acceleration clause in Texas

1980In a recent Supreme Court case, Smart v. Tower Land and Investment Co., 597 S.W.2d 333 (Tex.1980), quoting with favor Walker v. Temple Trust Co., 124 Tex. 575 , 80 S.W.2d 935 (1935), the Court indicated that an acceleration clause would not be usurious unless it contained language “affirmatively providing] for the retention of unearned interest.” While we do not approve of the language underlined in Paragraph 19 of this contract, since our record shows appellant complies with the rebate Paragraph 14, we “adopt the construction which comports with legality,” Walker v. Temple Trust Co., supra, 8

1980In a recent Supreme Court case, Smart v. Tower Land and Investment Co., 597 S.W.2d 333 (Tex.1980), quoting with favor Walker v. Temple Trust Co., 124 Tex. 575 , 80 S.W.2d 935 (1935), the Court indicated that an acceleration clause would not be usurious unless it contained language “affirmatively providing] for the retention of unearned interest.” While we do not approve of the language underlined in Paragraph 19 of this contract, since our record shows appellant complies with the rebate Paragraph 14, we “adopt the construction which comports with legality,” Walker v. Temple Trust Co., supra, 8

1956Parker v. Mazur supra. In Faulk v. Futch, 147 Tex. 253 , 214 S.W.2d 614, 616 , 5 A.L.R.2d 963 , the court said: “* * * the rule is well established that, ‘Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon fail-tire to pay any installment of principal or interest, such holder cannot without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payor at the latter’s known place of business.’ Gri

1948In Griffin v. Reilly, Tex.Civ.App., 275 S.W. 242, 248 , it is stated: “Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon failure to pay any installment of principal or interest, such holder cannot without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payer at the latter’s known place of business.

1956Parker v. Mazur supra. In Faulk v. Futch, 147 Tex. 253 , 214 S.W.2d 614, 616 , 5 A.L.R.2d 963 , the court said: “* * * the rule is well established that, ‘Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon fail-tire to pay any installment of principal or interest, such holder cannot without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payor at the latter’s known place of business.’ Gri

1956Parker v. Mazur supra. In Faulk v. Futch, 147 Tex. 253 , 214 S.W.2d 614, 616 , 5 A.L.R.2d 963 , the court said: “* * * the rule is well established that, ‘Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon fail-tire to pay any installment of principal or interest, such holder cannot without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payor at the latter’s known place of business.’ Gri

2015The contention [**18] required to refund payments: that the lender’s right to exercise an acceleration clause resulted in a usurious contract was discussed [*340] ″The maker hereof is not know nor shall in Shropshire v. Commerce Farm Credit Co., 120 he ever he personally liable on this note, but the Tex. 400, 30 S.W.2d 282 (1930), on motion for payees or other holders of this note shall never be rehearing, 120 Tex. 412, 39 S.W.2d 11 (1931), obligated to refund any payment of interest or cert. denied, 284 U.S. 675 (1931).

1980The contention that the lender’s right to exercise an acceleration clause resulted in a usurious contract was discussed in Shropshire v. Commerce Farm Credit Co., 120 Tex. 400 , 30 S.W.2d 282 (1930), on motion for rehearing, 39 S.W.2d 11 (1931), cert. denied, 284 U.S. 675 , 52 S.Ct. 130 , 76 L.Ed. 571 (1931).

1981However, in addition to an acceleration clause, the contract discussed in Smart contained the following language: “ ‘The maker hereof is not now nor shall he ever be personally liable on this note, but the payees or other holders of this note shall never be obligated to refund any payment of interest or principle after such payment has been made.’ ” 597 S.W.2d at 340 .

1980In a recent Supreme Court case, Smart v. Tower Land and Investment Co., 597 S.W.2d 333 (Tex.1980), quoting with favor Walker v. Temple Trust Co., 124 Tex. 575 , 80 S.W.2d 935 (1935), the Court indicated that an acceleration clause would not be usurious unless it contained language “affirmatively providing] for the retention of unearned interest.” While we do not approve of the language underlined in Paragraph 19 of this contract, since our record shows appellant complies with the rebate Paragraph 14, we “adopt the construction which comports with legality,” Walker v. Temple Trust Co., supra, 8

2015The contention [**18] required to refund payments: that the lender’s right to exercise an acceleration clause resulted in a usurious contract was discussed [*340] ″The maker hereof is not know nor shall in Shropshire v. Commerce Farm Credit Co., 120 he ever he personally liable on this note, but the Tex. 400, 30 S.W.2d 282 (1930), on motion for payees or other holders of this note shall never be rehearing, 120 Tex. 412, 39 S.W.2d 11 (1931), obligated to refund any payment of interest or cert. denied, 284 U.S. 675 (1931).

1980The contention that the lender’s right to exercise an acceleration clause resulted in a usurious contract was discussed in Shropshire v. Commerce Farm Credit Co., 120 Tex. 400 , 30 S.W.2d 282 (1930), on motion for rehearing, 39 S.W.2d 11 (1931), cert. denied, 284 U.S. 675 , 52 S.Ct. 130 , 76 L.Ed. 571 (1931).

