Present: Carrico, C.J., Compton, Stephenson, Lacy, Hassell, and
Keenan, JJ., and Whiting, Senior Justice

WILLIAM F. SMITH, et al.
                                               OPINION BY
v.   Record No 950649                SENIOR JUSTICE HENRY H. WHITING
                                             January 12, 1996
AVCO MORTGAGE AND ACCEPTANCE, INC.

          FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
                   William F. Rutherford, Judge


     In this appeal, we deal with issues arising out of a

creditor's refusal of the borrowers' tender of an uncertified

check in their attempted exercise of a right contained in the

following contractual provision:
          The Borrowers shall have the right to pay off the
     loan, in full, prior to the maturity date, so long as
     they are current on their monthly payment obligations,
     by payment of the sum of SIXTY THOUSAND AND NO/100
     DOLLARS ($60,000.00) on or before March 15, 1993.


     Since this issue was decided on the creditor's demurrers, we

will consider as true the borrowers' well-pleaded material facts

and all reasonable inferences fairly and justly drawn from the

facts alleged.   Commercial Constr. Specialties, Inc. v. ACM
Constr. Management Corp., 242 Va. 102, 103, 405 S.E.2d 852, 853

(1991).

     In 1988, William F. Smith and Janis K. Smith executed an

installment payment note, secured by a deed of trust on the

Smiths' real properties in Norfolk.    Later, the Smiths entered

into a loan modification agreement containing the foregoing

provision with Avco Mortgage and Acceptance, Inc. (Avco), then

the holder of the Smiths' note.

     The Smiths decided to prepay the note on March 15, 1993,

after their bank had closed for the day.    William T. Webb, Avco's
agent, advised Scott Morgan, the Smiths' banker, that the Smiths

would have to pay $60,000 that day to obtain the benefit of this

provision.    Therefore, the Smiths tendered their uncertified

check in that amount to Webb at 6:00 p.m. that day.    Although

Morgan had assured Webb that the check would be honored

immediately upon its presentation when the bank opened the

following morning, Webb refused to accept the Smiths' tender

because it was not made with "certified funds or bank draft"

tendered by March 15.
     Thereafter, the Smiths filed two actions against Avco.       The

first action was an application under the provisions of Code

§ 55-66.5 for the release of the Smiths' deed of trust and their

reasonable attorney's fees incurred in that proceeding. 1   The

second was a motion for judgment for damages arising from Avco's

refusal to accept their check.    In similar demurrers filed to the

Smiths' application and motion for judgment, Avco asserted that:

          [T]he Plaintiffs are not entitled to the relief
     requested or any damages as on the face of the [Smiths'
     pleadings] it is apparent that the Plaintiffs did not

     1
      Code § 55-66.5(C) provides:

                  Upon a finding by the court that the holder of a
             mortgage or deed of trust which has been fully paid or
             discharged has unjustifiably and without good cause
             failed or refused to release such mortgage or deed of
             trust, the court, in its discretion, may order that
             costs and reasonable attorneys fees be paid to the
             petitioning party. This subsection shall not preclude
             a separate suit by the petitioning party for actual
             damages sustained by reason of such failure or refusal
             to release the encumbrance.




                                  -2-
     comply with the Modification of Deed of Trust by paying
     $60,000 as required.


Following argument and the receipt of memoranda from counsel for

the parties, the court sustained the demurrers and entered final

judgments for Avco.    The Smiths appeal. 2

     The Smiths contend that since the prepayment provision does

not require payment by certified funds or bank draft, they had

the right to make the prepayment by their uncertified check.

Avco responds that since the Smiths' pleadings admit that Avco

could not present their check for payment until after March 15,

the Smiths could not make timely payment according to the

foregoing provision.    We agree with the Smiths.
     In the absence of an agreement specifying the medium of

payment, as in this case, uncertified checks are commonly used in

the ordinary course of business to pay money obligations.     See

Staff Builders of Philadelphia, Inc. v. Koschitzki, 989 F.2d 692,

694 (3rd Cir. 1993); 6A Ronald A. Anderson, Uniform Commercial

Code § 3-802.5 (3rd ed. 1993 rev.).     Thus, we conclude that the

Smiths made a timely tender of their payment obligation under the

loan modification agreement.    We further conclude that Avco's

agent could not demand payment to be made by certified funds or

     2
      Although no orders have been entered consolidating these

actions either in the trial court or on appeal, the litigants and

the trial court have treated them as consolidated for purposes of

appeal, and we will do so as well.




                                 -3-
bank draft when the loan modification agreement did not so

specify. 3

     Hence, we hold that the circuit court erred in sustaining

Avco's demurrers.   Accordingly, we will reverse the judgment of

the circuit court and remand these actions for further

proceedings consistent with this opinion.

                                              Reversed and remanded.




     3
      Avco did not demand payment in legal tender.    See 31 U.S.C.

§ 5103 (defining legal tender).    Hence, we do not consider the

implications of such a demand.     See Vick v. Howard, 136 Va. 101,

116 S.E. 465 (1923); Restatement (Second) of Contracts § 239

(1979).



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