*1 as to both provision the Plan’s offset stock received cash and Orion reorganization claimants in the earlier class
proceedings.15
III. CONCLUSION is AF- judgment of the MDL Court
FIRMED. BROWN,
Don H. Josef Miller and Allen McAlear, Plaintiffs-Appellants,
L.
AVEMCO INVESTMENT
CORPORATION,
Defendant-Appellee.
No. 77-2169. Appeals,
United Court of States
Ninth Circuit.
Sept. 1979. approval Appellants argument review of the MDL did not raise the our Court’s provision pro the Plan of Allocation and did not find the reduction the' offset duced the debentureholders’ share of the reduction to be so at odds with the relative strength arbitrary appellant-debentureholders’ claims settlement fund was because it bore degree comparison no claimant relation to the which their claims of the other with those may have been those of the other classes as to render the offset decision inferior to However, claimants. abuse of discretion. we considered the issue *2 Butte, Mont., argued, Joyce,
Thomas F. McAlear, plaintiffs-appellants; for Allen L. Bozeman, Mont., on brief. Bennett, III, Bozeman, Mont.,
Lyman H. defendant-appellee. for brief KILKENNY, ELY and Circuit Before FERGUSON,* Judge. District Judges, and FERGUSON, Judge: District Montana, Plaintiffs, citizens of sued de- fendant, Maryland corporation, in a diver- 1332) alleging sity (28 action U.S.C. § Defendant coun- airplane. conversion of an interference with contractual terclaimed for rights. juryA trial was held and verdicts judg- against plaintiffs returned. A final with the ment was entered in accordance plain- court denied verdicts. The district tiffs’ motion for new trial and defendant’s notwithstanding the judgment motion judg- appeal from the verdict. Plaintiffs of the motion for a ment and denial court orders a new trial on new trial. This erro- grounds that the trial on the issue of accelera- neous instructions prejudiced the tion and these instructions plaintiffs.
FACTS Robert Herri- September 1. On AVEMCO and ford borrowed from $6500 for $9607.92 note promissory executed a interest (amount plus “add-on” borrowed insurance). and credit for secured note was promissory 2. The a se- to AVEMCO granting agreement California, * Judge, District of Ferguson, Central States District United J. Honorable Warren sitting by designation. July curity airplane. in an 6. On security interest AVEMCO refused agreement following contained lan- this offer and wrote to Herriford announc- guage: comply that because his failure to agreement, with the note and Security Time essence of this accelerating payments AVEMCO was
Agreement. hereby agreed It is if $5,078.97 entire balance of was due be made of any default *3 July 28, payable and on or before 1975. part principal or interest of the explained later that the AVEMCO addition- promissory hereby note secured al amount was due to reimburse AVEMCO time specified, and in the manner therein its purchase Single for of “Vendor’s Inter- any or of any obliga- if breach be made est Insurance.” promise tion or of debtor herein con- hereby, any tained or secured if or all 25, July 1975, plaintiff 7. On McAlear property hereby covered be hereaf- of plaintiffs advised AVEMCO that did not sold, leased, transferred, mortgaged, ter accept rejection of their AVEMCO’s tender or otherwise encumbered without money and that the to retire the debt was Party written consent of Secured first Security . available to AVEMCO at the First obtained, had and or in the of event Bozeman, Montana, upon presenta- Bank of seizure of the aircraft under execution or mortgage. tion of of a satisfaction legal other process, any or if for reason July 30, 1975, 8. agent On an insecure, Party Secured may deem itself passkey plane AVEMCO used a to start the principal then the unpaid upon whole sum and flew it to Seattle. note, promissory said with the interest 30, accrued thereon or advanced under the July 9. On AVEMCO notified Security Agreement, terms or se- repossession Herriford of this and demand- thereon, hereby, cured and the interest $5,578.97 ed August immediately shall pay- become due and proceeds or the aircraft would be sold with option (em- able at the Party, Secured expenses to be applied first to sale and phasis added) second to Herriford’s account. security provided agreement The also that September 22,1975, a 10. On bill sale apply the laws of Texas respect would with plane for the was filed with AVEMCO rights agreement. under the Agency. Federal Aviation The consid- eration was and the bill of 4, 1973, $7000 sale was 3. July On Herriford entered 25,1975. (AVEMCO August dated had ear- option into a lease agreement and with the lier recorded a sale which subsequently three plaintiffs whereby plaintiffs would error.) withdrawn as an hourly pay rentals the plane for and con- tribute equally toward Herriford’s debt 11. Plaintiffs filed this action for con- Upon retirement with AVEMCO. pay- full August version on 1975. Defendant mortgage ment of the on airplane, charging counterclaimed interference with plaintiffs would have to purchase an rights. contract juryA trial was held and ownership (each) plane one-fourth jury a returned verdict for defendant for the sum of one dollar. on both coun- the conversion claim and the assessed, damages how-
4. terclaim. No were Plaintiffs became co-insureds with ever. airplane Copies Herriford on the in 1973. policy
of this were sent AVEMCO. judgment 12. Defendant for not- moved 9,1975, withstanding plaintiffs July plaintiffs On advised verdict they moved for a new The court op- AVEMCO exercised their trial. district tion with Herriford and now appeal tendered to denied these motions. Plaintiffs $4,859.93 AVEMCO the still owed Herri- judgment from the final and the denial of ford. new motion trial. recog- As courts and commentators court erro-
This court finds nized, together 51 to be read neous instructions acceleration Rule Fed.R.Civ.P., re- Rule which states: new must be ordered. trial could fused to instruct acceleration rulings or or- exceptions Formal done if defendant believed in unnecessary; are ders of the court impaired faith that its interest was purposes exception for which for all security agreement. by the breach of the necessary it has been is suf- heretofore prejudicial error. That refusal was party, that a at the time the ficient the court is made or ruling or order of addressing the in- Before merits of the sought, known to the court the makes acceleration, however, struction on desires the court action which he plaintiff must determine whether objection take or his to the action complied with Rule 51 of the Federal Rules grounds preserve therefor of Civil Procedure to this issue for court and *4 * * * appeal. review on objec- preserve appeal In to an order RULE 51 instruction, thus, jury it is not tion to a Rule 51 states: object except to necessary party for a Rule 51. previously party’s position has “if the INSTRUCTIONS TO JURY: OBJECTION and it is clearly been made objection would be plain that a further At the or at such close evidence Miller, Wright 9 A. unavailing.” C. & during as
