Smoot v. Checketts

• Decision Date: 14 June 1912
• Docket Number: 2230
• Citation: 125 P. 412,41 Utah 211
• Court: Utah Supreme Court
• Parties: SMOOT v. CHECKETTS et al

125 P. 412

41 Utah 211

SMOOT v. CHECKETTS et al

No. 2230

Supreme Court of Utah

June 14, 1912

APPEAL from District Court, Second District; Hon. J. A. Howell Judge.

Action by William S. Smoot against Joseph Checketts and another doing business under the name of Checketts & Bradeson, and others.

Judgment for plaintiff. Defendants appeal.

AFFIRMED.

A. G Horn for appellants.

Agee & McCracken, J. N. Kimball and R. S. Farnsworth for respondent.

FRICK, C. J. McCARTY, J., concurs. STRAUP, J., dissenting.

OPINION

FRICK, C. J.

The respondent, William S. Smoot, for himself and as the assignee of other lien claimants, commenced this action to foreclose certain mechanics' liens. Ray A. Ross filed a cross-complaint, but, for the purposes of this opinion, he will be treated the same as though he were an assignee of the respondent Smoot. The district court found the issues in favor of the lien claimants and ordered that the premises against which the liens were claimed be sold.

The controlling facts, stated as briefly as possible, are: That Checketts & Bradeson, as copartners, and hereafter called contractors, in April, 1908, entered into a contract with the Inter-Mountain Fair Association, a corporation, hereafter styled association, whereby said contractors agreed to furnish the labor and material to construct and complete certain buildings, and also to remove and repair certain other buildings and structures for said association, for the agreed price of $ 2,839, payable on and before the completion of the buildings and structures aforesaid. Said contractors became financially embarrassed, and some time in the latter part of July, 1908, before completing the buildings and structures aforesaid, abandoned their contract. Prior to said abandonment, said contractors had, however, contracted debts and obligations for material used in and for labor performed upon said buildings and structures. The controversy in this case is limited to the claims for labor performed as aforesaid.

One of the principal questions presented for determination arose out of the following circumstances, namely:

A short time after the contractors had abandoned their contract, a number of the laborers who had been employed by said contractors, and who, under such employment, had performed labor upon the buildings and structures aforesaid, met with some of the officers of the association and demanded payment for their labor, and, in case payment were not made, they threatened to file liens under the statutes of this state against said buildings and structures. After some discussion, the association paid the claimants about one-third of what was due them for labor, and took from each of them a receipt in the following form: "Ogden, Utah, July 31, 1908. Received of Inter-Mountain Fair Association dollars, in full of all claims against the above association for labor." The amount that was paid to each claimant was inserted in his receipt, and each one signed a separate form. In its answer, the association pleaded the foregoing payment as an accord, satisfaction, and settlement of all claims. The claimants, however, denied such compromise or settlement. Upon that issue the court found that, when the foregoing payments were made and the receipts executed and delivered, "there was in fact no agreement that either of said parties would release the said defendant (association), or the defendants Checketts & Bradeson (the contractors) from liability to them, and, further, that there was no dispute at the time of said payments as to the amounts then due and owing to the said plaintiff" or his assignors, including Ross. The court further found that there was no consideration to support the alleged accord and satisfaction, and further found that the payments made as aforesaid were made out of money that was due and owing by said association to said contractors. The court further found that, although said contractors had abandoned said contract, notwithstanding that fact "there was sufficient money remaining in its (the association's) hands of the contract price of the work to be performed under said contract after the payment for the completion of said work to pay the plaintiff and his assignors" together with all other claims for material. Upon these facts the court found, as a conclusion of law, that there was neither a compromise settlement nor an accord and satisfaction of said claims.

