Davis-Wood Lumber Co., Inc. v. Farnsworth & Co., Inc.

• Decision Date: 11 January 1937
• Docket Number: 16449
• Parties: DAVIS-WOOD LUMBER CO., Inc., v. FARNSWORTH & CO., Inc., et al
• Court: Court of Appeal of Louisiana — District of US

171 So. 622

DAVIS-WOOD LUMBER CO., Inc., v. FARNSWORTH & CO., Inc., et al

No. 16449

Court of Appeal of Louisiana, Orleans.

January 11, 1937

Robert B. Todd, of New Orleans, for appellant.

Alfred D. Danziger and Albert B. Koorie, both of New Orleans, for appellees.

OPINION

McCALEB Judge.

The defendant, R. P. Farnsworth & Co., Inc., is a general contractor doing business in the city of New Orleans. On March 4, 1932, it entered into a written contract with the Continental Can Company whereby it agreed to erect a factory building for said Continental Can Company at Harvey, La. Later, on March 28, 1932, it engaged the plaintiff Davis-Wood Lumber Company, under two subcontracts whereby the plaintiff agreed to furnish it with 1,996 pieces of pile "to be sound, straight, uniformly tepered, yellow pine with bark removed and free from imperfection (3)5C" for a consideration of 14 cents per lineal foot. The subcontracts contain many conditions, and among them it appears that "sub-contractor agrees that should they fail to furnish piles as hereinbefore stated and contractor be compelled at any time to stop driving and thereby delay progress of work then contractor shall have the right to deduct from any monies due sub-contractor the sum of $ 50.00 per day as liquidated damage for each day's delay."

After the execution of the subcontracts, the plaintiff delivered 1,953 pieces of piling, and, prior to the dispute over which this cause of action arises, the defendant paid the plaintiff on account of the deliveries so made the sum of $ 7,845.19. During the month of April, 1932, the plaintiff mailed to the defendant its statement for the balance due on piles delivered under the contract amounting to $ 2,885.15. The defendant disputed the amount of the balance due, claiming that the plaintiff had breached the terms and conditions of the contracts by not delivering the piles in time and asserted that it had sustained liquidated damages in the sum of $ 1,212.50. It further contended that the sum of $ 375.57 was due it by the plaintiff for back charges which, together with the claim for liquidated damages, amounted to a total sum of $ 1,588.07.

Conferences were had, between representatives of the plaintiff and defendant corporations, to no avail, and on August 15, 1932, the defendant sent to the plaintiff its cash voucher for the sum of $ 1,297.08, payable to plaintiff, drawn on the Whitney Trust & Savings Bank of New Orleans. The reverse side of the cash voucher contains the following notation:

"Balance due according

to statement

$ 2885.15

Less damages & back

charges

$ 1588.07

Credit

$ 1297.08"

It further appears on the said cash voucher, at the top of the space used for indorsement, the printed words "endorsed and accepted in full payment of within account."

The foregoing check of the defendant corporation was received by the plaintiff in the usual course of business and the plaintiff deposited the same to its account and stamped on the space of the check used for endorsements, the words "for deposit Davis-Wood Lumber Co., Inc."

After depositing this check to its account, the plaintiff, some time during the month of October, 1932, filed a lien against the factory building at Harvey, La., for the sum of $ 1,588.07 and then brought this suit on October 23, 1933, to recover that amount from the defendant company.

The defendant answered the petition and contended, among other things and as a special defense in bar of the suit, that it had paid the balance due under the contracts by its check on August 15, 1932, for $ 1,297.08 which was indorsed and accepted by plaintiff in full settlement of the account between the parties, and that therefore the plaintiff is now estopped from asserting this claim.

By agreement, the plea of estoppel was tried specially and evidence was heard with respect thereto. The district judge, being of the opinion that the acceptance of the check by the plaintiff constituted a full accord and satisfaction of the indebtedness and that plaintiff was estopped from claiming any further balance under the contracts, maintained the plea and dismissed the suit. Wherefore this appeal.

The defendant argues here that the cashing of the check by the plaintiff constituted an estoppel under the authority of Meyers v. Acme Homestead Ass'n, 18 La.App. 697, 138 So. 443, 447.

