Studstill v. American Oil Co.

• Decision Date: 21 June 1972
• Docket Number: Nos. 1,No. 47019,2,3,47019,s. 1
• Citation: 126 Ga.App. 722,191 S.E.2d 538
• Parties: Z. D. STUDSTILL, Jr. v. AMERICAN OIL COMPANY
• Court: Georgia Court of Appeals

Page 538

191 S.E.2d 538

126 Ga.App. 722

Z. D. STUDSTILL, Jr. v. AMERICAN OIL COMPANY.

No. 47019.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

June 21, 1972.

Rehearing Denied July 19, 1972.

Syllabus by the Court

Where one remits to another a sum less than that claimed to be due with the understanding express or implied that it is in full settlement of the obligation, acceptance and retention by the creditor of the sum results in an accord and satisfaction. Mere retention of a check tendered in full payment without any affirmative act or use does not result in satisfaction of the claim. Retention of a check offered in full settlement for an unreasonable time without cashing or using it but also without indicating a refusal to accept it in full settlement may in law constitute an acceptance, against the intention of the creditor not communicated to the debtor. But where, over a period of approximately six months, the debtor and creditor negotiated over whether the tendered and uncashed check should constitute a full or a partial settlement, and the debtor was at all times advised that it would not be accepted if intended as settlement in full, mere retention thereafter of the stale check did not result in an accord and satisfaction so as to bar the present action for damages for personal injury.

The plaintiff Studstill was injured in an automobile collision due to the alleged negligence of the operator of an American Oil Company truck. The company promptly paid for Studstill's automobile and has never claimed that this was more than a payment or partial settlement relating to property damage only. Thereafter, on April 27, 1970 it mailed a $10,000 check to the plaintiff with a letter stating that this was 'in settlement of the above claim for injury and damage' and that 'we are willing to do this without obligation on your part to sign releases or agreements.' The instrument itself had five possible check boxes for purpose of payment; 'Ind. Dam.' was checked; 'Med.' and 'Final' were not. It was never cashed. According to the plaintiff's affidavit he attempted during the next six weeks to contact the defendant's agent with whom he had been dealing to ascertain whether the check was intended to be a part payment or a full settlement, was unable to make contact, and eventually employed counsel. This attorney wrote the company on June 18, 1970 asking for clarification, stating that $10,000 would not constitute an equitable settlement and that plaintiff was holding the draft pending clarification of the company's position. Under date of August 4 he wrote again, stating that he had been promised written confirmation of a telephone statement by the agent that the check might be cashed as part payment of the claim. On August 25 the agent replied, apologized for the delay, and stated that the $10,000 must be considered a final settlement. This was followed on October 12, 1970 by a demand that the plaintiff either accept the offer and negotiate the check or else return it. On November 9 plaintiff's attorney replied advising that Mr. Studstill definitely would not settle for $10,000 but offered to continue discussions. He did not return the draft. Apparently no further settlement moves were made. The plaintiff filed suit April 22, 1971. On May 5 and 13 defendant requested that the check be returned and plaintiff's counsel, to whom plaintiff had turned over the instrument, refused to surrender it. He did, however, return it by mail on July 29 after the defendant had filed a motion for summary judgment based on accord and satisfaction. The defendant promptly returned it to plaintiff's attorney on August 3, plaintiff's attorney returned it to defendant on August 11, and defendant then stated he was holding it pursuant to plaintiff's order.

On November 16 the trial court, holding that these maneuvers constituted an irrevocable accord and satisfaction, granted the defendant's motion for usmmary judgment and plaintiff appeals.

Rembert C. Cravey, McRae, for appellant.

Smith & Harrington, Will Ed Smith, Eastman, for appellee.

DEEN, Judge.

Checks are payable on demand (Code Ann. § 109A-3-104(2)(b) within a reasonable time after issuance and, when not certified, 30 days is to be considered a reasonable time in which to present for payment (Code Ann. § 109A-3-503(2) (a)). 'Bank checks . . . are not payment until themselves paid.' Code § 20-1004. "An agreement by a creditor to receive less than the amount of his debt cannot be pleaded as an accord and satisfaction, unless it be actually executed by the payment of the money, or the giving of additional security, or the substitution of another debtor, or some other new consideration . . . and, in the absence of an agreement to the contrary, a bank check thus tendered as in full payment is not such until it is itself paid' (Colfax Gin Co. v. Buckeye Cotton Oil Co., 24 Ga.App. 610(2), 101 S.E. 697) or unless the check is itself accepted as payment. Interstate Life & Accident Co. v. Wilson, 52 Ga.App. 171(2), 183 S.E. 672.

