Hearst Corp. v. Lauerer, Markin & Gibbs, Inc., L-87-085

• Decision Date: 30 October 1987
• Docket Number: No. L-87-085,L-87-085
• Parties: , 6 UCC Rep.Serv.2d 358 HEARST CORPORATION, Appellant, v. LAUERER, MARKIN & GIBBS, INC., Appellee.
• Court: Ohio Court of Appeals

Page 87

37 Ohio App.3d 87

524 N.E.2d 193, 6 UCC Rep.Serv.2d 358

HEARST CORPORATION, Appellant, v. LAUERER, MARKIN & GIBBS, INC., Appellee.

No. L-87-085.

Court of Appeals of Ohio, Sixth District, Lucas County.

Oct. 30, 1987.

Syllabus by the Court

An accord and satisfaction is effected where a creditor endorses and negotiates a debtor's check on which the debtor has placed the restriction, "deposit constitutes acceptance as payment in full for all claims * * *," even though the creditor has added the language "under protest, all rights reserved." R.C. 1301.13 (UCC 1-207) does not apply to such situations.

Lawrence Gibson, Toledo, for appellant.

Jack G. Fynes and Sandra J. Polin, Toledo, for appellee.

RESNICK, Judge.

This cause is before the court on appeal from a judgment of the Lucas County Court of Common Pleas wherein that court rendered summary judgment in favor of Lauerer, Markin & Gibbs, Inc., defendant-appellee. The Hearst Corporation, plaintiff-appellant, filed a timely notice of appeal and asserts the following assignments of error:

"I. The trial court erred in finding that a check tendered with a restrictive endorsement by defendant-appellee and accepted with a reservation of rights by plaintiff-appellant constituted an accord and satisfaction between the parties.

"II. The trial court erred in granting defendant-appellee's motion for summary judgment since there existed genuine issues of material fact and defendant was not entitled to judgment as a matter of law."

Appellant and appellee entered into an oral contract, the subject of which was that appellant was to create and publish a promotional insert for appellee. The services were rendered and appellant submitted invoices totaling $90,040.50. However, a genuine dispute arose over the amount due for those services because of a problem in the location of the advertisement within the publication. Appellee tendered a check in the amount of $55,040.50 which contained on the back a restriction which read: "DEPOSIT CONSTITUTES ACCEPTANCE AS PAYMENT IN FULL FOR ALL CLAIMS AGAINST LAUERER MARKIN & GIBBS, INC." Appellant, upon receiving the check, added the language "UNDER PROTEST, ALL RIGHTS RESERVED" directly under appellee's restriction, endorsed the check, and then negotiated it.

Appellant's second assignment of error contends that summary judgment was inappropriate in that reasonable minds can come to differing conclusions based upon conflicts created by the application of R.C. 1301.13; Duhart v. Franklin Park Lincoln-Mercury (July 1, 1983), Lucas App. No. L-83-027, unreported; and Inger Interiors v. Peralta (1986), 30 Ohio App.3d 94, 30 OBR 193, 506 N.E.2d 1199.

Summary judgment is governed by Civ.R. 56(C) which provides, in pertinent part:

" * * * Summary judgment shall be rendered forthwith if the pleading, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be considered except as stated in this rule. A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor. * * * "

A trial court must determine three things before summary judgment can be granted: first, that there is no genuine issue as to any material fact; second, that the moving party is entitled to judgment as a matter of law; and third, that reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor. Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66, 8 O.O.3d 73, 74, 375 N.E.2d 46, 47.

The Ohio Supreme Court more recently reiterated the function of summary judgment in Norris v. Ohio Standard Oil Co. (1982), 70 Ohio St.2d 1, 2-3, 24 O.O.3d 1, 2, 433 N.E.2d 615, 616:

" 'Summary judgment is a procedural device to terminate litigation and to avoid a formal trial where there is nothing to try. It must be awarded with caution, resolving doubts and construing evidence against the moving party, and granted only when it appears from the evidentiary material that reasonable minds can reach only an adverse conclusion as to the party opposing the motion. * * * A successful motion for summary judgment rests on the two-part foundation that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.' " (Citations omitted.)

