Case Name: The Seeds Grain & Hay Company v. Conger
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1910-12-20
Citations: 83 Ohio St. 169
Docket Number: No. 12213
Parties: The Seeds Grain & Hay Company v. Conger.
Judges: Summers, C. J., Crew, Spear, Sitauck and Price, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 83
Pages: 169–178

Head Matter:
The Seeds Grain & Hay Company v. Conger.
Dispute over unliquidated demand — Tender by debtor of check in full payment — Must be accepted or rejected as such — Acceptance of check and rejection of terms — Silence of debtor. not waiver — Accord and satisfaction.
1. Where there is a bona tide dispute over an unliquidated demand and the debtor tenders an amount less than the amount in dispute, upon, the express condition that it shall be in full of the disputed claim, the creditor has but one alternative; he must accept the amount tendered upon the terms of the condition, unless the condition be waived, or he must reject it entirely, or if he has received the amount by check in a letter, he must return it.
2. Where in such case the creditor retains a check which was sent upon the condition that it shall be in full satisfaction of the debt claimed to be due, and receives the money thereon and notifies the debtor that the amount is placed to his credit, but that he does not intend that the same shall close up the matter in dispute, to which the debtor makes no reply, such silence by the debtor does not amount to a withdrawal of the condition which accompanied the tender, nor to a waiver of it. The transaction is an accord and satisfaction.
(No. 12213
Decided December 20, 1910.)
■ Error to the Circuit Court of Champaign county.
The .plaintiff in error commenced this action in the court of common pleas of Champaign county to .recover $700 and interest upon a contract for sale and delivery of oats by the defendant. The defendant in error contracted with the plaintiff in error to sell and deliver to it ten thousand bushels of oats, during the month of August, 1907, at thirty-seven cents per bushel. On the 17th day of August, defendant called plaintiff over the telephone and notified it that he could not comply with the contract and desired to settle. There is conflict in the testimony as to the substance of this conversation, the defendant insisting that there was a settlement on the basis of forty cents a bushel and the plaintiff denying this. Upon the same day, August 17th, the defendant sent the plaintiff a check for $300, endorsing thereon the following words: “Settlement in full August account,” and
accompanied it with a letter in which he stated that it was according to their telephone talk of that day and was, “settlement in full for the 10,000 bushels oats sold you May 29, 1907, for August shipment.” Defendant on the same evening answered as follows: “Note telephone conversation with you this morning with reference to your sale of 10,000 bushels No. 3 white oats to us subject to Eastern weights and inspection, and your wish to settle that trade at 40 cents track your place, our bid of last night. This we can’t consent to do now, for the reason we find ourselves short a few cars of oats, and have nothing with which we can replace this at the present time, but would be. glad to buy the. .oats for you just as quickly as we get enough to replace the amount you sold us. We will not charge you anything for making the purchase, only the price we are obliged to pay for the oats. Jt seems to us, however, that you can get the-matter closed up more advantageously if you hustle around and buy the oats at Mechanicsburg and ship them on the contract. If you want us to buy them in, while we are short ourselves, we will give you the first ten cars of oats we can buy subject to the same conditions on which your sale was made.” Plaintiff received the check, drew the money on it, and kept it, but, at the same time, wrote a letter to the defendant, of the date of August 19th, acknowledging the receipt of the check for $300 and stating, “which amount we place to your credit. In our conversation of Saturday we did not mean to close up that transaction as we wrote you on Saturday evening. We have bought about 6,000 or 7,000 bushels of oats to-day at forty-one to forty-two cents and are bidding forty-two cents to-night, and just, as soon as we get a sufficient amount to cover your 10,000 bushels, will advise you about the cost of them, and I think you will want to adjust the matter as we wrote you on Saturday evening.” It does not appear on the record that there was any open account existing between the plaintiff and defendant, other than the $300 itfcm. The defendant made no answer to the plaintiff’s letter of August 19th.
At the conclusion of the plaintiff’s testimony a motion was made by defendant’s counsel to withdraw the case from the jury and direct a verdict for the defendant, which the court then declined to do, but at the conclusion of all the evidence the motion was renewed and the court sustained it, upon the ground that under the facts above stated the plaintiff was not entitled to recover and that the transaction shown by the check and letters became an accord and satisfaction upon the plaintiff accepting the money. Upon petition in error the circuit court affirmed the judgment of the court of common pleas and this proceeding in error is prosecuted to reverse the judgment of both the lower courts.
