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

Facts

Petitioner has been a customer of Respondent for over eleven years. Petitioner had entered into numerous revolving notes with Respondent over the years. Petitioner frequently was late making payments but Respondent never took issue with this. In fact, Respondent automatically renewed the notes even when payments were not up to date. In November of 1982, Respondent executed a note for $400,000. Prior to the due date for the only interest payment on March 1, Petitioner approached the bank to borrow additional funds. During the negotiations the due date for the first interest payment passed. Respondent became concerned about the loan. Respondent requested and received a list of customers from Petitioner for the undisclosed purpose of using it to collect directly the company’s accounts. Respondent called a meeting on March 24 and presented Petitioner with a letter stating that all amounts due on the note were payable immediately. Petitioner produced a blank check and offered to pay the delinquent amount but Respondent refused. Respondent collected the balance of the note with interest two weeks after exercising its right to set off the company’s accounts at the bank and after receiving payments from the company’s customers on their outstanding accounts.