Majestic Bldg. Material Corp. v. Gateway Plumbing, Inc.
| Decision Date | 21 May 1985 |
| Docket Number | No. 49321,49321 |
| Citation | 694 S.W.2d 762 |
| Parties | 41 UCC Rep.Serv. 1602 MAJESTIC BUILDING MATERIAL CORPORATION, Plaintiff-Appellant, v. GATEWAY PLUMBING, INC., Defendant-Respondent. |
| Court | Missouri Court of Appeals |
Patrick R. Gunn, St. Louis, for plaintiff-appellant.
Alan Douglas Lobel, Clayton, for defendant-respondent.
Plaintiff Majestic Building Material Corporation (Majestic) sued on an account to recover $2,200.28 for gravel sold to defendant Gateway Plumbing, Inc. (Gateway). The case was court-tried on stipulated facts which narrowed the issue to whether the pleaded affirmative defense of accord and satisfaction barred plaintiff's claim. In a trial de novo the court found for defendant. Majestic appeals. We reverse.
The parties stipulated that between May 17 and May 27, 1983 Majestic sold and Gateway bought Torp Gravel. Majestic billed Gateway $4,640.62 for the gravel which was agreed by an "additional stipulation" to be a fair and reasonable charge. Gateway elected to defend solely on the legal defense of accord and satisfaction and not maintain a dispute on the reasonableness of the bill. On June 9, 1983 Gateway tendered a check to Majestic for $2,440.34. At the time Gateway tendered the check there was a notation on the back of the check as follows:
Payment in full and in full and final settlement of all claims & demands of any kind and description as against Gateway Plbg. Inc., its officers, directors, employees and representatives, arising out of any matter or things whatsoever the nature or description.
Majestic received the check and deposited it into its bank account. Prior to negotiating the check Majestic added the following notation to its endorsement:
This check is accepted under protest and with full reservation of rights to collect the balance owing of $2,200.28.
The parties agreed
We review this court-tried case pursuant to Rule 73.01 as construed in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
Plaintiff contends that the court erred in applying the common law doctrine of accord and satisfaction on the ground that the doctrine is inapplicable to an undisputed liquidated claim. In the alternative Majestic contends that § 400.1-207 RSMo 1978 (hereafter 400.1-207) relating to the sale of goods abrogates the common law doctrine of accord and satisfaction. 1
Accord and satisfaction is a contract which must reflect the essential elements of the meeting of the minds of the parties and the giving and receiving of something of value as consideration therefor, contemplated as something less than the amount claimed by a creditor. Ayers Plastics Co. v. Packaging Products, 597 S.W.2d 177, 181 (Mo.App.1979). The mere payment of a sum less than that due, even with a restrictive endorsement, does not effect an accord and satisfaction. Id. It is a well established rule in our law that an accord and satisfaction must meet the basic requirements of a simple contract. One of these essential elements is valid consideration such as some benefit to the creditor or detriment to the debtor. Id. at 182.
When Gateway tendered its check with the "full and final settlement" language it believed that the unit value of the gravel was $6.10 per unit and not the charged amount of $11.60 per unit. In view of the stipulation that the charged sum of $11.60 per unit was fair and reasonable an essential element of an accord and satisfaction at the common law is missing. The evidence fails to show that Gateway suffered any detriment by tendering its payment or that Majestic received any benefit. Under recognized principles of accord and satisfaction, applied to an account, stipulated to be based on charges which are fair and reasonable, Gateway's check was partial payment of an undisputed and liquidated claim. Gateway's check was "the mere payment of a sum less than that due, even with a restrictive endorsement, [and] does not effect an accord and satisfaction." Ayers, 597 S.W.2d at 181. The stipulation of reasonability of charges removed from the trial court's consideration any element of dispute on the amount of Majestic's claim. Accordingly, the trial court erred in applying the common law defense of accord and satisfaction. Gateway's intention at the time of tender of the check was apparently based upon a belief that $6.10 per unit was a fair and reasonable charge but the "additional stipulation" has the effect of agreeing that $11.60 per unit was fair and reasonable. Gateway expressly withdrew the question of reasonability of charge as a defense with the result that application of accord and satisfaction was error as a matter of law.
What has been said does not fully dispose of the appeal because the additional stipulation on reasonability is conditional. Gateway stipulated that the court "may find that the charges of Plaintiff were fair and reasonable if the Court finds against Defendant's position that an accord and satisfaction has been reached between the parties." The trial court faced and we must consider Majestic's second contention that this case is governed by § 400.1-207. This is an issue of first impression in Missouri.
Section 400.1-207 reads as follows:
A party who with explicit reservation 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.
The issue was considered in Milgram Food Stores, Inc. v. Gelco Corp., 550 F.Supp. 992 (W.D.Mo.1982). In that case the parties engaged in three separate transactions. Milgram was a lessee who overpaid Gelco on a lease and sued to recover the overpayment. Gelco requested a set-off based on another claimed indebtedness. Milgram then purchased some tractors and gave a payment check to Gelco with a restrictive endorsement in order that the payment check constitute a full settlement check to cover all transactions. Gelco accepted the check and altered the endorsement by striking part of the language in an effort to limit the check to payment for the tractors only. The court found an accord and satisfaction and found § 400.1-207 inapplicable to a full payment check. Because the check was deposited by Gelco without using "without prejudice," "under protest" or the like as a preface to its endorsement we find that the district court's conclusions that § 400.1-207 is inapplicable to a full payment check unnecessary to its opinion because Gelco failed to avail itself of "explicit reservation of rights." Alteration of endorsement is not an express reservation of rights.
The official comment on § 400.1-207 states its purpose as the provision of (emphasis ours) The language of this section will accommodate both performance and payment as a right within the underlying contract. For example, the right to cancel is not lost by the acceptance of performance when the aggrieved party has made a reservation of rights, Cities Service Helex, Inc....
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