Opinion
No. 40079.
April 9, 1956.
1. Accord and satisfaction — acceptance of check as — generally.
Ordinarily, acceptance of check which states that it is in full of a demand is an "accord and satisfaction" of the whole demand.
2. Accord and satisfaction — acceptance of check as — generally.
Regardless of whether claim is liquidated, one may not accept a check tendered in full settlement with mental reservation that he would afterwards assert a claim for additional compensation.
3. Accord and satisfaction — essential element of — agreement.
An essential element of "accord and satisfaction" is an agreement or meeting of minds of the parties, which must have all essentials of a contract and may be express or implied from circumstances.
4. Accord and satisfaction — "accord".
"Accord", or the agreement, precedes "satisfaction", which is execution of the agreement, resulting in "accord and satisfaction".
5. Accord and satisfaction — "accord" — essential of — identity of claim or account to be satisfied.
Essential to "accord" is identity of the claim or claims, account or accounts to be satisfied by acceptance of the accord.
6. Accord and satisfaction — acceptance of check marked "account in full" — where no accord.
An accord and satisfaction is not accomplished by tender and acceptance of a check with words "account in full" thereon, unless payee knows or should know what account is intended to be satisfied.
7. Accord and satisfaction — identical account — different account — payee's knowledge.
Where payee reasonably understands that a particular account is intended to be satisfied, there is no "accord and satisfaction" of another and different account or claim.
8. Accord and satisfaction — identical account — different account — payee's knowledge — evidence.
Whether payee knew or should have known what claim or account was intended to be satisfied is to be determined from all surrounding circumstances.
9. Accord and satisfaction — check by debtor for insurance premiums marked "account in full" — not tendered or accepted — in satisfaction of all premiums due.
In suit for insurance premiums, which were due under policies providing for computation of earned premium on termination of policy, pursuant to audits, evidence did not establish that check by debtor for premiums was tendered in satisfaction of all premiums due including final earned premiums, though check recited that it would be accepted in full payment of account in full.
10. Trial — stipulations — practice and procedure — denial in short of defendant's answer — evidence.
Where parties stipulated in open court that plaintiff could deny in short the allegations of defendant's answer, lack of written reply to defendant's plea of accord and satisfaction did not require exclusion of evidence in avoidance of defense of such plea.
11. Practice and procedure — action on sworn account — counter-affidavit — evidence.
In action on sworn account for insurance premiums, wherein defendant's answer and counter-affidavit denied liability for items revealed by audit of premiums due but did not challenge correctness of audits nor rates and figures used in computing premium, failure to introduce insurance company's manual of rules, rates and rating plans did not defeat recovery. Sec. 1754, Code 1942.
12. Practice and procedure — action on sworn account — challenging correctness of.
In action on sworn account, defendant seeking to challenge correctness of items of account must particularize wherein they are not correct. Sec. 1754, Code 1942.
Headnotes as approved by Gillespie, J.
APPEAL from the Circuit Court of Marshall County; T.H. McELROY, Judge.
James Stone Sons, Oxford, for appellant.
I. There certainly could not have been any settlement of a disputed claim when appellee tendered his check for $361.09 because on that date there was nothing in dispute between the parties.
II. This check of appellee could not have been an accord and satisfaction because nobody knew, or claimed to know, at such date that anything was owing to anybody and for the further reason, by the terms of the insurance contracts themselves, nobody could be compelled to pay anybody any amount until the audit, which could not be made until after the cancellation of the policies, had been made and submitted. In order to constitute a suable claim, two elements were absolutely necessary: first, that there should be a debt and second, that there should be an audit showing such debt.
III. As to estoppel, the actions of appellant have not worked any damage or detriment to appellee and could not possibly have done so. Also, the estoppel is based on the acceptance of the check for $361.09 and, as we have shown, this check had nothing to do with a claim which had not been determined and which could not have been determined by the time the check was given.
IV. As to accord and satisfaction, three things are necessary: first, a liability on the part of defendant; second, an agreement as to the amount to be paid; and third, acceptance of this amount in settlement of a disputed claim. Neither of these three existed as to the amounts sued for here on July 24, 1952. On that date there could be no liability, recoverable in court, until the audit had been made, and the audit could not be made until after that date.