earlier time the trial the court Federal Practice and Procedure 2553 § directs, file reasonably any party may (footnote omitted) (1971) 639-640 requests written the court instruct precisely This was the situation before law jury as set forth case. the trial court in the instant Plain- requests. The court shall inform counsel specifically requested tiffs that Instruc- proposed upon requests its action given. 2 4 Instead the tions Nos. and prior arguments jury, their judge On the basis of the denied both. jury the court shall instruct the after below, this appears plain record it completed. party may arguments are No assign giving represented judge’s as denial the trial final error the failure give objects opinion instruction unless he that these two instructions should jury objection thereto before the retires consider given not be that further verdict, stating its distinctly the matter plaintiffs by would been grounds he objects which and the unavailing but of the court’s wasteful objection. Opportunity given shall be appellants are now time. To hold that objection hearing make out complaining of the precluded from trial jury. instructions court’s refusal to these elevation of unnecessary would be an 51 read Rule how- Rule must be with form substance. Stewart Ford over ever, provides exceptions which that formal 396, 406, U.S.App.D.C. Motor to rulings or orders of court are unnec- (D.C.Cir. 1977) (footnotes F.2d action, essary. question The central is what omitted) objection, meets re- short of formal quirements Rule in further noted that the The court Stewart by interpretation has been reached same Ap- Court of The District of Columbia the Third Circuits. both and Seventh peals recently compliance held that there expressed a recently similar request with This circuit Rule when a to instruct has Heilman, court, been view of 51 Robinson v. Rule submitted considered case, (9th objection Cir. by refused the court and further light jury instructions unavailing: would be court reviewed subsequent Supreme decision amination of witnesses. Plaintiffs’ counsel doing, Court. In so this court held extensively questioned Munsey, that the James Vice object AVEMCO, defendant’s failure to to the trial President of about the reasons instruction incorporated court’s questioning, for acceleration. Under this controlling earlier law of the circuit did not the witness testified that AVEMCO never foreclose review the court under the payments new contended that loan weren’t be- case. payments made or that would not be made in the future. Rather AVEMCO ac- designed
Rule 51 prevent unnec- celerated the loan because of some uncer- essary new trials caused errors in in- tainty about the insurance and because the structions that the district court could plaintiffs lease to approved. had never been they have corrected if had been brought counsel, hand, Defendant’s on the other to its proper attention at the time. . questioned simpler witnesses to elicit a in- The rule was not intended to require terpretation rights: of acceleration a lease pointless formalities. “There is no need without consent is a agree- breach of the exception for an charge after has ment —a default rights of acceleration. where, given here, been the court has fully been informed in advance of the disagreement This was further focused charge appellants’ as to contention and it for the court when defendant moved for a was clear that further persuade efforts to plaintiffs directed verdict after the court would have been unavailing, presented their case in chief. The first *5 . . . . Heil- [citations omitted]” issue in defendant’s motion was whether or man’s counsel had earlier unsuccessfully not AVEMCO was entitled to accelerate the contended that his client should not be promissory note, repossess and sell simple negligence. liable for Restating plane. argued Defendant’s counsel to the point exception identical as an to the court: instruction would have been useless. 563 all, First of it must be determined that (citations F.2d at omitted) there was a Security default Agreement, being upon the default relied
Here the purpose of Rule 51 has by the Defendant as testified to Mr. below, been met. As discussed the district Munsey as an adverse witness. No. was fully plaintiffs’ aware of position that there was a lease or sale of the regard in to acceleration. The court’s re collateral without the written consent of give plaintiffs’ fusal proposed instruc party. secured The evidence before tions on represented this issue a final deci presented McAlear, Court as Mr. sion require court. To plaintiffs to Miller, as well as Mr. as well as Mr. object after the given instructions were is Munsey, sought is that no one the consent require a pointless formality. pre To So, given and no consent was . . . . clude review of the court’s instructions on point default, at this we have a we have a this basis would exalt form over substance right of possession Avemco to take of the injustice plaintiffs. they collateral which in fact did. trial, Throughout the plaintiffs contended motion, opposed Plaintiffs’ counsel di- that defendant could only properly acceler- rectly arguing proper that acceleration was payment ate of the loan if the defendant in security impaired: if defendant’s was good faith security believed his was im- paired by security agree- that, the breach of the provided In addition to the contract trial, Throughout ment. defendant con- they couldn’t sell it without their written tended that mere technical violation of the consent. But that didn’t cause a breach e., security agreement, leasing plane i. they the contract in the sense that consent, justified without acceleration. repossess could The con- property. This disagreement apparent in the ex- tract specifically provided upon hap- Further, party if the secured event, default. they option that had the
pening of
the collateral under
pay-
reposses
due and
declare
full amount
[sic]
security agree-
in
they declared
clause
“insecurity”
It wasn’t until when
able.
