Cooper v. Yazoo & M.V.R. Co.

• Decision Date: 19 October 1903
• Citation: 82 Miss. 634,35 So. 162
• Parties: EDWARD W. COOPER ET AL. v. YAZOO & MISSISSIPPI VALLEY RAILROAD COMPANY
• Court: Mississippi Supreme Court

35 So. 162

82 Miss. 634

EDWARD W. COOPER ET AL. v. YAZOO & MISSISSIPPI VALLEY RAILROAD COMPANY

Supreme Court of Mississippi

October 19, 1903

FROM the circuit court of Sunflower county. HON. A. McC. KIMBROUGH, Judge.

Edward W. Cooper and CarL H. Rock, appellants, partners under name of Cooper & Rock, were plaintiffs, and the railroad company appellee, was defendant, in the court below. The facts were these: Appellants, railroad contractors, entered into a contract with the appellee to clear and grub the right of way of a projected extension of the railroad track. They began the work and were paid in part as the work progressed. When they finished, and desired a settlement in full, a controversy arose between them and the company as to the correct balance due them, there being a material difference between the amount they claimed and the sum admitted to be due them by the company. Not being able to reach a settlement, appellants went to Chicago, the home office of the company, and after repeated and extended interviews there with the chief engineer of the company, not being able to reach an agreement, the engineer agreed to pay them $ 6,053.65 in full settlement of the claim. They declined this but the engineer had voucher made for that amount and tendered it to appellants, stating that the payment was in full settlement and satisfaction of the claim. They accepted the voucher and signed a full settlement receipt, cashed the voucher, and used the money. They afterwards brought this suit against the railroad company to recover the balance claimed to be due them. On the trial they testified that they accepted the voucher, but at the same time stated to the chief engineer that they did not waive their right to the balance, affirming that they would take the voucher, and give the company credit for it, and sue for the balance; but they also testified that the engineer would not agree to this, and told them that they could either accept it in full settlement or stand upon their demand and litigate. The court below gave a peremptory instruction for defendant. From a verdict and judgment in accordance therewith, plaintiffs appealed to the supreme court.

Affirmed.

Johnson Chapman & Neill, for appellants.

Was there an accord and satisfaction by the final settlement in Chicago? The general rule is laid down in 1 Cyc. 319.

"(I) Statement of general rule.--When the debt or demand is liquidated or certain and is due, payment by the debtor and receipt by the creditor of a less sum is not a satisfaction thereof, although the creditor agrees to accept it as such if there be no release under seal or no new consideration given. Payment of a less amount than is due operates only as a discharge of the amount paid leaving the balance still due, and the creditor may sue therefor notwithstanding the agreement. A court of equity has no power to enjoin collection of the balance.

"(II) Reason for rule.--The reason for the rule is that the agreement is without consideration and void, as the debtor is under an obligation to pay the whole debt at the time and the creditor is entitled to receive the whole. The doctrine has been freely criticised in most of the courts which have had occasion to consider it; but with one exception they have nevertheless adhered to it, unless, as in the case of some jurisdictions, it has been abrogated by express statutory provisions.

"(III) Extent of rule.--The general rule is not affected by the fact that the debtor has a surety and that the debt is due by bond, nor by the fact that payment of a less sum is made by depositing in the bank and giving cheek thereon, as this does not change the character of the payment or give it an effect other than if the money had been paid directly. So, also, the rule is not affected by the fact that the debt is a judgment debt. The desire of the parties to avoid trouble and contention is not recognized as constituting a legal consideration for such agreement. Neither does the fact that the debtor borrowed the money to make the settlement at the creditor's request affect the rule.

"(V) Rule, how affected by giving receipt in full.--In the absence of statute providing otherwise the rule is settled, except in one state (Connecticut) that the giving of a receipt in full does not in any way affect the rule that payment of a less sum in discharge of a greater sum presently due is not a satisfaction thereof though accepted as such, and it is immaterial that the debtor knew that there was error or fraud."

