Opinion
No. 33341.
October 17, 1938.
1. ACCORD AND SATISFACTION. Compromise and settlement.
A debtor's payment of any amount on a debt is sufficient consideration for creditor's agreement to accept such amount in full satisfaction, irrespective of whether the debt is liquidated or disputed.
2. ACCORD AND SATISFACTION. Compromise and settlement.
Where creditor accepts payment of less than the full amount of his claim in satisfaction of the claim, that creditor protests against receiving the smaller amount is of no consequence to prevent the acceptance from being an accord and satisfaction.
3. ACCORD AND SATISFACTION. Compromise and settlement.
An offer of part payment of a creditor's claim in full satisfaction of the whole must be clear and unequivocal in order to bind the creditor by acceptance thereof.
4. ACCORD AND SATISFACTION. Insurance.
Where disability insurer sent insured a check reciting "for total and permanent disability payment" and "received payment in full as detailed on reverse side," the effect of insured's acceptance of such check, as an accord and satisfaction of insured's claim for further benefits, was not destroyed by accompanying letter which described how insurer determined that the amount of the check was all that was due.
5. APPEAL AND ERROR.
On appeal from judgment for plaintiff entered after demurrer to defendant's plea was sustained and defendant failed to plead further, reviewing court could not consider a letter, copy of which was filed with the demurrer, which did not appear in defendant's plea but allegedly altered the effect to be given to an instrument relied on in the plea.
6. PLEADING.
A demurrer challenges the sufficiency only of the allegations of the pleading demurred to, and hence a demurrer setting forth facts not appearing in the challenged pleading should be overruled as a "speaking demurrer."
APPEAL from the circuit court of Lauderdale county; HON. ARTHUR G. BUSBY, Judge.
Wells, Wells Lipscomb, of Jackson, for appellant.
Where a sum of money is tendered in satisfaction of the claim, and the tender is accompanied with such acts and declarations as amount to a condition that, if the money is accepted, it is accepted in satisfaction, and such that the party to whom it is offered is bound to understand therefrom that, if he takes it subject to such condition, an acceptance of the money offered constitutes an accord and satisfaction. This is true although the creditor protests at the time that the amount paid is not all that is due, or that he does not accept it in full satisfaction of his claim. Where the tender or offer is thus made, the party to whom it is made has no alternative but to refuse it or accept it upon such condition. If he accepts it, he accepts the condition also, notwithstanding any protest he may make to the contrary.
Clayton v. Clark, 74 Miss. 499, 21 So. 565; Cooper Rock v. Y. M.V.R.R. Co., 82 Miss. 634, 35 So. 162; Greener Sons v. Cain Sons, 137 Miss. 33, 101 So. 859; Phillips v. St. Paul Fire Marine Ins. Co., 156 Miss. 41, 125 So. 705.
In the case of May Bros. v. Doggett, 155 Miss. 849, 124 So. 476, the court laid down the rule that in Mississippi the rule as to accord and satisfaction applies not only to unliquidated demands, but also to liquidated demands.
Clayton v. Clark, 74 Miss. 499, 21 So. 565; Greener Sons v. Cain Sons, 137 Miss. 33, 101 So. 859; Y. M.V.R.R. Co. v. Sideboard, 161 Miss. 4, 133 So. 669; Blue Ribbon Creamery Co. v. Moak, 168 Miss. 130, 147 So. 329; Stovall v. Lampton Co., 174 Miss. 58, 164 So. 39; Jones v. McFarland, 178 Miss. 282, 173 So. 296; State Highway Dept. v. Duckworth, 178 Miss. 35, 172 So. 148.
It is our position that applying the above authorities to the facts alleged in the plea of accord and satisfaction, and admitted by the demurrer, we must come to the inescapable conclusion that the acceptance by the plaintiff of the check tendered to him under the circumstances as shown by the correspondence, and the check itself, constituted a valid accord and satisfaction.
Cooper Rock v. Y. M.V.R.R. Co., 82 Miss. 634, 35 So. 162.
