Peterson v. Ramsey County

• Citation: 563 N.W.2d 103
• Decision Date: 13 May 1997
• Docket Number: No. 960131,960131
• Parties: Ronald PETERSON, d/b/a Ronald Peterson Construction, Plaintiff and Appellee, v. RAMSEY COUNTY, a/k/a Ramsey County Sewer District # 1, Defendant and Appellant. Civil
• Court: United States State Supreme Court of North Dakota

Page 103

563 N.W.2d 103

1997 ND 92

Ronald PETERSON, d/b/a Ronald Peterson Construction, Plaintiff and Appellee, v. RAMSEY COUNTY, a/k/a Ramsey County Sewer District # 1,

Defendant and Appellant.

Civil No. 960131.

Supreme Court of North Dakota.

May 13, 1997.

Peter K. Halbach (argued), Haugland, Halbach and Halbach, Devils Lake, for defendant and appellant.

Cameron D. Sillers (argued), Cameron D. Sillers, PC, Langdon, for plaintiff and appellee.

MARING, Justice.

¶1 Ramsey County appeals the trial court's Judgment dated December 8, 1995, and order denying its motion for new trial dated April 22, 1996. We affirm the judgment and order.

¶2 In September 1988 Ronald Peterson, doing business as Ronald Peterson Construction Company (Peterson), entered into a written contract with Ramsey County (the County or the owner) to "commence and complete the construction of Small Diameter Gravity Sewers...." Peterson's work was to be supervised by the project engineer, Olson-Kaufman, Inc. (the engineer). The contract documents provided that any changes in the contract or the contract price must be in written form, called a change order, and authorized before any changes in work, materials or price took place. Throughout the project, however, the engineer or representatives of the County directed Peterson to make additions or other modifications in the field. These changes were often directed and completed without prior authorization in the form of a written change order. The trial court concluded oral modifications were made to the general contract by mutual agreement in this manner and the County does not appeal this finding.

¶3 Peterson substantially completed work on the project in May of 1990 and the final inspection and acceptance of the project was conducted by the engineer. A dispute arose at the end of the project as a result of the additions and modifications which had occurred in the work performed. On or about May 5, 1992, the County issued a Warrant-Check to Peterson for $11,980.72, which the County intended as the final payment for performance of the contract. The check did not contain a restrictive endorsement informing Peterson that cashing the check would constitute a full and complete settlement of the disputed issues, nor was the check accompanied by a letter informing Peterson of such consequences.

¶4 On May 29, 1992, Peterson wrote a letter to the County setting forth a number of issues and claims that had arisen during the performance of the contract. In this letter, Peterson in essence informed the County he did not accept the proffered $11,980.72 check as final payment for the work performed, and requested an additional $37,667.14 on the contract. On June 23, 1992, the Ramsey County State's Attorney sent a letter to Peterson stating the check for "approximately $11,900" was the County's "final offer for final payment." On January 4, 1993, after several months with no communication between the parties, Peterson cashed the $11,980.72 check and brought suit against the County to recover the $37,667.14 balance.

¶5 In its answer to Peterson's complaint, the County asserted the affirmative defense of accord and satisfaction. A bench trial was held on June 27 and 28, 1995. The trial court entered judgment in favor of Peterson in the amount of $56,783.05 on December 8, 1995. After judgment was entered, the County moved for a new trial on the grounds the findings, conclusions, and order of the court were contrary to and against the law, and the evidence was insufficient to justify the court's findings. On April 22, 1996, the motion was denied. The County appeals the judgment and order denying its motion for a new trial.

¶6 The County contends Peterson's retention and cashing of the check tendered as "final offer for final payment" created an accord and satisfaction as a matter of law; or in the alternative, that the trial court's refusal to find an accord and satisfaction under the facts was clearly erroneous.

¶7 The question of whether there is an accord and satisfaction is a question of fact. See, e.g., Herb Hill Ins., Inc. v. Radtke, 380 N.W.2d 651 (N.D.1986); Shirazi v. United Overseas, Inc., 354 N.W.2d 651 (N.D.1984). This Court will not reverse a trial court's finding of fact on appeal unless it is clearly erroneous. Rule 52(a), N.D.R.Civ.P. "[A] finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence supports it or if, on the entire record, we are left with a definite and firm conviction that a mistake has been made." Matter of Estate of Murphy, 554 N.W.2d 432, 436 (N.D.1996) (citation omitted).

