Nationwide Mut. Ins. Co. v. Quality Builders, Inc.

• Decision Date: 22 January 1992
• Docket Number: Docket No. 127443
• Citation: 482 N.W.2d 474,192 Mich.App. 643
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. QUALITY BUILDERS, INC., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 474

482 N.W.2d 474

192 Mich.App. 643

NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. QUALITY BUILDERS, INC., Defendant-Appellee.

Docket No. 127443.

Court of Appeals of Michigan.

Submitted Aug. 6, 1991, at Grand Rapids.

Decided Jan. 22, 1992, at 9:20 a.m.

Released for Publication April 13, 1992.

Timothy E. Baxter, Bloomfield Hills, for plaintiff-appellant.

Hartwig, Crow & Jones by John L. Crow, St. Joseph, for defendant-appellee.

Before DANHOF, C.J., and WAHLS and GRIFFIN, JJ.

PER CURIAM.

Plaintiff appeals as of right from an order that granted summary disposition to defendant pursuant to MCR 2.116(C)(7) on the ground that plaintiff's claim for insurance premiums allegedly owed by defendant was barred by accord and satisfaction. We reverse.

In February 1986, plaintiff issued three separate one-year insurance policies to defendant: a workers' compensation policy, a business automobile policy, and a general liability policy. The workers' compensation and business automobile policies were renewed for an additional year in February 1987 and the general liability policy was replaced by a one-year blanket protection policy. Although the record is not entirely clear on this matter, it seems that in 1987 defendant came to believe that it was being overcharged for insurance premiums and failed to make a number of payments. Defendant purportedly sent a notice of cancellation to plaintiff in December 1987, followed by a check for $2,210 marked "Paid in Full" and an accompanying letter that explained how defendant had arrived at this figure.

According to statements made by plaintiff's counsel at the hearing on defendant's motion, the check was sent to a post office box designated to receive premium payments. The check was then received by plaintiff's bank, which, apparently as a matter of standard practice, deposited the check in plaintiff's account. The bank then forwarded the letter to plaintiff, which allegedly did not receive it until several months after the check was cashed. Plaintiff then sent a letter to defendant that noted the results of an insurance audit of defendant and asked for further information in order to "make any necessary adjustments" and to "clear up any discrepancies concerning your audit bill."

Plaintiff eventually brought an action against defendant, claiming that defendant owed $31,379 for insurance coverage that had been provided but for which plaintiff had not been paid. Defendant pleaded accord and satisfaction as an affirmative defense and later moved for summary disposition pursuant to MCR 2.116(C)(7). With its motion, defendant filed an affidavit that alleged that the check had been marked "Paid in Full," that the accompanying letter had stated that "[t]his pays my account with Nationwide in full," and that the check had been cashed. Plaintiff did not file an opposing affidavit.

The trial court granted defendant's motion, holding that an accord and satisfaction had been reached when the check was negotiated. Although the trial court doubted that the notation "Paid in Full" on the check, by itself, could constitute an accord between the parties, it held that an accord was reached when the check was read in conjunction with the accompanying letter and satisfaction occurred when the check was negotiated. The trial court also rejected plaintiff's argument that it could not be held accountable for the bank's act of automatically depositing the check into plaintiff's account.

Accord and satisfaction is an affirmative defense. Defendant has the burden of establishing an accord and satisfaction. Obremski v. Dworzanin, 322 Mich. 285, 290, 33 N.W.2d 796 (1948). Accord and satisfaction is based on contract principles and is generally contractual in nature. Fuller v. Integrated Metal Technology, Inc., 154 Mich.App. 601, 607, 397 N.W.2d 846 (1986). An "accord" is an agreement between parties to give and accept, in settlement of a claim or previous agreement, something other than that which is claimed to be due, and "satisfaction" is the performance or execution of the new agreement. Id. As this Court noted in Fuller, however, there is a principle that is peculiar to the law of accord and satisfaction and is not found in the general law of contracts:

That particular principle relates to a situation where one party tenders an item in full satisfaction of a claim and the other party accepts the thing tendered. In such a situation, an accord and satisfaction may arise regardless of the lack of an agreement between the parties. An accord and satisfaction may be effected by payment of less than the amount which is claimed to be due if the payment is tendered by the debtor in full settlement and satisfaction of the claim. In order to effect an accord and satisfaction under such circumstances, the tender must be accompanied by an explicit and clear condition indicating that, if the money is accepted, it is accepted in discharge of the whole claim. [154 Mich.App. at 607-608, 397 N.W.2d 846.]

