Holm v. Hansen

• Decision Date: 15 December 1976
• Docket Number: No. 2--57522,2--57522
• Parties: 20 UCC Rep.Serv. 879 Luther HOLM, Appellant, v. C. N. HANSEN, Appellee.
• Court: Iowa Supreme Court

Page 503

248 N.W.2d 503

20 UCC Rep.Serv. 879

Luther HOLM, Appellant, v. C. N. HANSEN, Appellee.

No. 2--57522.

Supreme Court of Iowa.

Dec. 15, 1976.

Dick L. Jensen, of Dreher, Wilson & Adams, Des Moines, for appellant.

Thomas E. Mullin and Richard McConville, of Mullin, Mullin, McLaughlin & Harvey, Creston, for appellee.

Heard by MOORE, C.J., and MASON, UHLENHOPP, HARRIS and McCORMICK, JJ.

McCORMICK, Justice.

This appeal involves an action for breach of warranty of cattle purchased by plaintiff Luther Holm from defendant C. N. Hansen. The case was tried to the court at law. The trial court found defendant proved an accord and satisfaction and entered judgment accordingly. The questions presented are whether the trial court erred in holding plaintiff's claim is barred by an accord and satisfaction, and, if so, whether the court erred in its alternative determination of plaintiff's damages. We hold that the court erred in finding an accord and satisfaction was established and in its alternative assessment of damages. We reverse and remand for determination of plaintiff's damages and entry of new judgment.

Because this is a law action, the trial court's findings of fact have the force of a jury verdict. If supported by substantial evidence they will not be disturbed. We view the evidence in its light most favorable to the judgment and construe the court's findings liberally. However, we are not bound by trial court conclusions of law. Farmers Insurance Group v. Merryweather, 214 N.W.2d 184, 187 (Iowa 1974).

This litigation arose from the following sequence of events:

December 27, 1969, plaintiff, who owned a brood herd of 41 angus cows and one angus bull, purchased 50 cows and one bull from defendant to increase his herd. The purchased cattle were mainly hereford. Defendant told plaintiff the purchased herd was 'clean' and the cows were with calf. However, as plaintiff learned the next day, defendant's herd had not been brucellosis tested within 30 days prior to sale as required by law, and plaintiff, upon advice of his veterinarian regarding the danger of administering the test to cows heavy with calf, decided not to require the test be given.

December 28, 1969, plaintiff put the new herd on his south farm, separate from his angus herd, which he maintained on his home farm.

December 30, 1969, one of the purchased cows aborted. Plaintiff returned this cow and one which had aborted prior to purchase to defendant and received two replacement cows which were put with those on his south farm.

Thereafter, on a date not disclosed, defendant sold the two returned cows for slaughter; he was advised they reacted positively upon testing for brucellosis. He notified plaintiff.

April 6, 1970, the purchased herd was tested for brucellosis by plaintiff's veterinarian at defendant's suggestion and expense. One cow was identified as a suspect and was segregated from the herd; the herd was quarantined.

May 7, 1970, the quarantined herd was retested and no brucellosis was detected; the quarantine was lifted; plaintiff's veterinarian gave the herd 'a clean bill of health'. Defendant told plaintiff that when he got the matter straightened out he would settle with him.

May 26, 1970, the suspect cow which had been segregated from the herd was sold for slaughter. Because one cow had died in a winter blizzard, this left 48 cattle in the herd.

June 2, 1970, plaintiff and defendant met at the Winterset sale barn. Defendant paid plaintiff $600 in the transaction which is the basis of defendant's claim of accord and satisfaction. (That transaction is fully described in division I).

November 1970, plaintiff's two herds were combined and placed on plaintiff's home farm.

January 1971, plaintiff found several aborted calves. One fetus was found to have brucellosis. The combined herd was then tested, and nine cows were either brucellosis suspects or reactors. Included were an angus from plaintiff's original herd and three herefords who had reacted negatively to the 1970 testing. The herd was quarantined, and defendant was notified of the continuing problem; he refused to do anything about it.

February 1971, plaintiff sold the nine cows showing evidence of brucellosis, along with three others, for slaughter.

March 1, 1971, additional testing revealed five more cattle with evidence of brucellosis.

March 8, 1971, upon recommendation of a state veterinarian, plaintiff sold the remaining cattle for slaughter. During 1971 he also sold 43 calves produced by the purchased herd.