While it is clear that an executed accord and satisfaction, by accepting money or cashing a check given in full settlement for less than the amount of the demand, is in bar of an action to collect any excess (Rivers v. Cole Corp., 209 Ga. 406, 73 S.E.2d 196) and while retaining a check for an unreasonable length of time may lead to the legal conclusion that it has in fact been accepted as payment (cases to which effect are discussed below) nevertheless, 'an agreement by a creditor to receive less that the amount of his debt cannot be pleaded as an accord and satisfaction, unless it be actually executed by the payment of the money, . . . or some other new consideration.' Code § 20-1204. (Emphasis supplied).

It follows that if it is intended to accept a check as payment of a demand, that check should be promptly presented for payment, usually within a 30-day period. Where, in the absence of circumstances suggesting a contrary state of facts, the check, although not cashed, is kept for a period greatly in excess of this time, such retention may of itself cause the debtor to rely on the theory that his offer (accord) has been accepted (satisfaction), in which case the creditor no longer has a right of action for the excess. That, however, is not the situation here. It was perfectly clear to both parties as long as six months after the initial action of the company in forwarding the check that the plaintiff had not and would not accept it if it was to be construed as an accord and satisfaction. This is shown by the letter of October 12 which commences: 'I must assume that your client, Mr. Jack Studstill, Jr., has chosen not to accept our offer, as Mr. Studstill had not negotiated our draft.' By that time the check was already stale, since a bank is under no obligation to a customer to pay a check, other than a certified check, which is presented more than six months after its date. Code Ann. § 109A-4-404. Nor was it in the plaintiff's possession when the summary judgment order was entered. Where both parties recognize that there has been no agreement in existence at or very close to a time when there is no obligation on the drawee to honor the instrument even if it should be presented, there has obviously been no meeting of the Minds on the compromise settlement. 'It is only when there is a dispute as to the amount due, and one party tenders and the other accepts the check reciting that it is in payment in full of a demand, and the check is subsequently paid that the reception and retention of a check can be set up as accord and satisfaction.' Meeks v. Moulton, 46 Ga.App. 35(2), 166 S.E. 445. (Emphasis supplied). 'A defense by one sued for a trespass that he gave his promissory notes in settlement of the claim for damages is not sufficient to prevent the plaintiff from recovering upon the original cause of action unless it is shown that the notes have been paid, or that there was an express agreement between the parties that the notes should be received by the plaintiff as payment of his claim for damages.' Brantley Co. v. Lee, 109 Ga. 478, 34 S.E. 574. Here there is no showing that the plaintiff ever expressly agreed to receive the check as payment; in fact, the contrary is established beyond dispute.

The cases cited by the appellee do not require a contrary ruling. In Hamilton & Co. v. Stewart, 108 Ga. 472, 34 S.E. 123 a check to cover balance of payment was in fact cashed. In Plowden v. Hall, 55 Ga.App. 321, 190 S.E. 37 the landlord accepted and held the tenant's check for the very period in which he was attempting to evict him for nonpayment of rent; there being no showing that the check was void, it was held that the undisputed facts showed the tenant was not in arrears for the period on which the eviction proceeding was based. The rule is stated in Pan-American Life Ins. Co. v. Carter, 57 Ga.App. 294, 195 S.E. 326 that it matters not whether the tender be of cash or a check; if the check is accepted in full settlement an accord and satisfaction will result. Here the evidence is clear that the plaintiff never at any time considered accepting $10,000 in full settlement of his individual damage. Gay v. American Oil Co., 115 Ga.App. 18, 153 S.E.2d 612 is also a case involving an attempted lease forfeiture where the landlord retained a rent check, and follows Pan-American Life Ins. Co. v. Carter, supra, merely holding that retention of the check amounted to a waiver of the forfeiture. In Holton Dodge, Inc. v. Baird, 118 Ga.App. 316, 163 S.E.2d 346 the plaintiff did in fact execute a written settlement and accept a draft in payment thereof, and the case holds that after these acts she cannot rescind the settlement in the absence of fraud practiced upon her. Baggett v. Chavous, 107 Ga.App. 642, 131 S.E.2d 109 holds that retention of a check for an unreasonable time without cashing and without indicating a refusal to accept it as an accord and...