The relevant inquiry in such a situation is not whether the creditor accepted a new agreement, but whether the creditor accepted the condition that accompanied the tender. Once the tender itself is accepted, the creditor may be bound by the condition. As our Supreme Court explained in Shaw v. United Motors Products Co., 239 Mich. 194, 196, 214 N.W. 100 (1927):

The applicable rule of law is, if the tender is in full satisfaction of an unliquidated claim, the amount of which is in good faith disputed by the debtor, and the creditor is fully informed of the condition accompanying acceptance, an accord and satisfaction is accomplished if the money tendered is retained; for there can be no severance of the condition from acceptance and it avails the creditor nothing to protest and notify the debtor that the amount tendered is credited on the claim and not accepted in full satisfaction.

Thus, in the present case defendant was required to show (1) its good faith dispute of (2) an unliquidated claim of plaintiff, (3) its tender of money in satisfaction of the claim, and (4) plaintiff's acceptance of the tender. Defendant must also show that plaintiff was fully informed of the condition. This does not mean that defendant must show plaintiff's express acceptance of the condition; rather, the law of accord and satisfaction is that where a creditor accepts a conditional tender, the creditor also assents to the condition. Shaw, supra. The law will deem a creditor to have been fully informed where the tender of money in full payment of a disputed claim is made in unequivocal terms. "The law requires that in order to accomplish an accord and satisfaction the statement that is so intended must be clear, full and explicit." Durkin v. Everhot Heater Co., 266 Mich. 508, 513, 254 N.W. 187 (1934). See also DMI Design & Mfg., Inc. v. ADAC Plastics, Inc., 165 Mich.App. 205, 418 N.W.2d 386 (1987).

Upon a grant of summary disposition pursuant to MCR 2.116(C)(7), we will review the validity of the movant's claim by examining any pleadings, affidavits, depositions, admissions, and documentary evidence filed or submitted by the parties. Durant v. Dep't of Education (On Second Remand), 186 Mich.App. 83, 96, 463 N.W.2d 461 (1990); Fuller, supra 154 Mich.App. at 606-607, 397 N.W.2d 846. If the pleadings show that a party is entitled to judgment as a matter of law, or if the affidavits or other proofs show that there is no genuine issue of material fact, the trial court must render judgment without delay. MCR 2.116(I)(1); Paterek v. 6600 Limited, 186 Mich.App. 445, 447, 465 N.W.2d 342 (1990); Fuller, supra 154 Mich.App. at 607, 397 N.W.2d 846.

In this case, plaintiff argues on appeal, as it did below, that issues of fact preclude summary disposition. For example, plaintiff argues that the bank's role in depositing the check raises factual questions of an agency relationship between the bank and plaintiff and whether a "meeting of the minds" occurred. These facts, however, are not found in the pleadings. Furthermore, plaintiff failed to file an affidavit or any documentary evidence setting forth these facts in opposition to defendant's motion. Plaintiff was required to do so under MCR 2.116(G)(4). McCart v. J. Walter Thompson USA, Inc., 437 Mich. 109, 115, n. 4; 469 N.W.2d 284 (1991). Plaintiff has also attached documentary evidence to its appellate brief that is not found in the trial court record and will not be considered by this Court on appeal. Wiand v. Wiand, 178 Mich.App. 137, 143, 443 N.W.2d 464 (1989). We need not decide, however, whether an unsupported allegation made at oral argument is sufficient to raise a genuine issue of material fact, because we believe that one...