V. There was no agreement as to the amount to be paid by appellee to appellant because nobody knew what such amount would be, from whom it would be owing to whom, and this could not be known until after the audit had been completed.
VI. The check which was given by appellee to appellant, as the record shows, was simply a balance of the deposit estimated premium which appellee had not paid. The record shows without dispute that this was the customary dealing between appellant and appellee, and appellee is bound to have known all about this situation. It seems to us that he is just trying to beat a widow out of her money.
VII. The decision of the Trial Court in this case was on a motion for directed verdict. Appellee has not even testified. Therefore, on this case as it is now before this Court all testimony, and every reasonable inference therefrom, must be considered in favor of appellant.
VIII. The judgment of the Trial Court should be reversed and this case remanded because the record shows that there was never a settlement of a disputed claim, because appellant is not estopped and because there could not possibly have been any accord and satisfaction on this record as it now stands.
Collation of authorities: B.F. Goodrich Rubber Co. v. Newman (Mo.), 271 S.W. 1029; Bliss v. Backemeyer, 122 Neb. 537, 240 N.W. 556; Butler v. Ragsdale, 54 Ga. App. 1, 188 S.E. 578; Cruze v. Life Ins. Co. of Virginia (La.), 184 So. 735; Fern v. First Natl. Bank of Anadarko, 119 Okla. 228, 249 P. 404; Fogg v. Hall, 133 Maine 322, 178 A. 56; Hibler's Admrx. v. Bourbon Agricultural Bank Trust Co., 225 Ky. 629, 9 S.W.2d 1008; May v. Robinson, 223 Ala. 442, 136 So. 734; Williams v. Mid-South Paving Co., 200 Miss. 103, 25 So.2d 792; Wunderlich v. State Highway Comm., 183 Miss. 428, 184 So. 456.
Smith Hurdle, Holly Springs, for appellee.
Appellant was plaintiff below and sued appellee for additional premiums on two insurance policies sold to appellee by appellant, who was engaged in the insurance business. One policy was a comprehensive general automobile liability policy, and the other was a standard workmen's compensation and employer's liability policy. Both policies provided for an estimated advance premium, and provided a method of determining the earned premium upon termination of the policy. One of the policies provided:
"The premium stated in the declarations is an estimated premium only. Upon termination of this policy, the earned premium shall be computed in accordance with the company's rules, rates, rating plans, premiums and minimum premiums applicable to this insurance. If the earned premium thus computed exceeds the estimated advance premium paid the named insured shall pay the excess to the Company; if less, the Company shall return to the named insured the unearned portion paid by such insured."
The other policy provided for a similar method of computing earned premiums. Under both policies, the premium could not be determined until termination of the policy and an audit made as provided by the policy within a certain time — one year under one policy and three years under the other. Only after the audit could it be determined whether the estimated premium exceeded the earned premium or whether the earned premium exceeded the estimated premium, and, therefore, whether the appellant owed the insured or the insured owed the appellant. The policies were written on August 23, 1951, for a one-year period. Because of the sale by appellee of his business operations, the policies were cancelled on July 24, 1952, which was about a month before they would have expired, and on the same day, appellee sent appellant a check for $361.09, which was the amount of the balance owed appellant by appellee on the estimated premiums on the two policies, and certain other insurance policies not here involved. This check had written thereon on the left margin the following:
"By endorsement this check is accepted in full payment of the following account. Date 7/24 Acct. in full. Total of Invoices . Less Discount . Total deductions . Amount of check $361.09. If incorrect please return. No receipt necessary." This writing was in print and was a form commonly seen on the left side of printed checks. The underscored words and figures were written in pen and ink. This check was endorsed by appellant and paid by the bank on August 4, 1952.
Thereafter the auditor for the insurance company made the audits as provided in the policies, in the course of which the actual payrolls, on which the final earned premium was figured, were furnished by an employee of appellee and the audit was completed on August 14, 1952, and showed that the final earned premium on the two policies amounted to $659.17 in excess of the estimated premiums theretofore paid by appellee. This amount was paid by appellant to the insurance company and appellee was billed therefor. Upon refusal of appellee to pay this amount, appellant brought this suit and appellee pleaded accord and satisfaction based on the acceptance by appellant of the aforementioned check.
