POTTER v. PACIFIC COAST LUMBER CO OF CALIFORNIA

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District Court of Appeal, Second District, Division 1, California.

POTTER v. PACIFIC COAST LUMBER CO. OF CALIFORNIA et al.

Civ. 17303.

Decided: September 22, 1950

Buck & O'Reilly and John F. Runner, all of San Luis Obispo, for appellants. Renetzky & Davis, Laura O. Coffield, all of San Luis Obispo, for respondents.

Defendants appeal from a judgment in favor of plaintiff, a lumber broker, in an action for a balance claimed to be due under contracts for the sale of three carloads of lumber to the defendant corporation, Pacific Coast Lumber Company. Defendants C. V. Wilson and S. G. Truitt, as vice-president and purchasing agent, respectively, of defendant corporation, negotiated the contracts. The complaint was in the form of common counts. The answer, in addition to denials, set forth an affirmative defense of accord and satisfaction, the substance of the allegations in this respect being that three checks in stated amounts had been mailed to plaintiff by defendant corporation; that attached to each of said checks was a voucher in which said defendant informed plaintiff that it intended the check as full payment of a certain disputed claim; that the vouchers so attached to the three checks informed plaintiff that the checks were intended as full payment; that the plaintiff indorsed and cashed each check, and thereby agreed to the settlement intended by the defendant corporation; that at the time of making said payments the defendants in good faith disputed the amounts due the plaintiff.

The first transaction involved a carload of pine, of specified grade, widths, surfacing, and price per thousand board feet, ‘F.O.B. mill,’ with 2% discount for cash. The lumber was to be shipped from Oregon to San Luis Obispo. Upon arrival of the shipment, defendant corporation paid the carrier's freight bill which covered freight from Spokane, Washington, to San Luis Obispo. The corporation then remitted $2,930.14 by check to the plaintiff, this sum representing the amount of the plaintiff's invoice less the cash discount and less $86.40 claimed as ‘freight overcharge’—being the difference between the freight actually paid the carrier and the freight from Portland, Oregon.

Subsequently defendant corporation ordered two more carloads of pine, one to be shipped to Grover City, California, and the other to Santa Barbara. Again, it was understood that the lumber was to come from Oregon, although the plaintiff testified that he informed defendants it would come from eastern Oregon. The lumber in these two carloads was rough-milled at Seneca, in eastern Oregon. One carload was then shipped to Brewster, Oregon, for ‘re-manufacture’, and from there transported to Grover City, while the other carload was shipped to Portland for ‘remanufacture’ and thence to Santa Barbara. On each of these shipments defendant corporation remitted to the plaintiff by check, deducting the 2% cash discount and also deducting the items representing freight charges from eastern to western Oregon. In the case of the Santa Barbara car defendant also made certain deductions for ‘scant loading’, ‘improper surfacing’, and ‘random widths'.

Defendant C. V. Wilson testified that by ‘F.O.B. mill’ he understood to mean F.O.B. the ‘re-manufacturing’ mill where the lumber was finished and from whence it was finally shipped; he and other witnesses also testified to a custom of the lumber trade that where Oregon lumber is sold ‘F.O.B. mill’ a zone freight rate is often specified, but if nothing is said about the zone, then the ‘Portland rate’, from Portland, Oregon, to destination, will apply; in such case the custom is for the purchaser to charge back to the seller any excess freight paid to the carrier. In none of the transactions here in question was there anything said concerning freight or the freight rate applicable except the bare phrase ‘F.O.B. mill’. Plaintiff denied the existence of any such custom.

In remitting for each of the three shipments, defendant corporation mailed to the plaintiff a check or draft, attached to which was a voucher identifying the shipment for which payment was intended and setting forth the amount of the corresponding invoice, with deductions noted. Printed at the top of each such voucher was the notation:

‘Payee will please detach and keep this statement. Payment of sight draft attached hereto is accepted in full settlement of account stated below, and endorsement thereof will constitute payee's receipt to the Pacific Coast Lumber Company of California.’

