Charleston Urban Renewal Authority v. Stanley

Decision Date05 December 1985
Docket NumberNo. 16499,16499
Citation176 W.Va. 591,346 S.E.2d 740
CourtWest Virginia Supreme Court
Parties, 1 UCC Rep.Serv.2d 1425 CHARLESTON URBAN RENEWAL AUTHORITY, etc. v. Spyros STANLEY.

Syllabus by the Court

1. To show an accord and satisfaction, the person asserting the defense must prove three elements: (1) Consideration to support an accord and satisfaction; (2) an offer of partial payment in full satisfaction of a disputed claim; and (3) acceptance of the partial payment by the creditor with knowledge that the debtor offered it only upon the condition that the creditor accept the payment in full satisfaction of the disputed claim or not at all.

2. If a check bearing a notation indicating that it is offered in full settlement is delivered to a creditor, the retention and use of the check by the creditor constitutes an accord and satisfaction.

3. To take advantage of the full payment check rule, the debtor must make it clear that the check which he sent is offered only on the condition that it is taken in full payment.

Henry R. Glass, III, Chester Lovett, Lovett, Vaughan & Cooper, Charleston, for appellant.

Anthony G. Halkias, Charleston, for appellee.

NEELY, Chief Justice:

In August, 1978, Spyros Stanley and the Charleston Urban Renewal Authority ("CURA") entered into a written, month-to-month lease for premises located at 501-515 Summers Street in Charleston. Under the terms of this lease, the appellee, Mr. Stanley, agreed to pay the appellant CURA, $600.00 a month rent. He used the property as a parking lot.

In November, 1982, CURA exercised its prerogative under the lease and terminated Mr. Stanley's tenancy. CURA informed Mr. Stanley that if he failed to surrender possession of the premises by 2 January 1983 his continuing occupation would be construed as a tenancy from day-to-day at a rental rate of $150.00 per day. Mr. Stanley held over, and when CURA sued him for possession of the premises he filed a counterclaim alleging representations by CURA over a number of years that he would be able to continue to enjoy possession. In July, 1983, the circuit court held for CURA in its action for eviction and against Mr. Stanley on his counterclaim; that part of the proceedings is not before us. However, after the court's July order evicting Mr. Stanley the question of Mr. Stanley's liability to CURA for damages arising from his illegal retention of the premises remained to be decided.

In January, 1984 the circuit court took the issue of damages under advisement and upon the pleadings, legal memoranda, and a motion in limine by the appellee, which the court treated as a motion to dismiss, the circuit court dismissed the action on the grounds of accord and satisfaction and entered judgment in the favor of Mr. Stanley. CURA now appeals.

I

The record is sparse. Mr. Stanley never plead accord and satisfaction as an affirmative defense; however, he did introduce evidence that he had tendered to CURA the sum of $600.00 per month in one form or another for every month that he held over. Mr. Stanley tendered checks to CURA in the following order:

                   CHECK DATE      AMOUNT
                -----------------  -------
                January 3, 1983    $150.00
                January 4, 1983    $150.00
                January 5, 1983    $150.00
                January 6, 1983    $150.00
                February 20, 1983  $600.00
                March 15, 1983     $600.00
                April 20, 1983     $600.00
                May 16, 1983       $600.00
                June 20, 1983      $600.00
                July 15, 1983      $600.00
                

The front of the 6 January check bore the legend "January rent in full." Mr. Stanley contends that CURA scratched out the "in full" when they deposited the check. The checks for the subsequent months bear legends that state only the month to which they correspond--e.g., "April rent," "May rent," etc.

The circuit court made the following findings of fact and conclusions of law in its letter opinion:

"Further, defendant in support of its position of satisfaction and accord, alleges that the words "Jan. rent in full" appeared on the face of defendant's check dated "Jan. 5, 1983" and that plaintiff "scratched out" the words "in full." Plaintiff made no attempt to address this allegation in its reply memorandum and, therefore, the Court must accept this allegation as true. This, then, being the case, the Court finds that plaintiff knew full well the defendant tendered this check as payment in full and attempted to circumvent this intent by altering, perhaps illegally, the face of defendant's check. If such action by plaintiff did, in fact, take place (and as mentioned above, it was not refuted by plaintiff), this Court's sensibilities of fair play and morality are highly offended; such action having been taken by an agent of a public, tax-supported body."

