Hamburger v. Economy Department Store

BURCH, P. J. On the 8th of February, 1923,, defendant, a merchant of Sioux Falls, ordered 669 pairs of shoes of plaintiff, a wholesale merchant of Boston. The shoes were ordered and billed at specified prices per pair. On receipt of the shipment, defendant returned 72 pairs and received credit at invoiced price on his account for the shoes returned. A little more than a month later, after repeated demands for payment, defendant returned 258 pairs more, claiming that they did not conform- to sample, and notified plaintiff of the return shipment stating, “remittance for balance of account will follow in a few days.” On receipt of this letter, plaintiff wired defendant that the shoes returned would not be accepted. On April 20th, defendant, after receipt of the telegram, sent to plaintiff a check for $5.52.60, with a remittance sheet reading as follows: “Sioux Falls, S. D., Date April 20, 1923. “M. Plamiburger Shoe Co., Boston, Mass. “Enclosed please find check for amount of invoice as follows: “Remarks: 'Closes Account to date. “Yours truly, “Economy 'Department Store.” The 258 pairs came back to defendant at Sioux Falls, who- also refused them-, and the record does not disclose what became of them. Plaintiff indorsed and cashed the check and demanded payment of the balance, being the invoice price of the 258 pairs that defendant had attempted to return, but which plaintiff had refused. Defendant refused to pay, and plaintiff brought this action. At’the close of all the evidence, both parties moved for a directed verdict and .both motions were denied. The case was submitted to the jury, which found á verdict for plaintiff for $537.30, with interest. Thereafter defendant moved for judgment notwithstanding the [67] verdict on the ground that plaintiff, by indorsing' and cashing the check, had' agreed to accept the amount in full satisfaction of a claim against defendant. This motion was granted, and plaintiff appeals from a judgment dismissing the action and an order denying a new trial. The sole question is, Was there an accord and satisfaction under the facts above stated? To constitute an accord and satisfaction, there must have been an agreement between appellant and respondent to extinguish the obligation in a given manner, and a compliance with such an agreement by the defendant. The agreement is the accord, and the execution of the new agreement is the satisfaction. Thus the new executed contract takes the place of and satisfies the old executory contract. At common law, accord and satisfaction arose most often in settlement of disputed claims, and, when it was attempted to be applied' in settlement of undisputed claims, the question of consideration for the new contract was a material and often a close question. If it appeared that the debt was a fixed and undisputed amount, an agreement by .the creditor to take a lesser sunn in satisfaction was held to be without consideration unless consideration otherwise appeared in the terms of the contract, such as payment before due'or satisfaction in some manner other than in money. But we have a statute which makes a discussion of consideration unnecessary. Section 787, R. C. 1919 provides: “Part performance of an obligation, either before or after a breach thereof, when expressly accepted by the creditor -in writing in satisfaction, or rendered in pursuance of an agreement in writing for that purpose, though without any new consideration, extinguishes the obligation.” In Qualseth v. Thompson, 44 S. D. 190, 183 N. W. 116, this court held that an unqualified indorsement of a check on the face of which was indorsed “balance for sawing lumber,” with knowledge that defendant claimed an offset against the total amount of the bill, was in law an acceptance in writing of the condition, and the obligation was extinguished. In the instant case the check did not contain a statement on its face or elsewhere that it was tendered in full of account, or other words of similar import, but it was accompanied! by a statement of account saying, “closes account to date.” In Adams v. Morehead, 45 S. D. 216, 186 N. W. 830, this court held that, where a remittance was accompanied by a [68] letter stating that it was sent “to close my account,” where plaintiff in writing acknowledged receipt and asked defendant to send him a note for the balance -and in the meantime he cashed the draft, that amounted to an acknowledgment in writing. But in Siegele v. Des Moines Mutual Hail Insurance Association, 28 S. D. 142, 132 N. W. 697, this court held that there was no acknowledgment in writing where a check was sent in satisfaction of a claim reciting on its face, “This check accepted as payment in full for all claims to date,” and the creditor cashed it, but wrote under his name: “Accepted in part payment of loss by payee.” In discussing the case, Judge Whiting, who wrote the opinion, says: “This check was not 'accepted in writing’ in satisfaction of the disputed claim; as a matter of fact,-the assured by his act refused to so accept same.” In Hagen v. Townsend & White, 27 S. D. 457, 131 N. W. 512, this court held that an agreement to. receive a less amount than the sum. claimed to be due cannot be the basis for an accord and satisfaction, citing Eggland v. South, 22 S. D. 467, 118 N. W. 719. In Hagen v. Townsend & White, supra, it was also said that the agreement of accord must be founded upon a valuable consideration, but in view of our present statute (section 787) and the case of Ad'ams v. Morehead, supra, in which this principle was expressly dis-affirmed and language to that effect in Hagen v. Townsend & White, supra, was 'disapproved, that can no longer be considered the law of this state. However, though a new consideration is not necessary, it is essential to a valid accord and satisfaction that there be a new executed contract to take the place of and satisfy the old executory contract. To determine whether there is a new contract, we must resort to well-known principles governing contracts. In the instant case the original contract involving the purchase of the shoes was plainly a divisible contract. Both parties so treated it. Respondent claimed and exercised the right to return a part of the consignment and to retain a part, settling therefor on the basis of the prices shown by the invoice. Seventy-two pairs were returned and accepted by appellant on that basis. An attempt was made to return 258 pairs more on the same basis. A check was sent to cover the exact amount due for the shoes retained, on the basis of the invoice. True the check accompanied a statement containing the words, “closes account to date,” but that statement showed credit [69] for goods returned. No one claims the check was to pay for any part of the returned goods, or was intended to pay for anything but the goods retained. The satisfaction tendered was the check and 258 pairs of shoes. Appellant expressly by telegram refused to accept the shoes. There was no accord, unless cashing the check .amounted to a withdrawal of the refusal to accept the returned goods, and to an acceptance of the entire tender. The statement with the check divided the items so there could be no doubt as to what the check purported to- pay. It certainly did not purport to pay the entire account, and the words “closes account to date” add nothing to the purport of the check. There is no evidence of an agreement to receive the returned shoes and the check in- settlement of the account. On the contrary, there was an express refusal to do so. Accepting a part and refusing a part of the offer is not an accord. What the situation might be if the offer was an indivisible offer not capable of an acceptance in part and refusal in part is not decided. In this case respondent divided his offer, specifying in his statement what portion of the account each offer was to settle. That is very different than offering a check in full payment of the account. If both offers had been accepted, the account would have been closed to date. To an itemized statement as here, the words “closes account to date” might properly be added in anticipation of the acceptance of both, without intending to prevent the acceptance of one without the other. If acceptance of one was conditioned upon the acceptance of the other, such condition- should-have been plainly stated to avoid any misunderstanding. This court cannot hold appellant to the acceptance of a condition that was not expressed. The trial court erred in rendering judgment notwithstanding the verdict, and such judgment is reversed, with directions to ren- . der judgment on the verdict. SHERWOOD, J., concurs. POLLEY and BROWN, JJ., dissent.