The facts as disclosed by this record show that the check was tendered in full satisfaction of all claims for disability benefits under the policies sued upon herein to February 1, 1934.
From a careful study of plaintiff's demurrer, it appears to us that his principal contention is that there was no consideration for the accord and satisfaction. Suffice it to say, that under the authorities in this state, when an amount smaller than that claimed to be due is offered in full settlement of a claim, and the offer is accepted by the creditor, this action constitutes a new contract which, upon its execution, is valid and binding on the parties. This new contract is valid and enforceable although there was no consideration, in the ordinarily accepted sense of the word, for it.
Greener Sons v. Cain Sons, 137 Miss. 33, 101 So. 859; Clayton v. Clark, 74 Miss. 499, 21 So. 565; Stovall v. Lampton Co., 174 Miss. 58, 164 So. 49; Jones v. McFarland, 173 So. 296, 178 Miss. 282.
Graham Graham, of Meridian, for appellee.
In considering the authorities cited in appellant's brief, it will be necessary for the court to keep in mind the fact that this is not an entire contract but ten contracts in one representing $100 per month from May 1, 1933, to February 1, 1934, and that each monthly installment of $100 could have been sued for in a separate suit as each installment accrued, and likewise each one or any one of the installments, whether first, fifth or tenth, could have been tendered for a month specified and detailed and appellee would have been forced to accept same, even though there were other installments for other months that were still due and not tendered, which is a very different situation from one where the contract was an entirety and where a definite amount was tendered and accepted in full of the entire contract, which is the case in the authorities cited by counsel.
In order that the payment of a smaller sum than demanded shall operate as a satisfaction of the claim, it must be accepted as such. Where a person accepts a tender, but not in full of all demands, this acceptance will not conclude him from claiming more. The nature of the offer or tender by the debtor is an important consideration in determining whether there has been an acceptance and satisfaction.
Cooper Rock v. Y. M.V.R.R. Co., 86 Miss. 634, 35 So. 162.
If there had been no details furnished with the check nor in the letter responding to the telegram, then appellee might have been bound solely by what appeared on the check but certainly not when details and conditions were specially prepared by the appellant and sent with the check for the information of appellee as a basis of his action and upon which he did act.
There is absolutely no writing on the check, either front or back, which makes the check a payment in full because the "In full" on the back of the check is limited by what follows, to-wit: "As detailed on reverse side."
The payment of a sum admittedly due and payable furnishes no consideration for the discharge of an additional and distinct amount or item of liability, and does not effect an accord and satisfaction thereof.
1 C.J.S. 29 a (2), page 502; Dewees v. Bostick Lbr. Mfg. Co., 50 So. 865, 96 Miss. 253.
Where a debtor divides an account, or its items, conceding one part, but disputing the other, the acceptance of payment of the amount of the conceded items does not discharge the disputed ones, or the entire account.
Where, however, a claim or debt is liquidated and undisputed, and only a part thereof is paid, or where nothing more is paid than the amount conceded to be due, and an additional claim or amount is in dispute, the rule is well settled, except where it is otherwise provided by statute, and except in a few jurisdictions, where, the contrary has been held, that the giving of a receipt in full does not in any way affect the application or operation of the general rule that such a payment does not constitute or effect on accord and satisfaction; and it is immaterial that the receipt is given with full knowledge of the facts, and that there is no mistake or fraud.
1 C.J.S. 35, page 539.
We say under the authorities in Mississippi and the facts in this case there was no accord and satisfaction because to constitute a valid accord and satisfaction, it is essential that what is agreed to be given or performed shall be offered as a satisfaction and extinction of the original claims or demands, that is, that the debtor shall intend it as a satisfaction of all such demands and that such intention shall be made known to the creditor in some unmistakable manner or that the offer be made in such wise or be accompanied by such acts and declaration as to amount to a condition that if the thing offered is accepted it is accepted in satisfaction of all monthly claims and not for just certain designated ones. The appellant left the inescapable inference in their letter of January 29, 1934, that appellee had not submitted to them sufficient proof of disability prior to October 1, 1933, and that since his proof prior to that date was not sufficient they were forced to refuse payment, but that his proof was good from October 1, 1933, up to the date of the settlement and therefore they were paying same, which, in our opinion, left the first five months open to be proved by additional proof, as they did not seem to refuse to pay unconditionally but that under the state of the record the facts were not sufficient at that time to justify the conclusion that he had been totally and permanently disabled from May 1, 1933. The burden of proof also being upon the appellant to prove his accord and satisfaction, and knowing that, if he had intended this check as a complete accord and satisfaction for all disability claims under the policies he should have so specified and made it plain to the appellee.
