ALDERMAN V. DAVIDSON
954 P.2d 779 (Or. 1998)
NATURE OF THE CASE: The trial court determined that the repeated acceptance by Alderman
(P) of late payments from Davidson (D) constituted a waiver of P's right to insist on timely
payment of property taxes and the court dismissed P's foreclosure suit. P appealed and the
court of appeals reversed. D appealed.
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.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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