Court Opinion

ID: 3401531
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:13:14.825974+00
Date Added: 2024-06-11T13:42:28.830771
License: Public Domain

1. In the absence of an independent agreement by a creditor that the acceptance of an amount less than the indebtedness will be taken, or is taken, in full satisfaction thereof, the mere acceptance of a check for a less sum than the amount of an unliquidated debt, remitted by the debtor with notice that it is in full satisfaction of the debt, will not amount to an accord and satisfaction unless there existed previously to the tender a bona fide dispute by the debtor as to the correctness of the amount of the debt.
2. Under the evidence, the jury was authorized to find that the debtor did not act in good faith in deducting from the amount of an invoice, admitted *Page 871 
by the debtor to be correct, a sum claimed as commission, and in remitting a sum less than the amount of the invoice, accompanied by a letter stating that it was in satisfaction of the account.
        No. 14969. JANUARY 13, 1945. REHEARING DENIED FEBRUARY 9, 1945.
Sylvania Electric Products Inc., hereinafter called the manufacturer, brought suit against Electrical Wholesalers Inc., hereinafter called the wholesaler, on an account for $1805.47. The defendant pleaded an accord and satisfaction. This plea set forth a letter dated July 15, 1942, addressed to the plaintiff and signed by the defendant, which in part said: "Check enclosed for $655.34 in payment of June account as follows:
      Unpaid June invoice ............................. $2709.53 Deduction 2% cash discount ............. $  54.19 Less amount retained as commission on sale of Miralumes for installation in Marietta Aircraft Assembly Plant (at 5 cts. per fixture) .................... $2000.00 Total deductions ................................ $2054.19 -------- Net amount paid ................................. $ 655.34."
By an amendment the defendant sought to recover from the plaintiff $234.53, representing an amount due it for additional credits in excess of debits since the June transactions.
The evidence showed the following facts as material to a consideration of the accord and satisfaction pleaded by the defendant: The wholesaler was, among others, a wholesaler of electrical equipment in Atlanta, Georgia, much of which was purchased from the manufacturer, though it had no exclusive sales rights in the territory which it served in and about Atlanta. Sometimes when bids were invited by others the wholesaler would prepare a bid at prices which would permit the manufacturer to allow the wholesaler certain discounts in case orders were obtained. These bids would be mailed to the manufacturer, who would itself make the bids to the intending purchaser, and when the order was obtained and the material supplied the wholesaler would be allowed the usual discounts. The construction of a bomber plant near Marietta. Georgia, under the sponsorship of the United States Government, required the use of certain lighting fixtures, such fixtures supplied by the manufacturer being known as Miralumes. For reasons satisfactory *Page 872 
to the Government, only manufacturers were to be allowed to make bids. The wholesaler nevertheless sought to induce the manufacturer to allow it a commission in case the manufacturer should be awarded the contract, contending that, inasmuch as the material was to be delivered in a territory which it ordinarily served, it should be protected. The manufacturer informed the wholesaler that no such commission could be allowed unless the Government would consent to its being included in the bid. Subsequently it was awarded a contract for furnishing the necessary Miralumes. This contract did not permit the inclusion of any commission for a wholesaler. Upon the delivery of the material to the bomber plant, the wholesaler renewed its insistence for a commission, but was informed that it could not be allowed under its contract with the Government. The wholesaler, admittedly owing the June account, stated through its president, Fred H. Dendy, to Hugh Saussy, the district sales manager of the manufacturer, on July 14, 1942, that its conviction was that a commission should be allowed, and that upon remitting for the June account the wholesaler would deduct the commission. Saussy then stated that he had had numerous conversations with the management of the manufacturer and knew that it would not be allowed for a number of reasons, the first being that the Government had limited bids to manufacturers, eliminating any commission for a wholesaler. Dendy reiterated his statement that a commission would nevertheless be deducted in the next remittance and the wholesaler would take its chance in court. Saussy informed him that a check in such proposed settlement would not be accepted, and that suit would follow if the account was not paid in full. On the following day, the wholesaler sent a check for its June account of $2709.53 less the deductions hereinbefore set out, the amount of the check being $655.34, accompanied by a letter showing the calculations and stating that, "Check is enclosed for $655.34 in payment of June account as follows," briefly referring to the divergent views as to a commission and regretting that "we could not see the matter from the same angle." This check was retained by the manufacturer and its proceeds used, and subsequently, on November 25, 1942, it brought suit against the wholesaler to recover the balance claimed to be due it on account.
