Opinion
No. 5484.
Argued June 8, 1966.
Decided July 15, 1966.
1. Payment of part of a debt accepted in full payment discharges liability for the balance whether the debt is liquidated or unliquidated.
2. The question of whether a lesser sum was accepted as satisfaction in full of a greater sum under either a liquidated or an unliquidated claim is one of fact to be determined under all the circumstances.
3. Where a lessor was apprised of the lessee's dissatisfaction with the lease and was aware that the lessee was attempting to terminate it by issuing a check for the monthly rent with a notation thereon "final and terminating payment under lease" the finding was warranted that the endorsement was a mere unilateral attempt to terminate it and that the lessee failed to sustain her burden of proving that the lessor in cashing the check accepted it as an accord and satisfaction of the lessee's obligation under the lease.
The defendant appeals from a judgment of $500 for the balance of four months' rent under a lease. The following statement of facts was reserved and transferred by Chretien, J.
"The plaintiff, Joseph Kramas, and his wife, Helen Kramas, are the owners of certain real estate in Manchester, known as 1321 Elm Street. The defendant, Jeannette Beattie, is the sole proprietor of Beattie's Aquarium, a business engaged primarily in the sale of tropical fishes, other pets and pet supplies.
"On August 1, 1961, the parties entered into a lease agreement whereby Beattie rented a store at 1321 Elm Street for a period of three years at a monthly rental of $125.00 payable in advance on the first day of each month. The original lease agreement was marked in evidence.
"The store in question was one of several units, all of which were heated by a single system. The system was equipped with a single thermostat which was not under control of Mrs. Beattie. The thermostat was equipped with a timing device which ordinarily shut off or reduced the heat during some portions of the night. Mrs. Beattie testified that the heat was insufficient during the night to sustain the health and welfare of the tropical fish and that the heat was insufficient for her personal health and comfort during the daytime. Mr. Kramas acknowledged receiving complaints from Mrs. Beattie concerning the heat. Mr. Kramas acknowledged in particular that there were more complaints about heat during the winter of 1964. Mrs. Beattie complained that on several occasions water had leaked through the ceiling of the store and polluted some of her fish tanks thereby causing the death of some of her fish. On one such occasion Mr. Kramas paid Mrs. Beattie for her losses. Mr. Kramas denied receiving any complaints on other occasions.
In January, 1964, Mrs. Beattie consulted her attorney who sent a letter to Kramas dated February 1, 1964. That letter was sent by registered mail with return receipt requested, and Kramas acknowledged receiving the same. A second letter was sent to Kramas by Beattie's attorney under date of February 21, 1964. Kramas acknowledged receiving that letter. [Both letters expressed an intention to terminate the lease.]
"On February 29, 1964, Mrs. Beattie gave Kramas her check #631 dated February 29, 1964 in the amount of $125. The check bore the notation `Final and terminating payment under lease.' Kramas presented the check for payment and cashed the same on March 4, 1964. Kramas was aware of the above notation on the check at the time he received the check and prior to cashing it. Kramas had received the above letters prior to this time and knew Mrs. Beattie was trying to `break the lease,' and that she intended to move out of the store. Mrs. Beattie testified that at the time the check was handed to Mr. Kramas he was told `This terminates the lease.' Mr. Kramas denied any conversation whatsoever at that time. On or about March 29, 1964, Mrs. Beattie vacated the premises, signed another lease, and moved her business to another location diagonally across the street from the first one. On April 2, 1964, Mrs. Beattie received a letter dated April 1, 1964 from Kramas' attorney. . . . That letter was the first communication of any kind received by Mrs. Beattie from or in behalf of Mr. Kramas following delivery of the check in February 29, 1964."
The district court ruled that the lease did not contain any express or implied condition that the premises leased to the defendant were fit for the raising or keeping of tropical fish and that the lessors did not commit a breach of the terms of the lease. The court further ruled "that the payment of the March rent by the lessee did not constitute an offer of compromise of a disputed claim, the acceptance of which by the lessors would amount to a cancellation of the lease. The month's rent was due and there was no consideration paid by the lessee that could lead to the conclusion that there was an accord and satisfaction. The court, therefore, granted a verdict for the plaintiff in the amount of $500.
Betley Betley (Miss Constance J. Betley orally), for the plaintiff.
Wiggin, Nourie, Sundeen, Nassikas Pingree and Dort S. Bigg (Mr. Bigg orally), for the defendant.
A half century ago New Hampshire by judicial decision, quietly and unheralded, modernized a portion of the law of consideration by lopping off one of the historical errors of the common law. It repudiated Pinnel's Case, 5 Coke 117a (1602) and Foakes v. Beer, 9 App. Cas. 605 (1884) as being neither logical nor just. See, Ferson, The Rule in Foakes v. Beer, 31 Yale L.J. 15 (1921); Havighurst, Consideration, Ethics and Administration, 42 Colum. L. Rev. 1, 27 (1942). "The rule that the payment of a less sum can never sustain an agreement to discharge a greater, because without consideration, however well supported by authorities . . . is based upon misconception, is not founded in reason, and cannot be followed without abandoning the greater principle that reason is the life of the law." Frye v. Hubbell, 74 N.H. 358, 377. Consequently in Frye v. Hubbell, supra, it was held that payment of part of a debt accepted in full payment discharged liability for the balance. Watkins v. Carrig, 91 N.H. 459, 464; Annot. 119 A.L.R. 1123. Whether "the claim be liquidated or unliquidated, the matter resolves itself into a question of fact as to whether the lesser sum was accepted as satisfaction in full." Corey Steeplejacks Co. v. Cray, 106 N.H. 126, 130; 1A Corbin, Contracts, s. 175, p. 119 (1963).
In the present case there is no doubt that the defendant was dissatisfied with the lease, was attempting to "break the lease," and wished to terminate the lease with the payment of rent for the month of March by the check which bore the notation "final and terminating payment under lease." There is also no doubt that the plaintiffs were aware of these facts because of the defendant's complaints and the letters they had received from the defendant's attorney. If the presiding justice had believed the defendant's testimony that she was terminating the lease by the check for the March rent and the defendant accepted it as such, there would be an accord and satisfaction. Hackett v. Railroad, 95 N.H. 511; C R Construction Co. v. Manchester, 89 N.H. 506. However it is evident that the court concluded from the testimony that the plaintiffs had not violated the terms of the lease, that they did not accept the payment of rent for March which was due as a discharge of the obligation of the lease. It was findable that the notation endorsed on the check was only reiteration of the defendant's purpose, stated in the previous letters to the plaintiffs, to terminate the lease unilaterally, and that the plaintiffs did not waive their rights under the lease regardless of what actions the defendant might take. The burden of proof was on the defendant to make out a case for accord and satisfaction. 6 Corbin, Contracts, s. 1280 (1962). The court has in effect found that this burden has not been met by the defendant. We do not read the court's statement that "there was no consideration paid by the lessee that could lead to the conclusion that there was an accord and satisfaction," as requiring a separate consideration as a matter of law. It appears to have been only one of several evidentiary factors from which the court concluded from the testimony that the plaintiff did not agree to an accord and satisfaction. "In all the circumstances, it cannot be said as a matter of law that the plaintiff by cashing the check accepted it in full payment of his account." Corey Steeplejacks Co. v. Cray, 106 N.H. 126, 130; New Hampshire Annotations to Restatement, Contracts, s. 420, p. 145; 6 Corbin, Contracts, s. 1281 (1962). Consequently the defendant's exceptions are overruled and the order is
Judgment on the verdict.
All concurred.