Potter v. Pacific Coast Lumber Co. of Cal.

• Decision Date: 27 July 1951
• Citation: 234 P.2d 16,37 Cal.2d 592
• Court: California Supreme Court
• Parties: POTTER v. PACIFIC COAST LUMBER CO. OF CALIFORNIA et al. L. A. 21779.

Page 16

234 P.2d 16

37 Cal.2d 592

POTTER v. PACIFIC COAST LUMBER CO. OF CALIFORNIA et al.

L. A. 21779.

Supreme Court of California, in Bank.

July 27, 1951.

Buck & O'Reilly and John F. Runner, all of San Luis Obispo, for appellants.

Renetzky & Davis, Paul W. Davis, all of San Luis Obispo, and Laura O. Coffield, Napa, for respondent.

SPENCE, Justice.

Plaintiff sought to recover the alleged balance due under contracts for the sale of three carloads of lumber. Defendants pleaded an accord and satisfaction as an affirmative defense. The trial court made findings rejecting said defense and entered judgment in favor of plaintiff for the sum of $1,011.96. From such judgment, defendants appeal.

Defendants argue the single proposition that the findings against the existence of an accord and satisfaction are contrary to the undisputed facts. An examination of the record sustains defendants' position.

Plaintiff, a lumber broker in Oregon, contracted to sell three carloads of Oregon lumber to defendant company, a California corporation with offices in San Luis Obispo. Defendants C. V. Wilson and S. G. Truitt, as vice-president and purchasing agent, respectively, of defendant company, negotiated the contracts. The terms of sale specified grade, widths, and surfacing of the lumber and a stated price per 1,000 board feet 'F.O.B. mill,' with 2 per cent discount for cash. At the trial defendants claimed that under business custom with respect to such sales of Oregon lumber 'F.O.B. mill,' the freight charge would be at the 'Portland rate' that is, the buyer would be obligated to pay the shipping cost as computed from Portland to the point of destination unless a different zone or rate was specified; that such uniform practice prevails so that the buyer may know what his 'laid down cost is' for lumber as supplied from various small mills located in different parts of the state, and any freight cost that the seller 'may have to get the lumber into the (applicable) zone is reflected in the mill price'; and that on such basis, the buyer would regularly charge back to the seller any 'excess freight' paid to the carrier. Plaintiff denied having any knowledge of such applicable 'zone system' and the existence of such business custom. In none of the three contracts in question was there anything said concerning freight or the shipping rate chargeable except the bare term 'F.O.B. mill.'

The first order called for shipment from Oregon to San Luis Obispo. That carload arrived with a freight bill from Spokane, Washington, to San Luis Obispo, as the result of an erroneous routing. Defendant company paid the carrier's freight bill. It then remitted $2,930.14 by check to plaintiff, this sum representing the amount of plaintiff's invoice, less the 2 per cent cash discount and $86.40 as 'freight overcharge' being the difference between the freight actually paid to the carrier and the freight from Portland, Oregon.

The other two orders called for shipment, respectively, to Grover City, California, and Santa Barbara. The lumber in each of these carloads was rough-milled at Seneca, in eastern Oregon; one carload was then shipped to Brewster, Oregon, for 'remanufacture,' and from there transported to Grover City, while the other carload was shipped to Portland for 're-manufacture,' and thence to Santa Barbara. On these two shipments defendant company remitted to plaintiff by check the respective amounts of $2,594.76 and $1,772.89, having deducted in each instance the 2 per cent cash discount and the freight rate chargeable from eastern to western Oregon, respectively $500.35 and $361.49. In addition, with respect to the Santa Barbara car, these further deductions were made: '$35.71 for 'scant loading,' an extra charge exacted by the carrier because the car had not been fully loaded; $111.81 or $5 per thousand board feet, for improper surfacing of the lumber; and $223.61, or $10 per thousand board feet, for 'random widths.' With regard to these latter two items on the Santa Barbara car, it is undisputed that the contract called for twelve-inch stock exclusively, surfaced four sides; and that the lumber actually shipped consisted of 'random widths,' all of it less than twelve-inch, and was surfaced on two sides only. According to defendants, the basis of the deduction for improper surfacing was the cost, at Santa Barbara, of having the lumber surfaced as ordered; and the basis for the deduction for 'random widths' was the difference in retail price between the lumber ordered and that actually received.

In remitting for each of the three shipments, defendant company mailed a check or draft, attached to which was a voucher identifying the shipment for which payment was intended and setting forth the amount of the corresponding invoice, with deductions noted. Printed at the top of each such voucher was the following notation: 'Payee will please detach and keep this statement. Payment of sight draft attached hereto is accepted in full settlement of account stated below, and endorsement thereof will constitute payee's receipt to the Pacific Coast Lumber Company of California.' Plaintiff cashed each of the three remittance checks or drafts, and then later wrote to defendant company seeking additional payments.

