Opinion ID: 846741
Heading Depth: 1
Heading Rank: 5

Heading: ucc preemption in cases involving negotiable instruments

Text: In 1964, the Michigan Legislature enacted the Uniform Commercial Code. In 1993, the Legislature added to Article 3 of the UCC a provision governing accord and satisfaction. Article 3 is known as the Uniform Commercial Code-Negotiable Instruments. MCL 440.3101. It is compendious and by its terms is intended to apply to all negotiable instruments with limited exceptions not relevant here. [7] MCL 440.3311 of Article 3 provides: (1) If a person against whom a claim is asserted proves that ( i ) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, ( ii ) the amount of the claim was unliquidated or subject to a bona fide dispute, and ( iii ) the claimant obtained payment of the instrument, the following subsections apply. (2) Unless subsection (3) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. (3) Subject to subsection (4), a claim is not discharged under subsection (2) if either of the following applies: (a) The claimant, if an organization, proves that ( i ) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and ( ii ) the instrument or accompanying communication was not received by that designated person, office, or place. (b) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This subdivision does not apply if the claimant is an organization that sent a statement complying with subdivision (a)( i ). (4) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim. Whether a statutory scheme such as MCL 440.3311 preempts the common law is a question of legislative intent. Millross v. Plum Hollow Golf Club, 429 Mich. 178, 183, 413 N.W.2d 17 (1987). In general, where comprehensive legislation prescribes in detail a course of conduct to pursue and the parties and things affected, and designates specific limitations and exceptions, the Legislature will be found to have intended that the statute supersede and replace the common law dealing with the subject matter. [ Id., citing 2A Sands, Sutherland Statutory Construction (4th ed.), § 50.05, pp. 440-441.] The Legislature has the authority to abrogate the common law. Rusinek v. Schultz, Snyder & Steele Lumber Co., 411 Mich. 502, 507-508, 309 N.W.2d 163 (1981). When it does so, it should speak in no uncertain terms. Marquis v. Hartford Accident & Indemnity ( After Remand ), 444 Mich. 638, 652 n. 17, 513 N.W.2d 799 (1994), quoting Bandfield v. Bandfield, 117 Mich. 80, 82, 75 N.W. 287 (1898). As already noted, Article 3 of the UCC is comprehensive. It is intended to apply to nearly every situation involving negotiable instruments. See MCL 440.3102. The language contained in MCL 440.3311 completely covers the details of accord and satisfactions. MCL 440.3311(3) and (4) contain exceptions or conditions. Their enumeration eliminates the possibility of their being other exceptions under the legal maxim expressio unius est exclusio alterius. [8] The maxim is a rule of construction that is a product of logic and common sense. Feld v. Robert & Charles Beauty Salon, 435 Mich. 352, 362, 459 N.W.2d 279 (1990), quoting 2A Sands, Sutherland Statutory Construction (4th ed.), § 47.24, p. 203. This Court long ago stated that no maxim is more uniformly used to properly construe statutes. Taylor v. Michigan Public Utilities Comm., 217 Mich. 400, 403, 186 N.W. 485 (1922). Therefore, the language of the statute shows that the Legislature covered the entire area of accord and satisfactions involving negotiable instruments. It clearly intended that the statute would abrogate the common law on this subject. [9] Our conclusion is buoyed by the UCC comment to MCL 440.3311. It notes that conflict existed previously over whether the common law was modified by the predecessor of MCL 440.3311, former section 1-207. By updating Article 3, it informs us, the Legislature intended to alleviate these conflicts and update the law of accord and satisfaction. Specifically, the comment provides: As part of the revision of Article 3, Section 1-207 has been amended to add subsection (2) stating that Section 1-207 does not apply to an accord and satisfaction. Because of that amendment and revised Article 3, Section 3-311 governs full satisfaction checks. Section 3-311 follows the common law rule with some minor variations to reflect modern business conditions. [MCLA 440.3311, comment 3.] These comments support a finding of preemption. They demonstrate the Legislature's intent to modify and update the common law. Therefore, we hold that MCL 440.3311, not the common law, applies to an accord and satisfaction involving a negotiable instrument such as a check. And we apply this statute to the case at hand.