Opinion
34102.
DECIDED JUNE 17, 1952. REHEARING DENIED JULY 10, 1952.
Certiorari; from DeKalb Superior Court — Judge Guess. February 11, 1952.
Marvin O'Neal Jr., for plaintiff in error.
McCready Johnston, Brown Shoob, contra.
"In the absence of an independent agreement by a creditor that the acceptance of an amount less than the indebtedness will be taken, or is taken, in full satisfaction thereof, the mere acceptance of a check for a less sum than the amount of an unliquidated debt, remitted by the debtor with notice that it is in full satisfaction of the debt, will not amount to an accord and satisfaction unless there existed previously to the tender a bona fide dispute by the debtor as to the correctness of the amount of the debt." Sylvania Electric Products v. Electrical Wholesalers, 198 Ga. 870 (1) ( 33 S.E.2d 5).
DECIDED JUNE 17, 1952 — REHEARING DENIED JULY 10, 1952.
Cole Corporation filed suit against E. D. Rivers Jr., trading as Radio Station WEAS, for balance allegedly due on a written contract attached to the petition. The contract calls for the plaintiff to furnish the defendant with a record library of 1200 selections to be used on commercial or sustaining programs, and to remain the property of the plaintiff; the contract to be for a period of three years, beginning as of the first day of one month after the station goes on the air commercially, the plaintiff further agreeing to augment the library by one album of at least 20 selections each month during the life of the contract. The defendant agreed to pay $492 per year for this service in monthly sums of $41.00 payable in advance upon the date the contract begins. The radio station commenced to operate commercially on August 20, 1947. On November 12, 1947, the defendant wrote the plaintiff as follows: "You may consider this notice of termination of my contract with your company for the use of your library service. We have found the library to be of very little use to us due to its contents and makeup. I am basing my cancellation on your failure to perform under section 1 of the contract in which you specifically agree to augment the library as set out in this section. We have been on the air five months and to my knowledge have received only three albums."
The defendant admitted owing for three months, or $123. After considerable correspondence as to whether the contract could be canceled, the defendant on June 22, 1948, sent a check for $82 marked, "Aug. rental paid. Sept., Oct. paid. Bal. due (Nov.) $41." He then, on August 30, 1948, sent a check for $41 marked "November rental, 1947. Account paid in full." These checks were cashed and the proceeds retained by the plaintiff. Suit was brought for the balance of the three-year contract, the plaintiff having in the meantime continued to forward monthly supplements in spite of the defendant's instructions to the contrary. Upon a trial of the case the jury returned a verdict for the plaintiff. A motion for a new trial on the general grounds only was overruled, and the exception is to this judgment.
1. The defendant does not appear to have based his defense on failure of consideration. He offered no evidence to this effect and testified that the records were of some value. He further testified that Station WEAS first went on the air commercially on August 20, 1947, and that when he wrote the letter on November 12, 1947, the station had received three record supplements. It thus appears from the undisputed testimony that the plaintiff had not breached its contract to supply one supplement per month beginning the first day of one month after the station went on the air commercially at the time the defendant attempted to cancel it.
The defendant relies upon Code § 20-1204, and upon Ryan v. Progressive Retailer Publishing Co., 16 Ga. App. 83 ( 84 S.E. 834), among other cases, in support of his position that a check marked "payment in full" on a disputed account, which is received and cashed, and the proceeds retained, is an executed accord and satisfaction, barring the creditor from pursuing his claim further. The Code section provides that "an agreement by a creditor to receive less than the amount of his debt cannot be pleaded as an accord and satisfaction unless it be actually executed by the payment of the money. . ." The Ryan case holds that, "Where the amount of a debt is . . disputed, and the debtor tenders his check for a less amount, containing the statement that it is `in full of all demands against' the maker . . and collects and retains the money, there is a valid accord and satisfaction," although the creditor only accepts the check "as a credit on account." However, in an exhaustive review of Georgia cases, the Supreme Court, reversing the Court of Appeals in Sylvania Electric Products v. Electrical Wholesalers, 198 Ga. 870 ( 33 S.E.2d 5), held that the mere acceptance by a creditor of a check sent by the debtor (accompanied by a letter showing it was tendered only as a final settlement of the account), and the retaining of the proceeds thereof, regardless of the existence of any dispute as to the amount due and regardless of the good or bad faith of the pretended claim of the debtor, was error. The dissenting opinion in this case points out that this ruling is contrary to prior rulings in Hamilton v. Stewart, 105 Ga. 300 ( 31 S.E. 184), Tarver v. Rankin, 3 Ga. 210, and other cases, and contrary to the construction given Code § 20-1204 by the United States Supreme Court in Chicago, M. St. P. Ry. Co. v. Clark, 178 U.S. 353 ( 20 Sup. Ct. 924). In Harvey v. Smith, 207 Ga. 692 (1) ( 63 S.E.2d 885) a bona fide dispute was shown, and the court held that there was an accord and satisfaction "under either or both theories announced by this court in the majority and dissenting opinions" in the Sylvania case.
While the rule is recognized that where there is a bona fide dispute, even without merit, over the amount due, and an amount less than the amount of the debt is accepted in settlement thereof, it amounts to an accord and satisfaction of the entire debt, yet there is no such dispute under the evidence in this record. The letter written by the defendant seeking to cancel the contract on the ground that the plaintiff had failed to perform under section one thereof pointed out that "we have been on the air five months and to my knowledge have received only three albums". He also testified that at the time the letter was written on November 12, 1947, he had received three supplementary albums to augment the library in accordance with section one of the contract. The evidence is undisputed that the radio station commenced to operate commercially on August 20, 1947. The contract was to take effect according to its terms beginning "as of the first day of one month after station goes on the air commercially." It follows that the evidence demands a finding that according to the contentions of both parties the contract was not breached at the time the cancellation was attempted, and that there was therefore no bona fide dispute between the parties relating to the terms of the contract or its performance.
The judgment overruling the motion for a new trial as amended is without error.
Judgment affirmed. Gardner, P. J. and Carlisle, J. concur.