Baillie Lumber Co. v. Kincaid Carolina Corp.

• Decision Date: 30 April 1969
• Docket Number: No. 6927SC87,6927SC87
• Citation: 167 S.E.2d 85,6 UCC.Rep.Serv. 480,4 N.C.App. 342
• Parties: , 6 UCC Rep.Serv. 480 BAILLIE LUMBER COMPANY, Inc. v. KINCAID CAROLINA CORPORATION.
• Court: North Carolina Court of Appeals

Page 85

167 S.E.2d 85

4 N.C.App. 342, 6 UCC Rep.Serv. 480

BAILLIE LUMBER COMPANY, Inc. v. KINCAID CAROLINA CORPORATION.

No. 6927SC87.

Court of Appeals of North Carolina.

April 30, 1969.

Ervin, Horack & McCartha, by C. Eugene McCartha, Charlotte, for plaintiff-appellee.

Keener & Cagle, by Joe N. Cagle, Hickory, for defendant-appellant.

MALLARD, Chief Justice.

When the case was called for trial, the parties submitted to the court an agreed statement of facts and issues as follows:

'AGREED STATEMENT OF FACTS AND ISSUES

Plaintiff and Defendant stipulate and agree the facts in this case are as follows:

Plaintiff is a lumber distributor in Hamburg, New York. Defendant is a furniture manufacturer in Lincolnton, North Carolina. Sometime prior to April 6, 1967, defendant placed an order with plaintiff for 8,964 feet of cherry lumber. Plaintiff filled the order and on April 6, 1967, sent its statement to defendant in the amount of $2,447.61 for the lumber. A copy of the statement is attached.

On August 16, 1967, defendant through its attorneys, wrote its creditors offering a 35% Settlement to them. A copy of defendant's letter to plaintiff is attached.

On August 25, 1967, plaintiff replied to defendant's offer. A copy of plaintiff's letter of reply is attached.

There were no further communications between plaintiff and defendant until February 27, 1968.

On February 27, 1968, defendant forwarded its check number 4985 in the amount of $428.33 to plaintiff with the words 'first installment of agreed settlement' on the face of the check, which was endorsed by plaintiff 'with reservation of all our rights.' A copy of the check is attached.

On April 2, 1968, defendant forwarded its check number 5118 in the amount of $428.33 to plaintiff with the words 'final installment of agreed settlement' on the face of the check, which was endorsed by plaintiff 'with reservation of all our rights.' A copy of the check is attached.

On May 2, 1968, plaintiff entered suit against defendant for $1,590.95, which is the difference between the amount of plaintiff's statement of April 6, 1967, and the two checks forwarded to plaintiff by defendant.

Plaintiff and Defendant agree that the issues that arise in this case are as follows:

1. Was defendant indebted to plaintiff in the amount of $2,447.61 for the purchase of lumber, as alleged by plaintiff in its Complaint?

ANSWER: Yes, by agreement of the parties.

2. Was there an accord and satisfaction between plaintiff and defendant, as alleged by defendant in its Further Answer and Defense?

ANSWER: _ _ (To be answered by the Court)

3. How much, if any, is plaintiff entitled to recover from defendant?

ANSWER: _ _ (To be answered by the Court)'

Defendant Kincaid assigns as error a portion of the findings of fact by the trial judge, all of the conclusions of law, and the signing and entering of the judgment.

The judgment, which includes the court's findings of fact, reads as follows:

'This matter coming on to be heard before the undersigned Judge presiding over the September 1968 Mixed Session of the Superior Court for Lincoln County, the parties submitted to the Court an agreed statement of facts, and agreed that the issues submitted by them be answered by the Court. The Court therefore makes findings of fact, and enters its conclusions of law and judgment as follows:

FINDINGS OF FACT

1. On May 6, 1967, plaintiff sold and delivered to defendant certain lumber, for which defendant agreed to pay plaintiff $2,447.61.

2. Under date of August 16, 1967, defendant, as part of a general settlement with its creditors, offered to pay plaintiff 35% Of the sum of $2,447.61 due plaintiff, in full satisfaction of the debt.

3. Under date of August 25, 1967, plaintiff agreed to accept said settlement, upon condition that payment of the offered sum be made to it on or before September 20, 1967.

4. Defendant did not pay said sum to plaintiff on or before September 20, 1967.

5. On February 27, 1968, defendant forwarded a check in the amount of four hundred twenty-eight dollars thirty-three cents ($428.33), being one-half (1/2) of thirty-five (35%) per cent of plaintiff's claim, to the plaintiff with the words 'First installment of agreed settlement' on the face of the check. Said check was endorsed by plaintiff 'With reservation of all our rights' and was cashed by the plaintiff. On April 2, 1968, defendant forwarded its check #5118 in the amount of four hundred twenty-eight dollars thirty-three cents ($428.33) to the plaintiff with the words 'Final Installment' on the face of the check. Said check was endorsed by the plaintiff 'With reservation of all our rights' and was cashed by the plaintiff.