Mr. Lemuel D. Lilly, for plaintiff in error.
There was error in this action for two reasons: First, because the accord was a question of fact for the jury and the facts were so disputed that the court should not have passed on them, but should have submitted the question to the jury. Second, under the circumstances of this case, the payment was not accepted by Seeds as a satisfaction and upon the receipt of the letter so stating, it was Conger’s duty to insist' upon the condition if he expected to hold Seeds to it.
On the first proposition stated above, it is the rule that where the defendant admits the original contract, but pleads that a substitute contract was entered into, the burden is on him to show the substitute contract.
In order to establish a defense of this character, there must be present in the transaction upon which it rests all the elements of a complete agreement— a lawful subject-matter, a sufficient consideration and the aggregatio menttum or mutual assent of the parties. Fuller v. Kemp, 138 N. Y., 231.
If a debtor tenders to his creditor a sum of money in full of all legal claims, which the creditor may have against him on account, and the creditor receives- the money protesting that it is not sufficient, but saying that he will take it and pass it to the debtor’s credit upon his account, and the debtor does not express any dissent to this course, the acceptance of the tender is no bar to the recovery of such sum as may be found due him exceeding the amount of the tender. Gassett v. Andover, 21 Vt., 342; Robinson v. Railroad Co., 84 Mich., 658; Pottlitzer v. Wesson, 35 N. E. Rep., 1030.
The Indiana court cited and approved Curran v. Rummell, 118 Mass., 482, and Fuller v. Kemp, 33 N. E. Rep., 1034; Cooley v. Kinney, 119 Mich., 377.
Conger knew on the receipt of Seeds’ letter of August 17, that the check for $300 would not be accepted as full payment. He was advised again on the twentieth when he received Seeds’ letter acknowledging receipt of the check, that it was accepted only as part payment, and Conger never insisted on the condition. This brings the case at bar substantially within the principle of the case of Laroe v. Dairy Co., 73 N. E. Rep., 61, and Brake Co. v. Prosser, 157 N. Y., 289, 51 N. E. Rep., 986.
Mr. Thomas B. Ware and Mr. Louis D. Johnson, for defendant in error.
In the case at bar, the suit is upon an unliquidated demand — damages for. the violation of the contract of sale. The doctrine of accord and satisfaction goes back to the leading case of Cumber v. Wane, 1 Strange, 426. Also found in Smith Leading Cases. This rule never did hold where the demand was for an unliquidated amount and is held by the undecided weight of authority not to apply when any part of the claim is unliquidated and that the accepting of a check for the amount admitted to be due, coupled with the; condition that it would be received in full payment operated as a release of the unliquidated portion. Railway Co. v. Clerk, 178 U. S., 365; De Arnaud v. United States, 151 U. S., 483; Hull v. Johnson, 46 Atl. Rep., 182; Hussey v. Crass, 53 S. W. Rep., 986.
In another case upon a contract for services rendered in Japan, the employer contended that the payment should be made in yens, and not American money, and told defendant that he should take a check representing the payment in yens, or nothing. Plaintiff later accepted a check for the amount in yens, and signed a receipt stating that the amount was in full payment of the contract, with salary, interest and allowance. Held, that the receipt constituted an accord and satisfaction. Komp v. Raymond, 59 N. Y. Supp., 909. Authority to the same effect is not wanting in Ohio. Iron Works v. Hazen, 24 C. C., 681.

Opinion:
Davis, J.
In the application of the law of accord and satisfaction, a distinction between liquidated and unliquidated demands is universally recognized. Where there is a bona fide dispute over an unliquidated demand and the debtor tenders an amount less than the amount in dispute, upon an express condition that if accepted it shall be in full of the disputed claim, the creditor must accept it upon the condition unless the condition be waived, otherwise he must refuse it; or if he has received the amount tendered he must return it. 1 Enc. L. & P., 626-628. He cannot accept the tender in such case and recovér the balance which he claims, because- he is presumed to have accepted it upon the express condition on which it was offered.