in
[sic], they
and able
not do so unless it believes
may
the full amount due
ment it
they
payment
were exercis-
good
prospect
notice that
that the
faith
.
than
impaired.
that
.
.
.
Further
is
security
itself
that,
pro-
the Uniform Commercial Code
Requested Instruction #
Plaintiff’s
on the
to Accelerate in 1—
Option
vides
or his
providing
party
A
that one
term
who wishes
acceler-
208 that
creditor
pay-
may
successor in interest
accelerate
good
in
ate a note must act
faith
or
collateral
performance
require
ment or
basis for be-
must have some reasonable
or “when
or
collateral “at will”
additional
impaired
lieving
that
is
in words of
he
himself insecure” or
deems
paid.
not to
the indebtedness is
be
be
to mean
import shall
construed
similar
Now,
uncontradicted in
the evidence is
only if
power
so
shall have
to do
he
my
the record that
clients sent this mon-
believes that the
good
he
faith
ey
twenty-three
months
the Union
performance
impaired.
taking
Bank was
Bank and
Union
establishing lack of
burden
knew,
surely
checks.
are
They
these
whom
plaintiffs against
faith
on the
people strangers
these
contract.
power
has been exercised.
immediately
Why
they
didn’t
write and
# 14
Requested Instruction
Plaintiffs’
money,
say,
your
you
“we can’t
are
take
debtor,
contends that
Defendant
They
perfectly
not our
were
debtor.”
HERRIFORD,
or sold
leased
RICHARD
they
getting
satisfied as
were
long as
plaintiffs without its
airplane
paid, which is
they
all
were entitled to to
provided in the securi-
written consent as
begin with and that
is all that Avemco
plain-
ty agreement. The
evidence
So,
obtaining.
our
should
satisfied
Upon the
tiffs
this to be true.
shows
they
contention
acted in com-
shows
event,
it to
happening
you
of this
if
find
accelerating
plete bad faith in
the loan.
*6
option to
the defendant had the
true
argument,
After the
the court reserved
paid if
full amount due it be
declare the
ruling on the motion. Defendant’s case was
prospect
it in
faith believed that the
good
presented.
called
wit-
then
Defendant
two
the con-
performance
or
who had
called by plain-
nesses
been earlier
impaired.
tract was
was
tiffs. One
these witnesses
Mr. Mun-
instructing
jury,
the
examination,
Immediately before
plaintiffs’
sey. On cross
coun-
to
the instruc-
questioned
the
announced
counsel
again extensively
sel once
the
court
give:
felt
tions he would
why
witness about
AVEMCO
their loan
trial,
was insecure. At the close
the
Let
the Plaintiffs’
the record show that
motion for
defendant renewed the
directed
Devitt &
requested instructions
from
again,
verdict.
the court
rul-
Once
reserved
refus-
given
Blackmar are
and Court has
ing on the motion.
9,10,11,
4, 5, 6,
ed Plaintiff’s instructions
The Plaintiff has withdrawn
and 13.
the
Plaintiffs had
court sev-
submitted
give 70.-
71.20
The Court will
and 71.10.
issue
jury
eral
instructions on the
of accel-
71.07,
71.15, 71.18,
71.01,
71.08,
70.03,
eration:
72.01,
will
and 81.03. The Court
81.01
Requested
Plaintiffs’
Instruction # 4
requested
give
instructions
Plaintiffs’
Avemco)
party (like
A secured
has the
14, 2, 3, 7 and 8.
amended
right
repossess
(airplane)
the collateral
rejected two
specifically
Thus the court
only where
has been a default on
there
proceeded
debtor,
acceleration and
part
may
and it
not
instructions on
omit the
14 amended to
give
there has been no to
instruction
possession
take
when
da,
clause “if it in
faith believed that the
and mere
proposed
submission of
in-
payment or performance
clearly
structions did not
show that
impaired.”
contract was
issue was focused before the
As
court.
this
court stated:
It was clear from the court’s action that
The trial
required
court is not
rum-
agreed
position
court
with defendant’s
mage through
briefs
proposed
trial
argument
acceleration. After extensive
instructions
po-
in an effort
to discover
throughout
trial,
on this
issue
the court
objections
yet
tential
not
instructions
following
announced
in-
given
formulated.