Argued orally by W.C. Wells, Jr., for appellant, and by S.M. Graham, for appellee.
On December 23, 1937, the appellee filed his declaration in the court below against the appellant on two insurance policies issued by it to him in November, 1923, by which the appellant agreed to pay the appellee the sum of $50 per month on each of the policies in event he should become totally disabled. The declaration alleges that he became totally disabled on the first day of May, 1933, and defendant has failed and refused to pay him the $100 a month due him for the months of May to September, 1933, inclusive, aggregating $500, and prays a recovery thereof. The appellee filed a special plea of accord and satisfaction alleging:
"That on or about the 27th day of January, 1934, it forwarded by mail postage prepaid, to the plaintiff at his home address in Basic, Mississippi, its certain check in the amount of $500.00, being check No. D — 450973, which check was in full payment of all claims for total and permanent disability under the policies sued upon herein to, and including the 1st day of February, 1934. A photostatic copy of said check is attached hereto marked Exhibit `A,' and prayed to be made a part hereof the same as if copied herein in words and figures.
"That said check was received by the plaintiff herein on or about the 29th day of January, 1934, and on receipt thereof the said plaintiff herein telegraphed your defendant as follows:
"`Cannot accept check for five hundred dollars disability commenced May first nineteen thirty three and you were notified at that time I ceased working October first and filed request proof November seventh I am due a check for one thousand dollars covering from May first nineteen thirty three to and including February nineteen thirty four wire immediately by Western Union or I will be forced to return check and file suit.'
"An exact copy of said telegram is attached hereto as Exhibit `B' and prayed to be made a part hereof the same as if copied herein in words and figures.
"That upon receipt of such telegram, and on January 29th, 1934, your defendant wrote the plaintiff and stated in such letter that he was entitled to disability benefits only from October 1st, 1933, and that said check for $500.00 represented the entire amount due him under the terms and conditions of the contracts of insurance sued upon. An exact copy of said letter is attached hereto as Exhibit `C,' and prayed to be made a part hereof the same as if copied herein in words and figures.
"That plaintiff with full knowledge of the fact that the defendant was claiming and maintaining that the said sum of $500.00 was the entire amount due him under the contract, accepted said check and cashed same at the Merchants and Farmers Bank of Meridian, Mississippi, under date of February 1st, 1934.
"That at the time of the receipt of such check, and the cashing of same, the defendant, in good faith, disputed and denied its liability to the plaintiff with respect to the matters alleged in the declaration, and that the acceptance of said check in the amount of $500.00, and the cashing of same, and that the retaining of the proceeds thereof, constituted an accord and satisfaction of all amounts claimed by the plaintiff to be due, including the amount sued for herein.
"Wherefore, your defendant states that it is not indebted to the plaintiff in the amount sued for on account of such accord and satisfaction, all of which it is ready to verify."
The copy of the check referred to in the plea reads as follows:
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"Metropolitan Life Insurance Company
Warrant Number Policy No. Disability No. Income No.
New York Check No. Feb. 1, 1934 D-459873 (Not valid Before Order of this date)
"Pay to Robert O. Perrin $500.00 Five Hundred 00/100 Dollars.
