Early-Foster Co. v. W. F. Klump Co. , 229 S.W. 1015 ( 1921 )

The writer regrets the fact that he cannot agree with his Associates in the conclusion reached by them, to the effect that the uncontradicted testimony establishes an accord and satisfaction, with that degree of certainty which justified the trial court in directing a verdict in favor of the defendant, and the reasons for his dissent will now be stated:

"An `accord' is an agreement whereby one of the parties undertakes to give or perform, and the other to accept in satisfaction of a claim, liquidated or in dispute, and arising either from contract or from tort, something other than or different from what he is or considers himself entitled to; and `satisfaction' is the execution of such agreement." 1 Cyc. 307.

"To constitute a valid accord and satisfaction it is also essential that what is given or agreed to be performed should be offered as a satisfaction and extinction of the original demand; that the debtor shall intend it as a satisfaction of such obligation, and it is equally essential that the creditor should have accepted it with the intention that it should operate as a satisfaction. Both the giving and acceptance in satisfaction are essential elements, and if they be lacking there can be no accord and satisfaction." 1 Cyc. 312.

Another modern and valuable authority gives this definition:

"An accord and satisfaction is a method of discharging a contract, or settling a cause of action arising either from a contract or a tort, by substituting for such contract or cause of action an agreement for the satisfaction thereof and an execution of such substituted agreement." 1 Ruling Case Law, p. 177.

And the same authority reads:

"An accord and satisfaction is the result of an agreement between the parties, and, like all other agreements, must be consummated by a meeting of the minds of the parties; if the creditor is to be held to abate his claim against the debtor, it must be shown that he understood, or should have understood, that he was doing so when he received the consideration claimed therefor." 1 Ruling Case Law, p. 183.

For further and more elaborate discussion of the general subject of accord and satisfaction, the reader is referred to the authorities cited and to the valuable notes to Harrison v. Henderson, 100 Am. St. Rep. 390, and Fuller v. Kemp, 20 L.R.A. 785.

However, as no material difference exists between the other members of this court and the writer, upon the main question of law discussed in the majority opinion, and as we differ only as to the application of that rule to this case, reference to other cases more or less analogous is deemed appropriate. Before making such reference, however, it is not improper to say that an examination of the cases cited in the majority opinion will show that most of them contain express stipulation, stating that the payment was in full, or using language of similar import, while no such stipulation or condition is embodied in any of the communications which passed between the parties in the instant case. For instance, in Hunt v. Ogden, 58 Tex. Civ. App. 443, 125 S.W. 386, cited in the majority opinion, there was an indorsement on the check, "in full for all dues and demands to date;" and in most of the other cases language of similar import was used.

As sustaining my views, the following cases are referred to:

In Amr. Forwarding Mercantile Co. v. Lindsay Chair Co.,129 Ill. App. 548, the court said:

"The contention that the verdict and judgment are excessive is based upon a claim that appellee is not entitled to interest, and that there was an accord and satisfaction, in that appellee accepted a check sent by appellant in full of a disputed account as to which there was a difference between the parties, relating to the percentage of discount to which appellant claimed to be entitled. The difference is said to be $90.04. As to the alleged accord and satisfaction there is evidence tending to show that the amount of discount to be allowed upon a portion of the account was in dispute, and that, finally, December 19, 1902, appellant wrote, inclosing a check, with the statement that: `In conclusion we wish to say that the check for $816.43 which we inclose is the correct balance due you and we will not deviate from it. We ask you to change your records accordingly in order that we may have a clean sheet for the future.' It is argued that this language indicates that the check referred to was sent in full of appellee's accounts, and that its acceptance by appellee was a satisfaction of that account. We cannot concur in this view. The language of the letter in effect states that the check is for the correct balance, and that appellant will not pay any more. From this appellee might conclude that if it wanted to collect the balance it would have to do so by enforcing the claim at law or otherwise. But there is nothing in the letter which can be reasonably construed as a notification to appellee that the check was sent upon condition that if accepted and used it would be in satisfaction of the claim. The check does not purport to have been sent in full of the demands and the letter does not so indicate. In Canton Coal Co. v. Parlin, 215 Ill. 244-246, cited by appellant, the check there in controversy was sent `in full of account.' No such statement nor its equivalent accompanied the check in the case at bar, nor is there anything from which such intention can be implied. It is one thing to inform a creditor when sending a check that the debtor will not pay any more, and a very different thing to advise him that the check is sent upon condition that, if he accepts it, he will do so in full settlement of the account. See De Kalb Implt. Works v. White,59 Ill. App. 171173; Lang v. Lane, 83 Ill. App. 543-548."

