Mominee v. King

• Decision Date: 08 March 1994
• Docket Number: No. 82A01-9308-CV-277,82A01-9308-CV-277
• Court: Indiana Appellate Court
• Parties: Jules MOMINEE d/b/a Mominee Studios, Appellant-Defendant, v. Bob KING d/b/a King's Art Glass, Appellee-Plaintiff.

Page 1280

629 N.E.2d 1280

Jules MOMINEE d/b/a Mominee Studios, Appellant-Defendant, v. Bob KING d/b/a King's Art Glass, Appellee-Plaintiff.

No. 82A01-9308-CV-277.

Court of Appeals of Indiana,

First District.

March 8, 1994.

Bradley J. Salmon, Lacey Terrell Annakin Heldt & Baugh, Evansville, for appellant-defendant.

Rodney H. Grove, Grove Law Office, Evansville, for appellee-plaintiff.

NAJAM, Judge.

STATEMENT OF THE CASE

Jules Mominee appeals the trial court's money judgment in favor of Bob King. King initiated this breach of contract action to recover damages for unpaid commissions that Mominee allegedly owed him under their referral agreement. Mominee contends there was an accord and satisfaction which discharged his debt to King and that the trial court erred in its judgment.

We agree with Mominee and reverse.

ISSUE

Mominee presents three issues for our review. Because we conclude one issue is dispositive, we address only the following question: whether an accord and satisfaction results when a check, expressly conditioned as payment in full on a disputed account, is cashed by the creditor and the creditor understands the condition upon which the debtor tendered the check.

FACTS

In 1983, Mominee and King entered into an oral commission agreement. King was in the business of repairing stained glass windows and installing storm window coverings. The agreement provided that King would refer customer leads to Mominee, whose business it was to design and manufacture stained glass windows. In return for King's referrals, primarily for church window jobs, Mominee would pay King a commission equal to 10% of the contract price which the customer paid Mominee for his stained glass.

In 1984, Mominee and King orally modified their agreement and adjusted the amount of King's commission to account for changes in the design of Mominee's stained glass windows. Between late 1984 and early 1989, Mominee calculated King's commissions based on his understanding of their oral agreement and forwarded payment to King, who cashed all of Mominee's checks without requesting an accounting. However, a dispute arose in February of 1989 regarding the amount of commissions King was entitled to receive. King claimed that Mominee had not been paying him the full 10% commission and requested that Mominee pay him the alleged balance due in full. Mominee disagreed, and he and King met shortly thereafter in an attempt to resolve their dispute. They could not agree and terminated their business relationship.

During their meeting, Mominee informed King that he owed King only $812.00 in unpaid commissions for a job in Beecher, Illinois. King did not dispute that $812.00 was owed on the Beecher job, but he disagreed that it was the only unpaid commission and that it was the full amount Mominee owed him for all commissions. After the meeting, Mominee gave King his check for $812.00, dated February 10, 1989, which included the following language in the memo Subsequently, King inserted the word "not" in the memo section so that the notation then read, "Balance on Commissions Payment not in full." Record at 209 (emphasis added). On April 7, 1989, after waiting nearly two months, King endorsed and cashed Mominee's check as modified.

                section:  "Balance on Commissions Payment in full."   Record at 132, Defendant's Exhibit 6
                

King filed his complaint on December 13, 1991, and alleged that Mominee breached the parties' oral contract by not paying full commissions for seven job referrals which King sent to Mominee before the parties terminated their business relationship. Mominee moved for summary judgment on the affirmative defense of accord and satisfaction, but his motion was denied. Following a bench trial, the trial court entered judgment for King.

DISCUSSION AND DECISION

Standard of Review

Because Mominee had the burden of proof at trial on his affirmative defense, he appeals from a negative judgment. When a party appeals from a negative judgment, he must demonstrate that the evidence points unerringly to a conclusion different from that reached by the trial court. Communications Workers of America, Locals 5800, 5714 v. Beckman (1989), Ind.App., 540 N.E.2d 117, 127. We will reverse a negative judgment only if the decision of the trial court is contrary to law. Aetna Casualty & Sur. Co. v. Crafton (1990), Ind.App., 551 N.E.2d 893, 894. In determining whether a trial court's decision is contrary to law, we must determine if the undisputed evidence and all reasonable inferences to be drawn therefrom lead to but one conclusion and the trial court has reached a different one. Id.

Accord and Satisfaction

Mominee asserts that an accord and satisfaction resulted when he tendered a check to King who, understanding Mominee's intent that the check was payment in full for all commissions, accepted the check by endorsing and cashing it. King contends that the check did not satisfy Mominee's debt to him because, under Indiana law, where there exists more than one claim or account against a debtor, payment for the exact amount of one claim is not satisfaction of all outstanding claims.

"Accord and satisfaction is a method of discharging a contract, or settling a cause of action by substituting for such contract or dispute an agreement for satisfaction." Daube and Cord v. LaPorte County Farm Bureau (1983), Ind.App., 454 N.E.2d 891, 894. The term "accord" denotes an express contract between two parties by means of which the parties agree to settle some dispute on terms other than those originally contemplated, and the term "satisfaction" denotes performance of the contract. Reed v. Dillon (1991), Ind.App., 566 N.E.2d 585, 590. As a contract, accord and satisfaction requires a meeting of the minds or evidence that the parties intended to agree to an accord and satisfaction. See Erie Co. v. Callahan Co. (1933), 204 Ind. 580, 585, 184 N.E. 264, 266. Under Indiana Trial Rule 8(C), accord and satisfaction is an affirmative defense which must be specifically pleaded and proven by the party raising it. The question of whether the party making the defense has met its burden is ordinarily a question of fact but becomes a question of law if the requisite controlling facts are undisputed and clear. See Rauch v. Shots (1989), Ind.App., 533 N.E.2d 193, 194, trans. denied.

An accord and satisfaction, with regard to checks tendered as payment in full, operates as follows:

"where the amount is unliquidated or disputed, and a remittance of an amount less than that claimed is sent to the creditor with a statement that it is in full satisfaction of the claim, and the tender is accompanied by such acts or declarations as amount to a condition that if the remittance is accepted it is accepted in full satisfaction of the disputed claim, and the creditor is cognizant of such conditions, the acceptance of such a remittance by the creditor constitutes an accord and satisfaction, even though the creditor protests at the time that the amount tendered is not accepted in full satisfaction unless the debtor withdraws or waives the condition that it be accepted in full satisfaction. In other words, one who accepts and cashes a check tendered in full payment of a disputed claim cannot vary the legal effect of such acceptance as an accord and satisfaction by merely ignoring the condition and protesting that he is accepting the check as partial payment only, or by failing to sign the formal receipt enclosed acknowledging full satisfaction, or by endorsing on the check that it is accepted as part payment."

1 Am.Jur.2d Accord and Satisfaction Sec. 21, at 320. Similarly, under Indiana law, a check tendered in satisfaction of a claim must be accompanied by an express condition that the acceptance is in full satisfaction of the claim and that the creditor takes the check subject to that condition. Rauch, 533 N.E.2d at 194. Further, and most importantly, the creditor must positively understand the condition upon which the check is tendered. Id.

Here, the parties met in an attempt to resolve a disputed debt. It is uncontroverted that Mominee and King did not agree and were unable to resolve the dispute over the amount of unpaid commissions that Mominee owed King. Mominee subsequently informed King that his outstanding debt to King was $812.00, representing only the commission from the Beecher job. Mominee then tendered a check to King for that same amount. The check included a notation which...