F.2d
structions:
Accord, Wylier
Corp.,
v. Fairchild Hiller
debtor,
Defendant
contends
(9th
1974)(plaintiff
F.2d 506
Cir.
attached a
HERRIFORD,
RICHARD
leased or sold
cautionary
pretrial
instruction
memo-
airplane
to the Plaintiffs without its
pro-
randum but did not include it in his
provided by
written consent as
the Secur-
posed instructions submitted to the district
ity Agreement.
Upon
happening of
noncompliance
court and this
found
event,
you
true,
this
if
it to be
find
with Rule
Defendant had the
declare
full
due
paid.
amount
to be
opinions
Two other
expressed similar
views.
In Sears v.
Pacific
Southern
parties
All
proceed-
knew from what had
(9th
1963),
Cir.
this court stat-
ed that
the court did
unknowingly
not
plaintiff merely objected
ed that
to the
hastily
giving
this instruction. The court
requested
court’s failure to
instruc-
argument
law,
had heard
on this issue of
tions.
It was not
whether
clear
the district
rejected
had
requested
viewed and
instruc-
proposed
court had reviewed the 21
instruc-
tions on it
specifically
and had
out
amended
individually
tions
or had
attention
fqcused
“good faith” and “impairment” language
legal questions presented
on the
by them.
from
given
the instruction
on acceleration.
Counsel made no
effort
correct
this.
when,
It is understandable
after
emphasized
This circuit
dilemma
the jury
instructed
and asked if there
court in
situation:
objections
instructions,
were any
recognizes
Plaintiff
that when com-
plaintiffs
object
did
to the acceleration
plaint
is made of an instruction that
though
clause
plaintiffs
instructions even
given,
requires
singled
the rule
it to be
specifically
did
mention two other instruc-
grounds
objection sepa-
out and the
tions
not received as much atten-
stated;
rately
argues
but he
that where a
objection
tion.
It
clear
that an
requested
the re-
instruction
refused
acceleration instruction would neither focus
quest
requirement.
itself satisfies this
change
issue further nor
the court’s
*7
comparison
He
that
in-
reasons
mind.
requested
struction
with the court’s
reasons,
For these
court
this
finds that
charge will
error
in
reveal the
or omission
plaintiffs complied with Rule 51 as
might
the latter. There
be merit
in
on
instructions
and will
this
acceleration
in
plaintiff’s argument,
dealing
if we were
appeal evaluate the merits of the instruc-
single
request covering
with
one
holding
tion. This
is consistent with other
issue,
subject or
but here a' number of
Ninth
cases
51.
Circuit
on Rule
requests
plaintiff’s
were submitted and if
correct,
frequently
One of the most
cited Ninth
contention
re-
were
this would
Circuit
quire
rummage through
cases Bertrand v. Southern
all
judge
Pacific
Company,
(9th
1960).
discover,
could,
1374 written in- poorly discussed the the court con- think such a given. those We ed to defendant and by the proposed struction meaning- rule render the struction would changes. to offer In the defendant invited 313 F.2d at less. 505.. neither of- request, this defendant spite of Gove, 991, 994 345 F.2d Stiles v. See also instruc- changes objected to the fered nor appellant had 1965) where the
(9th Cir.
Hargrave
the court.
In
v.
given by
tions as
requested
six
objected to failure
1960), one
Wellman,
(9th
948
Cir.
276 F.2d
compli-
court found no
instructions and the
appeal was whether
of the issues on
Rule 51.
ance with
give appel-
declining to
trial court erred in
on the issue of
requested instruction
lant’s
mention
Circuit cases
other Ninth
Six
issue had been
duty
a bailor. That
submitted
requested instructions were
parties and the court
by both
withdrawn
compliance
been
but held that there had not
objection. There
had been no
and there
these cases deal with
Rule 51. All of
jury on which the
issue before the
was no
from the one
which are different
situations
appropriate.
have been
instruction would
States,
Bock v. United
presented here.
In
apply
opinions of this circuit
Other
1967) and
v.
(9th
Siebrand
1375
tween the debtor Herriford
proceeded
to evaluate
mer
and the creditor
Rule 51
cases,
appeal.4
Rich
its of the
One
these
provided
AVEMCO
that if Herriford leased
Corp.
271 F.2d
Corp.,
field
v. Karseal
Oil
AVEMCO,
plane
without the consent of
1959),
(9th Cir.
contains dicta which is
709
could,
option,
at its
AVEMCO
accelerate
directly opposed to the view of Rule 51
of the loan.
payment
full
Herriford leased
by the District of
stated
Columbia Court
plaintiffs
plane
in 1973.
In
Co.,
Appeals in
v. Ford
553
Stewart
Motor
year, plaintiffs became co-insureds on the
130, supra, and the
.made here.