¶8 The County argues the question of whether there was an accord and satisfaction in this case is a question of law and not a question of fact. When the evidence is such that a reasonable person can draw only one conclusion, a question of fact becomes a question of law. Malarchick v. Pierce, 264 N.W.2d 478, 479 (N.D.1978). Questions of law are not reviewed under the clearly erroneous standard. A review of the record reveals that a reasonable person could draw more than one conclusion from the facts of this case. We conclude the "clearly erroneous" standard of review applies here. Rule 52(a), N.D.R.Civ.P.

I

¶9 Accord and satisfaction are defined by statute in North Dakota. ¹ N.D.C.C. § 9-13-04 defines accord as, "an agreement to accept in extinction of an obligation something different from or less than that to which the person agreeing to accept is entitled." N.D.C.C. § 9-13-05 defines satisfaction as, "[a]cceptance by the creditor of the consideration of an accord extinguishes the obligation and is called satisfaction." "The 'accord' is the agreement and the 'satisfaction' is its execution or performance." Shirazi v. United Overseas, Inc., 354 N.W.2d 651, 654 (N.D.1984).

¶10 This court has had several opportunities to interpret these statutes. See Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 495 (N.D.1996); Mougey v. Salzwedel, 401 N.W.2d 509, 513 (N.D.1987); Herb Hill Ins., Inc. v. Radtke, 380 N.W.2d 651, 652 fn.1 (N.D.1986); Dangerud v. Dobesh, 353 N.W.2d 328, 332 (N.D.1984); Shirazi v. United Overseas, Inc., 354 N.W.2d 651, 654 (N.D.1984); Malarchick v. Pierce, 264 N.W.2d 478, 479 (N.D.1978); Frank v. Daimler-Benz, A.G., Stuttgart, West Germany, 226 N.W.2d 143, 147 (N.D.1975). We have consistently held an essential element of an accord and satisfaction is an agreement evidencing the parties' mutual assent. See, e.g., Earthworks, Inc., 553 N.W.2d at 495. Accord and satisfaction is an affirmative defense and the burden of proof is on the party raising the defense. Shirazi v. United Overseas, Inc., 354 N.W.2d 651, 654 (N.D.1984). The trial court found the County did not meet its burden of proving Peterson had agreed to accept the $11,980.72 check as settlement of all his claims.

¶11 The County contends this case is comparable to Malarchick v. Pierce, 264 N.W.2d 478 (N.D.1978), in which this court concluded an accord and satisfaction had occurred as a matter of law when a contractor cashed a check offered as full settlement of the disputed claim. The facts of Malarchick, however, are clearly distinguishable. In Malarchick, the contractor performed work on the Pierces' home under a "loose" agreement without a specified price. After Malarchick had substantially completed the work, a dispute arose as to the price. Malarchick was given a check for $3,500 as a full settlement by the Pierces. While at one point Malarchick denied he understood the $3,500 check was offered as full settlement, Malarchick later testified that, although he was not pleased with the offer of $3,500 as a full settlement, he knew at all times the offer was for a full settlement. Because that understanding evidenced a meeting of the minds, Malarchick's cashing of the check constituted an accord and satisfaction. In this case, Peterson testified he never understood the $11,980.72 as a full settlement of all his disputed claims. In fact, he testified he cashed the check with the understanding he could still pursue his disputed claims against the County. The County's reliance on Malarchick is misplaced.

¶12 The County also cites case law from other jurisdictions. We find those cases unpersuasive in light of our own statutes and case law. Mere negotiation of a check without evidence of mutual assent does not constitute accord and satisfaction under North Dakota law.

¶13 When Peterson received the May 5, 1992, check, there was no indication it was intended as an offer of "final payment." The check was not accompanied by a letter or other statement describing it as final payment for Peterson's work, nor did the check itself contain any language restricting its endorsement. The engineer did suggest the $11,980.72 amount as final payment in a May 1, 1992, letter to the Ramsey County Commissioners, and a copy of that letter was sent to Peterson Construction Company. On May 29, 1992, however, Peterson wrote to the County detailing work performed and requesting an additional payment of $37,667.14. He also indicated in his letter that if his offer to settle for $37,667.14 was not accepted he would start legal proceedings. After the County received this letter, the State's Attorney wrote to Peterson stating, "[t]he County Commissioners decided that the final offer to you for final payment enclosure of Phase II of the project shall be in the amount of the check which had been forwarded to you previously, of approximately $11,900." Peterson was not present at the Ramsey County Commission meeting when that decision was made. On or about January 4, 1993, Peterson cashed the $11,980.72 check.

¶14 The County contends Peterson's conduct in cashing the check was sufficient evidence to demonstrate his agreement to accept the check as full and final settlement. The County also argues the trial court's reliance on Shirazi v. United Overseas, Inc., 354 N.W.2d 651 (N.D.1984) is erroneous. We do not agree...