Moe v. John Deere Co. - 516 N.W.2d 332 (S.D. 1994)

Rule:

Modification of a written contract may be effected either through subsequent conduct or oral agreements. Whether a modification has occurred is a question of fact.

Facts:

Ted Moe bought a farm tractor from defendant Day County Equipment. He purchased a John Deere D8850 for a cash price. Plaintiff tractor financed the purchase amount by agreeing to make five equal yearly installments. Plaintiff became delinquent in his payments. Defendant John Deere did not follow up on the delinquent payment until a representative from them contacted plaintiff. Defendant’s representative and plaintiff agreed that plaintiff would pay the amount plus the interest. But the parties failed to specify the due date for the payment. Defendant, the original holder of the contract later assigned the contract to another entity, defendant Day County Implement Company, and the tractor was repossessed and sold. Plaintiff sued defendants for wrongful possession, fraudulent repossession, commercially unreasonable sale and for failure to account for the surplus. Defendants moved for partial summary judgment on all the issues. The trial court entered judgment granting defendant’s motion in the plaintiff's action for wrongful repossession, fraudulent repossession, commercially unreasonable sale, and failure to account for the surplus.

Issue:

Did the plaintiff breach the security agreement?

Answer:

No.

Conclusion:

The court reversed the judgment and remanded for a new trial on the issue of whether the plaintiff was in default. The court held that the defendant original holder of the contract was not entitled to summary judgment on plaintiff’s claims. The court held that plaintiff breached the security agreement and the promissory note when he failed to timely make payment. However, the oral statements and conduct of the parties appeared to modify the written agreement. The court then held that the repeated acceptance of late payments by a creditor who had the contractual right to repossess the property imposed a duty on the creditor to notify the debtor that strict compliance with the contract terms would be required before the creditor could lawfully repossess the collateral.