## Facts

- The McClanahans executed a $13,500 promissory note payable in $300 monthly installments, secured by a chattel mortgage on the Streamline Tavern.
- The note allowed acceleration, at the holder’s option, upon default in any installment.
- The mortgage also permitted acceleration if the mortgagee deemed itself insecure.
- The June 1951 installment was paid on time; the July 1951 installment was late but accepted by the noteholders in August 1951.
- In August 1951, the McClanahans sold the tavern to the Siegels, who assumed the note and mortgage.
- A third party, Kaczor, prepared two versions of the assumption agreement: one stated the August installment was due August 21, 1951; another stated the next payment was due September 21, 1951.
- Kaczor was not the noteholders’ agent and lacked authority to alter the assumption agreement on their behalf.
- Relying on the version they received, the Siegels took possession in mid-August and paid on September 17, 1951 what they understood to be the installment then due.
- The September 21, 1951 installment was not paid on that date.
- While that installment remained unpaid, the noteholders gave notice on October 5, 1951 that they elected to accelerate the entire debt based on default and alleged insecurity, and they sued to foreclose the chattel mortgage.
- The trial court denied foreclosure and entered judgment for the defendants.

## Issues

1. Whether the noteholders could accelerate the entire indebtedness and foreclose the chattel mortgage based on a single short delinquency by an assuming purchaser acting under a good-faith mistake about the due date.
2. Whether the mortgage’s “deems itself insecure” clause permitted acceleration based on the noteholders’ asserted insecurity absent facts reasonably supporting impairment of the security.
3. Whether equitable limits on forfeiture barred acceleration and foreclosure under the circumstances.

## Decision

- The Washington Supreme Court affirmed judgment for the defendants and denied foreclosure.
- The court held the noteholders were not entitled to accelerate maturity based on the isolated, non-willful delinquency connected to a good-faith misunderstanding.
- The court also held the insecurity clause did not justify acceleration where the asserted insecurity was not supported by reasonable, objective conditions showing impairment of the security.
- Equity warranted relief from forfeiture because strict enforcement would be harsh and disproportionate to the default, particularly given the prior acceptance of a late installment.

## Legal Principles

- Acceleration clauses, though generally enforceable by their terms, are subject to equitable restraint when enforcement would work a forfeiture disproportionate to a minor or technical default.
- A court may deny acceleration where the delinquency is isolated, brief, non-prejudicial, and caused by a reasonable, good-faith mistake rather than willful nonperformance.
- An “insecurity” clause requiring that the mortgagee “deems itself insecure” is not purely subjective; it must be exercised honestly and in good faith and must be reasonably supported by facts indicating genuine impairment of the mortgagee’s security.
- Prior acceptance of late payments may support equitable refusal to enforce a strict acceleration election based on a subsequent similar delinquency.

## Conclusion

The court refused to permit acceleration and foreclosure where the default was a single, short delinquency arising from a good-faith misunderstanding and where the claimed insecurity lacked reasonable factual support, applying equity and a good-faith standard to limit forfeiture-based enforcement of acceleration and insecurity clauses.


Jacobson v. McClanahan, 264 P.2d 253 (Wash. 1953)