On the other hand, the plaintiff claims that the facts of the case at bar are different from those of the Meyers Case and that no estoppel has taken place. It further maintains that the acceptance of the check of the defendant cannot be regarded as a compromise under the provisions of article 3071 of the Civil Code, inasmuch as the defendant paid only what it admitted to owe to the plaintiff, and as to which there was no dispute, and that the only amount which was in dispute between the parties was the sum of $ 1,588.07 (the subject of this suit).

Article 3071 of the Civil Code provides:

"A transaction or compromise is an agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their differences by mutual consent, in the manner which they agree on, and which every one of them prefers to the hope of gaining, balanced by the danger of losing.

"This contract must be reduced into writing."

The foregoing article demonstrates that there must be some consideration in order for a valid transaction or compromise to subsist, and it is contended that no consideration passed to the plaintiff when it received an amount from the defendant which was admittedly due and payable under the contracts and over which no dispute existed. In other words, it is urged that the only amount in dispute between the parties is the subject of this suit and that the plaintiff has never received any payment which had the effect of adjusting or compromising its right to claim that amount in these proceedings. The language of article 3071 of the Code seems to sustain the argument. But, while the effect of the acceptance of the check may not be considered as a compromise as defined by the Code, we find that the courts of the state have held, in cases similar to this, that the plaintiff may, under certain circumstances, estop himself from making a claim for an alleged balance due when he has accepted a payment from the defendant which is made on the condition that it will operate as a full settlement of the account. In our case of Meyers v. Acme Homestead Ass'n, supra, we observed that it is sometimes difficult to ascertain what is the consideration given in cases such as this in order for the transaction to be binding within the meaning of the codal article, but that the question had been settled by the Supreme Court in Berger v. Quintero, 170 La. 37, 127 So. 356, 357, wherein a plea of estoppel was maintained and the rules of the common law respecting accord and satisfaction were applied.

Since the Supreme Court has held that a plaintiff may estop himself from proceeding further, where he has accepted a check for less than the amount claimed which bears the notation that it is tendered in full settlement, the question then arises whether there has been created such an estoppel on the part of the plaintiff in the instant case which now prevents it from maintaining this suit.

We find that the rules in regard to the application of the doctrine of accord and satisfaction are ably set forth in Corpus Juris Secundum, vol. 1, p. 460 through 570. In order for that plea to be maintained, there must be: (1) An unliquidated or a disputed claim; (2) a tender by the debtor; (3) an acceptance of the tender by the creditor.

With reference as to whether the claim in the case at bar was an unliquidated or a disputed one, Corpus Juris Secundum, vol 1, p. 518, Verbum Accord and Satisfaction, informs: "A question as to the construction of a contract, or the basis of a settlement, affecting the amount due from one party to the other, renders the claim unliquidated or disputed within the rules relating to part payment as accord and satisfaction." Here the plaintiff claimed a balance due of $ 2,885.15 for piles sold and delivered under the two contracts. The defendant disputed the amount because under its construction of the contracts, it contended that the plaintiff was liable to it for a sum claimed as liquidated damages together with another sum claimed for back charges, amounting in all to $ 1,588.07. The plaintiff, on the other hand, denied the construction placed upon the wording of the contracts by the defendant. There was, therefore, an honest and genuine dispute existing between the parties as to the amount which was due by the defendant to the plaintiff under the terms and conditions of the contracts. Under these circumstances, we hold that the plaintiff's claim against the defendant was unliquidated and disputed. In Meyers v. Acme Homestead Ass'n, supra, the plaintiff was a stockholder in the defendant homestead. He had applied for a withdrawal of his stock. The charter of the homestead provided that, in cases where shareholders gave notice to the association of their desire to withdraw their stock, such shareholders would not be entitled to receive dividends during the time when their withdrawal notices were pending. Some time after the plaintiff had given his withdrawal notice, the homestead mailed him a check for the amount of his stock, exclusive of dividends, to which plaintiff claimed he was entitled. The check tendered by the homestead bore the notation that it was given in full settlement of the account between the parties. The plaintiff cashed the check after he had written thereon the words "all rights...