Opinion
No. 106,875.
11-30-2012
WERTH HEATING, PLUMBING AND AC, INC., Appellee, v. Elizabeth HERRMAN, Appellant.
Elizabeth Herrman, appellant pro se. No appearance by appellee.
Elizabeth Herrman, appellant pro se.
No appearance by appellee.
MEMORANDUM OPINION
PER CURIAM. Elizabeth Herrman, a pro se appellant, appeals a $306.42 judgment for Werth Heating, Plumbing and AC, Inc. (Werth) in this small claims lawsuit. Herrman contends she reached an accord and satisfaction with Werth for $153.61. We agree and reverse the judgment.
Factual and Procedural History
Herrman contracted with Werth to perform plumbing work on a rental property. Herrman paid Werth's bill of $306.42, but she stopped payment on the check. Herrman claimed the bill exceeded the time the plumber actually worked.
The trial court found that subsequently Herrman and Werth settled their dispute for $209.61, “contingent upon her paying the full amount by 10:00 the next day.” The trial court found “Herrman again changed her mind, didn't come in by 10:00, didn't pay the $209 .” Instead, Herrman presented a check for $153.61, and a letter to Werth explaining how she had calculated that amount.
Herrman wrote two statements on the back of the check, “cashing this check resolves all debt between us,” and “Paid in Full.” Upon receipt, Werth crossed out both statements, endorsed the check, and deposited it. Werth then filed this small claim lawsuit for $306.42 minus the $153.61 Herrman had already paid.
In her answer to Werth's lawsuit, Herrman raised the defenses of settlement and payment. The district court, however, rejected the defenses:
“[Herrman] wrote something on the back of the check ... that cashing the check for less would somehow involve a settlement of the dispute.
“... [T]hat is true if there is an unknown amount; in other words, the amount is in dispute and the parties settle it. That is not the case here. There was a fixed amount, the $209.61 amount that the parties had agreed to. That's not what was paid.
“So that statement on the back of the check is essentially ineffective, and it constitutes an attempt to elicit a new promise from the plumber, which is unsupported by consideration. The consideration was the exchange of the plumbing services for money.”
The trial court granted judgment to Werth and ordered Herrman to pay the original bill of $306.42 plus court costs. The trial court did not mention a setoff for the $153.61 Herrman had already paid. Herrman appeals.
Accord and Satisfaction
On appeal, Herrman contends the trial court “failed to apply the standards of [a]ccord and [s]atisfaction” to the uncontroverted facts. Werth did not file an appellate brief. Since Herrman challenges the trial court's conclusions of law, our review is unlimited. See American Special Risk Management Corp. v. Cahow, 286 Kan. 1134, 1141, 192 P.3d 614 (2008).
K.S.A. 84–3–311, enacted in 1991, addresses “Accord and Satisfaction by use of instrument.” See K.S.A. 84–1–101, Kansas Comment 1996; K.S.A. 84–3–311, Kansas Comment 1996. Because as used here “instrument” means “negotiable instrument,” K.S.A. 84–3–104(b), and a check is a negotiable instrument, K.S.A. 84–3–104(a) and (f), see State v. Pierce et al., 208 Kan. 19, 33, 490 P.2d 584 (1971), K.S.A. 84–3–311 controls. See K.S.A.2011 Supp. 84–1–308, Official UCC Comment 3; In re Al Muehlberger Concrete Const, Inc., 319 B.R. 663, 666 (Bankr.D.Kan.2005). The statute nevertheless “follows the common law rule with some minor variations to reflect modern business conditions.” K.S.A. 84–3–311, Official UCC Comment 3. K.S.A. 84–3–311 provides in relevant part:
“(a) If a person against whom a claim is asserted proves that (1) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (2) the amount of the claim was unliquidated or subject to a bona fide dispute, and (3) the claimant obtained payment of the instrument, the following subsections apply.
“(b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.”
The trial court's ruling concerned the second factor in subsection (a), whether the amount of the claim was liquidated or subject to a bona fide dispute. The requirement of an unliquidated claim or bona fide dispute is found in non-UCC Kansas caselaw. See Amino Brothers Co. Inc. v. Twin Coney Watershed District, 206 Kan. 68, 72, 476 P.2d 228 (1970) (“Our cases recognize the distinction” between “claims unliquidated or disputed and those liquidated or undisputed.”); Baugh v. Fist, 84 Kan. 740, 743, 115 P. 551 (1911) (noting existence of a “ bona fide dispute.”). Since K.S.A. 84–3–311 follows the common law with minor variations, we may consider this caselaw.
In Crumpacker v. Crumpacker, 239 Kan. 183, 718 P.2d 295 (1986), a district court ordered a father to pay child support payments. The payments were “continually in arrears,” and after “[v]arious attempts were made to enforce the judgment,” the father was found in contempt. 239 Kan. at 183. The contempt order produced some payment, but the problems with nonpayment continued.
Father eventually gave mother support checks “containing the statement ‘paid in full.’ “ 239 Kan. at 185. Father argued this worked an accord and satisfaction, but our Supreme Court disagreed. “Here, the debt was liquidated and undisputed and cannot be the subject of an accord and satisfaction.” 239 Kan. at 185. The rationale for the rule is that “a dispute ... should be bona fide, otherwise there would be no consideration. [Citation omitted.]” Baugh, 84 Kan. at 743.
A different situation was presented in Amino Brothers, where the defendant entered into a contract to build a dam. The contract was modified during construction, and the extra compensation due “was left for later determination after a study of the costs involved.” 206 Kan. at 69. Defendant submitted a bill for $22,342.96, but plaintiff sent a check for $2,944.72 bearing the statement: “ ‘This check is in payment of items as per statement following. Endorsement of payee will constitute a receipt in full when check is paid.’ “ 206 Kan. at 70.
After endorsing and cashing the check, defendant sued for the difference. Our Supreme Court held there was an accord and satisfaction: “[Plaintiff] need not have accepted and cashed the check. The effective way to protest the offer of settlement would have been to decline the check. Not having done so, [plaintiff] is estopped to deny settlement of its claim. [Citation omitted.]” 206 Kan. at 74. The present case is closer to Amino Brothers than to Crumpacker. Werth sued for the original billed amount of $306.42 after attempting to compromise the amount. This would indicate the amount was in dispute, unlike in Crumpacker. Werth then accepted a check for $153.61 under conditions similar to the plaintiff in Amino Brothers.
We might also ask what amount was liquidated and undisputed. Werth sued for $306.42, and the trial court awarded that amount. But the trial court did not find $306.42 was liquidated and undisputed; it found $209.61 was liquidated and undisputed. If true, Werth should have sued for $209.61, and the trial court would have awarded judgment in that amount. Presumably this did not occur because the conditions precedent for settlement in that amount were not met. See Arnold v. S.J.L. of Kansas Corp., 249 Kan. 746, Syl. ¶ 4, 822 P.2d 64 (1991). But if the conditions precedent were not met, we do not believe the amount of $209.61 was liquated and undisputed either.
We conclude there was no liquidated and undisputed amount due and owing. Herrman contested the $306.42 amount, the parties negotiated and arrived at $209.61, which was unenforceable for the failure of Herrman to meet conditions precedent, and Werth then attempted to reject the $153.61 amount, treating it as a mere payment on the balance. But because Werth accepted payment of $153.61 with knowledge that Herrman intended it as an accord of the dispute and a satisfaction of the debt, we hold that Herrman is not liable for the balance.
Reversed.