Cove View Excavating and Const. Co. v. Flynn

• Decision Date: 28 July 1988
• Docket Number: No. 870180-CA,870180-CA
• Citation: 758 P.2d 474
• Parties: COVE VIEW EXCAVATING AND CONSTRUCTION CO., Plaintiff and Respondent, v. D. Thomas FLYNN and D. Thomas Flynn Construction, Inc., Defendants and Appellants.
• Court: Utah Court of Appeals

Page 474

758 P.2d 474

COVE VIEW EXCAVATING AND CONSTRUCTION CO., Plaintiff and Respondent, v. D. Thomas FLYNN and D. Thomas Flynn Construction, Inc. Defendants and Appellants.

No. 870180-CA.

Court of Appeals of Utah.

July 28, 1988.

John Burton Anderson, Kevin Olsen (argued), Salt Lake City, for defendants and appellants.

Marcus Taylor, Richfield, for plaintiff and respondent.

Before BENCH, JACKSON and BILLINGS, JJ.

OPINION

JACKSON, Judge:

D. Thomas Flynn Construction, Inc. and D. Thomas Flynn ("Flynn") appeal from the $1,517.50 circuit court judgment entered against them pursuant to an oral agreement for the purchase of construction materials and the rental of a pump and a backhoe. We reverse the judgment and remand the case to the trial court for entry of judgment in appellants' favor.

In the spring of 1984, Flynn talked to Charles Wayne Grundy ("Grundy"), president of respondent Cove View Excavating and Construction Company ("Cove View"), about a few days' use of Grundy's large backhoe. Flynn needed the equipment to complete excavation work he was performing on a highway project. The agreed rental charge was $125 per hour, but no specific number of hours was set. With Grundy as its operator, the backhoe was put to work on the job site from May 7 through May 15. A large pump Flynn eventually needed because of unexpected water problems on the job was also rented from Grundy at an orally agreed-upon $35 daily charge, with no specific number of days set.

On May 25, Grundy sent an invoice to Flynn for $5,922.50, including 41.5 hours for backhoe rental on May 7, 8, 9, 10 and 15, seventeen days of pump rental from May 8 through May 25, and $140 for purchased construction materials. Flynn disagreed with the number of hours billed for the backhoe and the number of days billed for the pump, which was removed from the job site on June 14. According to his time records, he only owed Grundy a total of $4,060 for materials, pump rental, and backhoe rental through June 26. On that day, he sent to Cove View a check for $5,000 with the following handwritten notation on the front of the check: "pmt in full to date labor & materials." In addition, the back of the check contained a handwritten restriction: "payment in full for all labor and materials to 6/26/84."

On June 27, before receiving the check, Grundy sent a second invoice to Flynn that included the overdue May invoice amount plus twenty more days of pump rental (from May 26 through June 14) and pump repair costs, for a total of $6,724.56. No additional hours were billed for backhoe rental. On the advice of counsel, Grundy crossed out the restrictive language on the back of the check and negotiated it. He thereafter billed Flynn for the unpaid $1,724.56 balance and eventually filed this suit.

At the bench trial, Flynn produced his daily records showing fewer hours of usage than claimed by Grundy in his billings. Flynn asserted they had agreed he would be charged only for the time the backhoe was actually in use, as opposed to on the job. He also claimed the rental of the pump was only for the days of actual use, i.e., through May 25, not all the days he had it in his possession. Grundy contradicted this and testified his billings were compiled from his memory and from the daily journals in which he recorded how many hours the backhoe was on the job. According to him, they had agreed Flynn was to be billed for the number of days he had the pump. The trial court resolved these disputed factual matters in favor of Cove View, disallowing only the pump repair costs and three days of pump rental charges when the pump was broken.

In support of their motion for summary judgment at the close of respondent's evidence, later denied, appellants had argued they were entitled to judgment as a matter of law because, under Marton Remodeling v. Jensen, 706 P.2d 607 (Utah 1985), the parties had reached an accord and satisfaction of Cove View's claim. An accord and satisfaction arises when the parties to a contract agree that a different performance, offered in substitution of the originally agreed-upon performance, will discharge the obligation created under the original agreement. Golden Key Realty, Inc. v. Mantas, 699 P.2d 730, 732 (Utah 1985); Brimley v. Gasser, 754 P.2d 97, 98 (Utah App.1988). The elements essential to contracts generally must be present in an accord and satisfaction, including an offer and acceptance and a meeting of the minds. Spor v. Crested Butte Silver Mining, Inc., 740 P.2d 1304, 1308 (Utah 1987). The burden of proving every necessary element is on the party claiming an accord and satisfaction. Bench v. Bechtel Civil & Minerals, Inc., 758 P.2d 460, 461 (Utah App.1988).

