Opinion
SC1978/03.
Decided December 22, 2003.
SCOTT FAIRGRIEVE
DECISION AFTER TRIAL
Plaintiff commenced this action to recover the sum of $2,955.84 for property damage arising out of a motor vehicle accident which occurred on July 18, 2003. Plaintiff's vehicle was parked when struck by defendant's vehicle. Defendant conceded liability. Plaintiff claimed damages as follows:
A. Plaintiff introduced the Kelley Blue Book value for her 1994 Dodge Intrepid Sedan of $5,095.00. Allstate paid plaintiff $3,376.00 for the property damage to her vehicle by the draft dated August 5, 2003. The draft was negotiated by the plaintiff without any language indicating that she reserved her rights to seek further sums. It was established that plaintiff spoke to the Allstate representative concerning the amounts that Allstate was to pay.
B. Plaintiff received a draft from Allstate for towing, storage, and impound fee of the vehicle in the sum of $494.82. This draft was also negotiated by plaintiff without any language limiting the consequences of the negotiation of the draft.
Plaintiff submitted a bill from Ogden Bros. in the sum of $615.00 for towing, storage and impound. Plaintiff also accepted a draft from Allstate in the sum of $537.30 for vehicle loss of use.
Defendant contends that plaintiff acceptance of the checks constitutes an accord and satisfaction under UCC § 1-207. UCC § 1-207 states:
§ 1-207. Performance or Acceptance Under Reservation of Rights
A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest" or the like are sufficient.
Since negotiable instruments are involved, the provisions of the UCC apply. In DeVerna v. Kinney Systems, 146 Misc2d 276, 556 NYS2d 190 (App Term 1st Dept 1990), the court held that the provisions of the UCC apply to transactions involving negotiable paper even if the underlying transaction is outside the scope of the Code:
As correctly noted in the decision below, defendant's tender of a check in settlement of plaintiff's property damage claim brought the transaction within the reach of section 1-207 of the Uniform Commercial Code. The Court of Appeals has stated: "By construing the section [UCC § 1-207] to permit a reservation of rights whenever a negotiable instrument is used to make payment on an existing debt, regardless of the nature of the underlying [transaction] between the parties, the commercial law of negotiable instruments is rendered more simple, clear and uniform" ( Horn Waterproofing Corp. v. Bushwick Iron Steel Co., 66 N.Y.2d 321, 331, 497 N.Y.S.2d 310, 488 N.E.2d 56 [emphasis added]). We additionally note that at page 331 of the Horn opinion, the Court cites with approval to Cohen v. Ricci, 120 Misc2d 712, 466 NYS2d 121, a case where, as here, a check was given as payment for property damage to the claimant's automobile arising out of the defendant's negligence. This lends further support to the conclusion that Horn is to be read as application section 1-207 of the Code to all transactions where a claim is settled by check, notwithstanding that the underlying obligation is not one covered under the substantive law of the Uniform Commercial Code.
In McCreedy v. Lopera, 130 Misc2d 292, 498 NYS2d 666 (Suffolk Dist Ct 1985, Judge Mitchell) the plaintiff brought suit to recover sums owed for property damage involving a car accident. Plaintiff endorsed on the settlement check "partial payment". The court held that the foregoing restriction preserved plaintiff's rights to recover for additional property damages:
Accord and satisfaction is well-established in the civil law of New York. It occurs when an amount is offered to settle a claim and is accepted by the payee. Where the debt is agreed upon, payment of said amount terminates the debtor/creditor relationship.
Where the amount is not liquidated but is for an amount less than claimed, the acceptance results in an accord and satisfaction barring any further recovery. ( Simmons v. American Legion of Honor, 178 N.Y. 263, 70 N.E. 776 and Nassoiy v. Tomlinson, 148 N.Y. 326, 42 N.E. 715).
§ 1-207 of the U.C.C. reverses the commonlaw rule. It authorizes conditional endorsements as to all code-covered transactions. This section was thought to apply to commercial claims but not claims or obligations based on transactions outside the code.
In the recent case of Horn Waterproofing Corp. v. Bushwick Iron and Steel Co, Inc., 66 N.Y.2d 321, 497 N.Y.S.2d, 488 N.E.2d 56, a negotiable instrument is a code-covered instrument covered by Article III of the U.C.C. Such instruments fall within the protection of § 1-207 regardless of the nature of the underlying transaction. Thus a payee may preserve any claim he may have a seek an amount in excess of the accepted amount.
Here, a code-covered check was endorsed "Partial Payment," by so endorsing, plaintiff preserved his right to seek redress for the disputed amount.
The proven amount in this case is the sum of $821.28. Judgment for plaintiff in the sum of $821.28.
In the case at bar (unlike the prior cases cited), plaintiff failed to place any restrictive language on the drafts like "without prejudice", "under protest", "partial payment", or any similar notation. Since plaintiff failed to follow the procedure outlined by UCC § 1-201, an accord and satisfaction occurred. Thus plaintiff's action is barred by the doctrine of accord and satisfaction because plaintiff failed to preserve her rights as required by UCC § 1-201.