It is necessary to analyze the statutory and case law of R.C. 1301.13 and the doctrine of accord and satisfaction to determine whether summary judgment was warranted. Accord and satisfaction is defined in the first and third headnotes of Aerosonic Instrument Corp. v. NuTone, Inc. (C.P.1958), 80 Ohio Law Abs. 289, 152 N.E.2d 739:

"1. An accord is an agreement for giving and taking a thing in satisfaction of an existing claim or debt; the satisfaction is the actual giving and taking of such thing.

" * * *

"3. If there is to be an accord and satisfaction certain elements are essential (1) a proper subject matter; (2) competent parties; (3) an assent or meeting of the minds of the parties; (4) a consideration."

See, also, 15 Ohio Jurisprudence 3d (1979) 538, Compromise, Accord, and Release, Section 21.

The trial court summarily held that Inger Interiors, supra, is the law of Ohio as it is to be applied and that Duhart, supra, is clearly distinguishable.

Appellant contends that this case is similar to the situation in this court's decision in Duhart, supra. However, we agree with the trial court that Duhart, supra, is distinguishable. In Duhart, appellee-customer paid appellant-car dealer the purchase price of an automobile, plus taxes and the cost of a temporary license plate and signed all the documents necessary to transfer title. Thereafter, appellant sold the car to someone else. After some negotiations, appellant tendered to appellee a check for $6,300 which contained a restrictive endorsement which read "in total refund and release of all claims regarding stock # 9637." Before cashing the check, appellee made a notation on it which read "endorsement is under protest with explicit reservations of all rights or remedies accruing to payee due to drawer's breach of contract to sell 1977 Lincoln automobile stock # 9367 [sic ] in accordance with O.R.C. § 1301.13." This court held that all the elements of accord and satisfaction were not met in that there was no assent or meeting of the minds of the parties; and there was no consideration. There was no consideration for the release of appellant from a claim for damages for breach of contract because " * * * appellant merely returned appellee's money, which he was legally obligated to do. * * * " There was no assent or meeting of the minds as to a release from a claim of breach of contract; the parties' respective notations clearly evidenced that.

Appellant contends in the instant case that the parties' notations on the check indicate an absence of assent or a meeting of the minds as in Duhart. However, the distinguishing feature between the instant case and Duhart is that a separate and distinct matter regarding breach of contract existed in Duhart. A separate matter is not present here. There is only a dispute as to the amount of money due. Furthermore, the case the Duhart court relied upon, Warner Elevator Mfg. Co. v. Higbee (1935), 53 Ohio App. 546, 22 Ohio Law Abs. 586, 7 O.O. 355, 5 N.E.2d 947, is also distinguishable in that it appears that only oral statements indicated that the employment paycheck was intended as full payment; there was no "payment in full" notation on the employment paycheck itself. Further, it appears that these statements were not conclusive because additional oral statements by the company treasurer suggested that speaking to the company president could yield to the employee the balance claimed on account of salary. For these reasons, it was held that the employee did not, by cashing the check, agree that it was in full satisfaction of his claim. The company which tendered the check made it appear that the oral condition of the check's being in full payment was ineffective. Accord Kiser v. Wilberforce Univ. (1941), 33 Ohio Law Abs. 438, 35 N.E.2d 771, paragraph two of the headnotes:

"2. A creditor who is tendered a check in payment of a disputed unliquidated amount, with an acknowledgment thereupon of payment in full for the services for which the payment is tendered, may either refuse to accept the check and not present it for payment, or present it for payment and collect on it upon the terms under which it was tendered; he cannot accept the benefit thereof and refuse the condition under which it was tendered, unless the debtor has waived the condition and permitted it to be paid as a credit on account instead of in full settlement." (Emphasis added.)

A similar situation occurred in Toledo Edison Co. v. Roberts (1934), 50 Ohio App. 74, 17 Ohio Law Abs. 474, 3 O.O. 446, 197 N.E. 500. However, in that case, decided by this court, it was the payee of the check who, before cashing it, erased the condition of the drawer that acceptance of the check acknowledged payment in full. This court held that the erasure by the payee did not negate the drawer's express condition and that an accord and satisfaction had occurred upon the negotiation of the check. See, also, First Natl. Bank & Trust Co. v. Fireproof Warehouse & Storage (1983), 8 Ohio App.3d 253, 8 OBR 326, 456...