Court Opinion

ID: 9532904
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:26:05.618351+00
Date Added: 2024-06-11T13:28:52.021448
License: Public Domain

LEHMAN, Justice.
Appellant Aztec Gas and Oil Corporation (Aztec) appeals entry of judgment in favor of Appellee Roemer Oil Company (Roemer) for $14,912.00.
We affirm.

ISSUES

Although the parties cite six issues in their briefs, we find the following two issues determinative:
I. Under what circumstances does a check constitute legal tender?
II. Can a drawer of a check unilaterally modify the time period a check holder has for presentment?

FACTS

This dispute arose over payments due under a settlement agreement entered into to resolve litigation which was the subject of Roemer Oil Co. v. Aztec Gas & Oil Corp., 886 P.2d 259 (Wyo.1994). The settlement agreement required Aztec to pay Roemer $15,261.48 in six payments, and included a confession of judgment signed by Aztec to secure payment of the settlement amount. The default provision of the settlement agreement provided that in the event Aztec failed to make timely payments Roemer could enter the confession of judgement if, after written notice of default from Roemer, Aztec failed to cure default within ten days. The confession of judgment also purportedly waived all of Aztec’s defenses to the entry of judgment.
Aztec paid each installment by cheek. Aztec made the first payment on time, but all subsequent payments were late. Approximately two weeks after Roemer received the fifth payment, Aztec contacted Roemer and twice requested that Roemer promptly deposit the fifth payment cheek because Aztec intended to close the account on which the cheek was drawn. Two weeks later when Roemer presented the check, approximately thirty days after its receipt, the cheek was dishonored.
Roemer accepted Aztec’s sixth payment check, but when Aztec attempted to reissue the fifth payment, Roemer refused payment. Instead, Roemer moved for entry of judgment in district court to enforce the confession of judgment as provided by the settlement agreement. Aztec responded by opposing Roemer’s motion and moving to dismiss the case with prejudice. The district court conducted a telephonic hearing on the motions and granted Roemer’s motion, finding that Aztec came before the court “with unclean hands for failure to make any of the payments, except the first $8,000 payment, in a timely manner on the dates contained in the Settlement Agreement.” Aztec timely appeals.

DISCUSSION

Standard of Review

The parties stipulate to all the material facts in the case, so no factual issues for review exist. Our review, therefore, is de novo, limited to questions of law to which we accord no deference to the district court. Anderson v. Bommer, 926 P.2d 959, 961 (Wyo.1996); Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo.1994). This dispute arises over a settlement agreement; we have previously held that a settlement agreement is a contract, subject to the same legal principles as those which apply to any contract. Matter of Estate of McCormick, 926 P.2d 360, 362 (Wyo.1996) (citing Idaho Migrant Council, Inc. v. Warila, 890 P.2d 39, 41 (Wyo.1995)).

