McKee Const. Co. v. Stanley Plumbing & Heating Co., 17630

• Decision Date: 07 April 1992
• Docket Number: No. 17630,17630
• Citation: 828 S.W.2d 700
• Court: Missouri Court of Appeals
• Parties: 18 UCC Rep.Serv.2d 16 McKEE CONSTRUCTION COMPANY and the City of Joplin, Missouri, ex rel. and to the use and benefit of McKee Construction Company, Plaintiff-Appellant, v. STANLEY PLUMBING & HEATING COMPANY, a Missouri corporation, Defendant-Respondent.

Page 700

828 S.W.2d 700

18 UCC Rep.Serv.2d 16

McKEE CONSTRUCTION COMPANY and the City of Joplin, Missouri,

ex rel. and to the use and benefit of McKee

Construction Company, Plaintiff-Appellant, v. STANLEY PLUMBING & HEATING COMPANY, a Missouri corporation,

Defendant-Respondent.

No. 17630.

Missouri Court of Appeals,

Southern District,

Division Two.

April 7, 1992.

Rehearing Denied April 29, 1992.

John R. Sims, Greg R. Bridges, Ruyle and Sims, Neosho, for plaintiff-appellant.

Walter E. Williams, Joplin, for defendant-respondent.

MAUS, Judge.

McKee Construction Company, (McKee) filed this action against Stanley Plumbing & Heating Company, (Stanley) seeking the balance of payment for excavation work done by McKee for Stanley. Stanley filed a motion for summary judgment alleging there had been an accord and satisfaction. That motion for summary judgment was granted. McKee appeals. The following is a brief summary of the facts necessary for the disposition of this appeal.

McKee entered into a contract with Stanley to do excavation work at the Shoal Creek Wastewater Treatment Facilities which was being constructed by the City of Joplin. As McKee worked on the project, disputes arose between McKee and Stanley as to whether McKee's work was being done properly. After McKee ceased work, a dispute arose as to whether the work was actually finished. Because of these disputes, there was disagreement over the amount McKee was to be paid for the work.

Stanley's attorney sent a letter with an enclosed check for $19,570.75 to McKee's attorney. The check was made payable to the attorney and McKee. The letter of enclosure stated, in part, the following.

"I am enclosing herein Stanley Plumbing & Heating's check in the amount of $19,570.75 payable to Mr. McKee and to you. This check is tendered in full payment of all claims by Mr. McKee for work done on the Shoal Creek Wastewater Treatment Plant. Acceptance and negotiation of this check will be considered a full and final release of any claims that he may have against Stanley Plumbing & Heating. If Mr. McKee does not agree that this is a full and final settlement, please return the enclosed check to me."

The attorney endorsed the check and gave it to McKee. McKee then sought the advice of two other attorneys. The last attorney he consulted added the following restrictive endorsement to the back of the check:

"Under protest and with full reservation of rights to collect the balance owing."

The check was then endorsed by McKee and cashed. After cashing the check, McKee brought suit to recover the balance of the contract price allegedly due him. Stanley filed a motion for summary judgment alleging the acceptance of the check for $19,570.75 constituted an accord and satisfaction. The trial court granted the motion for summary judgment. McKee appeals.

McKee's first point is:

"The trial court erred in granting summary judgment to respondent based on the determination that an accord and satisfaction took place when appellant cashed a payment-in-full check, because an accord and satisfaction did not occur as a matter of law in that appellant had placed a restrictive endorsement on the check pursuant to RSMO. 400.1-207, thus reserving its right to collect the balance it claims is due and owing."

The law on accord and satisfaction has been succinctly stated.

"An accord and satisfaction is a contract for the settlement of a disputed or unliquidated claim for an amount less than that claimed by the creditor. Such contract has been held to have been made in a myriad of cases, where a check has been tendered in payment of an account on express condition that acceptance thereof shall be deemed to be satisfaction in full. There have been repeated rulings that if the creditor cashes the check under such circumstances, an accord and satisfaction results notwithstanding protests on his part. Even his striking out or modification of the condition written on the check has been held to be ineffective. (Citation omitted)." Henderson v. Eagle Express Company, 483 S.W.2d 767, 768 (Mo.App.1972).

McKee contends Uniform Commercial Code § 400.1-207 RSMo 1986 has abrogated this common law rule. Section 400.1-207 provides:

"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." § 400.1-207.

McKee cites Majestic Building Material v. Gateway Plumbing, 694 S.W.2d 762 (Mo.App.1985), which contains the following statement:

"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. v. United States, 543 F.2d 1306, 1316, 211 Ct.Cl. 222 (1976); or, the fact that a seller continues to deliver goods on demand is not a waiver of seller's contention that the buyer is not entitled to the quantity of goods demanded when the seller makes delivery under a reservation of rights. Shea-Kaiser-Lockheed-Healy v. Department of Water & Power, 73 Cal.App.3d 679, 690, 140 Cal.Rptr. 884, 890 (1977). There is no logical reason that payment as a term of the underlying contract should be excluded from § 400.1-207. That section refers to a reservation of rights and Majestic as a seller had a right to payment and to assent to Gateway's performance of its obligation of payment." Id. at 765.

