Opinion
No. A06-1557.
Filed July 31, 2007.
Appeal from the District Court, Ramsey County, File No. C7-06-1322.
Eric J. Sherburne, Stein Moore, P.A., (for respondent).
Timothy R. Maher, Guzior Armbrecht Maher, (for appellant).
Considered and decided by Halbrooks, Presiding Judge; Lansing, Judge; and Hudson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
Respondent Associated Bank sued appellant Daniel J. Larscheid to enforce the terms of two promissory notes. The district court granted summary judgment in favor of respondent. Appellant argues that the district court misapplied the law and that his obligation to pay the notes was either suspended or partially discharged. Because the district court did not err in its application of the law, we affirm.
FACTS
Appellant executed and delivered two promissory notes (notes) to respondent in the amounts of $30,000 and $70,350. Appellant defaulted on these notes, and respondent initiated this cause of action in district court to enforce the terms of the notes.
Thereafter, appellant and respondent engaged in settlement discussions. During negotiations, appellant tendered a $70,000 uncertified check (check) to respondent's attorney. But respondent's attorney returned the check to appellant; respondent rejected the check because it did not comport with the terms of the proposed settlement and appellant was not a party to the check.
Ultimately, settlement negotiations failed, prompting respondent to move for summary judgment. After a hearing, the district court granted respondent's motion, concluding that respondent was entitled to judgment in the amount of $89,388 and immediate possession of the collateral securing the notes. This appeal follows.
DECISION
On appeal from a grant of summary judgment, the role of this court is to determine whether there are any genuine issues of material fact and whether the district court erred in its application of the law. Zimmer v. Carlton County Co-op Power Ass'n, 483 N.W.2d 511, 513 (Minn.App. 1992), review denied (Minn. Jun. 10, 1992). "[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Appellate courts review de novo the district court's application of the law. Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). Because neither party raises any factual disputes, the only question to be answered is whether the district court misapplied the law.
Here, the undisputed evidence shows that (1) appellant tendered a check during settlement negotiations; (2) respondent rejected the check; and (3) the parties failed to reach a settlement agreement. Based on this evidence, the district court concluded that respondent was entitled to recover $89,388. Appellant challenges this amount and argues that the district court erred in its application of the law because either tender of the check suspended a portion of his obligation, or return of the check discharged a portion of his obligation. Appellant's arguments are unpersuasive.
Appellant initially raised the affirmative defense of accord and satisfaction. But in his brief, appellant admits that he did not satisfy the requisite elements of accord and satisfaction. Thus, we do not address this issue.
Suspension
Under Minnesota law, "[u]nless otherwise agreed . . . if . . . an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken." Minn. Stat. § 336.3-310(b) (2006). "In the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid or certified." Id., (b)(1). "[I]f the check . . . is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation." Id., (b)(3). Dishonor of a check occurs when (1) presentment is excused, and (2) the check is not duly accepted or paid. Minn. Stat. § 336.3-502(e) (2006). Presentment is excused when "the person entitled to present the instrument cannot with reasonable diligence make presentment." Minn. Stat. § 336.3-504(a)(i) (2006).
Respondent argues that there was no agreement that the check would be taken as payment for appellant's obligation, and any suspension of appellant's obligation lapsed because dishonor occurred. The undisputed evidence shows that respondent and appellant did not reach a settlement agreement and respondent returned the check to appellant. This evidence supports a finding that the parties never agreed that the check would be taken as payment for appellant's obligation.
In addition, the undisputed evidence shows that appellant's obligation was not suspended because dishonor had occurred. Once appellant reacquired possession of the check, presentment became excused because it was impossible for respondent to present the instrument. In addition, appellant has not offered any evidence that the check was duly accepted or paid. We conclude that the district court properly applied the law and that appellant's tender did not suspend his obligation to pay the notes.
Discharge
Appellant argues that the return of the check discharged a portion of his obligation under the notes. In support of this argument appellant cites to Minn. Stat. §§ 336.3-603, .3-604 (2006). But appellant's reliance on these statutory provisions is misplaced.
Section 336.3-603, subsection (b), states:
If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an endorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.
(Emphasis added.) Section 336.3-604, subsection (a), states:
A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed record.
(Emphasis added.) Appellant has not presented any evidence establishing that he is an "endorser" or "accommodation party" entitled to discharge under section 336.3-603. Nor has appellant presented any evidence that respondent discharged his obligation to pay the notes by surrendering, destroying, mutilating, or canceling the notes as required by section 336.3-604. We conclude that the district court properly applied the law when it determined that respondent's return of the check did not partially discharge appellant's obligation to pay the notes.