alliance Bank
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throughout the history of appellant's promissory note.
Appellant
argues that he made irregular payments throughout the history of
the note, which were accepted by the bank, and that it was unfair
for the bank to suddenly act in strict compliance with the note
without giving him warning.
The "non-waiver clause" of the
promissory note states "Even if, at a time when I am in default,
the Note Holder does not require me to pay immediately in full as
described above, the Note Holder will still have the right to do
so if I am in default at a later time."
In Price v. First
Federal Savings Bank, Ky. App., 822 S.W.2d 422 (1992), the
appellant argued that the bank had established a pattern of
accepting late payments over the course of a loan secured by a
mortgage, which constituted a waiver or estoppel of its right to
exercise the acceleration provision of the mortgage.
This Court
held that where a mortgage contains a non-waiver clause, the
mortgagee's acceptance of late payments does not constitute a
waiver of its right to accelerate and foreclose in the event of a
subsequent default.
Id. at 424.
Similarly, in the instant case,
the bank’s acceptance of late payments over the course of the
note did not waive its right to enforce the terms of the note for
subsequent defaults by appellant.
The standard of review of a trial court’s granting of
summary judgment is “whether the trial court correctly found that
there were no genuine issues as to any material fact and that the
moving party was entitled to judgment as a matter of law.”
Scifres v. Kraft, Ky. App., 916 S.W.2d 779, 780 (1996).
We are
to view the record in the light most favorable to the party
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opposing the motion and resolve all doubts in its favor.
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky., 807
S.W.2d 476, 480 (1991).
Having determined that no genuine issue
of material fact exists, Alliance Bank was properly entitled to
summary judgment as a matter of law.
For the aforementioned reasons, the judgment of the
Russell Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
William G. Bertram
Jamestown, Kentucky
Jeffrey H. Hoover
Jamestown, Kentucky
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