CONCLUSIONS OF LAW

1. No accord and satisfaction was had between plaintiff and defendant.

2. Plaintiff, by accepting the checks of defendant dated February 27, 1968, and April 12, 1968, with reservation of rights, reserved its right to collect the balance of the amount claimed to be due it.

3. Defendant is indebted to plaintiff in the sum of $1,590.05 (sic).

JUDGMENT

It is ordered, adjudged and decreed:

1. That plaintiff have and recover judgment of defendant in the sum of $1,590.05 (sic), with interest thereon from May 6, 1967, until paid.

2. That defendant pay the costs of this action.'

The 'findings of fact' in paragraph numbered 5 are not identical to the facts contained in the 'agreed Statement of Facts and Issues'; however, they are in substantial accord and Kincaid, having agreed to the facts, will not be heard to controvert them.

However, Kincaid contends that the court erred when it failed to find that the checks were tendered to Baillie in full satisfaction of Baillie's claim. Kincaid specifically requested the court to so find. Kincaid also contends that the refusal of the court to so find was tantamount to an affirmative finding that it had not made such a request.

The burden of proving the defense of accord and satisfaction was on Kincaid. The question of accord and satisfaction may be one of fact and of law. Rosser v. Bynum, 168 N.C. 340, 84 S.E. 393; Allgood v. Wilmington Savings & Trust Co., 242 N.C. 506, 88 S.E.2d 825. In this case the trial judge was the judge of both the law and the facts. The court, upon the competent evidence offered, found the facts and then stated as its conclusion of law that there was no accord and satisfaction between the parties. The facts found support the conclusions of law and the judgment. Kincaid's assignment of error to the findings of fact and failure to find other facts is overruled.

G.S. § 1--540 reads as follows:

'By agreement receipt of less sum is discharge.--In all claims, or money demands, of whatever kind, and howsoever due, where an agreement is made and accepted for a less amount than that demanded or claimed to be due, in satisfaction thereof, the payment of the less amount according to such agreement in compromise of the whole is a full and complete discharge of the same.'

By the words of this statute, G.S. § 1--540, a compromise and settlement is indicated; and a compromise, as distinguished from accord and satisfaction, must be based on a disputed claim while accord and satisfaction may be based on an undisputed or liquidated claim. Eastern Steel Products Corporation v. Chestnutt, 252 N.C. 269, 113 S.E.2d 587.

In 1 Strong, N.C. Index 2d, Accord and Satisfaction, § 1, it is said:

'A compromise and settlement must be based upon a disputed claim; an accord and satisfaction may be based on an undisputed or liquidated claim.

An accord and satisfaction is compounded of two elements: An accord, which is an agreement whereby one of the parties undertakes to give or perform and the other to accept in satisfaction of a claim, liquidated or in dispute, something other than or different from what he is or considers himself entitled to; and a satisfaction, which is the execution or performance of such agreement.'

It should be noted that G.S. § 1--540 applies as a compromise and settlement when an agreement is made and accepted. In the case before us Kincaid in the letter of its attorney made a conditional offer to Baillie. The condition was to pay thirty-five per cent if a sufficient number of creditors accepted the proposal within sixty days from 16 August 1967. In reply thereto on 25 August 1967, Baillie made a conditional acceptance of the offer. The conditions were to accept if Kincaid's letter contained all of the relevant information and if payment was made to Baillie on or before 20 September 1967. Thus, it is seen that Baillie did not accept the offer of Kincaid as made. The counterproposal as made by Baillie was not accepted by Kincaid. It is part of the agreed statement of facts tht after 25 August 1967 there was no further communication between the parties until 27 February 1968. Baillie was not paid anything on its account on or before 20 September 1967 in accordance with its proposal. The principles of law applicable here have been stated by Justice Rodman in the case of Prentzas v. Prentzas 260 N.C. 101, 131 S.E.2d 678, as follows:

'Defendants' plea of accord and satisfaction 'is recognized as a method of discharging a contract, or settling a cause of action arising either from a contract or a tort, by substituting for such contract or cause of action an agreement for the satisfaction thereof, and an execution of such substitute agreement.' Walker v. Burt, 182 N.C. 325, 109 S.E. 43; Eastern Steel Products Corp. v. Chestnutt, 252 N.C. 269, 113 S.E.2d 587; Bizzell v. Bizzell, 247 N.C. 590, 101 S.E.2d 668; Allgood v. Wilmington Savings & Trust Co., 242 N.C. 506, 88 S.E.2d 825, 1 Am.Jur.2d 301.

The word 'agreement' implies the parties are of the mind--all have a common understanding of the rights and obligations of the others--there has been a meeting of the minds. Richardson v. v. Greensboro Warehouse & Storage Co., 223 N.C. 344, 26 S.E.2d 897, 149 A.L.R. 201; Sprinkle v. Ponder, 233 N.C. 312, 64 S.E.2d 171; Allgood v. wilmington Savings...