E.S. Herrick Co. v. Maine Wild Blueberry Co., 7548

• Decision Date: 07 February 1996
• Docket Number: Docket No. H,No. 7548,7548
• Citation: 670 A.2d 944
• Parties: E.S. HERRICK CO. v. MAINE WILD BLUEBERRY CO. DecisionLawan 95 322.
• Court: Maine Supreme Court

Page 944

670 A.2d 944

E.S. HERRICK CO. v. MAINE WILD BLUEBERRY CO.

Decision No. 7548.

Law Docket No. Han 95 322.

Supreme Judicial Court of Maine.

Argued Dec. 7, 1995.

Decided Feb. 7, 1996.

Barry K. Mills (orally), Hale & Hamlin, Ellsworth, for Plaintiff.

Brett D. Baber (orally), Rudman & Winchell, Bangor, for Defendant.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, DANA, and LIPEZ, JJ.

DANA, Justice.

Maine Wild Blueberry Co. (Maine Wild) appeals and E.S. Herrick Co. (Herrick) cross-appeals from a judgment entered in the Superior Court (Hancock County, Marsano, J.) awarding Herrick damages for Maine Wild's breach of contract. Maine Wild contends that the court erred in determining that Herrick was not bound by an accord and satisfaction and was contractually required to negotiate the amount of the "field price" due under the 1990 contract. Both parties challenge the amount of the damage award. Because we find that Herrick was bound by an accord and satisfaction, we vacate the judgment.

At a jury-waived trial the following facts emerged. Maine Wild entered into a contract to purchase from Herrick all of Herrick's wild blueberries for the 1990 crop year. Maine Wild agreed to pay "10cents per pound over field price." ¹ The 1990 contract was substantially similar to earlier contracts between the parties that also contained references to the field price and a premium. ² A dispute between the parties arose during the 1990 crop year regarding the meaning of the term field price and the amount Maine Wild owed Herrick following Herrick's delivery of its blueberries.

Between 1984 and the beginning of 1990, when Frederick Kneeland was the President of Maine Wild, the determination of the field price had never been a problem. When Kneeland became ill in 1990, Amr Ismail became president of Maine Wild and involved in determining the field price for the 1990 crop year. Ismail testified that after Herrick and the other growers had delivered their blueberries, Maine Wild announced that it considered 30cents a pound to be the field price. Following a meeting between Maine Wild and its dissatisfied growers at which Maine Wild was informed about field prices as high as 40cents a pound being paid by other buyers, Maine Wild agreed to increase its field price from 30cents to 33cents a pound. Maine Wild ultimately paid all of its 1990 growers, including Herrick, based on a field price of 33cents a pound.

Maine Wild had initially paid Herrick for 1,240,755 pounds of blueberries based on a field price of 30cents. Early in 1991 Maine Wild advanced another 2cents per pound and on May 1, 1991, Maine Wild sent a payment to Herrick with a cover letter stating: "[e]nclosed is a check for $12,407.55 representing final settlement for blueberries that Maine Wild purchased from you in 1990." ³ Herrick cashed the check without first telling Maine Wild it was not accepting the check in final settlement. Herrick brought suit to recover the balance owed based on a 37cents field price.

The court concluded there was no accord and satisfaction because it found that Maine Wild had agreed that it owed Herrick 33cents per pound and it was simply paying that amount and because Herrick had previously made it clear to Maine Wild that it did not agree that 33cents was the field price. The court found that the 33cents field price had been unilaterally determined rather than negotiated as the contract required and that if the field price had been negotiated it would have been 35cents per pound. It entered a judgment that awarded Herrick damages in the amount of $24,815.10, plus interest and costs.