In De Kalb Implt. Works v. White, 59 Ill. App. 171, where a person sent a draft to another for a less sum than was claimed to be owing, suggesting that the same be accepted in settlement, for, if returned, he should not trouble himself to send again, it was held that the draft might be accepted for the undisputed portion of the claim, and a suit maintained for the balance.

In Preston v. Grant, 34 Vt. 201, where the party making a tender upon a promissory note said that he tendered the sum offered as the balance due upon the note, it was held that there was nothing in this language that could fairly convey the idea to the party to whom the tender was made that it was offered upon the condition that if he took it he did so in satisfaction of the note, and that his acceptance of the sum so offered did not constitute an accord and satisfaction as a matter of law.

In Hodges v. Truax, 19 Ind. App. 651, 49 N.E. 1079, where the payer sent the payee of a promissory note a check for part of the sum due, with the words in the body of the check, "in full of all notes and obligations to date," and accompanied the same by a letter, stating that he made such tender for several reasons, the acceptance of the check, acknowledging the receipt thereof on account, did not operate as a discharge of the entire debt.

In Boston Rubber Co. v. Peerless Wringer Co., 58 Vt. 551, 5 A. 408, the court said:

"Did the transaction between the parties amount to an accord and satisfaction? What amounts to one is well stated in Preston v. Grant,34 Vt. 201, viz.: `To constitute an accord and satisfaction it is necessary that the money should be offered in satisfaction of the claim, and the offer accompanied with such acts and declarations as amount to a condition that if the money is accepted it is accepted in satisfaction, and such that the party to whom it is offered is bound to understand therefrom, that, if he takes it, he takes it subject to such condition.' See Towslee v. Healey, 39 Vt. 522, and cases cited in Rob. Dig. 2. Do the facts reported by the referee bring this case within the rule as above stated? On the first day of April, 1881, the defendant sent to the plaintiff a statement of the account; on the 26th of the same month a similar statement was sent, with a note for the apparent balance, and a letter in explanation of some of the items, the letter ending as follows: `Trusting you will find this correct and satisfactory, we remain.' The plaintiff kept the note and wrote the defendants, giving its view of the items in controversy. There was nothing in the correspondence referred to which indicated in the slightest degree that the note was offered in satisfaction of the account. It simply covered an admitted balance, and was in the usual mode of payment. There was no act or declaration accompanying the giving of the note that amounted to a condition that, if it was accepted, it was to be in satisfaction of the claim; nothing to give the plaintiff to understand that, if he took it, he took it subject to such a condition. The case is lacking all the substantial elements of an accord and satisfaction."

In Pottlitzer v. Wesson, 8 Ind. App. 472, 35 N.E. 1030, a debtor sent his check in payment of an account. It was held that this did not necessarily imply that if the creditors accepted the check they must have understood that their accepting it was in full of their claim; hence there was no accord and satisfaction thereby shown.

In Perkins v. Headley, 49 Mo. App. 556, it was held:

"Where a controversy as to the amount of the indebtedness exists between a creditor and his debtor, and the debtor tenders to the creditor the amount which he claims is due on condition that the acceptance of it should discharge the entire demand, the acceptance will constitute an accord and satisfaction as a matter of law, since one who accepts a conditional tender assents to the condition."

But it was held in this case:

"That the mere fact that the plaintiff received from the defendants less than the amount of his claim in silence, and with knowledge that the defendants claimed to be indebted to him only to the extent of the payment made, did not conclusively and as matter of law establish an accord and satisfaction."

In Beckman v. Birchard, 48 Neb. 805, 67 N.W. 784, where a payment of money was made as a balance due, and the claim made that this was an accord and satisfaction, it was held:

"A creditor who accepts money tendered by the debtor unconditionally does not by that act estop himself from maintaining an action to recover any further sum that may be due."

In Kruger v. Geer, 26 Misc.Rep. 772, 56 N.Y.S. 1015, an attorney wrote to his client:

"Enclosed you will find a statement of account, my receipted bill for professional services since our last settlement, and a check for $166.86, being the balance due you."

