Case Name: Glen PILLOW and Terry DICUS, d/b/a PILLOW AND DICUS FARM v. THERMOGAS COMPANY OF WALNUT RIDGE
Court: Arkansas Court of Appeals
Jurisdiction: Arkansas
Decision Date: 1982-12-01
Citations: 6 Ark. App. 402
Docket Number: CA 82-111
Parties: Glen PILLOW and Terry DICUS, d/b/a PILLOW AND DICUS FARM v. THERMOGAS COMPANY OF WALNUT RIDGE
Judges: Cooper, J., dissents.
Reporter: Arkansas Appellate Reports
Volume: 6
Pages: 402–410

Head Matter:
Glen PILLOW and Terry DICUS, d/b/a PILLOW AND DICUS FARM v. THERMOGAS COMPANY OF WALNUT RIDGE
CA 82-111
644 S.W.2d 292
Court of Appeals of Arkansas
Opinion delivered December 1, 1982
Henry ¿r Morgan, by: John R. Henry, for appellants.
No brief for appellee.

Opinion:
Donald L. Corbin, Judge.
Appellants, Glen Pillow and Terry Dicus, requested appellee, Thermogas Company of Walnut Ridge, to apply 350 pounds of liquid fertilizer per acre to appellants' farmlands at a set per acre application cost. Appellee billed appellants for $7,631.55 representing a 309-acre application. Appellants then figured the application on 213 acres for a total of $4,872.33. Controversy arose over what was the correct amount of the debt. Appellants mailed a check to appellee for $4,872.33 with a notation "acc in full" on the face of the check. Appellee scratched through this notation and wrote on the check "check not accepted in full payment of account. H. Dicus." The trial court awarded appellee judgment for the difference between the full amount claimed by appellee and the amount paid by check by appellants. We reverse.
The issue on appeal is whether an accord and satisfaction has been reached. In this one-brief case, appellants cite two pre-code cases. In American Insurance Union v. Wilson, 172 Ark. 841, 291 S.W. 417 (1927), the Supreme Court, at page 844, stated:
The law is well stated in this state that where a debtor sends a check to his creditor to apply upon a disputed claim the reception and collection of the check by the creditor renders it an accord and satisfaction of the debt.
Further, at page 845, the Court stated:
The term "liquidated" when used in connection with the subject of accord and satisfaction has reference to a claim which a debtor does not dispute.
Here, the record clearly reflects that there was no liquidated claim. Appellee's principal agent, Howard Dicus, testified that at the time he received appellants' check a controversy existed and that he cashed the check after marking through the notation "acc in full" and wrote "check not accepted in full payment of account. H. Dicus."
Appellant also cites Root Refining Co. v. Brooks, 192 Ark. 1, 90 S.W.2d 221 (1936), which stated the following rule from Massachusetts Mutual Life Ins. Co. v. Peoples Loan & Investment Co., 191 Ark. 982, 88 S.W.2d 831 at page 5:
When a claim is disputed or unliquidated, and the tender of a check or draft in settlement thereof is of such character as to give the creditor notice that it must be accepted in full satisfaction of the claim or not at all, the retention and use thereof by the creditor constitutes an accord and satisfaction. (Citing cases).
It was there also said that it was not necessary that the dispute or controversy should be well founded, but that it was necessary that it should exist in good faith.
There, the payee-creditor received a check which contained this indorsement: "This check is given in payment of final payment on account of purchase of lease covering NE1/4 of the NW1/4, section 18, township 17 south, range 17 west, Union County, Arkansas." Before depositing the check for collection, the payee-creditor made the following notation on its back: "Payment on account but not final payment." The Court stated that the payee had the option of accepting the check as tendered or of returning it. He had made his election and was bound by it.
The same holds true here. Appellee's unilateral alteration is of no legal consequence. He had the option of accepting the check as tendered or of returning it.
The Uniform Commercial Code, Ark. Stat. Ann. § 85-1-207, provides:
A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest" or the like are sufficient.
Arkansas has not yet interpreted Ark. Stat. Ann. § 85-1-207 as to its effect on the common law rule of accord and satisfaction. We hold that § 85-1-207 has not altered our common law rule of accord and satisfaction. If we were to decide that a creditor can reserve his rights on a "payment in full" check, it would seriously circumvent what has been universally accepted in the business community as a convenient means for the resolution of disagreements. Thus, we hold that the acceptance by a creditor of a check offered by the debtor in full payment of a disputed claim is an accord and satisfaction of the claim. A unilateral action by the creditor in protest or an attempted reservation of rights by the alteration of a check offered as payment in full is of no legal consequence. See Chancellor, Inc. v. Hamilton Appliance Co., 175 N.J. Super. 345, 418 A.2d 1326 (1980).
Reversed.
Cooper, J., dissents.