This action was brought in June 1972. Plaintiff sought damages for the loss of his entire herd on several theories, including breach of express and implied warranties. After trial, the court held defendant had proved his defense of accord and satisfaction based on the June 2, 1970, transaction between the parties. However, the court alternatively held, in the event its finding of accord and satisfaction was incorrect, that defendant breached an express warranty that the cattle he sold plaintiff were clean, that he breached an implied warranty of their fitness as breeding stock, that he acted illegally in selling the cattle for removal from his premises without brucellosis testing within the preceding 30 days, and that plaintiff sustained actual damages of $3000.

I. The finding of accord and satisfaction. Accord and satisfaction is a method of discharging a claim whereby the parties agree to give and accept something in settlement of the claim and perform the agreement, the 'accord' being the agreement, and the 'satisfaction' its execution or performance. It is a new contract substituted for an old contract, which is thereby discharged, or for an obligation or cause of action which is settled. It must have all of the elements of a valid contract. Kellogg v. Iowa State Trav. Men's Assn., 239 Iowa 196, 210--212 29 N.W.2d 559, 567 (1948).

We first review the evidence from which the trial court concluded an accord and satisfaction was established.

Plaintiff's version of the transaction of June 2, 1970, was as follows:

Q. * * * Would you describe the conference?

A. He got in the truck with me, and we discussed selling the one and the one dying, and he asked me what would it take to make me happy, and I informed him that I had bought 50 cows, and that is what I would like to have was 50 cows for may herd.

Q. How did you arrive at the figure $600?

A. He asked me to set a price, and I said it was entirely up to him, and he wanted to know if $600 would do, and that would replace the two cows, and that was the end of the conference.

On cross-examination plaintiff said he had made no claim of defendant. The discussion was initiated by defendant who 'wanted to know what it would take to make it right.' Plaintiff reiterated that he accepted the $600 because it would make up for the loss of his two cows.

Defendant testified he told plaintiff he would settle with him after the April 1970 brucellosis problem was straightened out. The cattle were released from quarantine on May 7, 1970, and the only cow showing evidence of brucellosis was sold May 26 1970. Defendant testified as follows regarding the June 2, 1970, transaction:

Q. What did he say and what did you say at that particular time? A. * * * I said, 'Luther, what is it going to take for me to straighten this up with you now and so we will be done with it?' He said, 'I would like to have two cows brought back.' I said, 'Okay, what do you want?' So we arrived at a price of $600. I give him $600 and the suspect cow, and I said, 'Now Luther, are you going to be satisfied?' And he said, 'Yes, I'm happy with the deal.' I said, 'I don't want to hear no more about it.'

Q. What, if anything, did he say about you buying two more cows for him? A. Well, he wanted to know if I would take this check and buy two more cows when I paid him, and I said 'No, I would just rather not, Luther.'

Later in his testimony, defendant characterized the settlement as follows:

He got this suspect cow, and the cow that was lost in the lot at the time of the deal, * * * and he got the price out of the suspect cow, and I give him $600 in money, and that was to be the settlement. That was my understanding.

In making findings of fact, the trial court summarized the transaction as follows:

On June 2, 1970, at Winterset, plaintiff met defendant at the sale barn. Defendant asked plaintiff what they could do to straighten up. Plaintiff told defendant that he had bought 50 cows and wanted 50. Defendant then asked what it would take to satisfy plaintiff. The sum of $600.00 was agreed upon, plaintiff to retain the cattle and $147.70 received from sale of the suspect. Plaintiff asked defendant to use the $600.00 to buy him two replacement cows but defendant declined. Plaintiff accepted defendant's $600.00 check, cashed it and used the proceeds.

We are bound by these findings of fact because they are supported by substantial evidence. However, we believe the court was mistaken in holding these facts established the defense of accord and satisfaction.

The court reached its conclusion through the following reasoning:

* * * It cannot be claimed that either party possessed an advantage when they met at Winterset on June 2, 1970. The breaches were then apparent, each party knew all relevant facts, the future prospects were as nearly visible to the plaintiff as to the defendant and the latter's inquiry to the plaintiff in substance: 'What will it take to satisfy you?', required a reply from plaintiff that matured into agreed dollars.

The court is unable to accept plaintiff's assertion that the conversation that day was limited to partial satisfaction as of that date but must conclude that the parties were intending to effect a resolution of their problem in its entirety, knowing all the present facts and realizing the future possible prospects.

The court also said:

It was plaintiff's duty, if he did not accept the condition of full satisfaction or settlement...