Generally, however, the law is applied differently in cases of liquidated and undisputed claims, the reason being, as sometimes stated, that the payor pays no more than he is clearly bound in law to pay and there is therefore no consideration for a release of the remainder of the obligation. But even in such a case, it has been held that when the parties have agreed in settlement of a bona fide dispute between them, that the lesser sum shall be received in satisfaction of the greater, it will be regarded as an accord and satisfaction. City of San Juan v. St. John's Gas Co., 195 U. S., 510. Especially if the agreement has. been fully executed. Dreyfus & Co. v. Roberts, 75 Ark., 354.
Keeping in mind the foregoing principles, it is easy to distinguish from the case in hand all of the cases cited by counsel for plaintiff in error. Indeed, some of them are distinctly against him, notably Fuller v. Kemp, 138 N. Y., 231, and Eames Vacuum Brake Co. v. Prosser, 157 N. Y., 289. In the latter case it was said that, "Ordinarily the retention of a check inclosed in a letter which refers to the amount as the balance due on accounts between the parties, will not be held to be an accord and satisfaction so as to bar an action for the balance due. It is only where a dispute has arisen between the parties as to the amount due, and a check is tendered on one side in full satisfaction of the matter in controversy, that the other party will be deemed to have acquiesced in the amount offered, by an acceptance and retention of the check," citing in support of the last sentence, Fuller v. Kemp, supra, and Nassoiy v. Tomlinson, 148 N. Y., 326.
Another case, relied upon for the plaintiff in error, is Gassett v. Andover, 21 Vt., 342. There the debtor tendered a sum of money in full for all legal claims which the creditor had against him upon account. The creditor received the money, protesting that it was not sufficient, but said that he would take it and pass it to the debtor's credit on the account. The debtor expressed no dissent. It was held that the acceptance of the tender did not bar the creditor's right to recover such- sum as might be found due him on the account. It is entirely clear that the supreme court of Vermont did not regard this judgment as inconsistent with its former judgment in another case, reported in the same volume, McDaniels v. Lapham et al., 21 Vt., 222, in which it was held that "The doctrine, that the receiving a part of a debt due, under an agreement that the same shall be in full satisfaction, is no bar to an action to recover the balance, does not apply to any cases, except when the plaintiff's claim is for a fixed and liquidated amount, or where the sum could be ascertained by mere arithmetical calculation. But when a party makes an offer of a certain sum to settle a claim, when the sum in controversy is open find unliquidated, and attaches to his offer the condition, that the same, if taken at all, must be received in full, or in satisfaction, of the claim in dispute, and the other party receives the money, he takes it subject to the condition attached to it, and it will operate as an accord and satisfaction, even though the party, at the time of receiving- the money, declare that he will not receive it in that manner, but only in part satisfaction of his debt so far as it will extend." In this case there is a dispute which'grew out of the inability of the defendant to fulfil his contract to deliver 10,000 bushels of oats during the month of August at thirty-seven cents a bushel. The defendant sought to limit his liability by securing a settlement at the highest market price on August 17th; and he insists that he succeeded in doing so and paid the amount agreed upon, although the plaintiff attempted to recede from the settlement and sought to hold him on the original contract. The plaintiff denies all of this, except the payment of the money. Here was a real controversy, which yet exists, over the amount of the defendant's liability. It was a dispute over a demand which was yet contingent and the amount of which was not yet determined. We have at present no concern as to the merits of this contention. It is enough for our present purpose that it plainly appears that there was such a difference between these parties; and that, the defendant sent to the plaintiff his .check, indorsed on 'the face of it, "Settlement in full August account," and accompanied it with a letter saying, "Enclosed' find my check for $300, which, according to our talk over the 'phone today is settlement in full for the 10,000 bushels oats sold you May 29, 1907, for August shipment." There was no othpr claim or account between them and this .plainly expressed condition of payment was never withdrawn; for mere silence by the debtor under the circumstances of this case does not amount to a withdrawal of the condition, nor a' waiver of it. The plaintiff, had only one alternative, to accept the check as payment in full or to return it. He kept it and drew the money on it, knowing the condition imposed, and thereby completed the transaction as an accord and satisfaction.
The judgment of the court below is
Affirmed.
Summers, C. J., Crew, Spear, Sitauck and Price, JJ., concur.