We call the attention of the court to the authorities cited in the notes in support of the text which we have copied. This subject in this cyclopedia is edited by Seymour D. Thompson. A full discussion of this subject with the same conclusion as to what is the law is found in the notes to Jones v. Perkins, 29 Miss. 139, 64 Am. Dec., 138; also in notes to Fuller v. Kemp, 20 L. R. A., 785.

The reason of the rule as given in the text book quoted and as is set out in many of the authorities is that the agreement to take a less sum in payment of the whole debt is without consideration and therefore void. The rule and the reason for it may be technical, but so are very many of the revered principles of the law. A rule of the common law, set up and adhered to for nearly three hundred years, should not be ignored and disregarded by the courts as technical and unreasonable any more than a statute should receive this treatment.

The reason of the rule under discussion may receive some light from the examination of a collateral or kindred question, the compromise of doubtful controversies. "To make the compromise valid, both parties must concur in supposing the right to be doubtful, for if the claimants knowing his claim to be groundless, forces the other party to a settlement by threats of suit, the compromise will be void." 6 Am. & Eng. Enc. Law, 714. The rule is even stronger than stated; if both parties believe the claim to be doubtful when in fact and in law it is wholly without foundation, a note for the payment of a certain sum in compromise is without consideration and uncollectable. Foster v. Metts, 55 Miss. 77.

For a full discussion of the principles involved in eases arising out of invalid claims based upon settlements of controversies we call attention to the Alabama case of Thompson v. Hudgins, 22 So. 636. The giving up of a part of a liquidated debt after maturity, at the place appointed for payment, without consideration, is not a binding contract. Demars v. Musser Sauntry S. S. & Mfg. Co., 37 Minn. 418.

The opinion of the court in Clayton v. Clark, 74 Miss. 499, is a very striking and plausible argument, all precedents aside, as to what the common law ought to be; but in the light of the authorities we respectfully submit it reaches a wrong conclusion as to what the common law is.

The rule we have been discussing applies to liquidated claims. Let us see if the debt sued for in this case is properly a liquidated demand. The contract which is the basis of this suit is for the building of a road between certain named points. Section 8 of the contract provides that when the work is fully completed, "the party of the second part will pay the parties of the first part in full for the performance of same, as follows, to wit: for clearing and grubbing, fifty dollars per acre."

There could be no difficulty, and there was none, in ascertaining the exact number of acres in the job. The engineer in charge of the work testified that there were two hundred and seven and seventy-seven hundredths acres. This measurement absolutely fixed the amount of compensation for this class of work due the contractors. If the amount due can be ascertained by arithmetical calculations, it cannot be said to be unliquidated. Cincinnati v. Cincinnati St. R. Co., 6 Ohio N. P., 140.

It is not even shown by any witness that there were some of the acres on the line upon which no clearing and grubbing were done; on the contrary, Cooper testifies that clearing and grubbing were done on every acre of the line. There was no suggestion that any part of the clearing and grubbing was improperly done, none of this work was rejected or discarded by the enginner in charge.

The measurements and calculations were wholly in the hands of appellee. It was unjust to the contractors that this trust should be abused in order to reduce the compensation they were to receive for the job. The report was none the less fraudulent by reason of the fact that appellant detected its inaccuracy. Appellee set up a false basis for a settlement and thereby succeeded in retaining a part of the money that justly, under the contract, belonged to appellants. "If, however, the accord and satisfaction is procured by fraud on the debtor's part--as, for instance, by false representations or by the suppression of material facts--it is not binding, since fraud vitiates all contracts, and hence, in an action on the original obligation the effect of the accord and satisfaction may be avoided by showing these facts. 1. Cyclopedia of Law and Procedure, p. 338, authorities cited in notes; see also Fire Ins. Assn. Limited v. Wilkham, 141 U.S. 564, 35 L. Ed., 866.

In passing upon the question as to whether the settlement in Chicago was an accord and satisfaction the manner of its procurement as well as the other facts and circumstances surrounding the parties at the time should be taken into consideration. According to the terms of the contract the amount due the contractors was a certain fixed sum, to be arrived at by a simple calculation, all of the data for which...