F.2d
decision
copies
policy
sent
airplane and
of the
were
Richfield,
although
the court stated that
years payments
For two
con-
AVEMCO.
requested instructions had been submitted
tinued to
regularly
be
made on the note.
and “counsel for Richfield knew
court’s
9,1975,
plaintiffs
When
July
contact-
position
posi
and the court knew counsel’s
and offered
be-
they
ed AVEMCO
what
tion,” (271
722)
F.2d at
must
Richfield
make
debt,
lieved was full
objection
preserve
issue on
formal
negotiate
refused to
them
AVEMCO
with
This
appeal.
interpretation is inconsistent
can
purpose
inquire
with the
of Rule 51 and
result
further
and did not
of either Herri-
injustice. Apparently
even in
manifest
plaintiffs
about
ford
their intention
Richfield,
cases,
many
as in so
other
this
pay
in full.
plaintiffs’
the debt
While
appellant
right
found that
had no
$4,859.93 may
offer of
not have met the
justice required
review
issue but
such
tender,
legal
requirements
of a valid
The
review.
most recent instance of this is
complete disregard
AVEMCO’s
offer
Jellison,
(9th
in Wellman v.
593
876
F.2d
eagerness
payment, repos-
and
to accelerate
1979)
Cir.
where this court stated: “While
plane
sess the
and sell it for
should
$7000
plaintiffs
are not entitled
a review of
invoked
concern of the district
right,
instruction
a matter of
we
prompted
court and
examination of
have reviewed the
a whole.”
instructions as
fairness of the acceleration.
593
at 878.
F.2d
Both the Uniform
Code
Commercial
Thus,
compli
even if there were not
(U.C.C.)
equity impose
duty.
and
case,
ance
Rule 51 in this
review would
sought
pro-
this protection
Plaintiffs
and
appropriate.
be
The acceleration issue was
posed jury instructions on acceleration
justice requires
central to the trial and
re
incorporated
a test of reasonableness
view of the treatment of that
issue in the
requirement
and fairness:
the U.C.C.
instructions as a whole.
security impairment.
faith belief of
ACCELERATION
rejected
these
in-
The district
there
structed that
could
an automatic
The facts as
trial
established at
are
agreement
as follows:
be-
if
enforcement
acceleration clause
Chapman,
149,
(9th
709,
Corp.,
(9th
v.
271
Brown
304 F.2d
154
Karseal
F.2d
Cir.
Cir.
722-723
1962);
Roden,
denied,
590,
Empire Printing
1959),
961,
247
Co. v.
361 U.S.
4
cert.
80 S.Ct.
8,
(9th
1957).
States,
(1960);
16
F.2d
Cir.
Koch
264
L.Ed.2d 543
v. United
334,
denied,
(9th
1958),
F.2d
338
Cir.
cert.
358
See,
g.,
945,
354,
(1959);
e. Moore v. Telfon
U.S.
S.Ct.
Communications
79
of a lease
payment
perform-
or
new trial
of
prejudicial.
prospect
A
erroneous and
impaired.”
is
ance
required.
U.C.C.;
it became
adopted
has
Texas
designed
clauses are
Acceleration
of the Tex-
in 1967. Section 1.208
effective
from
protect the creditor
actions
Code states:
Business and Commercial
as
impair
credi
jeopardize
or
debtor
to Accelerate at Will. A
Option
1.208.
§
be used
security. They are
tor’s
party
one
or his suc-
providing that
term
g.,
advan
offensively, e.
for the commercial
payment
may
accelerate
cessor
interest
is a
Acceleration
tage of
creditor.
require collateral or
performance or
or
consequences
draconian
remedy
harsh
“at
or “when he
will”
additional collateral
matter of
Acceleration is a
for the debtor.
in words of
insecure” or
deems himself
courts,
of
including those
equity and the
import
be construed mean
similar
shall
Texas,
historically
been careful
only if
power to do so
that he shall have
of acceleration in
evaluate the fairness
good
that the
he in
faith believes
particular
facts of a case. As the Texas
impaired.
performance
or
stated in Parker v.
Appeals
Court
Civil
good
establishing lack of
The burden of
174,
Mazur,
(Tex.Civ.App.
175
13 S.W.2d
against whom the
party
is on the
faith
1928),
very
“will
close
equity
courts
scan
power has
exercised.
been
ly
rigorous
of so hard and
the enforcement
a contract.”
applied
has
this Texas
The Fifth Circuit
based on a clause
statute to acceleration
duties,
performing
equitable
their
authorizing
when the creditor
acceleration
required
long
Texas courts have
that accel
Sheppard
insecure.”
Fed
“deemed himself
light
of the facts.
eration
reasonable
Palmer,
F.2d 1369
Union v.
408
eral Credit
Osborne,
(Tex.Civ.
v.
97
Warren
S.W. 851
(5th
1969).
on this basis
Cir.
Acceleration
App.1906);
They
125
would not
A.L.R.
specific language
clearly falls
within
permit enforcement of acceleration clauses
McKay
Farmers and
1.208. See also
v.
§
when the debtor’s default was due
Clayton,
Rep.
