Court Opinion

ID: 9646984
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:19:27.751495+00
Date Added: 2024-06-11T14:57:35.174578
License: Public Domain

GUDGEL, Judge,
dissenting:
Respectfully, I dissent. In the first place, this is not a case to which the Uniform Commercial Code applies. This matter involves a dispute over the amount due as payment under the terms of a lease between the parties. The record shows without question that the parties entered into a short-term lease for the rental of certain equipment. In contrast to situations involving either sales or installment sales contracts disguised as leases, a true short-term lease such as this is clearly not governed by Article 2 or Article 9 of the Uniform Commercial Code. See Ford Motor Credit Co. v. Webb-Elkhorn Coal Corp., Ky.App., 775 S.W.2d 945 (1989); Hertz Commercial Leasing Corp. v. Joseph, Ky.App., 641 S.W.2d 753 (1982).
Moreover, contrary to the view set out in the majority opinion, I am not persuaded that this case falls within the scope of Article 3 of the code merely because a check was utilized to tender payment for the underlying debt. In reaching its conclusion the majority relies upon Horn Waterproofing Corp. v. Bushwick Iron & Steel Co., Inc., 66 N.Y.2d 321, 497 N.Y.S.2d 310, 488 N.E.2d 56 (1985). However, I am of the opinion that a better-reasoned view is that set out in Jahn v. Burns, 593 P.2d 828 (Wyo.1979). There, the Wyoming Supreme Court held that the fact “that a negotiable instrument was used in a transaction does not make the entire transaction a commercial one.” Id. at 831. Further, the court concluded that the provisions of Article 3 pertain only to the “interpretation, transferability, negotiability, rights of holders, and other aspects of the instrument itself. If the other portions of the transaction are not ‘commercial,’ the use of commercial paper does not cause them to fall within the provisions of the Code.” Id. at 831. See also Sistine v. Tollard, 95 Wis.2d 678, 291 N.W.2d 636 (1980); R. Anderson, Uniform Commercial Code § 3-101:8 (1971); Annot., 37 A.L.R.4th 358 (1985).
Here, there is no dispute as to either the negotiability or the validity of the check used to tender payment for the underlying debt. To hold, as the majority has done, that the entire transaction nevertheless falls within the scope of Article 3 merely because a check rather than cash was utilized to tender payment for the debt creates, in my opinion, a legal distinction which is inequitable, illogical, and ill-advised.
Further, even if it is assumed that this case falls within the scope of the code, I believe that we should follow the rule to which the majority of jurisdictions in this country adhere. Those courts have refused to hold that the common-law doctrine of accord and satisfaction has been abrogated by § 1-207 of the code in conditional check situations such as the one before us in this appeal. See, e.g., Grosse and Goggin, The 1-207 Dilemma Revisited, 16 N.Ky.L.Rev. 425 (1989), and cases cited therein.
My conclusion in this vein is based upon several considerations, including those which are aptly summarized in Professors Grosse and Goggin’s article, supra. First, as KRS 355.1-207 specifically refers to the performance and continuation of contracts, but not to the subject of payment, the statute on its face does not apply to the issue before us involving the common law doctrine of accord and satisfaction in a conditional check situation. Further, applying § 1-207 to transactions such as the one at hand has the effect of improperly permitting one party to unilaterally determine the other party’s rights. More importantly, a review of the official comment to § 1-207 clearly reveals that the drafters of the code had no intention of altering the common law doctrine of accord and satisfaction. Indeed, the conclusion that the common law doctrine was intended by the drafters of the code to remain undisturbed is bolstered by the fact that KRS 355.1-103 *175states that those principles of common law and equity which are not displaced by particular provisions of the code shall continue to apply subsequent to the code’s enactment. See also Restatement (Second) of Contracts § 281, comment d (1981). Finally, it should also be noted that a proposed section of the code, § 3-803(3), and the related commentary would have codified the common law doctrine of accord and satisfaction. However, that section and the commentary, which ultimately were deleted from the code in order to avoid confusion and the possibility of abuse, did not cross-reference in any way to § 1-207. See also, e.g., Hearst Corp. v. Lauerer, Markin & Gibbs, Inc., 37 Ohio App.3d 87, 524 N.E.2d 193 (1987); Cass Construction Co., Inc. v. Brennan, 222 Neb. 69, 382 N.W.2d 313 (1986).
I am also of the opinion that the majority’s reliance upon Horn, supra, in concluding that the common law doctrine of accord and satisfaction has been superseded by the passage of KRS 355.1-207, is misplaced. Indeed, as the majority opinion acknowledges, § 1-102 of the code is to be “liberally construed and applied to promote its underlying purposes and policies.” However, the court in Horn specifically relied in large part on the New York legislature’s own comment to § 1-207 which, unlike the official commentary to the uniform code, clearly permits § 1-207 to be construed so as to alter the doctrine of accord and satisfaction in relation to a conditional check situation. As the Kentucky legislature adopted no such modification to the uniform code’s official commentary, the majority’s reliance upon Horn as authority in the instant action is unjustified.
For these reasons, I would affirm the trial court’s summary judgment.