J.L. Riley & Co. v. London Guaranty & Acc. Co.

• Decision Date: 18 November 1921
• Docket Number: 12332.
• Citation: 109 S.E. 676,27 Ga.App. 686
• Parties: J. L. RILEY & CO. v. LONDON GUARANTY & ACCIDENT CO., LIMITED.
• Court: Georgia Court of Appeals

109 S.E. 676

27 Ga.App. 686

J. L. RILEY & CO. v. LONDON GUARANTY & ACCIDENT CO., LIMITED.

No. 12332.

Court of Appeals of Georgia, Second Division

November 18, 1921

Syllabus by the Court.

This was a suit for $1,000 alleged to be a balance due on account of insurance premiums collected by the defendants as general agents of the plaintiff. The defendants denied indebtedness and set up as their primary defense a plea of accord and satisfaction. As a secondary defense they set up by way of recoupment a counterclaim in the amount sued for. The plea alleges that for several years the defendants had been the general agents of the plaintiff in their insurance business under a contract providing for the termination of such agency after 90 days' written notice; that the plaintiff through its special representative, had contracted to pay them $1,000, in consideration of the cancellation of their agency contract, without the giving of the stipulated previous notice so that new agents could be immediately substituted, and for the further consideration that the defendants should turn over their business, including new business, to the substituted agents, and in lieu of the full previous commissions thereon should accept a brokerage commission; that the defendants performed their part of this agreement; and that, after deducting the $1,000 credit thus due, they settled in full for all premiums collected by them. The sole dispute under both pleas relates to the credit claimed of $1,000. While the evidence as to the making of such an alleged contract by the special agent of the company as well as his authority so to act, was in sharp conflict, the defendants offered testimony which might be taken to support this portion of their plea, together with evidence tending to show the plaintiff's ratification of the alleged agreement by the acceptance of benefits thereunder. By the plea of accord and satisfaction it is alleged, and it is undisputed under the evidence: That at the time the defendants made their last payment to the plaintiff, they had collected as premiums, and then held, the amount of $1,139.67. That on June 1, 1916, they made a remittance to the plaintiff of $139.67 by check, on the back of which and just above the place of indorsement was written the following: "Endorsement of this check is acknowledgment of payment in full of the following: If incorrect return to J. L. Riley & Co., Atlanta, Ga. Collections for February, March, April & May, 1916." That accompanying this check was a letter stating, by detailed items the balances due the company for collections of premiums during the four months stated on the check, and giving the total as $1,139.67, below which was written the following: "Less amount agreed upon by your Mr. S. B. Wright, Jr., Special Agent, for surrender of agency, $1,000.00--Check herewith, $139.67;" that the letter and the check were received by the plaintiff on June 5, 1916, and the check indorsed and cashed, and that in about two weeks thereafter the plaintiff made protest as to the allowance of the $1,000 credit. It is clear from the letters in evidence that the claim for this amount had been made and disputed long prior to the mailing of the check. Held:

1. All claims, whether disputed or undisputed, may furnish the subject-matter of an agreement in accord and satisfaction, provided such agreement, like all other contracts, is supported by a consideration. When such a valid plea is proved as laid, the rights of the creditor are controlled thereby.

(a) Where the amount of the claim is unliquidated, the mere adjustment of such a bona fide dispute by the express terms of a new agreement will of itself afford a valid consideration, sufficient to render the new agreement binding, and this would be true whether the new agreement had been actually performed or not. Sections 4326, 4328, Civil Code 1910.

(b) "As a general rule, when a principal sues his agent for an accounting or to recover money which has come into his hands by virtue of the agency, the agent has the right of set-off or counterclaim in order to enforce demands which he has against the principal." Clark & Skyles, Agency, § 427, p. 953. Such a bona fide dispute as to the right of the agent to a counterclaim which he would thus have a right to set-off against such an otherwise undisputed demand renders the claim, when taken as a whole, a disputed one. 1 R.C.L. 198, § 33; Tanner v. Merrill, 108 Mich. 58, 65 N.W. 664, 31 L.R.A. 171, 62 Am.St.Rep. 687.

(c) When a party makes an offer of a certain sum to settle a claim, the amount of which is in bona fide dispute, with the condition that the sum offered, if taken at all, must be received in full satisfaction of the claim, and the party receives the money, he takes it subject to the condition attached to it, and it will operate as an accord and satisfaction. Redmond v. Atlanta, etc. Ry., 129 Ga 133, 141, 58 S.E. 874; Ryan v. Progressive Publishing Co., 16 Ga.App. 83 (1, 2), 84 S.E. 834. Such would not be the rule, however, where the claim is not in bona fide dispute, and where the...