The trial court found that defendants were indebted to plaintiff in the sum of $1,011.96 (apparently allowing defendants with respect to the San Luis Obispo car the deduction of $86.40 for the 'freight overcharge'; and with respect to the Santa Barbara car the deductions for 'scant loading,' improper surfacing, and 'random widths'). With respect to defendants' special plea of an accord and satisfaction, the court found that the allegations thereof (except that the checks were actually sent to plaintiff and cashed by him) were untrue, thereby finding that it was not true that by the voucher attached to each check defendant company 'informed plaintiff that it intended the check as full payment of a certain disputed claim,' or that the vouchers 'informed plaintiff that the said checks were intended as full payment,' or that 'plaintiff, by the acceptance, endorsement and/or depositing for collection of said drafts, or in any other manner, agreed to any settlement of the amount(s) due plaintiff.' Defendants properly contest the propriety of these findings relating to the alleged accord and satisfaction as without support in the record.

The great weight of authority undoubtedly supports the rule that where a claim is disputed or unliquidated and the tender of a check or draft in settlement thereof is of such character as to give the creditor notice that it must be accepted 'in full discharge of his claim' or not at all, the retention and use of such check or draft constitutes an accord and satisfaction (1 C.J.S., Accord and Satisfaction § 34, page 528); and it is immaterial that the 'creditor protests against accepting the tender in full payment' (1 Am.Jur. § 26, p. 228), for in such case 'the law permits but two alternatives, either reject or accept in accordance with the condition' (Williston on Contracts, Rev.Ed., Vol. VI, § 1856, p. 5220; see, also, 1 Cal.Jur. § 10, p. 134; annos. 34 A.L.R. 1035, 1044; 75 A.L.R. 905, 916; Lapp-Gifford Co. v. Muscoy Water Co., 166 Cal. 25, 27, 134 P. 989; Berger v. Lane, 190 Cal. 443, 447, 213 P. 45; Sierra and San Francisco Power Co. v. Universal Electric & Gas Co., 197 Cal. 376, 387, 241 P. 76; Johnston v. Burnett, 17 Cal.App. 497, 501, 120 P. 436; Russell v. Riley & Peterson, 82 Cal.App. 728, 737-738, 256 P. 557; Robertson v. Robertson, 34 Cal.App.2d 113, 118, 93 P.2d 175. Of course, for the principle of accord and satisfaction to apply in disposition of an unliquidated claim, there must be a 'bona fide dispute' between the parties (Stub v. Belmont, 20 Cal.2d 208, 218, 124 P.2d 826, but 'it matters not that there was no solid foundation for the dispute' as the test is whether 'the dispute was honest or fraudulent'. B. & W. Engineering Co. v Beam, 23 Cal.App. 164, 171, 137 P. 624; see 1 C.J.S., Accord and Satisfaction § 32(b), pages 515-517; 1 Cal.Jur. § 7, p. 131; Berger v. Lane, supra, 190 Cal. 443, 450-451, 213 P. 45; Shortell v. Evans-Ferguson Corp., 98 Cal.App. 650, 663, 277 P. 519; Everhardy v. Union Finance Co., 115 Cal.App. 460, 465, 1 P.2d 1024. Also, the debtor must make it clear that acceptance of what he tenders is subject to the condition that it shall be in full satisfaction. 1 Am.Jur. § 22, p. 223; Ann.Cas.1915A, 954; Lapp-Gifford Co. v. Muscoy Water Co., supra, 166 Cal. 25, 27-28, 134 P. 989; Biaggi v. Sawyer, 75 Cal.App.2d 105, 113-114, 170 P.2d 678.

In the application of these settled rules to the present case, defendants properly recognize that 'A finding of the trial court upon conflicting evidence will not be disturbed on appeal if there is evidence of a substantial character which reasonably supports the judgment.' Fewel & Dawes, Inc., v. Pratt, 17 Cal.2d 85, 89, 109 P.2d 650. Likewise it must be said that the conclusions of the trier of fact from evidence or testimony that is reasonably susceptible of conflicting or opposing inferences will not be set aside by an appellate tribunal. Estate of Bristol, 23 Cal.2d 221, 223, 143 P.2d 689. But these principles do not relieve an appellate court of its duty of analyzing the record for the purpose of determining whether or not there is any evidence of substantial character which reasonably supports the judgment as applied to the peculiar facts of the case. See 1 C.J.S., Accord and Satisfaction, § 49(b), pages 565-567. Upon such review, the conclusion is inescapable that the record here does not justify the finding that no accord and satisfaction was effected by the parties in settlement of plaintiff's claim, and that the trial court erred, as a matter of law, in adjudicating this issue contrary to defendants' position. 2 Cal.Jur. § 542, p. 918.

Here the check or draft in each instance remitted to plaintiff in payment for the...