1975Faulk v. Futch, supra; Brown v. Hewitt, 143 S.W.2d 223 (Tex.Civ.App.1940, writ ref’d); Curtis v. Speck, 130 S.W.2d 348 (Tex.Civ.App.1939, writ ref’d); Luczynski v. Sevier, 302 S.W.2d 474 (Tex.Civ.App.1957, writ ref’d n. r. e.); Griffith v. Griffith, 252 S.W.2d 517 (Tex.Civ.App.1952, writ ref’d n. r. e.); Bischoff v. Rearick, 232 S.W.2d 174 (Tex.Civ.App.1950, writ ref’d n. r. e.); Parker v. Mazur, 13 S.W .2d 174 (Tex.Civ.App.1929, writ dism’d); Credit Exchange of Dallas, Inc. v. Bell, 427 S.W.2d 674 (Tex.Civ.App.1968, no writ); Reynolds v. Skinner, 394 S.W.2d 201 (Tex.Civ.App.1965, no writ); Di

1968Dickson v. Dickson, 324 S.W.2d 422 (Tex.Civ.App., Houston 1959, no writ); 9 Tex.Jur.2d 77-78; 10 C.J.S.

1975Faulk v. Futch, supra; Brown v. Hewitt, 143 S.W.2d 223 (Tex.Civ.App.1940, writ ref’d); Curtis v. Speck, 130 S.W.2d 348 (Tex.Civ.App.1939, writ ref’d); Luczynski v. Sevier, 302 S.W.2d 474 (Tex.Civ.App.1957, writ ref’d n. r. e.); Griffith v. Griffith, 252 S.W.2d 517 (Tex.Civ.App.1952, writ ref’d n. r. e.); Bischoff v. Rearick, 232 S.W.2d 174 (Tex.Civ.App.1950, writ ref’d n. r. e.); Parker v. Mazur, 13 S.W .2d 174 (Tex.Civ.App.1929, writ dism’d); Credit Exchange of Dallas, Inc. v. Bell, 427 S.W.2d 674 (Tex.Civ.App.1968, no writ); Reynolds v. Skinner, 394 S.W.2d 201 (Tex.Civ.App.1965, no writ); Di

1948Bardsley v. Washington Mill Co., 54 Wash. 553 , 103 P. 822 , 132 Am.St.Rep. 1133 ; Beckham v. Scott, Tex.Civ.App., 142 S.W. 80 .” It is true that the collateral agreement contained a provision that the pledged stock could be sold without demand or notice in case of default, but this is not an agreement that the maturity date of the note can be accelerated without demand for payment.

1956Parker v. Mazur supra. In Faulk v. Futch, 147 Tex. 253 , 214 S.W.2d 614, 616 , 5 A.L.R.2d 963 , the court said: “* * * the rule is well established that, ‘Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon fail-tire to pay any installment of principal or interest, such holder cannot without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payor at the latter’s known place of business.’ Gri

1935Following this case, we find the following language used in Griffin v. Reilly (Tex.Civ.App.) 275 S.W. 242 , 248: “Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon failure to pay any installment of principal or interest, such holder cannot, without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payor at the latter’s known place of business.” This case is followed by Parker v. Mazur (Tex

1935The second deed of trust gave the holder of the interest notes, in case of certain defaults, the option of maturing “the whole sum of money hereby secured.” In case of Dugan v. Lewis, 79 Texas, 246 , there was a stipulation in the deed of trust to the effect that “the whole sum of money secured hereby” might, at the option of the holder, be declared due and payable, it was held that such acceleration provision did not make the contract usurious.

1935The three principal contentions made by plaintiff in error are: First, that the contract evidenced by the notes and deeds of trust is not usurious, because the terms of the principal notes are controlling and dominant over the acceleration clause in the second deed of trust and bring the case within the rule of Dugan v. Lewis, 79 Texas, 247 , 14 S. W., 1024 , rather than within the rule of Shropshire v. Commerce Farm Credit Co., 120 Texas, 400 , 30 S. W. (2d) 282 , 39 S. W. (2d) 11 ; second, that penalties may not be imposed because a greater rate of interest than ten per cent was not collecte

1935The' language used in the several acceleration clauses as above recited is also, in all material respects, identical with the language used in the several acceleration clauses construed in the opinion of the Commission of Appeals in Lincoln National Life Insurance Company v. Anderson, 124 Tex. 556 , 80 S.W.(2d) 294 , in which the court held that such language evidenced an intention to collect only earned interest and that the several contracts under consideration in which such language was used were not usurious.

1935App.) 80 S.W.(2d) 294 , where the acceleration clause in the deed of trust provided that on default the “whole indebtedness and all sums secured by this mortgage, to wit, the principal and interest then accrued,” should become due at option of holder, the Commission of Appeals held that the instrument did not provide 'for the collection of unearned interest, and the loan was not usurious.

1933Chief Justice Gaines, in Bomar v. West, 87 Tex. 299 , 28 S. W. 519, 520 , construed an analogous clause contained in a deed of trust securing a series of several notes, and concluded that there is no such right in one of several payees of a note providing for acceleration at the option of the “holder.” In Aat case, one Skinner made five promissory notes to one Bomar, payable one, two, three, four, and five years after date, re- speetively, to secure payment of which Skinner executed a deed of trust, which contained this clause: “In default of the payment of said notes, or of either of them, th

1933Chief Justice Gaines, in Bomar v. West, 87 Tex. 299 , 28 S. W. 519, 520 , construed an analogous clause contained in a deed of trust securing a series of several notes, and concluded that there is no such right in one of several payees of a note providing for acceleration at the option of the “holder.” In Aat case, one Skinner made five promissory notes to one Bomar, payable one, two, three, four, and five years after date, re- speetively, to secure payment of which Skinner executed a deed of trust, which contained this clause: “In default of the payment of said notes, or of either of them, th

2018Id.

2015In a concurring opinion in Shumway, Justice Mauzy, writing that “equity demands … a reasonable opportunity to cure any default” before a mortgage note is accelerated, wrote: “To hold otherwise places this court in the position of enforcing a contract that ‘no man in his senses and not under delusion would make on the one hand, and [which] no honest and fair man would accept on the other,’” Id. at 896 .

2014Coker, 650 S.W.2d at 394 .