The trial court found that defendants were indebted to plaintiff in the sum of $1,011.96; and with respect to the special defense found that the allegations thereof (except, of course, that the checks were actually sent) were untrue, thereby finding that it was not true that by the voucher attached to each check defendant corporation ‘informed plaintiff that it intended the check as full payment of a certain disputed claim,’ or that the vouchers ‘informed plaintiff that the said checks were intended as full payment’. The court further found that ‘it is not true that plaintiff, by the acceptance, endorsement and/or depositing for collection of said drafts, or in any other manner, agreed to any settlement of the amount due plaintiff.’

Appellants contend that the trial court's findings relating to the alleged accord and satisfaction were contrary to undisputed facts in evidence. With respect to the finding (implied) that plaintiff was not informed that the checks he received were intended by defendant corporation as payment in full, attention is directed to testimony of the plaintiff, as follows:

‘Q. Did you talk to him (Mr. Wilson) before you cashed it? Did you call him up before you cashed it? (Referring to the payment on the first shipment.) A. Yes, I think I did; and then I felt, if they were going to be that way about it, the best thing for me to do was to cash the draft so they couldn't stop payment on the draft. This was not a check, it was a draft. I knew that, with a dispute of that type, that there would be a question as to my accepting that as final payment, but I figured that a bird in the hand was better than nothing.

‘Q. Well, Mr. Potter, at the time you cashed those checks, you knew there was a dispute as to the amounts? A. Yes, because the amount was short on the draft. I figured we would be able to settle it one way or the other later.

‘Q. Did you know the basis for the dispute? A. No, only from checking the deductions that I figured that they took. I knew that the freight amounted to so much.

‘Q. Then you surmised, at least, that the deduction on one item was for freight? A. That's right.

‘Q. And on the other item, you had notice of what the deductions were from the attached statement with the check, did you not? A. Yes, sir.’

Appellants argue that ‘on the basis of the foregoing testimony the ultimate fact irresistibly following is that the defendant corporation informed the plaintiff * * * that the check or draft tendered therewith was offered in full payment of a certain fully identified, disputed claim.’ Appellants' remaining two contentions with respect to the findings are that there is no support in the evidence for the finding that by his acceptance of the checks or drafts plaintiff did not agree to a settlement, or for the finding that there was no bona fide dispute concerning the amount due.

As conceded by appellants, ‘A finding of the trial court upon conflicting evidence will not be disturbed on appeal if there is evidence of a substantial character which reasonably supports the judgment.’ Fewel & Dawes, Inc. v. Pratt, 17 Cal.2d 85, 89, 109 P.2d 650, 652. It is also well settled that the conclusions of a trier of fact from evidence or testimony that is susceptible of conflicting or opposing inferences will not be set aside by an appellate tribunal. In re Estate of Bristol, 23 Cal.2d 221, 143 P.2d 689.

Conceding the force of appellants' argument that the evidence clearly shows the existence of a dispute as to the amount due, and further that plaintiff was informed, by the fact that the checks were for less than the amount of his invoice, by the notations appearing on the attached vouchers, and through telephone conversations with defendants, that defendant corporation contested the particular freight items in question—it does not follow that the trial court erred, as a matter of law, in concluding that no accord and satisfaction was consummated.

It was an essential element of defendants' proof of an accord and satisfaction that their tender of a check for less than the amount due be expressly conditioned that if the money be accepted, it is to be in full satisfaction. 1 Am.Jur. 222, 223. As said in the cited authority, at page 223:

‘As pointed out in the preceding section, in order that the acceptance of an offer of payment of a lesser sum in discharge of a greater shall result in the discharge, it is a necessary element that the offer be made upon condition that the creditor accept the offered sum in full satisfaction of the indebtedness. This principle finds frequent application in the case of checks and other remittances. In order that the acceptance of the check or remittance shall operate as a full discharge, the condition that it is to be accepted in full satisfaction of the pending claim or obligation must be expressly made or the circumstances must be such as to indicate clearly to the creditor that it is so sent.

