Means v. Nelle Gertrude Berger Trust

• Decision Date: 21 November 1990
• Docket Number: No. CA,CA
• Citation: 799 S.W.2d 556,32 Ark.App. 202
• Parties: Henry N. MEANS, III, Appellant, v. NELLE GERTRUDE BERGER TRUST, Twin City Bank of North Little Rock, Arkansas, Trustee, Appellees. 90-28.
• Court: Arkansas Court of Appeals

Page 556

799 S.W.2d 556

32 Ark.App. 202

Henry N. MEANS, III, Appellant, v. NELLE GERTRUDE BERGER TRUST, Twin City Bank of North Little Rock, Arkansas, Trustee, Appellees.

No. CA 90-28.

Court of Appeals of Arkansas Division II.

Nov. 21, 1990.

Kay L. Matthews, Little Rock, for appellant.

John B. Thurman, North Little Rock, for appellees.

MAYFIELD, Judge.

This case was commenced by appellant, an attorney, to recover attorney's fees pursuant to a contingency contract with Nelle G. Berger. The case was submitted to the circuit judge upon the pleadings and a stipulation of facts. The stipulation states that in 1988 an inter vivos trust was established by Nelle Gertrude Berger, who thereafter died on December 22, 1988. According to a copy of the trust agreement, which is attached to appellant's complaint, Ms. Berger was the "settlor" of the trust into which virtually all of her assets were transferred. Prior to establishing the trust, Ms. Berger had retained the legal services of appellant to recover in excess of $50,000.00 alleged to be due from a third party as a result of a real estate transaction. Ms. Berger and appellant had agreed to a contingency fee of 35% of any net recovery.

Also, according to the stipulation, about two weeks after the trust was established the appellant wrote Ms. Berger a letter advising that a settlement had been reached for the recovery of $50,568.77 from the third party. His letter also noted that his fee was to be 35% but stated: "Since the case was not filed, I have elected to reduce my fee to 25% of the net recovery, even though most of the work has been completed on your case." Shortly thereafter, the appellant wrote to the trustee and remitted appellant's own trust account check for $37,926.58, which represented the recovery less 25% for his fee. The trustee deposited the proceeds into the trust, Ms. Berger thereafter expired, and in May of 1989 (after Ms. Berger's death), the appellant commenced this action against the trust to recover the difference between a 25% fee and a 35% fee. The trustee denied any indebtedness, affirmatively pleaded accord and satisfaction, and alleged that appellant had, on his own motion, agreed to accept $12,642.19 in full settlement and satisfaction. Paragraph 5 of the parties' stipulation reads as follows:

That the plaintiff voluntarily reduced his fee for services rendered under the said employment contract; that at the time plaintiff was paid for his services rendered, there was no dispute between the plaintiff and Mrs. Berger, nor the Trust, as to the amount of his fee, and plaintiff was paid the exact amount for his fee that he had requested from Mrs. Berger.

Another paragraph of the stipulation provides that a former neighbor and friend of decedent would testify to the facts set out in her affidavit which was attached to a motion for summary judgment filed by the appellant but not granted by the court. The affidavit essentially asserted that the appellant's fee reduction was simply a humanitarian attempt to help Ms. Berger's trust funds last during her lifetime.

After taking the matter under submission, the circuit judge found that appellant freely and voluntarily reduced his fee, that this reduced amount had been paid and accepted, and that the contract was completed and fully executed. The court, therefore, denied appellant's claim for relief; this appeal followed.

