Accord and Satisfaction: Check "in Full Payment.' At page 17a of the October (1910) Quarterly and page 2a of the October (1911) Quarterly we discussed the effect of the acceptance of a check marked "in full payment" or "in full settlement" where the check was for a smaller amount than was claimed to be due by the payee thereof. We saw that generally such acceptance acts as a bar, and the payee will be estopped from suing for any balance which he claims was due. This, however, is not an absolute rule of law, and the payee may recover the balance due him if he can show that the acceptance of the check was not made with the intention of settling the whole matter. Such was held to be the case in Siegle v. Des Moines Mutual Hail Ins. Ass'n, Decision No. 1414, where there was a dispute as to the amount of the loss under a policy of insurance. The company sent the insured a check for a less amount than he claimed, and marked the same "This check accepted as payment in full for all claims to date." The assured indorsed the same as follows: "Accepted in part payment of loss by payee." The court, governed to some extent by a local statute, held that such an acceptance showed an intent not to accept the check in full settlement, and would not bar the payee from establishing and recovering the full amount of his loss. Said the court: "A dispute arose between the insurance company and the assured in relation to the adjustment that was made of the loss. No question arose but what the loss was adjusted by the assured, and an authorized adjuster sent by the company. The company claimed the loss was adjusted at $400, and the assured claimed that it was adjusted at $925. Under such circumstances, the company wrote the policy holder, and inclosed a check, which, with a balance due the company for premium, amounted to $400. The check recited on its face: This check accepted as payment in full for all claims to date.' The policy holder cashed this check at his local bank, and, in doing so, he indorsed same: 'Accepted in part payment of loss by payee. Chris Bauer.' The jury evidently found that the loss was adjusted at $925. It is unnecessary to review the testimony in full; it was ample to sustain such a finding. "The appellant contends that, by accepting and cashing the check conditioned as such check was, the policy holder satisfied the debt, whether it was $400 or $925. The respondent contends that, regardless of the condition attempted to be attached to the check, the payee had a right and the power to qualify his acceptance of the check, and receive, same in part payment; and respondent further contends that, even if the check had been cashed without any attempt to qualify its acceptance, the acceptance and cashing of such check would not have amounted to an accord and satisfaction, as there was absolutely no consideration therefor. The respondent is clearly correct in this last contention, under the law as recently announced by this court, in the case of Hagen v. Townsend & White, 131 N. W. 512, wherein the facts were analogous to those in this case, unless section 1180 of the Revised Civil Code applies: Such section provides: Part performance of an obligation, either before or after a breach thereof, when expressly accepted by the creditor in writing in satisfaction, or rendered in pursuance of an agreement in writing for that purpose, though without any new consideration, extinguishes the obligation.' This check was not accepted in writing' in satisfaction of the disputed claim; as a matter of fact, the assured by his act refused to so accept same. His cashing of such check, without accepting same in full of his debt, may have been a wrongful conversion of the check; but it certainly was not an acceptance of $400 in satisfaction of the claim." It is interesting to note, however, that the court says that, while the acceptance in this case could not constitute an accord and satisfaction, because there was no intent to receive the check in full settlement, nevertheless the payee in using the check in violation of the intent of the maker was probably guilty of conversion. As we have said before (page 3a, October (1911) Quarterly): "It is extremely unsafe for any one to retain a check marked as described above (i. e., "in full settlement ") unless he be satisfied to accept it as a settlement in full." See Decision No. 1414. Accord and Satisfaction: Check "in Full Payment." At first sight the case of Worcester Color Co. v. Henry Wood's Sons Co., Decision No. 1415, appears to be in conflict with the case discussed in the preceding note, Decision No. 1414. In Decision No. 1415 the court says: "The proposition that the acceptance and collection of a check, proffered upon condition that it is in full settlement of an unliquidated claim, even though accompanied by protestations that it is not so received, bars any attempt to collect the balance, is supported by the great weight of authority." A close examination of the case, however, reveals that it is not really in conflict with the law as previously laid down by us. In the first place, the remarks of the court just quoted were not necessary to the decision