Title: Coffeyville State Bank v. Lembeck

State: kansas

Issuer: Kansas Supreme Court

Document:

227 Kan. 857 (1980)
610 P.2d 616
COFFEYVILLE STATE BANK, Appellant,
v.
JOSEPH W. LEMBECK and CARLENE C. LEMBECK, Appellees.
No. 51,013

Supreme Court of Kansas.
Opinion filed May 10, 1980.
Thomas A. DeVore, of Hall, Levy, Lively & Viets, of Coffeyville, argued the cause and was on the brief for the appellant.
Aubrey Neale, of Neale & Neale, of Coffeyville, argued the cause and Glen L. Tongier, of Coffeyville, was with him on the brief for the appellees.
The opinion of the court was delivered by
HERD, J.:
This is an appeal by Coffeyville State Bank from a summary judgment granted to Joseph W. Lembeck and Carlene C. Lembeck, husband and wife.
The facts are undisputed. On August 30, 1971, Joseph W. Lembeck gave Coffeyville State Bank a promissory note in the amount of $60,718.17 due in 90 days, with interest at 8 1/2% per annum until maturity and 10% per annum from the date of maturity until paid. The note was secured by personal property. Carlene C. Lembeck did not sign the note. The note was not paid according to its terms and on November 9, 1971, the bank commenced an action against the Lembecks in the district court of Neosho County for judgment on the note.
On May 4, 1972, the parties entered into the following agreement:
They made one variation from the terms of the agreement. A promissory note in the amount of $8900, instead of $8000, was executed by the Lembecks on April 24, 1972, in favor of the bank, payable without interest at the rate of $200 per month beginning June 10, 1972. Pursuant to the settlement agreement the Lembecks delivered to the bank their personal property and a deed to the 80 acres of land in Nowata County, Oklahoma, on April 24, *859 1972. Thereafter, the action on the note in Neosho County was dismissed without prejudice.
The defendants made payments on the settlement note until December, 1972, and thereafter were in default until June 24, 1975, when the settlement agreement was amended. The amendment reduced the monthly payment to $100 and stated the balance owed was $5787. The Lembecks failed to pay according to this amended settlement agreement and, on December 9, 1975, the bank filed an action in the district court of Montgomery County for judgment on the settlement note. Judgment was rendered on February 4, 1976, in the amount of $5687 in favor of the bank. The bank acknowledged payment of the judgment in full on October 25, 1978.
In the course of obtaining satisfaction of its judgment against the Lembecks, the bank learned that Joseph Lembeck's father had died in Nowata County, Oklahoma, on March 29, 1978, and that Lembeck would inherit one-half of an estate valued at approximately $250,000. The bank filed suit on the original $60,718.17 note on June 23, 1978, alleging the settlement agreement was an accord upon which judgment had been rendered. The Lembecks answered, alleging the petition failed to state a claim against the defendants upon which relief could be granted and affirmatively pled res judicata, collateral estoppel and the statute of limitations. The bank filed a motion for summary judgment, argued to the court November 9, 1978. At that time the defendants orally moved the court to render summary judgment for them. That motion was granted March 29, 1979. The bank appeals from the trial court's action.
The bank contends the May 4, 1972, settlement agreement is an executory accord and not a novation. The two concepts were distinguished in Elliott v. Whitney, 215 Kan. 256, 259, 260, 524 P.2d 699 (1974), where the court stated:
As stated in Elliott v. Whitney, one must determine whether the parties intended to extinguish the old contract by substitution of the new one. In Elliott, the second contract was clearly intended to extinguish any liability between the parties arising out of the prior agreement. In this case, the parties agreed as follows with regard to the prior obligation:
Clearly, the extinguishment of the prior obligation is conditioned upon the payment of the second note. We find the settlement agreement to be an executory accord. That finding, however, does not resolve the issue. Since the settlement agreement is an executory accord, the Lembecks' breach of that agreement gave rise to a cause of action on the original $67,000 note. The original claim was enforceable when the breach occurred. The bank had a choice of remedies at that time. The bank could have sued on the original note, giving the Lembecks credit for the value of the security surrendered, payments made and the land deeded, or the bank could have brought an action on the accord. The bank elected the latter and has obtained judgment and satisfaction thereof. This clearly presents an election of remedies which *861 estops the bank from suing on the original note. Restatement of Contracts § 417 (1932).
The following quotation from 6 Corbin on Contracts § 1276 (1962) is also pertinent to this case:
We have carefully reviewed all other points raised in the briefs, but in light of the foregoing, a discussion of them is unnecessary to a resolution of this controversy.
The judgment of the trial court is affirmed.