J.R. Hale Contracting Company v. United New Mexico Bank at Albuquerque

Over an 11-year period, United New Mexico Bank at Albuquerque (United) (defendant) extended numerous lines of credit to J.R. Hale Contracting Company, Inc. (Hale) (plaintiff). Although Hale was often late in making payments, United declined to take any adverse action other than occasionally contacting Hale to request the overdue payments. In November 1982, United extended a $400,000 loan to Hale. The loan note required one interest payment to be made by March 1, 1983, and provided that, upon any past due payments, United was entitled to exercise its right to accelerate payment of the entire balance without notice to Hale. The following year, Hale met with United several times to discuss the possibility of borrowing additional funds. Although Hale failed to make the interest payment, United did not remind Hale about the payment during the meetings. Hale was not notified of United’s intention to exercise the right to accelerate payment until March 24, when United gave Hale a letter demanding immediate payment of the entire balance. The notice provided that United had chosen to accelerate because Hale had failed to make the interest payment and because United had concerns about Hale’s overall ability to make payments on the note. Hale filed suit against United, claiming wrongful acceleration. The trial court granted a directed verdict in United’s favor based on the explicit language of the note. Hale appealed, arguing that United’s conduct invalidated the terms of the note.