Majestic relies upon cases from other jurisdictions adopting that view such as Scholl v. Tallman, 247 N.W.2d 490 (S.D.1976), Baillie Lumber Co. v. Kincaide Carolina Corp., 4 N.C.App. 342, 167 S.E.2d 85 (1969), ¹ Lange-Finn Construction Co. v. Albany Steel & Iron Supply Co., 94 Misc.2d 15, 403 N.Y.S.2d 1012 (1978). ²

However, that view is not followed by the vast majority of jurisdictions. See County Fire Door Corp. v. C.F. Wooding Co., 202 Conn. 277, 520 A.2d 1028 (1987); Air Van Lines, Inc. v. Buster, 673 P.2d 774 (Alaska 1983), 42 A.L.R.4th 1 (1985); Pillow v. Thermogas Co. of Walnut Ridge, 6 Ark.App. 402, 644 S.W.2d 292 (1982); Connecticut Printers, Inc. v. Gus Kroesen, Inc., 134 Cal.App.3d 54, 184 Cal.Rptr. 436 (1982); R.A. Reither Construction, Inc. v. Wheatland Rural Electric Association, 680 P.2d 1342 (Colo.App.1984); Eder v. Yvette B. Gervey Interiors, Inc., 407 So.2d 312 (Fla.App.1981), 37 A.L.R.4th 353 (1985); Stultz Elec. Works v. Marine Hydraulic Engineering Co., 484 A.2d 1008 (Me.1984); Cass Constr. Co., Inc. v. Brennan, 222 Neb. 69, 382 N.W.2d 313 (1986); Chancellor Inc. v. Hamilton Appliance Co., 175 N.J.Super. 345, 418 A.2d 1326 (1980); Les Schwab Tire Centers v. Ivory Ranch, Inc., 63 Or.App. 364, 664 P.2d 419 (1983); Marton Remodeling v. Jensen, 706 P.2d 607 (Utah 1985); State Department of Fisheries v. J-Z Sales Corp., 25 Wash.App. 671, 610 P.2d 390 (1980); Van Sistine v. Tollard, 95 Wis.2d 678, 291 N.W.2d 636 (1980); Jahn v. Burns, 593 P.2d 828 (Wyo.1979); Flambeau Products Corporation v. Honeywell Information Systems, Inc., 116 Wis.2d 95, 341 N.W.2d 655 (1984); Anderson v. Rosebrook, 737 P.2d 417 (Colo.1987); Sharpe v. Nationwide Mut. Fire Ins. Co., 62 N.C.App. 564, 302 S.E.2d 893 (1983). The issue is the subject of an annotation. Annot., Application of UCC § 1-207 to Avoid Discharge of Disputed Claim Upon Qualified Acceptance of Check Tendered as Payment in Full, 37 A.L.R.4th 358 (1985).

Cases which held that the Uniform Commercial Code (U.C.C.) § 1-207 abrogates the common law doctrine of accord and satisfaction initially stemmed from the adoption of the following construction given U.C.C. § 1-207:

"In summary the tender of a check in full satisfaction of a disputed amount will still constitute an offer of an accord and satisfaction. If the payee indorses without 'protest' or similar reservation, he will be bound by the accord and satisfaction, (at least if there was a bona fide dispute and the drawer is offering some concession). We believe that the enactment of 1-207 has substantially changed the outcome when the payee adds words of 'protest' to his indorsement. [Footnote omitted.] Certainly the post-Code case law indicates that 1-207 authorizes the payee who signs under protest to accept the amount of the check without entering an accord and satisfaction or otherwise forsaking his claim to any additional sum allegedly due him." White & Summers, Handbook of the Law Under the Uniform Commercial Code, § 13-21 (1972). ³

See Scholl v. Tallman, supra.

It must be noted that Scholl also relied upon the following observation.

"Likewise, the Commission on Uniform State Laws supports the position that § 1-207 was meant to apply to the conditional check.

'The Code rule would permit, in Code-covered transactions, the acceptance of a part ... payment tendered in full settlement without requiring the acceptor to gamble with his legal right to demand the balance of the ... payment.' 1961 Report of the Commission on Uniform State Laws, 19-20." Scholl v. Tallman, 247 N.W.2d at 492. (Omissions in original.)

That 1961 report was also cited as authority by the text cited above. That 1961 report is not a report of the National Conference of Commissioners on Uniform State laws who participated in drafting the Code. Nor was it a Comment accompanying the code when adopted in this state. Such comments are given great weight in construing a code. Boatmen's Nat. Bank v. Eidson, 796 S.W.2d 920 (Mo.App.1990). The significance of the 1961 report has been explained.

"The 1961 Report of the New York Commission on Uniform State Laws, in its section-by-section annotations reflecting the relationships between the UCC and then existing New York law, viewed sec. 1-207 as changing the common law rules governing payments tendered in full settlement. The New York report stated as follows:

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