American Food Purveyors, Inc. v. Lindsay Meats, Inc.

• Decision Date: 11 February 1980
• Docket Number: No. 58463,58463
• Parties: , 28 UCC Rep.Serv. 966 AMERICAN FOOD PURVEYORS, INC. v. LINDSAY MEATS, INC.
• Court: Georgia Court of Appeals

Page 325

265 S.E.2d 325

153 Ga.App. 383, 28 UCC Rep.Serv. 966

AMERICAN FOOD PURVEYORS, INC. v. LINDSAY MEATS, INC.

No. 58463.

Court of Appeals of Georgia.

Argued Sept. 11, 1979.

Decided Feb. 11, 1980.

John R. Grimes, Atlanta, for appellant.

Wayne L. Cardon, Steven N. Margolin, Atlanta, for appellee. SMITH, Judge.

We granted this interlocutory appeal to determine whether the trial court erred in denying appellant's motion for summary judgment on the ground that material fact issues remain relative to appellants defense of accord and satisfaction. We are bound by authority to hold that, as a matter of law, the parties reached an accord and satisfaction. The judgment of the trial court must therefore be reversed.

The material facts of this case are undisputed. On or about November 18, 1976, appellee shipped appellant certain food products valued at $13,196.92. Appellant accepted the shipment. Several weeks later, appellant complained about the condition of the goods. On or about February 11, 1977, appellant sent appellee a check in the amount of $2,696.08. The following notation was written on the back of the instrument: "This constitutes payment in full for all indebtedness." Appellee struck through this notation and cashed the check. Appellee then brought this action seeking additional amounts allegedly owed under the sales contract.

1. ". . . (I)f a debtor remits to the creditor a sum of money, less than the amount actually due, upon the condition, either express or implied, that it is in satisfaction of the creditor's claim, and the latter accepts and retains the money an accord and satisfaction results, and this is true whether the demand be liquidated or unliquidated, disputed or undisputed." Dixie Belle Mills v. Specialty Machine Co., 217 Ga. 104, 107, 120 S.E.2d 771, 774 (1961). Prater v. American Protection Ins. Co., 145 Ga.App. 853, 855, 244 S.E.2d 925 (1978). It cannot be seriously contended that such a "condition" does not exist in the instant case. The check which appellant forwarded to appellee expressly stated that it was "payment in full" for all debts. Unless appellee reserved its rights under the sales contract, we must hold that by virtue of an accord and satisfaction, appellee is precluded from maintaining this action.

2. Whether appellee has reserved its rights depends, of course, on whether the law permits appellee to do so. Traditionally, a party who cashed a check which contained a "payment in full" condition could not prevent an accord and satisfaction by any form of protest, including obliteration of the condition. Dixie Belle Mills v. Specialty Machine Co., supra. Under the traditional rule, acceptance of the check constitutes acceptance of the condition "notwithstanding the fact that (the creditor) protests at the time that the remainder of the account is still due and owing." C. & S. Bank v. Union Warehouse, etc., Co., 157 Ga. 434, 453, 122 S.E. 327, 330 (1924). This traditional rule was recently approved by the Georgia Supreme Court in Anderson v. Shelby Mutual Ins. Co., 237 Ga. 687, 689, 229 S.E.2d 462 (1976). Under this authority, we must hold that appellee could not both deposit the check and reserve its rights under the sales contract by striking out the "payment in full" notation written on the back of the instrument. However, we question the soundness of this authority.

3. UCC § 1-207 (Code Ann. § 109A-1 207) provides: "A party who with explicit reservation of rights performs or promises performance or asserts to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as 'without prejudice,' 'under protest' or the like are sufficient." Most of the jurisdictions which have considered the question of whether § 1-207 applies to the full-payment check have answered the question in the affirmative. Scholl v. Tallman, 247 N.W.2d 490 (S.D.1976); Lange-Finn Const. Co. v. Albany Steel & Iron Supply Co., 403 N.Y.S.2d 1012 (N.Y.Sup.1978); Miller v. Jung, 361 So.2d 788 (Fla.App.1978); Baillie Lumber Co. v. Kincaid Carolina Corp., 4 N.C.App. 342, 167 S.E.2d 85 (1969). See also Kilander v. Blickle Co., 280 Or. 425, 571 P.2d 503 (1977); White & Summers, Handbook of the Law Under the Uniform Commercial Code, § 13-21, pp. 452-454 (1972). In several other jurisdictions, explanatory comments to the Code follow in substance that portion of the Report of the New York Commission on Uniform State Laws which states: "This section ( § 1-207) permits a party involved in a Code-covered transaction to accept whatever he can get by way of payment, performance, etc., without losing his rights to demand the remainder of the goods, to set-off a failure of quality, or to sue for the balance of the payment, so long as he explicitly reserves his rights . . . The Code rule would permit, in Code-covered transactions, the acceptance of a past performance or payment tendered in full settlement without requiring the acceptor to gamble with his legal right to demand the balance of the performance as payment." See McKinney's Cons. Laws of New York, Book 621/2, Uniform Commercial Code 65, § 1-207, 6 Del.Code Ann. § 1-207 (1975); Fla.Stat.Ann. § 671.1-207 (1966); Mass.Ann. Laws c. 106, § 1-207 (1976); N.H.Rev.Stat.Ann. § 382-A:1-207 (1961). See also Minn.Stat.Ann. § 336.1-207 (1966).

Two jurisdictions have held that § 1-207 does not apply to the full-payment check. In Fritz v. Marantette, 404 Mich. 329, 273...