The trial resulted in a verdict and judgment in favor of the *Page 873 
plaintiff for the full amount sued for. The defendant's motion for new trial was overruled, and the Court of Appeals reversed the judgment of the trial court, holding that an accord and satisfaction resulted from the acceptance of the check in the circumstances stated, and that the settlement was binding upon the plaintiff irrespective of the question whether the dispute by the debtor was bona fide. The case is here on certiorari excepting to the judgment of the Court of Appeals.
(After stating the foregoing facts.) The following represents the opinion of the majority of this court, from which I dissent in part, and I do not concur in the judgment of reversal, for reasons shown in my dissenting opinion.
It has been many times ruled, where no question was involved as to an agreement by a creditor, that the acceptance by him of an amount less than the indebtedness, would be, or was actually, agreed to be taken in full satisfaction thereof, that the acceptance by a creditor of a sum less than the amount of an unliquidated debt, remitted by the debtor with notice that it is in full satisfaction of the debt, will not constitute an implied accord and satisfaction unless a dispute as to the correctness of the amount of the debt shall have existed previously to the tender. Copeland v. Montgomery, 8 Ga. App. 633
(70 S.E. 30); Edwards Bottling Works v. Jarnagin, 11 Ga. App. 162,163 (74 S.E. 1004); Staples v. Growers Finance Corporation,44 Ga. App. 451 (2) (161 S.E. 675); Meeks v. Moulton,46 Ga. App. 35 (2) (166 S.E. 445). See Carlton v. W.  A. R.Co., 81 Ga. 531 (3) (7 S.E. 623). It has also been held in numerous decisions that under such circumstances the dispute by the debtor must be bona fide. Dickerson v. Dickerson, 19 Ga. App. 269
(91 S.E. 346); Riley v. London Guaranty c. Co.,27 Ga. App. 686 (1 e) (109 S.E. 676); Armour Fertilizer Works
v. Wynne Mercantile Co., 40 Ga. App. 842 (151 S.E. 671);Fite v. Thweatt, 46 Ga. App. 82 (2) (166 S.E. 682);Baxter v. Bank of Grantville, 48 Ga. App. 458, 461
(172 S.E. 810); Bankers Health c. Ins. Co. v. Middleton, 58 Ga. App. 715,716 (2) (199 S.E. 351); Preston v. Ham, 156 Ga. 223,234 (119 S.E. 658). The ruling by the Court of Appeals in the present case that, in the absence of any agreement by the creditor that an extinguishment *Page 874 
of the entire indebtedness would result, the mere acceptance by the creditor of the check sent by the debtor and the use of the proceeds thereof concluded the creditor as to any balance claimed on the account, regardless of the existence of any dispute as to the amount due and regardless of the good or bad faith of any such pretended claim by the debtor, was error. The general rule recognized for the most part throughout the country as laid down by 1 C. J. S. 502, § 29 (2), is that, "The payment by a debtor, and acceptance by the creditor, of a sum which is conceded by the debtor to be due and payable, or as to which there is no dispute or controversy, furnishes no consideration for the discharge of a disputed claim for an additional and distinct amount or item of liability, for the payment, being of nothing more than the debtor admittedly owes, is neither a detriment to him nor a benefit to the creditor, and so does not constitute or effect an accord and satisfaction thereof, or of the entire account between the parties, in the absence of any new or additional consideration, even though such payment is tendered and accepted or receipted for as in full payment or settlement. The payment operates as a discharge of the items or amount paid only, and the creditor is entitled to maintain an action to recover the balance of his claim." Section 29 (5), p. 505, of this same authority, makes this statement: "Where a claim or demand is unliquidated, or the subject of a dispute or controversy between the debtor and creditor, the settlement of the dispute or uncertainty constitutes, of itself, as has been elsewhere pointed out, sufficient consideration for the accord and satisfaction of the claim and so, while a partial payment, merely as such, furnishes no consideration, such a claim or demand is nevertheless capable of being satisfied by the payment of an amount less than that claimed by the creditor, and an agreement that it shall be so discharged and settled is valid and effectual." As pointed out by C. J. S., this common-law rule has been relaxed by statutory provisions by some of the States to the extent that, where payment is made of less than the undisputed amount due under anagreement that it will be accepted in full, the execution of such an independent agreement becomes effective. 1 C. J. S. 497, § 27. In Georgia, the Code, § 20-1204, provides as follows: "Anagreement by a creditor to receive less than the amount of his debt cannot be pleaded as an accord and satisfaction, unless it be actually executed *Page 875 