"For total and permanent disability payment under designated policy on above date. "To The Chase National Bank of the City of New York Metropolitan Branch
"G.H. Thompson, "For the Treasurer (Seal)"
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On the back of the check appears the signature of the appellee immediately following the words (which appeared thereon when the check was received by the appellee): "Received payment in full as detailed on reverse side. By this endorsement I guarantee that I am totally disabled from working for compensation or profit." The letter referred to in the plea as Exhibit C thereto (which the reporter will set out in full) sets forth that the monthly disability payments of the policies did not commence until October 1, 1933, giving the reasons therefor, and that the settlement offered the appellee was in accordance with the terms and conditions of the policies. A demurrer to this plea was sustained and the appellant declining to plead further, a judgment was rendered for the appellee in accordance with the prayer of his declaration.
The question then presented is whether the acceptance by a creditor from his debtor of less than what the debtor actually owes him in full settlement of the debt constitutes an accord and satisfaction. Under all of the authorities if "A owes B a debt which is unliquidated, or of which either the existence or amount is honestly and reasonably disputed, a payment of any amount by A is sufficient consideration for B's agreement to accept it in full satisfaction." Rest. Contracts, Vol. 1, Sec. 76, Comment a. and Illustration 4 thereof, and Vol. 2, Sec. 420; Williston on Contracts, Rev. Ed., Vol. 1, Secs. 128 and 129, and Vol. 6, Sec. 854; 1 Am. Jur., Accord and Satisfaction, Sec. 60; 1 C.J.S., Accord and Satisfaction, Sec. 32, And such also is the rule of this court. Among its decisions so holding are: McCall v. Nave, 52 Miss. 494; Darrill v. Dodds, 78 Miss. 912, 30 So. 4; Cooper v. Yazoo M.V.R. Co., 82 Miss. 634, 35 So. 162; Phillips v. St. Paul Fire Marine Insurance Co., 156 Miss. 41, 125 So. 705.
This court, however, goes further than the authorities generally and holds that it is immaterial whether the creditor's claim is liquidated or disputed. Clayton v. Clark, 74 Miss. 499, 21 So. 565, 22 So. 189, 37 L.R.A. 771, 60 Am. St. Rep. 522, and the many cases following and approving it. May Bros. v. Doggett, 155 Miss. 849, 124 So. 476. As this appellee's claim was disputed by the appellant, the same result would be here reached under all of the authorities. That a creditor protests against receiving less than the full amount of his claim, but, nevertheless, accepts it, is of no consequence under all of the authorities including Darrill v. Dodds, Cooper v. Yazoo M.V.R. Co., both supra, and Greener v. Cain, 137 Miss. 33, 101 So. 859. A few of the authorities seem to hold that this rule does not apply when the debtor prays no more than he admits to be due, but the holdings generally are to the contrary, authorities, supra, and that fact appears in many of the cases decided by this court.
But counsel for the appellee say that the appellant's letter to the appellee indicates that the appellant only intended the check to cover the disability payments due the appellee for the months of October to February, inclusive, and not in full payment of his claim; that at all events it was so worded as to justify the appellee in so believing. An offer of part payment of a creditor's claim in full satisfaction of the whole must be clear and unequivocal in order to bind the creditor by the acceptance thereof. 1 C.J.S., Accord and Satisfaction, Sec. 33, Paragraph B.; Cooper v. Yazoo M.V.R. Co., supra. The check which the appellee accepted complies with this rule and the letter cannot be construed into modifying its terms. It simply states how the appellant arrived at the amount it tendered the appellee as being all that it was due him.
One question remains to be considered. The demurrer alleges that the check here under consideration was accompanied by a letter, which limited it to the disability payments due the appellee for the months of October to February, inclusive, a copy of which was filed with the demurrer. This letter does not appear in the appellant's plea, and, therefore, cannot be here considered. A demurrer challenges the sufficiency only of the allegations of the pleading demurred to, and it is not permissible to set forth therein facts not appearing in the challenged pleading. A demurrer so doing is designated as "a speaking demurrer" and should be overruled. 49 C.J. 420 and 423; Watson v. Sawyers, 54 Miss. 64; 21 R.C.L. 504; Shipman's Common Law Pleadings (2 Ed.), p. 260. This portion of the demurrer, therefore, is ineffective.
It follows from the foregoing views that the court below erred in sustaining the demurrer.
Reversed and remanded.