Accord and satisfaction is an affirmative defense, M.R.Civ.P. 8(c), and the party asserting an accord and satisfaction has the burden of showing that an accord and satisfaction has occurred by a preponderance of the evidence. Soucier v. Wall, 581 A.2d 422, 423 (Me.1990) (citing Stultz Elec. Works v. Marine Hydraulic Eng'g Co., 484 A.2d 1008, 1010 (Me.1984)); Bryson v. Kenney, 430 A.2d 1102, 1104 (Me.1981) (party raising issue of accord and satisfaction bears the burden of proving that debtor tendered amount in satisfaction of particular demand and creditor accepted it as such). An accord " 'is a contract under which an obligee promises to accept a substituted performance in future satisfaction of the obligor's duty.' " Stultz, 484 A.2d at 1011 (quoting Restatement (Second) of Contracts § 281 (1981)).

"Unless it is evidenced by a clear and unambiguous writing, the existence of an accord and satisfaction is a question of fact." Judkins Ins. Agency, Inc. v. Whitney, 588 A.2d 298, 299 (Me.1991) (citing Emerson v. Sweet, 432 A.2d 784, 785 (Me.1981)). We will not disturb the trial court's factual findings unless they are clearly erroneous because they are not supported by competent evidence in the record. McGraw v. S.D. Warren Co., 656 A.2d 1222, 1224 (Me.1995). "Accord and satisfaction may exist as a matter of law if 'an amount is tendered on a clear and unambiguous written condition that it be accepted in full settlement of all claims pending between the parties' and the claimant accepts payment of the amount tendered." Emerson, 432 A.2d at 785 (citing Wiggin v. Sanborn, 161 Me. 175, 178, 210 A.2d 38, 39 (1965)); see Michaud v. Vahlsing, Inc., 264 A.2d 539, 541 (Me.1970) (if there is no question of parties' intent and only one finding can be made, accord and satisfaction is established as a matter of law).

We have consistently concluded that a check bearing language that states " 'full and final payment' or 'in satisfaction of all claims' creates an accord and satisfaction when cashed or deposited by the payee." Stultz, 484 A.2d at 1010; see, e.g., Graffam v. Geronda, 304 A.2d 76 (Me.1973); Wiggin v. Sanborn, 161 Me. 175, 210 A.2d 38 (Me.1965); Larsen v. Zimmerman, 153 Me. 116, 135 A.2d 270 (1957). When the condition on which the tender is made is ambiguous or there is doubt as to what the parties intended or should have reasonably understood, we have found that there is no accord and satisfaction as a matter of law. See Emerson, 432 A.2d at 786-87 (check endorsed made no reference to "satisfaction" of any "claim" or "finality"); Farina v. Sheridan Corp., 155 Me. 234, 245, 153 A.2d 607, 614 (1959) (although check was marked "in full" exchange of correspondence between the parties raised an issue as to their mutual understanding); Fuller v. Smith, 107 Me. 161, 167, 77 A. 706, 709 (1910) (debtor stated in letter accompanying check "all my indebtedness" but spelled out how he calculated sum tendered leaving open the inference those were the only items intended to be settled).

Although in the instant case the language "final settlement" was written in the cover letter accompanying the check, as opposed to on the check itself, we have held that an accord and satisfaction is created by cashing a check that is accompanied by a letter bearing restrictive language. See Soucier, 581 A.2d at 423-24 (employee's cashing a check marked "accrued vacation time/severance pay" accompanied by a letter that referred to "settlement" constituted an accord and satisfaction in wrongful discharge claim).

In analyzing language that allegedly creates an accord and satisfaction we have focused on whether such language "has provided the payee with sufficient notice of the payor's intent." Stultz, 484 A.2d at 1010 (citing Graffam, 304 A.2d at 79-80). In Stultz we held that the unambiguous notation of full payment was an offer to create a new contract, an accord, and that the payee assented when it endorsed and deposited the check. Stultz, 484 A.2d at 1011. As a result, we concluded that "there is no acceptable alternative to finding that the Defendant's terms became binding." Id. (citing Graffam, 304 A.2d at 80).

The letter in the instant case did not use the specific language that the check in Stultz bore, "[e]ndorse only as...