24
Bank of
U.C.C.
Stockmens
debtor’s accident or mistake or to the credi
(N.M.App.1978); Ginn v. Citizens &
517
inequitable
tor’s own fraudulent or
conduct.
Bank,
175,
Ga.App.
145
National
Southern
Mazur,
Prosper
supra;
Parker v.
Hiller v.
(1978); Universal v. C.I.T.
243
528
S.E.2d
412,
Tex,
(Tex.Civ.App.
415
437 S.W.2d
Ind.App.
Corp.
Shepler,
v.
164
Credit
permit
they
Nor would
acceleration
Coopera
(1975);
equitable of reasonableness. Section present question difficult more imposes obligation 1-203 U.C.C. applies is whether the statute ed in this case or enforce- good performance faith as well clauses “default” acceleration every within the duty ment of contract clauses. When acceleration “insecurity” 1.208 further defines Code. Section because obligation to accelerate options the creditor chooses applies faith
1377
specific provision
the debtor violated a
apply
of
1.208 does not
to “default-type
§
security agreement
court, however,
because he
clauses.” The
did not base
insecure,
apply?
feels
does
1.208
Here
its decision to allow acceleration on the
§
agreement with
AVEMCO’s
Herriford con-
specific finding
U.C.C. Rather it made the
types
tains both
of clauses. Yet AVEM-
that
the exercise of the due-on-sale clause
CO’s asserted basis for the acceleration
particular
reasonable in the
factual
context;
breach of the
provision
allegations
consent-for-lease
there were no
of fraud
inequitable
or
security agreement
oppressive
and not the “deem
conduct. 289
630-31,
itself
N.C. at
224
at
language.
insecure”
S.W.2d
587.
Fay Marina,
question
(N.Y.
The
6
application
Rep.
U.C.C.
516
1.208 to
§
S.Ct.1969),
this situation has not been
the creditor accelerated because
answered. Sev
of nonpayment
simply
eral
and the court
security agree
courts have confronted
noted:
which,
“Defendant seeks to invoke the
here,
ments
like
effect of
the one
authorized
1-208,
(see
U.C.C.
which is not applicable
§
specific
acceleration both when a
provision
3-503).”
U.C.C.
The Code section cited as
§
is breached and when the creditor deems
support
refusing
apply
for
1.208 does
cases,
§
itself
insecure.
In these
without
not reveal
reasoning
court’s
discussion,
and the
much
applied
the courts have
provide
court does not
explanation.
further
See,
both the
equity principles.
U.C.C. and
Denha,
Finally, in Gorham v.
Mich.App.
g.,
e.
State Bank of Lehi v. Woolsy, 565
(1977),
We think it
our
modify
any
type
that a note with
of
providing
question
nal opinion by leaving
open
that
negotiable. Section
acceleration clause is
decision,
for future
appel-
for even if the
3-109,
paragraph
As
4 of the U.C.C.
U.C.C.
lants are correct in
of
their construction
explains, challenges
3-109
Comment to §
Code
decree must nevertheless be
agreements
acceleration clauses can no
with
prior
affirmed
under our
decisions.
negotiability,
be
on
but “must
longer
based
Code,
Apart from
in
possibility
as indicated
our
of
be based rather
abuse
opinion,
original
equity
holder,
nothing
a
of
to with
will
which has
do
protect
against
inequitable
negotiability
negotia-
a debtor
is not limited
and
maturity
problem
acceleration of the
of the debt.
ble instruments.
is now cov-
That
added)
(emphasis
cial rather against than as a shield Bischoff, In the trial court refused accel- 1.208, security impairment. grow- Section eration the noteholder when the debtor ing incorporating equitable princi- from and was late in one payment and had subse- ples, “good defines faith” in acceleration to quently tendered that amount to the holder. provide protection from such abuse. The court found that using the creditor was
The trial
general good
court
a
faith
the technical default as an excuse for ma-
give
instruction but
plaintiffs’
refused to
turing the
equity
debt. The same
principles
proposed
requiring
instruction
for accelera- prohibited
Vaughan
acceleration in
good
tion the
payment
faith belief that
Service, Inc.,
Plumbing
Crown
& Sewer
security
impaired.
is
requires
The U.C.C.
72, supra.
S.W.2d
There the creditor
more than a
faith belief that a techni-
sought acceleration
payment
because of late
cal breach occurred but the court’s instruc-
in one
having accepted
month after
late
tions erroneously required no more.
payments
previous
for
months.
In affirm-
injunction
the trial court’s
of a foreclo-
applicable
Even if
1.208 is not
to this
§
sure
equity,
sale on the basis of
the court
situation,
factual
equity requires a new tri-
wrote:
agreement provides
al. The
that Texas law
govern rights
agreement.
would
under the
Circumstances which tend to show that a
The trial court
equita-
failed
exercise its
optional right
holder has
exercised
of
ble
precedent.
duties as defined
acceleration,
Texas
purpose
pro-
not for the
of
tecting
preserving
his debt or
the securi-
Texas
recognized
courts have
both the
ty,
purpose
coercing
but for the
of
validity of acceleration clauses and their
pay
maker to
the entire debt or forfeit
potential
for abuse.