It is now insisted by the attorney for the association that the court erred in its findings as aforesaid. From the facts as found, which, in our judgment, are sustained by the evidence, the payments relied on by the association do not constitute an accord and satisfaction, nor did the transaction between the claimants and the officers of the association amount to a compromise and settlement of unliquidated or disputed claims. There was no dispute whatever between the officers of the association and the labor claimants with respect to the amount that was due to any one of them from the contractors. Neither was there any question with regard to whether the claimants, as a matter of law, were entitled to file liens against the buildings and structures of the association for the full amount of their claims. The mere fact that, under such circumstances, the claimants executed receipts in full when they had in fact received only about one-third of the amounts then due them from the contractors for labor is of slight, if any, importance. As to whether the receipt of a less sum will discharge a greater one does not depend upon the form of the receipt that is given.

When it is claimed that the payment by the debtor of a sum of money less than is due and owing to the creditor is a payment in full discharge of the entire amount due, a receipt acknowledging full payment standing alone is not controlling. If such a payment is based upon a sufficient independent consideration, or upon a compromise of a disputed or an unliquidated claim, and under such circumstances the lesser sum is received as payment in discharge of the larger one, the payment is binding upon the creditor. (Barnum v. Green, 13 Colo. App. 254, 259, 57 P. 757; Johnson v. Simmons, 76 Minn. 34, 78 N.W. 863; Canadian Fed. Co. v. McShane, 80 Neb. 551, 114 N.W. 594, 14 L. R. A. (N. S.) 443, 127 Am. St. Rep. 791; Farmers' & Mechanics' Life Ass'n v. Caine, 224 Ill. 599, 79 N.E. 956; Prudential Ins. Co. v. Cottingham, 103 Md. 319, 63 A. 359; Ness v. Minnesota & Colo. Co., 87 Minn. 413, 92 N.W. 333.)

In the foregoing cases, the doctrine of what constitutes a sufficient consideration for the discharge of a debt then due by the payment of an amount less than the whole debt is fully illustrated. Under the authority of every one of the cases referred to above, with many others which might be cited, the payment in the case at bar did not amount to either a compromise of a disputed claim or an accord and satisfaction.

Nor is the contention of counsel for the association tenable that the payments made were in the nature of a composition agreement with creditors, and hence are binding upon the lien claimants, as constituting a part of the creditors of the contractors. It is undoubtedly the law that, where all or a part of the creditors of a particular debtor agree among themselves that each will receive from the debtor, or out of his property or funds, a certain amount or per cent. of the creditor's claim in full payment or discharge of his entire claim, such an agreement is binding upon all the creditors who are parties to the same. In order that such an agreement be binding, however, there must be an agreement or understanding to the effect just stated by the creditors among or between themselves. In other words, there must be mutuality among the creditors in order to bind any of them. In the cases of Gage v. De Courcey, 68 N.H. 579, 41 A. 183; Bartlett v. Woodworth Mason Co., 69 N.H. 316, 41 A. 264, and Sage v. Valentine, 23 Minn. 102, the principles now under consideration are clearly illustrated and applied. The facts in the case at bar do not bring it within the principles aforesaid.

Counsel, however, insist that, under the facts, the case at bar falls within the doctrine that where one not the debtor, and who is not under any legal or moral obligation to pay the debt, does pay a sum less than the whole debt, and the creditor agrees and does receive the lesser sum in discharge of the greater one, the creditor is bound and cannot thereafter sustain an action for the remainder. This doctrine is clearly stated by Mr. Justice Collins in the case of Clark v. Abbott, 53 Minn. 88, 55 N.W. 542, 39 Am. St. Rep. 577. It is also applied in the case of Gordon v. Moore, 44 Ark. 349, 51 Am. Rep. 606. The foregoing doctrine has and can have no application as between material and laboring men and the owner of buildings and structures under our mechanics' lien statute. The owner of the building and the material or laboring men are not strangers within the purview of the foregoing doctrine. Under our statute (C. L. 1907, sec. 1374), the association had no authority to make any payments before such payments were due in accordance with the terms of the contract, and, if it made any payments, they, under the statute, had to be treated "as if not made," so far as the rights of the respondent and his assignors are concerned. The statute is applicable although, as in this case, the contractor "may thereafter abandon his contract."

As we have seen, the contract price was not payable unless and until the structures contracted to be erected were completed. We have also called attention to the fact that Checketts &amp Bradeson, the contractors, never completed their contract, but abandoned the structures before completing them. The provisions of section...