Appellant argues that the trial court erred in enforcing the modification of the contract because a subsequent agreement that modifies or changes an existing agreement must be supported by additional consideration. Feldman v. Fox, 112 Ark. 223, 164 S.W. 766 (1914); Sorrells v. Bailey Cattle Company, 268 Ark. 800, 595 S.W.2d 950 (Ark.App.1980); and Crookham & Vessels, Inc. v. Larry Moyer Trucking, Inc., 16 Ark.App. 214, 699 S.W.2d 414 (1985), are cited in support of this argument. Appellant also argues that a waiver must be supported by consideration, citing United States ex rel. Gillioz v. John Kerns Construction Co., 50 F.Supp. 692 (E.D.Ark.1943), rev'd 140 F.2d 792 (8th Cir.1944) (holding the waiver was, in fact, supported by consideration). The appellant cites Williams v. Davis, 9 Ark.App. 323, 659 S.W.2d 514 (1983), for the proposition that a compromise and settlement is contractual in nature and to have legal validity must possess the essential elements of any other contract, and refers us to 1 C.J.S. Accord and Satisfaction § 2 (1985), which states that an accord and satisfaction "arises where parties, by a subsequent agreement, have satisfied the former one, and the latter agreement has been executed." Therefore, the appellant concludes that his acceptance of a lesser fee than was agreed to--after having fully completed his agreement--was not legally binding without additional consideration, and should not be binding since the death of Ms. Berger eliminated the humanitarian motivation upon which the fee reduction was made.

However, the appellee (trustee of the fund) cites Miller v. Brown, 222 Ark. 236, 258 S.W.2d 237 (1953), where the Arkansas Supreme Court held that an agreement by a creditor to accept a smaller sum in satisfaction of a debt for a larger sum, which was carried into execution by receipt of the money and the execution of a written, signed, acknowledged, and recorded release deed, was a valid and irrevocable act. The appellee also points out that Miller held the motivation of the creditor to be immaterial:

Whether Mr. Evans who was without children, was motivated to accept in settlement a smaller amount than was legally due, by reason of his friendship for appellees, their many kindnesses, a sense of fairness, or a feeling that a 10% interest rate was exorbitant, we do not know, but the fact remains that he had a perfect right to make a settlement if mentally competent and not unduly influenced or overreached.

222 Ark. at 239-40, 258 S.W.2d at 239.

The appellant's reply brief attempts to distinguish the Miller case by pointing out that there is no deed in the case at bar and that Miller relied upon Gordon v. Moore, 44 Ark. 349 (1884), which stated:

We conclude, therefore, than [sic] an agreement by a creditor to accept a smaller sum in satisfaction of a debt, carried into execution by receipt of the money, and the execution of a formal and postive [sic] instrument of release, with all other acts essential to an absolute relinquishment of his right, is a valid and irrevocable act.

44 Ark. at 355 (emphasis added). Thus, the appellant contends that the Miller case does not support the trial court's decision in the present case. We note, however, that the court in Miller, after the above quote from Gordon, added "See, also, Dreyfus v. Roberts, 75 Ark. 354, 87 S.W. 641, 69 L.R.A. 823."

In Dreyfus, decided in 1905, the appellant's collection agency accepted $200.00 in payment of a judgment for $1,621.00, plus interest, and the collection agency sent the debtor a receipt which is set out in the opinion as follows:

Dear Sir: We have your communication with enclosure as stated [which was the $200 check], and you may consider this a receipt and satisfaction in full of the account of S.G. Dreyfus & Company v. yourself for $1,621. We will immediately have judgment satisfied, as per your request. Very truly yours,

The collection agency failed to have the judgment satisfied as promised, and Dreyfus caused execution to issue on the judgment. The trial court enjoined Dreyfus from selling property it had levied upon and held the judgment had been satisfied. In affirming the trial court, the Arkansas Supreme Court began its opinion with a discussion of the decision in Pinnel's Case, 5 Coke 117a (1602), where Lord Coke, speaking for the Court of Common Pleas, said that the payment of a lesser sum in satisfaction of a greater amount due is not a satisfaction; "but the gift of a horse, hawk, robe, etc., in satisfaction is good." Actually, the payment in the case was held to be a good satisfaction because it was paid before it was due, and our supreme court in Dreyfus pointed out that Lord Coke's statement that acceptance of a lesser sum is not valid satisfaction of the whole debt due was obiter dictum "but this dictum of this great lawyer and jurist established the doctrine at common law."

The opinion in Dreyfus also points out that the rule in Pinnel's Case has been criticized both in England and the United States. The opinion refers to the 1884 English case of Foakes v. Beer, 9 Appeal Cases, Law Reports, 605, where it was suggested that it would be an improvement if a release on payment of a lesser sum were held...