The case was tried by the judge without a jury, and a motion to exclude the evidence was sustained and judgment entered for appellee.
(Hn 1) The question is whether the acceptance of the check was an accord and satisfaction of the entire earned premium on the two policies of insurance. Ordinarily the acceptance of a check which states that it is in full of a demand is an accord and satisfaction of the whole demand. Yazoo M.V.R. Co. v. Sideboard, 161 Miss. 4, 133 So. 669. (Hn 2) It is not permissible for one to accept a check tendered in full settlement with the mental reservation that he would afterwards assert a claim for additional compensation. May Bros. v. Doggett, 155 Miss. 849, 124 So. 476. The rule obtains whether or not the claim is liquidated. May Bros. v. Doggett, supra. Cf. Clayton v. Clark, 74 Miss. 499, 21 So. 565; Rucker v. King Construction Co., 159 Miss. 387, 131 So. 872.
(Hn 3) One of the essential elements of an accord and satisfaction is an agreement, or a meeting of the minds of the parties. This agreement must have all the essentials of a contract and may be express, or implied from the circumstances. (Hn 4) Accord, or the agreement, precedes satisfaction, which is the execution of the agreement, resulting in accord and satisfaction. (Hn 5) Essential to accord is the identity of the claim, or claims, account, or accounts, to be satisfied by acceptance of the accord. (Hn 6) An accord and satisfaction is not accomplished by the tender and acceptance of a check with the words "account in full" thereon, unless the circumstances are such that the payee knows or should know, what account is intended to be satisfied; (Hn 7) and where the parties are so circumstanced, or the state of affairs between them is such, that the payee reasonably understands that a particular account is intended to be satisfied, there is no accord and satisfaction of another and different account or claim. (Hn 8) Whether the payee knew, or should have known, what claim or account was intended to be satisfied is to be determined from all of the surrounding circumstances attending the parties and the transactions involved. Cf. Wunderlich v. State Highway Commission, 183 Miss. 428, 184 So. 456, and Williams v. Mid South Paving Company, et al, 200 Miss. 103, 25 So.2d 792.
The amount of the check was the amount owing by appellee on the books of appellant, being a balance from several other insurance policies and the estimated premiums on the two policies here involved. The final determination of the total earned premium could not have been known to either party when the check was written and it was not then known which party owed the other, or the amount. There is no contention that there was to be a mutual accord and satisfaction, and it would not be reasonable to infer that appellee was intended to be released from all liability as to the results of the audits, and still allow appellee to make claim against appellant if the audit revealed the earned premium was less than the estimated premium.
(Hn 9) We think there is no proof, directly or by reasonable inference, that there was an agreement that the check was tendered in satisfaction of the final earned premiums under the two policies of insurance.
(Hn 10) Appellee contends that the motion to exclude was proper for the reason that there was no written reply by appellant to the plea of accord and satisfaction, and, therefore, no evidence should have been admitted in avoidance or defense of the plea of accord and satisfaction. The parties stipulated in open court that appellant could deny in short the allegations of the answer of appellee. We neither approve nor disapprove of this method of pleading, but the parties stipulated to that effect and neither should now be heard to complain.
(Hn 11) Appellee also contends that appellant failed to make out a case in that the proof of the audit was not sufficient to prove the claim and that the proof failed because the company's manual of rules, rates, and rating plans was not introduced; but a careful review of the pleadings reveals that while the answer and counter affidavit of the appellee denied liability for the items revealed by the audit, he did not challenge the correctness of the audit, nor the rates and figures used in computing the premium. (Hn 12) The suit was on a sworn account. If the correctness of the items is to be challenged by the defendant, he must particularize wherein they are not correct. Section 1754, Mississippi Code of 1942.
It was error to exclude the evidence and enter judgment for the appellee. Accordingly, the case is reversed and remanded.
Reversed and remanded.
McGehee, C.J., and Kyle, Arrington and Ethridge, JJ., concur.