No other indication being found that this was intended as full settlement, the court held:

"That the fact that plaintiff retained the check and the receipted statement where the check contained no condition that it should be received in full payment is insufficient to show an accord and satisfaction."

It was ruled in Brigham v. Dana, 29 Vt. 1:

"A sum of money paid and received will not operate as a full settlement, although the payer so intended it, and would not have paid it if he had not understood that such would be its effect, but in reference to which he made no such express condition, if the payee did not so understand it, and would not have received it upon such an understanding."

In Hillestad v. Lee, 91 Minn. 335, 97 N.W. 1055, it was held that acceptance by a creditor of a check for part of his disputed claim will not operate as an accord and satisfaction, unless the check recites, in effect, that it is in full payment of the claim, or it be so declared expressly or by implication when the check is tendered.

Ginn v. W. C. Clark Coal Co., 143 Mich. 84, 106 N.W. 867, 107 N.W. 904, sustains the same doctrine.

It is conceded in the majority opinion that an accord and satisfaction is based upon a contract, to the effect that, by the debtor paying a certain sum and the creditor accepting the same, the latter thereby agrees to and does release all of his original demand against the former. It should be borne in mind that the fact that the payment made was intended and accepted as a full satisfaction of the original claim is just as important and essential as the fact that such payment was made. It may be conceded that such agreement to release the original demand, upon payment of a given sum, may be proved by circumstantial evidence, and consist of what is often termed an "implied contract"; and therefore it has been often held that when the debtor tenders a given sum, accompanied by a distinct statement that it is offered in full satisfaction of the creditor's demand, and he accepts the sum, such acceptance is evidence of an implied contract upon his part to release his entire demand, although he may not have expressly agreed so to do. But no case has been cited, and my research has failed to find any, in which it has been held that the mere payment by the debtor of the amount which he concedes to be due when he denies owing any more, and the acceptance of the same by the creditor, without anything else done or said to indicate that it was offered in full satisfaction of the original demand, necessarily leads to the conclusion that such payment was intended as a satisfaction of the entire claim.

In Ry. v. Gordon, 70 Tex. 86, 7 S.W. 698, the Supreme Court of this state said:

"That an accord may be based on an implied contract we do not doubt, but before a right will be deemed to have been so surrendered, the implication must be one necessarily arising.

In that case the court was considering the question of the sufficiency of the testimony to show an accord and satisfaction, while in this case this court must not only consider that question, but also the further question of the right of the trial court to withdraw the case from the jury, and direct a verdict for the defendant. To justify such action on the part of the trial court, there must be more than sufficient evidence to support a finding of the essential facts necessary to constitute an accord and satisfaction, but the proof must be of such probative force as necessarily establishes such facts.

Does the mere fact that the defendant, contending that the plaintiff had drawn drafts on him for more than he owed, and demanding that the amount of the drafts be reduced, and, in effect, offering to pay the same when so reduced, necessarily imply that, if the plaintiff consented to such change in the drafts and accepted the amount the defendant was willing to pay, it would thereby agree to release the defendant as to its entire claim against him. To my mind, it seems just as reasonable to suppose that the defendant, though willing to pay the amount which he conceded to be due, was unwilling to pay the additional amount for which he did not concede himself liable, knowing that if he paid the same he would probably be without redress; and that he was willing to leave the disputed items for future adjustment. So much as to what was done and said by the defendant, which, in my judgment, does not necessarily show that the payments made by the defendant were intended by him as a satisfaction of the plaintiff's entire claim. But other facts tend strongly to show that such was not the intention of the defendant when he made the payment, nor of the plaintiff when it accepted the same.

On December 15, 1916, three days before the defendant made any payment, the plaintiff sent him a telegram, which, among other things, contained this language:

"If we have to make deduction, it will be under protest, and we will arbitrate,"

On December 18th, the plaintiff sent the defendant the following telegram:

"Answering any allowance we make is under protest. We instructing bank accordingly.

And later the same day, in two other messages, that protest was repeated.

While the writer concedes that there is no magic in the word "protest," nor in the thousands of other words, nevertheless, he believes that its use four different times in messages sent by the plaintiff to the defendant was sufficient to indicate that the plaintiff intended thereby to reserve, and not surrender, its legal rights concerning the disputed items, which it agreed might be deducted from the drafts it had drawn upon the defendant. As showing that the plaintiff did not understand that, by accepting the payment made, it thereby surrendered all further claims against the defendant, we refer to the fact that immediately after, and on the same day the concessions were made and the drafts were paid, it instituted this suit to recover the balance of its original claim, which had not been paid.