In
the Court of
property,
respect
relevant with
Appeals
Civil
discussed the creditor’s
equitable
these
considerations.
upon
accelerate
the debtor’s default:
(citations omitted)
S.W.2d at 76
The
remedy
exercise of the
works a
case,
In the instant
the facts before the
forfeiture
right
pay
peri-
over a
incorporation
trial court demanded the
od of time.
In the instant case of some
equity considerations into the instructions
eight years,
provision
The
for ac-
[sic]
jury.
sufficiently suggest-
to the
The facts
celeration of the time of payment
is a
that,
possibility
Vaughan
ed the
like in
privilege
and
running in favor of the holder
Bischoff, the
and in
creditor accelerated not out of
many
privi-
instances a valuable
a reasonable fear
lege.
impairment
It
optional
with the holder
but
inequitable
whether he will
it
rather
from an
desire to
exercise
or not. The
advantage
take
provides against
accelerated clause
of a technical default.
In-
suffering
hardships
of obvious
by a hold- deed acceleration because of a lease exe-
er of
privi-
years
clearly
a note or lien. Without
cuted two
earlier is
defen-
less
lege a
might
required
bring
subject
holder
sive
suspicion.
and is
to even more
suits,
series
Vaughan
Bischoff,
or wait an
payments
unreasonable
and
conveyance that
Here,
that he would not make a
there was no
late.
creditor were
impair
Ariz.App.
at
security.”
payment
would
suggestion
81,
surance more opinion completely devital- majority A more security. default provisions of Rule positive izes the pay directly doubts about future full raises FRCivP, things that providing among other lease, property ment. a sale of the Unlike assign giving error the party may no to new own transfers title the collateral *13 he give instruction unless the failure to an ers, security agreement to non-signators the jury retires to objects before the thereto unapproved by to the and unknown and verdict, distinctly the states consider its and differences between “due-on- creditor. The grounds objects to which he and the matter sale” "due-on-lease” clauses has been and objection. of by the extensively discussed California Su preme property in the of real Court context the of on transactions and doctrine restraint I. v. Ameri Wellenkamp alienation. Bank of on the majority relies for reversal ca, 943, 148 379, Cal.Rptr. 21 P.2d Cal.3d 582 give appel- to of court failure the district (1978); Savings
970
Tucker v. Lassen
&
4, 9
numbers
requested
lants'
instructions
Association,
629, 116
Loan
12 Cal.3d
Cal.
enough,
appellants
Strangely
and
633,
(1974);
P.2d
v.
Rptr.
526
1169
LaSala
error on the refusal of
do not claim
864,
Savings
American
& Loan
5 Cal.3d
To the
give
to
those instructions.
849,
(1971).
1113
Cal.Rptr.
97
489 P.2d
See
appellants
in the
contrary, the
claim error
Loan
Savings
also
v. American
&
Medovoi
requested
their
give
refusal
the court to
of
244,
Association,
Cal.App.3d
89
152 Cal.
6, requests
instructions numbers 5 and
have
Rptr.
(1979). Many other states
572
nothing
with
which
whatsoever to do
scrutinized enforcement
“due-on-lease”
“acceleration,” upon which
question
mortgage
“due-on-sale” clauses
we
Manifestly,
majority
focuses.
agreements
equity pro
and have held
alleged
should
reverse on
issues
not
hibits acceleration on a technical breach
presented
not
to us for decision.
are
even
finding
impairment.
without a
Appellants present
the issue of error
Loan
Savings
Continental Federal
&
See
requested
to
instructions in the
give
failure
1013,
Fetter,
P.2d
1017 n.
v.
564
Association
following language:
seq.
713
As
(Okl.1977);
4
69 A.L.R.3d
et
refusing
give
“(2)
court err in
Did the
Co. v.
the court in Baltimore Life Insurance
tendered
numbered 5
6
instructions
Harn,
190,
Ariz.App. 78,
193
15
486 P.2d
Brief, P. 1.
App.
by
plaintiffs?”
stated,
(1971)
equitable
“[o]therwise
FRAP, requires
appel-
28(a)(2),
Rule
an
powers
the trial court would be invoked
lant,
specify in
mortga
among
things,
other
impose
on a
penalty
an extreme
presented
issues
he
violated
brief “A statement of the
gor
showing
no
has
stated,
is,
Simply
contentions
for review.”
