Lange-Finn Const. Co., Inc. v. Albany Steel & Iron Supply Co., Inc., LANGE-FINN

• Citation: 94 Misc.2d 15,403 N.Y.S.2d 1012
• Decision Date: 14 April 1978
• Docket Number: LANGE-FINN
• Parties: , 24 UCC Rep.Serv. 11 CONSTRUCTION CO., INC., Plaintiff, v. ALBANY STEEL & IRON SUPPLY CO., INC., Defendant.
• Court: New York Supreme Court

Page 1012

403 N.Y.S.2d 1012

94 Misc.2d 15, 24 UCC Rep.Serv. 11

LANGE-FINN CONSTRUCTION CO., INC., Plaintiff, v. ALBANY STEEL & IRON SUPPLY CO., INC., Defendant.

Supreme Court, Special Term, Albany County, Part I.

April 14, 1978.

Cooper, Erving & Savage, Albany, for plaintiff (Terrance P. Christenson, Albany, of counsel).

McNamee, Lochner, Titus & Williams, P. C., Albany, for defendant (Harry P. Meislahn, Albany, of counsel).

HAROLD J. HUGHES, Jr., Justice.

This is a motion by plaintiff for summary judgment on its cause of action for conversion and for summary judgment dismissing the defendant's counterclaims.

Plaintiff was the general contractor on a project known as the "Port of Albany Restoration POA 75-1". Plaintiff subcontracted a portion of the work to defendant and, pursuant to that subcontract, defendant was to provide certain steel and steel products to be used on the job. During the course of construction a dispute arose between plaintiff and defendant regarding certain allegedly defective materials provided by defendant.

Upon the completion of the work, plaintiff delivered to defendant a check in the amount of $10,285.39 inscribed with the words "Final Payment POA 75-1", together with a statement indicating the computation of the amount tendered. Defendant claimed that the total sum due was $12,871.97 rather than $10,285.39. The difference of $2,586.58 was a backcharge made by plaintiff for additional expenses plaintiff incurred by reason of allegedly defective materials provided by defendants.

In an effort to compromise the dispute plaintiff sent a second check payable to defendant in the sum of $10,986.34. On this check was inscribed the notation "Final Payment Port of Albany, Shed No. 1 POA 75-1, balance $12,887.92 less roofing backcharges $1,901.58 $10,986.34." In the covering letter which accompanied this check, plaintiff wrote:

"Because we feel there is some doubt on a portion of the bill, we are issuing a new check in the amount of $10,986.34. However, we must insist that Albany Steel & Iron Supply Company pay the roofer's backcharges on the West Canopy roofing, flashing and siding work as it was their mistake, courts or whatever.

"If this is acceptable, please return our check # 15568, dated June 13, 1977, payable to Albany Steel & Iron Supply Co., Inc., in the amount of $10,825.39."

Defendant did not return either check but instead caused both checks to be certified. The total sum of $21,271.73 was removed from plaintiff's account at the Bankers Trust Company. Plaintiff, through its attorneys, made several demands for the return of the first check and defendant initially refused to comply with these demands. However, on March 2, 1978, following service of the motion papers for summary judgment, defendant returned the first check. The second check in the sum of $10,986.34 was deposited by defendant with the endorsement "without prejudice and under protest".

Plaintiff's first contention is that defendant's failure to return the first check to plaintiff constituted a conversion as a matter of law, and that it is entitled to recover interest on $10,285.39 from July 26, 1977, the date of conversion, until March 2, 1978, the date the check was returned. The court agrees. Upon the undisputed facts, the most defendant claimed it was entitled to was $12,871.97, and yet, by its actions, it deprived plaintiff of over $21,000 for a period in excess of seven months. When defendant had plaintiff's bank certify the check in the amount of $10,285.39, the effect was the same as obtaining cash in the amount of the check, and funds representing the amount of the check were effectively withdrawn from plaintiff's control ¹ (see 5A N.Y.Jur., Banks and Trust Companies, § 402). The court finds that when it received and obtained a certification of the second check, defendant was obliged to return plaintiff's first check and its failure to do so constituted a conversion (see 10 N.Y.Jur., Conversion, §§ 1, 17). Plaintiff is entitled to interest as a matter of right on $10,285.39 from July 26, 1977 to March 2, 1978 (see Hillsley v. State Bank of Albany, 24 A.D.2d 28, 31, 263 N.Y.S.2d 578).

Plaintiff's second contention is that the defendant's certification of the second check in the amount of $10,986.34 constituted acceptance of the check, resulting in an accord and satisfaction as a matter of law. It, therefore, seeks to dismiss defendant's counterclaims which seek to recover backcharges deducted by plaintiff. Plaintiff is correct in its contention that ordinarily where a check is tendered as payment in full for a disputed amount and the payee accepts the check, an accord and satisfaction results (see, e. g., Buffalo Elec. Co. v. State of New York, 14 N.Y.2d 453, 253 N.Y.S.2d 537, 201 N.E.2d 869; Peckham Ind. v. Lehmann, 49 A.D.2d 172, 374 N.Y.S.2d 144).

However, it does not appear that in these cases or in the other cases relied upon by the plaintiff that the courts considered the applicability of section 1-207 of the Uniform Commercial Code, which provides:

"A party who with explicit reservati of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as 'without prejudice', 'under protest' or the like are sufficient."

In the text under "New York Annotations" following this section (McKi...