## Facts

- Gene and Sandra Shumway borrowed money from Horizon Credit Corporation to buy a sailboat and signed a promissory note payable in monthly installments over fifteen years.
- The note allocated risk of loss to the borrowers, providing that damage to the collateral would not relieve them of payment obligations.
- The sailboat was damaged in an accident; the borrowers treated it as a total loss and stopped making payments while disputing coverage with their insurer.
- After several months of nonpayment, Horizon accelerated the note and sued for the entire unpaid balance plus interest.
- The note’s acceleration clause stated that upon default Horizon could require immediate payment of the entire unpaid balance “without prior notice or demand.”
- The trial court granted summary judgment for Horizon, and the court of appeals affirmed on the ground that the note language waived presentment and both forms of acceleration notice.
- The borrowers contended, among other defenses, that Horizon failed to provide required notice connected to acceleration.

## Issues

1. Whether the note’s “without prior notice or demand” language waived the makers’ right to presentment (demand for payment).
2. Whether that language clearly and specifically waived the makers’ right to notice of intent to accelerate.
3. Whether that language waived the makers’ right to notice of acceleration.

## Decision

- The Supreme Court of Texas reversed the court of appeals and remanded.
- The court held the makers waived presentment and notice of acceleration.
- The court held the makers did not waive notice of intent to accelerate because the waiver language was not clear and specific as to that distinct requirement.
- Because the notice of intent to accelerate was not waived and the summary-judgment record did not conclusively establish compliance, summary judgment for Horizon was improper.

## Legal Principles

- In Texas, absent an effective waiver, acceleration generally requires two separate communications: (1) notice of intent to accelerate and (2) notice of acceleration.
- Waivers of debtor protections related to acceleration are strictly construed and must be clear, specific, and unequivocal.
- Contract language allowing the holder to declare the entire balance due “without prior notice or demand” can waive presentment and may waive notice of acceleration.
- General waiver wording does not waive notice of intent to accelerate unless it expressly and unmistakably addresses that advance-warning requirement.

## Conclusion

The Texas Supreme Court held that the borrowers’ note waived presentment and notice of acceleration but did not waive notice of intent to accelerate; the lender therefore was not entitled to summary judgment absent proof that it provided the required notice of intent, and the case was remanded for further proceedings.


Shumway v. Horizon Credit Corp., 801 S.W.2d 890 (Tex. 1991)