‘When the assent of the creditor is sought to be inferred from the acceptance of a less sum than that claimed to be due, the fact that such amount is offered in full discharge of the whole claim must have been communicated to the creditor in some unmistakable manner. Consequently, where a check is tendered, even though it accompanies an account, if there is no expression of the condition that it must be accepted in full payment, the acceptance of the check does not constitute an accord and satisfaction, as no agreement to that effect can be implied from the transaction. * * *.’

Under the particular facts of the case at bar, it would appear that the trier of fact was justified in concluding, despite the printed statement on the voucher, that the tender of each check or draft was not unequivocally stated to be on condition that it be accepted in full settlement. The language of Owens v. Noble, 77 Cal.App.2d 209, 215, 175 P.2d 241, 244, quoting from Biaggi v. Sawyer, 75 Cal.App.2d 105, 114, 170 P.2d 678, is here pertinent: “Whether there was a dispute concerning the amount due, and whether the tender was on condition that acceptance would be in full satisfaction, are primarily questions of fact for the trial court.' In the case of Work v. Associated Almond Growers, 102 Cal.App. 232, 236, 282 P. 965, 966, this court quoted from cited authorities as follows: ‘It is an essential element in accord and satisfaction by tender of a check, that the tender is subject to the condition that the acceptance of the check is satisfaction in full. This condition is not shown by the mere fact that the debtor accompanied the check with an account showing a balance equal to the amount of the check, and it is disproved where the giving and acceptance of the check is followed by such conduct of both parties as clearly shows that they did not consider the check a final settlement of the debt.’ (Italics added.) Also see 1 Cal.Jur. p. 134, par. 10; Lapp-Gifford Co. v. Muscoy Water Co., supra [166 Cal. 25, 134 P. 989]; Duncan v. F. A. Hihn Co., 27 Cal.App. 152, 155, 148 P. 971; Wallace v. Crawford, 21 Cal.App.2d 394, 404, 69 P.2d 455.'

The record does not disclose conclusive evidence that the plaintiff was explicitly advised that his acceptance of the checks or drafts in any of the three transactions would be considered as an agreement to an accord and satisfaction. On the contrary, the actions of the parties indicate, simply that the defendant corporation asserted that it was not liable for certain freight charges and refused to pay them. It is significant in this respect that the disputed freight charge was a separable item. The amount tendered by defendant corporation was an amount admittedly due. The trier of fact could well conclude that the amount tendered was not offered in settlement of a disputed claim, but, as above stated, in payment of a conceded indebtedness, leaving at large the question of from which point freight should be charged to the buyer. Upon analysis, the facts herein show that an acknowledged debtor has made a remittance of an amount admittedly due, and now seeks to have declared an accord and satisfaction because the creditor accepted what was concededly justly due him. The trier of fact was warranted in concluding that there was lacking an essential element of an accord and satisfaction, to-wit, that the payment was offered and accepted in settlement of a disputed demand. Here no payment whatever was made on the ‘disputed’ demand.

The situation here presented is one in which an acknowledged debtor, disputing one small separable item of an invoice received in the regular course of business, deducts from his remittance the amount he disputes and remits in the regular course of business an amount admittedly owed, accompanying his check with a voucher in customary form containing printed words to the effect that the remittance is accepted ‘in full settlement of account stated below.’ It cannot be held that as a matter of law in such circumstances there has been an accord and satisfaction or account stated.

‘* * * To hold otherwise would put it in the power of a sharp, shrewd business man frequently to take advantage of the ignorant, uneducated, or unwary, and open the way, in the business and commercial world, to the perpetration of frauds rather than the honest settlement of disputes.’ Sanders v. Standard Wheel Co., 151 Ky. 257, 151 S.W. 674, Ann.Cas.1915A, 954.

Appellants state that they make no point of the fact that the judgment runs against Mr. Wilson and Mr. Truitt, agents of defendant corporation, ‘unless the suggestion is met with that the judgment ought to stand against the defendant individuals even though it be reversed as to their principal.’ No such problem arising, the question need not receive further consideration.

The attempted appeal from the order denying defendants' motion for new trial is dismissed. The judgment is affirmed.

WHITE, Presiding Justice.

DORAN and DRAPEAU, JJ., concur.

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