of the case. In other words, they were dicta, and hence not binding as an authority. In the second place, in the succeeding paragraph, the court qualifies the general rule as laid down by it in the following words: "It is not every use of the words 'in full to date' or equivalent phrases which constitutes an accord and satisfaction in connection with the payment of a controverted claim. Many cases have arisen where the conditions have been such as make it a question of fact whether there has been an accord and satisfaction, even though these words have been used where a payment has been made." The facts in the case as stated by the court were as follows: "On March 19, 1906, the defendant ordered of the plaintiff six barrels of Milori blue, and on March 21, 1906, 226 pounds of Chinese blue, which were shipped on these days respectively. On March 28, 1906, a written contract was made by which certain machinery and other chattels were sold by the plaintiff to the defendant for $5,000 to be Faid in instalments. On the same date, but by a separate transaction, the defendant agreed to buy of the plaintiff a lot of pulp blue. The pulp blue was invoiced and shipped on April 16, 1906, in three different items, the prices charged aggregating $532.07. Thereafter the defendant claimed that the shipments of March 19th and 21st were included in the contract of March 28th, and that the $5,000 therein stipulated was to pay for the earlier sales. It further claimed that the pulp blue was larger in quantity and poorer in quality than had been represented, while the plaintiff asserted that it corresponded with the representation both as to quality and quantity. There were communications between representatives of the plaintiff and defendant touching these matters. Ultimately the defendant paid the $5,000 called for by the written contract of March 28, 1906, but did not pay for the invoiced goods. On December 24, 1906, the plaintiff sent the defendant a corrected bill for the pulp blue, reducing it by $210.76, and making the total $321.31, together with a letter explaining that the reduction was made in accordance with a letter of May 1, 1906, from plaintiff to defendant, in which it was stated that the reduction in price was made with the understanding that all other payments for material will be paid for according to invoices and contract.' January 11, 1907, the plaintiff wrote the defendant again asking for a remittance. The defendant made no reply to either of these communications until March 13, 1907, when it returned the corrected bill for the pulp blue invoice of April 16, 1906, showing the amount due to be $321.31, together with a check for that sum, on which was written in full to date," and a letter saying, 'Enclosed please find check for your account in full $321.31.' The letter did not refer specifically to the invoices of March 19 and 21, 1906. Thereupon the president of the plaintiff after consultation with his attorney drew a pen through the words upon the check, 'in full to date,' collected it in ordinary course and sent the receipted bill to the defendant with a letter in which he said that the check was in settlement of the April 16, 1906, invoice and was not in full for all claims and asking remittance for the items here in litigation." It was held that even though the check bore on its face the words "in full to date," the circumstances were such that the plaintiff was justified in believing that it had reference only to the invoice for the blue pulp, and that, therefore, it was a bar to any suit on that claim alone and not to a suit for the price of the Chinese and Milori blue. This is in exact accord with what we have hitherto seen that whether a check marked "in full payment" is valid as an accord or not depends on the facts of the case, and is a question of fact rather than of law. It will be noted, however, that the court holds that the act of the plaintiff in crossing from the check the words "in full to date," in nowise affected the rights of the defendant. This is probably in conflict with Decision No. 1414, but the conflict is not in the general principle, but merely in the interpretation of the effect of a fact. See Decision No. 1415. Banks and Banking: Payment of Checks. The holder of a check, even though he be a holder in due course, acquires no rights whatsoever against the bank on which the check was drawn. If the bank refuses to pay the same the holder has no cause of action against the bank even though the refusal was wrongful. Not until the bank has accepted the check or certified it can the holder acquire any rights against the bank. The depositor, however, whose check is wrongfully refused payment is on a different footing. With him the bank has entered into a contract to pay any check drawn by him which is properly presented and for which he has sufficient funds. This contract of the bank is obviously broken when there is a wrongful refusal by the bank to pay a check of its depositor. Consequently though the holder of the check has no action against the bank, the depositor has, and may recover any damage caused him by reason of the wrongful dishonoring of the check. |