As the court pointed out in Marton Remodeling, there is not an automatic accord and satisfaction every time a creditor cashes a debtor's check bearing a "paid in full" notation or some equivalent language. Marton Remodeling, 706 P.2d at 609 (citing Smoot v. Checketts, 41 Utah 211, 125 P. 412 (1912)). There must also be an unliquidated claim or a bona fide dispute over the liquidated amount due the creditor. Id. In such cases, there is sufficient consideration to support the accord and satisfaction because the person's tender of the check on condition that it be accepted as full payment constitutes a surrender of the right to dispute the initial obligation. See Sugarhouse Fin. Co. v. Anderson, 610 P.2d 1369, 1372 (Utah 1980). ¹ Because there must be an unliquidated or disputed claim, it follows that the obligor's tendered payment cannot be given merely as a "progress payment" on an indivisible contract for a liquidated amount, as in Allen-Howe Specialties v. U.S. Constr., Inc., 611 P.2d 705 (Utah 1980). See Marton Remodeling, 706 P.2d at 609.

In his oral ruling from the bench after appellants had put on their case, the trial judge gave two reasons for rejecting Flynn's defense that an accord and satisfaction of the disputed rental charges had taken place when Grundy cashed the June 26 check. First, the court expressed its view that it was not "fair" or "proper" for Flynn to raise a dispute regarding the hours billed by merely sending the check with restrictive language the court concluded had "no effect." Second, the trial court characterized the June 26 check as payment on an "ongoing account" because Flynn still had the pump after the first billing was sent.

Respondent's counsel subsequently drafted the sparse written findings and conclusions in which neither of these two reasons is mentioned. Instead, the conclusion was that no accord and satisfaction had been reached solely because, despite the restrictive language on the check, Grundy had intended to accept the check as partial payment of the first invoice, not as full payment of Flynn's entire bill.

Under the standard of review set forth in Utah R.Civ.P. 52(a), a finding of fact is clearly erroneous if it is without adequate evidentiary foundation or if it is induced by an erroneous view of the law. State v. Walker, 743 P.2d 191, 193 (Utah 1987). We will not set aside the trial court's findings unless they are against the clear weight of the evidence or we otherwise reach a definite and firm conviction that a mistake has been made. Western Kane County Special Serv. Distr. No. 1 v. Jackson Cattle Co., 744 P.2d 1376, 1377 (Utah 1987). Conclusions of law, however, are simply reviewed on appeal for correctness without any deference to the trial court. Id. at 1378.

On appeal, appellants assert: (1) the evidence does not support the findings that the claim at issue here was undisputed and that Flynn's payment was on an ongoing account; and (2) the trial court erroneously interpreted and applied the law of accord and satisfaction. They contend the limitation on the check was itself a clear indication of dispute and an offer of full payment of Flynn's account through June 26--for less than the amount Grundy claimed was due through that date--which Grundy accepted by cashing the check, notwithstanding his actual intent. We agree.

The trial court apparently determined this was not a disputed claim because there were no discussions or correspondence to that effect between the parties prior to or contemporaneous with the check itself. However, there is no legal support for the proposition that restrictive language on the tendered check is alone insufficient to create the dispute required for an accord and satisfaction. In Hintze v. Seaich, 20 Utah 2d 275, 437 P.2d 202, 207 (1968), the Utah Supreme Court suggested that restrictive wording accompanying a tender of full payment could be a sufficient expression of the debtor's intention that it only be accepted as full payment of the pending claim.

The restrictive language is merely one evidentiary fact to be considered with other evidence, if any, in making the factual determination of whether the creditor knew or should have known that the payment was tendered as full satisfaction of an identified obligation of the debtor. 6 A. Corbin, Corbin on Contracts § 1277 (1962). See Rivervalley Co. v. Deposit Guaranty Nat'l Bank, 331 F.Supp....