agreement,
substance
which are not
Plaintiffs take
specified
appellants’
exception
in the
further
brief should not be considered
the re
Court’s instructions with reference to
viewing court. Palacios v. Government of
tender as defined
Texas law rather
Guam,
(CA9 1963);
give requested instruction should be disre majority, now utilized but not ar- garded specified where it ap is not gued by appellants. ap- The failure of pellants’ States, Muyres brief. v. United 89 pellants object to the court’s omission to 783, (CA9 give requested their instructions and the Moreover, even as late as the date of giving of an instruction which modified the filing trial, their motion for a new request number makes it rather obvious appellants made no claim of error on the appellants’ counsel was then satisfied with give failure of the court to instructions instructions, given. Instead, and 14. the appellants raised ob- This is not a case where the court failed jections to the failure give court to counsel an opportunity object. instructions numbered 5 Clearly, and 6. stated, As above the record shows that the majority should confine scope itself to the gave counsel the opportunity to ob- appellants’ contentions and not survey ject, that object, counsel did but that coun- open range wide stray search of a object sel did to the failure of the court maverick on which to ride to a reversal. To give appellants’ requested instructions turn appeal into a search for error no 9 and that matter the failure to promotes more justice the ends of than to give requests 5 and 6. It an instruc- turn donnybrook. a trial into a tion which modified number and evi-
dently counsel at that
time was satisfied
with the modification and with the court’s
II.
overall instructions.
The record before
presents
us
a classic
example
judge
conferring
51, FRCivP,
provisions
the
Under the
of Rule
attorneys and informing them on the in- we have held that
the failure to make a
going
give
structions he was
to
timely objection
and those
distinctly point
and to
out
which he would not.
among
objection
Included
the
the matter to which the
is related
requests for instructions were
pressed
precludes
appellant
those
raising
an
from
that
Calif,
by the majority. The court
point
appeal.
advised counsel
on
Standard Oil Co. of
he
give
Perkins,
would not
requests.
(CA9 1965).
those
No ob- v.
“MR. JOYCE:
exception
Plaintiffs take
give
the Court’s refusal to
the instruc-
“The
adversary pro-
trial of a case is an
damages
tion on the
pursuant
ceeding
to Texas
and we see no reason to relieve
law,
law instead of Montana
on the
requirement
counsel from the
to make
ground that
applies.
Montana law
object
known his desire to
to the court’s
Here,
pressed
appellants
their acceleration
the retirement of
instructions before
ear-
appellee’s
response to the
point only in
therefore,
We,
hold
counsel
jury.
that
The in-
verdict.
ly motion for
directed
manner
must indicate in some
before
any
or in
not mentioned
structions were
make an
jury
that he desires to
retires
that time.
way involved at
he
objection
before
instructions
us,
entirely
it was
On the record before
successfully
that
the court
can
contend
in-
might revise its
possible
the court
provisions
with the
comply
has
failed
satisfy
appellants’
as to
structions so
51.”
of Rule
argues
majority
contentions. The
v.
majority
heavily
relies
on
The
Stewart
requested instruc-
erroneously revised
court
396, 406,
Co.,
U.S.App.D.C.
Motor
Ford
language
by eliminating the
tion number 14
“
130, 140 (DC
1970),
Robin
Cir.
it
good
in
faith
‘[I]f
believe[s]
Heilman,
(CA9
performance
Needless to extent, necessity,
be read as a whole. issues jury
and character of instructions are the trial
left to the sound discretion of McCall, 592 F.2d court. United States v. NATIONAL LABOR RELATIONS BOARD, Petitioner, 1066, (CA9 1979); 1068-69 Wilson v. United States, (CA9 1970). 422 F.2d v. appellants received the full Clearly, BECKER, WISMER AND CONTRACT- requested instruction 14. benefit of their ENGINEERS, and International ING as the court an instruction Inasmuch Brotherhood Electrical Workers appellants and the failed to on acceleration 497, Respondents. Local Union and, object except additionally, thereto BECKER, WISMER AND CONTRACT- assign did not as error the failure to ENGINEERS, Petitioner, ING subject, I request own on the same their v. arguments majority’s decline to discuss the in this area. NATIONAL LABOR RELATIONS BOARD, Respondent. op- has several
Although our circuit had plain doc- portunities to extend the error 77-2151, Nos. 77-2282. appeals, trine to civil we have declined do Appeals, United Court States Insurance so. Monsa v. Central Ninth Circuit. 1968); Hargrave (CA9 52-53 F.2d Sept. Wellman, (CA9 1960). light appellants failed to of the facts that objections proper their at the time at
raise raise the claims of error
trial and failed to duty notify instructed, part, “The Defendant had the 1. The court as follows: HERRIFORD, debtor, it RICHARD principal issue involved in the Plaintiffs “The exercising its to declare the full amount there was a conversion case whether duty notify the Plain- due. It also had the airplane. Defendant of the If the defendant option, of its if it knew that tiffs of the exercise legal right possession take *16 airplane the Plaintiffs. The was owned July 29, 1975, airplane on there not con- Plaintiffs contend the Defendant knew of their Conversely, respossession (sic). version note, ownership prior call of the right legal if it did not have the to do so at deny knowledge. Defendants This is a time, there was a conversion. [R.T., dispute you factual resolve.” Vol. must debtor, “Defendant contends that the RICH- IV, pp. 226-227.] HERRIFORD, airplane ARD leased or sold the neglect appellants light Plaintiffs without its consent as written object except the failure to the above and to provided Security Agreement. Upon instructions, say requested I would their true, event, happening you of this if find it to be fully court’s instructions that as a whole the full the Defendant had the to declare the covered the issues case. paid. amount due to be