by the payment of the money, or the giving of additional security, or the substitution of another debtor, or some other new consideration." Thus there are cases decided by this court, some of which are cited in the dissenting opinion, in which an independent agreement on the part of the debtor that he would, or does, accept a part of an undisputed claim as in full settlement, will, when actually effectuated, become binding. There are other cases, cited in the dissenting opinion, recognizing the validity of a partial payment tendered as in full, even though not in furtherance of any agreement that it would have such an effect, by the creditor, where the amount of the indebtedness is in dispute — the dispute in such case furnishing the consideration. But, so far as the Justices concurring in the majority opinion believe, there is no case rendered by this court where, in the absence of any independent agreement by the creditor that he would, or does, accept a part of an undisputed claim as in full, his acceptance of a part of the debt due him will be adjudged to satisfy the entire indebtedness merely because the debtor alone saw fit to attempt such a settlement of his unpaid indebtedness by the terms of the tender of a part of what he admittedly owes. It is believed that there is now, and for a long time has been, general acceptance, on the part of the bench and bar of this State, of the soundness of the proposition that, in the absence of an independent agreement, the retention by the creditor of a smaller sum offered in settlement of a claim, as to the amount of which there was no bona fide dispute, does not amount to an accord and satisfaction. The practical considerations which form the basis of the wholesome doctrine known as stare decisis, constrain us to reverse the judgment of the Court of Appeals which is under review.
Since, in the absence of an independent agreement by the creditor that he would accept a portion of his undisputed claim as in full, a bona fide dispute as to the amount due is necessary to afford a consideration for the extinguishment of the entire debt by a tender of a lesser sum, it follows that, if under the evidence the jury was authorized to find that the debtor wholesaler's deduction of commission, in remitting for the June account, was not in good faith, the judgment of the Court of Appeals in reversing the judgment of the trial court, based upon the verdict of the jury finding in favor of the plaintiff creditor, was erroneous. We think, from *Page 876 
an examination of the evidence, that the jury was authorized to find that the charge of five cents per fixture as commission against the manufacturer represented no genuine conviction based on anything said or done to reasonably lead the wholesaler to expect that its action would be approved; but that it was merely a petulant effort to force its will upon the manufacturer, despite the repeated declarations to it that under the terms imposed by the government no commission could be allowed any wholesaler. It is admitted that the wholesaler had no exclusive sales rights in the territory in which the material was delivered. It is clear that it rendered no services, and, by reason of the fact that it was not a manufacturer, was barred from making any bid directly or indirectly. The fact that on some occasions the manufacturer made bids to others in such a way as to permit the allowance of commissions or discounts to the wholesaler furnishes no precedent for expecting a commission under totally different circumstances. Good faith requires something more than what the jury was authorized to find was a mere arbitrary and capricious charge against the creditor, where every fact and circumstance impeached the idea that the debtor could reasonably expect a commission on a sale from which a commission was barred by terms imposed upon the seller. Since the verdict of the jury can be sustained under the law upon the theory that they did not regard the contentions of the debtor as bona fide made, and the amount of the account was otherwise conceded to be correct, the judgment of the Court of Appeals must be reversed.
Judgment reversed. All the Justices concur, except Duckworthand Atkinson, JJ., who dissent.