In Texas Life Ins. Co. v. Minnie Ola Legg, 229 S.W. 587, decided by this court in 1918, in considering the action of the trial court, in directing a verdict, we said:

"We sustain the second assignment of error, which complains of the action of the trial court in directing a verdict for the appellees. While we do not hold that the testimony was insufficient to warrant a finding in favor of the appellees, upon either or both of the issues of fact above referred to, we do hold that it was not of such a conclusive nature as to justify the court in directing a verdict for them, The issues referred to were issues of fact, and, conceding that there was no conflict in the testimony, still, whether or not there was a waiver by appellant of its right to claim a forfeiture of the policy, and whether or not the necessary facts existed to constitute an estoppel, were conclusions to be reached and inferences to be drawn from the existence of the facts proved, and such conclusions and inferences were not so clear and manifest as to justify the court in directing a verdict for either side."

So, in the present case, as in the case cited, there was no direct or express proof of an agreement that the amounts paid by the defendant should be accepted by the plaintiff as a satisfaction of its entire demand, and such agreement, if found to exist at all, would have to be inferred from the existence of the facts in evidence; and, as, in effect, held in the case just cited, the general rule is that when a particular fact is to be inferred from the proof of certain other facts, either party has a right to have a jury decide whether or not such inference should be made.

In reference to the hypothetical case given in the majority opinion, it is deemed proper to call attention to the difference between that and the instant case. In that case the plaintiff's cause of action would be based upon a written obligation, signed by the defendant, and when, in such case, the plaintiff accepts less than the amount claimed by him to be due, and marks the note paid and delivers it to the payee, such conduct on his part tends strongly, and perhaps necessarily, to the conclusion that he understood and accepted the payment in full satisfaction of his original demand. In the case at bar, while there was a written contract, the breach of which constituted the plaintiff's cause of action, it was not shown that the plaintiff marked the same paid or canceled and delivered it to the defendant. On the contrary, the plaintiff merely drew drafts upon the defendant, in favor of certain banks in Waco, and these were sent by such banks to other banks in New Orleans, for collection. The drafts directed the defendant to pay to designated banks specified sums of money, and charge the same to the plaintiff's account, and were stamped paid by the collecting banks. They were not written obligations signed by the defendant, and therefore their surrender to him was no evidence of the fact that the plaintiff intended to surrender its entire cause of action. Also they directed the defendant to charge the amount paid to the account of the plaintiff, thereby indicating that the drafts were not intended as a full settlement between the parties.

And the same may be said about the bills of lading which accompanied the drafts; they were not signed by the defendant, and imposed no obligation upon him, and he was entitled to them when he paid the drafts. Therefore the delivery to the defendant of the drafts and bills of lading attached constitutes no analogy to delivery and cancellation of a promissory note. This shows that, if it be conceded that an instructed verdict would be justified in the hypothetical case embraced in the majority opinion, that case would not be authority for the decision made in this case.

A valid contract for an accord and satisfaction, like any other contract, must be based upon a sufficient consideration; and, inasmuch as the defendant paid to the plaintiff only the amount which he conceded to be due, and as there was no other consideration but such payment, to my mind it is difficult to see where there was any consideration for an agreement by the plaintiff to release the balance of his claim, if such agreement was made. It is difficult to see how the payment of a debt, which the debtor concedes to be due, can be made to operate as a consideration for another and different contract. The authorities seem to be in conflict upon that subject, and, as the question is not presented in the briefs nor considered in the majority opinion, it will not be discussed by the writer.

The writer notes that the majority opinion, in effect, holds that the evidence in this case is so conclusive that no reasonable ground exists for a difference as to the conclusion to be drawn therefrom. I am disposed to assert the proposition that there is no testimony sufficient to show an agreement to accept the payments made in satisfaction of the plaintiff's entire demand; and, if my Associates did not differ with me upon that subject, I would feel strongly inclined to hold that the testimony falls so far short of proving such contract that that issue should not be submitted to a jury. But, as the members of this court differ so widely as to the effect of the testimony, I am willing to hold that the issue referred to should have been submitted to the jury.

There are some other questions in the case, which have not been considered in consultation, and upon which the writer expresses no opinion.