Hoffman v. Ralston Purina Co., 76-220

• Decision Date: 09 January 1979
• Docket Number: No. 76-220,76-220
• Citation: 86 Wis.2d 445,273 N.W.2d 214
• Parties: David A. HOFFMAN, d/b/a Daalda Arabian Acres, Plaintiff-Appellant, v. RALSTON PURINA COMPANY, a Foreign Corporation, Waldschmidt & Sons, Inc., a Wisconsin Corporation and Heritage Mutual Insurance Company, Defendants-Respondents.
• Court: Wisconsin Supreme Court

Page 214

273 N.W.2d 214

86 Wis.2d 445

David A. HOFFMAN, d/b/a Daalda Arabian Acres, Plaintiff-Appellant, v. RALSTON PURINA COMPANY, a Foreign Corporation, Waldschmidt &amp Sons, Inc., a Wisconsin Corporation and Heritage Mutual Insurance Company, Defendants-Respondents.

No. 76-220.

Supreme Court of Wisconsin.

Submitted on Briefs Nov. 1, 1978.

Decided Jan. 9, 1979.

Michael I. Tarnoff and Warshafsky, Rotter & Tarnoff, S.C., Milwaukee, submitted brief for plaintiff-appellant.

John S. Skilton, Michael P. Erhard and Foley & Lardner, Milwaukee, submitted brief for defendants-respondents.

HEFFERNAN, Justice.

The sole issue in this case is whether, where there is a dispute as to liability in tort between two parties and the alleged tortfeasor makes an offer of settlement accompanied by a check and credit memorandum, the retention of the check uncashed and the acquiescence in the fruits of the credit memorandum for a period of more than seven months constitutes an acceptance of that offer. We conclude that under these circumstances, where David Hoffman retained the check and credit memorandum for an unreasonable length of time with the knowledge that both instruments were offered in full settlement of the disputed claim, such retention in itself constituted an acceptance of the settlement offer.

In addition, the offeree, Hoffman, in this case had a duty to speak to reject the offer, because the parties, Hoffman and Ralston Purina, were engaged in settlement negotiations at the time the offer was made.

The facts revealed at trial show that Hoffman operated a ranch for the raising of Arabian horses. He purchased Purina horse feed through a dealer, Waldschmidt & Sons, Inc. In January of 1973, Waldschmidt delivered a load of Purina feed to Hoffman which allegedly resulted in the illness and death of a number of Hoffman's horses. It was determined that the feed was contaminated with highway-grade rock salt. In February of 1975, Hoffman commenced an action against the Ralston Purina Company, Waldschmidt & Sons, Inc., and Heritage Mutual Insurance Company.

The action for the injury to his horses was based upon theories of strict liability in tort, negligence, and breach of warranty. Ralston Purina answered, specifically denying the allegations in respect to the facts underlying each theory of recovery set forth in the plaintiff's complaint and, in addition, alleging the affirmative defense that, prior to the commencement of the lawsuit, the claim had been settled and that there had been a full satisfaction and discharge of the plaintiff's claim.

The case was tried to the court, and the action against Ralston Purina was dismissed on the basis of evidence which the trial court concluded was sufficient to show that the plaintiff and Ralston Purina Company had reached an accord and satisfaction upon the tendering and acceptance of the sum of $3,000.

The record shows that, when Hoffman's horses began to show signs of illness, he called Purina and Waldschmidt. Following a series of meetings, an employee of Purina, one Wuestenberg, visited the Hoffman ranch on March 26, 1973. He brought with him a release, which recited that for the sum of $3,000 the Ralston Purina Company was to be released of all liability as the result of the damage to the horses. Although the settlement on its face purported only to release Ralston Purina, Hoffman by interlineation added the sentence, "This agreement in no way releases the liability of Waldschmidt Feed and Supply Co." The release was signed by Hoffman and witnessed by Wuestenberg. Wuestenberg advised Hoffman at the time the release was signed that he did not know whether the release as amended would be acceptable to Purina. A day or two later, Wuestenberg informed Hoffman that the release as amended was not acceptable to Purina.

Shortly after Purina rejected the release as amended, it terminated its previous credit relationship with Hoffman and insisted upon cash for all future deliveries. The chief officer of Purina's Fond du Lac plant stated that this insistence upon cash was because Hoffman was two or three months past due on his account with Purina. Hoffman, however, was able to get feed from another source.