When Checks Constitute Legal Tender

To determine if the dishonored cheek issued to Roemer for the fifth payment cured Aztec’s default, we must first address when a check constitutes legal tender. Payment by check is governed by both the common law and the Revised Uniform Commercial Code (UCC), which we adopted as W.S. 34.1-1-101 through 34.1-10-104 (1997). Although the UCC generally governs transactions involving negotiable instruments, W.S. 34.1-1-103 provides that “[ujnless displaced by the particular provisions of this act * * *, the principles of law and equity * * * shall supplement its provisions.”
*904Our jurisdiction has previously given little attention to the concept of legal tender at common law. We have held that actual tender of money, as opposed to a mere offer to pay, is necessary to constitute legal tender. See Radalj v. Union Savings & Loan Ass’n, 59 Wyo. 140, 138 P.2d 984, 999 (1943). A number of courts have held that when a debtor delivers a check to a creditor,
the original debt is not paid or discharged unless, and until, the check itself is actually paid on due presentment, or, it is sometimes stated, until it is honored or accepted by the drawee; and, where the cheek is not paid on presentment, the creditor may treat it as a nullity, return it, and recover on the original debt, or, at his option, sue on the check.
70 C.J.S. Payment § 18, at 21-22 (1987 & Supp.1996) (footnote citations omitted). We particularly agree with the Nevada Supreme Court’s analysis of the legal tender of a check:
[Pjayment by check, without objection, does not discharge a debt until the check is honored. Once honored, the time of payment relates back to the time the check was delivered. If the check is not honored, however, the payment is not deemed made until cash is actually received or a subsequent check honored.
R & S Investments v. Howard, 95 Nev. 279, 593 P.2d 53, 56 (1979) (emphasis in original). This approach is consistent with Article 2 of the UCC and other regional case law. See Gudenau v. Bierria, 868 P.2d 907, 911 (Alaska 1994) (“A check is proper payment for an obligation, and so long as the check is honored, the obligation is considered paid when the payee receives it.”). See also UCC 3-310 (rev’d 1990) and Vonk v. Dunn, 161 Ariz. 24, 775 P.2d 1088, 1091 (1989) (“A check constitutes only conditional payment of the underlying obligation unless the parties agree otherwise.”).
One of the purposes of the UCC is to encourage consistency in and continued expansion of our commercial practices. W.S. 34.1-l-102(b). Although UCC Article 2, adopted at W.S. 34.1-2-101 through 34.1-2-725, governs the sale of goods and is not directly applicable to the settlement agreement between the parties, it nevertheless provides useful guidance on how we should perceive transactions involving checks.
Wyoming Statute 34.1-2-511(c), in pertinent part, states that “payment by check is conditional and is defeated as between the parties by dishonor of the cheek on due presentment.” Official Comment 4 to UCC 2-511 explains that “[t]his Article recognizes that the taking of a seemingly solvent party’s check is commercially normal and proper and, if due diligence is exercised in collection, is not to be penalized in any way.” Official Comment 5 states that “[ujnder subsection (3) payment by check is defeated if it is not honored upon due presentation.” See also Bolz v. Security Mut. Life Ins. Co., 721 P.2d 1216, 1218 (Colo.App.1986) (“Payment by check is conditional only and does not discharge the liability for which payment is given, unless there is an express or implied agreement that the check [will] be accepted as absolute payment.”). See also UCC 2-511.
We adopt a definition of legal tender consistent with both the UCC and regional common law and hold that payment by check does not discharge a debt unless and until the check is honored; once honored, the time of payment relates back to the time the cheek is delivered. Since Aztec’s check was dishonored, it did not discharge Aztec’s obligation to make the fifth payment under the settlement agreement or cure Aztec’s default. Thus, entry of judgment was appropriate.

Modification of Presentment Time

Aztec argues that this court should find that Aztec’s fifth payment check, even though dishonored, cured Aztec’s default because Roemer had a duty to promptly present the cheek. This duty, Aztec asserts, arose because Aztec requested prompt presentment and, at the time of the request, adequate funds existed in the account. In support of this assertion, Aztec cites to J.S. Martin Lumber Co. v. Rice, 136 Okla. 172, 276 P. 733, 734 (1929) and Federal Land Bank v. Barrow, 189 N.C. 303, 127 S.E. 3, 6 (1925). Both cases, however, precede our adoption of the UCC.
*905Our statute now provides that a check will remain valid for a minimum of ninety days. Wyoming Statute 34.1-3-304(a) states that “[a]n instrument payable on demand becomes overdue at the earliest of the following times: * * * (ii) If the instrument is a cheek, ninety (90) days after its date.” Thus, Roemer could legitimately expect that the check would not become stale for ninety days. Wyoming Statute 34.1-3-117 specifically provides that
the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same transaction giving rise to the agreement.
Absent prior agreement to the contrary, Aztec could not unilaterally alter Roemer’s right to the ninety-day period to present a cheek as provided by statute.

CONCLUSION

We find Aztec’s appeal did raise legitimate legal issues regarding legal tender and, therefore, decline to award attorney fees. Aztec’s fifth payment check did not cure default because a dishonored check does not constitute legal tender and because Aztec could not unilaterally modify the time a cheek holder has for presentation. We therefore affirm the judgment in favor of Roemer.