The circuit court was impressed by the fact that on one check someone at CURA had scratched out the words "payment in full." The circuit court found that CURA's alterations indicated that someone at CURA knew that Mr. Stanley had tendered the check as a full payment. Consequently, the circuit court held that the cashing of Mr. Stanley's checks constituted an accord and satisfaction.

II

To show an accord and satisfaction, the person asserting the defense must prove three elements: (1) there must be some consideration to support an accord and satisfaction. 1 In this case, there can be little doubt that the claim was unliquidated. Litigation always carries the risk that the claimant will come up with less than he hopes. Accordingly, Mr. Stanley's tender of $600.00 cash per month was valid consideration for CURA to release its claim against him.

The second two elements of an accord and satisfaction are derived from the general contracts doctrine of offer and acceptance: (2) The debtor must offer the payment of consideration in full satisfaction of the disputed claim; and (3) the creditor must accept the consideration tendered with the knowledge that the debtor offered it only upon condition that the creditor accept the consideration in full satisfaction of the disputed claim or not at all. M & B Constr. Co. v. Mitchell, 213 Va. 755, 195 S.E.2d 873 (1973) (where there was no understanding or agreement between employer and employee that employee accepted employer's check for $1,000 in settlement of his claims under oral employment contract and employee told employer that he was expecting more than the $1,000 when he accepted the check in satisfaction of his claim against employer). It is in satisfying these final two elements that Mr. Stanley's defense falls short.

For the January rent, Mr. Stanley's inscription "January rent in full" along with CURA's acceptance and cashing of the check is enough to satisfy these two elements and establish an accord and satisfaction. The great weight of authority in this country is that if money is tendered in full satisfaction of a disputed claim, and accepted with knowledge that such amount is tendered in full satisfaction and not in partial satisfaction, then the acceptance and use of the money constitutes an accord and satisfaction. Writing "payment in full" or some similar legend upon a check shows the offeror's intent. Obliterating such a legend demonstrates the acceptor's knowledge of the tender's condition. Williston is explicit on this subject in his treatise on contracts where he states:

"It has been established that if a check bearing a notation indicating that it is offered in full settlement is delivered to the creditor, the retention and use of the check by the creditor constitutes an accord and satisfaction ... he cannot avoid the dilemma of returning the check or keeping it in full satisfaction by erasing or obliterating the words which import complete satisfaction.

The fact that the creditor protests against accepting the tender in full payment will not prevent the transaction from becoming a good accord and satisfaction where the debtors still insist that it must be accepted in full payment or not at all."

15 S. Williston, A Treatise on the Law of Contracts § 1854 (3d ed. 1972). The debtor remains the master of his own offer. The creditor of an unliquidated claim must either accept or reject the debtor's offer; he is not free unilaterally to modify the debtor's original offer and then proceed to accept the offer so modified.

If a check is tendered bearing the words "payment in full" or some other words of similar purport, the payee may either accept the check and acknowledge the accord and satisfaction, or return the check to the payor. If the payee chooses the latter course of action he may continue to dispute the underlying claim. The common law rule may seem draconian, but it is not without reason. The "full payment" check...

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    ...Corp. v. Bushwick Iron & Steel Co., 66 N.Y.2d 321, 497 N.Y.S.2d 310, 488 N.E.2d 56 (1985); Charleston Urban Renewal Authority v. Stanley, 346 S.E.2d 740, 743 n. 2 (W.Va.1985) (dictum) (court indicating it might apply section 1-207 if the underlying contract involved the sale of goods); Kila......
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    ...the payment in full satisfaction of the disputed claim or not at all.’ Syllabus Point 1, Charleston Urban Renewal Authority v. Stanley, 176 W.Va. 591, 346 S.E.2d 740 (1985).” Syllabus Point 5, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). 5. “Whether the parties altered their orig......
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