On May 2, 1973, Purina's director of claims and adjustments wrote to Hoffman and suggested that there be a further meeting between a Purina representative and Hoffman to resolve the situation. On May 9, 1973, a representative of Purina, Doyle L. Cook, wrote to Hoffman making an offer to settle for $3,000, with no reference to the amendment to the release which had been added by Hoffman. On May 11, 1973, Hoffman wrote to Purina stating his unwillingness to settle for the sum of $3,000 for the release of both Purina and the dealer, Waldschmidt. On May 15, the director of claims and adjustments for Purina again wrote to Hoffman, stating that, since Cook, the Fond du Lac representative of Purina, had in his possession the signed release of Hoffman (the release which excluded Waldschmidt from the release), a check would be sent to him shortly.

Although the trial court made the finding that Hoffman had in fact received this letter, Hoffman testified that he did not. On May 16, 1973, Cook, a Purina representative, wrote to Hoffman, stating:

"Since we had originally agreed to settle the claim with you for $3,000 and your signature was placed on the release, we would like to go ahead and settle this matter for once and for all.

"Attached is a credit memo in the amount of $2,624.36 that will clear your account in full with Ralston Purina and a check for $375.64. The total of these two come to $3,000."

Hoffman also testified that he had never received this letter nor the attached check for $375.64 and the credit memorandum in the amount of $2,624.36. The check was never cashed or returned. Hoffman acknowledged that a statement received from Purina dated May 15, 1973, showed that he had a balance due Purina in the amount of $2,650.60 and also acknowledged that a statement the next month dated June 17, 1973, showed his balance had been reduced to zero. He admitted that he never contacted anyone at Purina to determine why his indebtedness had been reduced.

At trial, Ralston Purina produced a document which it obtained from Hoffman in the course of pretrial depositions. That document was the May 15, 1973, Ralston Purina statement showing an indebtedness of $2,650.60. On that statement in handwriting, which Hoffman acknowledged to be his, was written, "Please forward difference for our consideration of your new offer as of 5/16/73."

While it is acknowledged that this statement with Hoffman's handwritten message was never sent to Ralston Purina, the fact that the notation was made upon the statement, referring to the offer of May 16, 1973, was taken as proof by the trial court that the plaintiff Hoffman knew the exact amount of the settlement check offered to him and that he had in fact received the settlement offer and the attached credit memorandum and check which accompanied the May 16 settlement offer.

In January of 1974 Purina found that the May 1973 check in the sum of $375.64 had not been cashed. When this was brought to Hoffman's attention, he stated that he had never received the check and that there was no settlement of the claim. Purina then sent him another check, which was returned.

On the basis of these facts, the trial court concluded that Hoffman had received the settlement offer dated May 16, 1973, and the accompanying check and credit memorandum. It concluded, as a matter of law, that the plaintiff's retention of the check and the credit memorandum for a period of more than seven months and the plaintiff's silence for that period of time was an acceptance of the offer and that, therefore, Purina and Hoffman had reached an accord and satisfaction of the prior controversy. He ordered judgment to be entered dismissing the plaintiff's complaint against Ralston Purina.

We conclude that the trial court's findings are not contrary to the great weight and clear preponderance of the evidence. Our analysis of the facts shows that Hoffman's offer to settle according to the amended terms of the release was indeed rejected by Purina. Purina, however, on May 16, 1973, made a new offer, which incorporated the terms of the release as amended by Hoffman. That offer, which was accompanied by a check and credit memorandum totaling the sum of $3,000, was received by Hoffman. The facts, then, demonstrate that Purina offered to settle the question of its disputed liability by the payment of $3,000, partially by crediting Hoffman's overdue account and partially by the check. Hoffman remained silent after the receipt of this offer and the attached instruments. He never cashed the check. He never returned either it or the credit memorandum. It was only in response to a query from Purina in January of 1974, more than seven months later, that he stated he was rejecting the offer.

The trial court properly concluded that these facts demonstrated that there was an "accord and satisfaction."

An "accord and satisfaction" is an agreement to discharge an existing disputed claim, whether the claim be one arising in contract, tort, or otherwise. An "accord and satisfaction" constitutes a defense to an action to enforce the claim. 6 Corbin, Contracts, sec. 1276, p. 114.

Ordinary contract principles apply in determining whether an agreement of "accord and satisfaction" is reached. Corbin, Supra, at 115. Mere performance does not operate as a satisfaction unless offered as such to the creditor or claimant. There must be expressions sufficient to make the creditor understand or to make it unreasonable for him not to understand that the performance is offered in full satisfaction of the claim. Corbin, Supra, sec. 1277, p. 118.

The decisions of this court are in agreement with Corbin's analysis. In Draper v. Rodd, 185 Wis. 1, 200 N.W. 761 (1924), it was held that there could be no accord and...