Redman v. Woods

Stephens, J.

J. E. Woods sued C. L. Redman on a promissory note. The defendant pleaded an accord and satisfaction in that it had been agreed between the parties that the indebtedness, represented by the note sued on, which was for the purchase-money for land to which the defendant held a bond for title, had been satisfied by the defendant’s acceptance of an offer of the plaintiff to cancel the indebtedness by surrendering the note to the defendant in exchange for the defendant’s return of the bond for title, and that this offer was accepted by the defendant and the possession of the land surrendered to the plaintiff. It appears from undisputed evidence that the defendant received a letter signed by the plaintiff which, after referring to the indebtedness represented by the note, contained a statement as follows: “I suggest an exchange of papers for closing it out.” This the defendant construed to mean the cancellation of the indebtedness by his delivering the bond for title to the plaintiff and surrendering the land and receiving in return therefor from the plaintiff the defendant’s canceled note. The defendant accordingly, in a letter to the plaintiff, accepted this offer, and followed this up with a tender of the bond for title to the plaintiff. The plaintiff rejected the defendant’s offer, and afterwards brought suit upon the note. The court directed a verdict for the plaintiff and the defendant moved for a new trial.

The question is, does this alleged agreement between the plaintiff and the defendant constitute an accord and satisfaction of the defendant’s debt? Section 4326 of the Civil Code of 1910 provides that “Accord and satisfaction is where, the parties, by a subsequent agreement, have satisfied the former one, and the latter agreement has been executed. The execution of a new agreement may itself amount to a satisfaction, where it is so expressly agreed by the parties; and without such' agreement, if the new promise is founded on a new consideration, the taking of it is a satisfaction of the former contract.” The agreement between the plaintiff and the defendant was purely executory on both sides. The offer by the defendant to perform was rejected by the plaintiff. Whether the defendant, under this agreement, had the right to compel performance, there had in fact been no performance on his part. There had been no actual surrender of the bond for title and the land to the plaintiff and an acceptance of the same by the plaintiff. The evidence does not show that the plaintiff had ever accepted possession of the land. It was not expressly agreed by the parties that this executory agreement to cancel the deal and “rue back” should be in satisfaction of the debt. Nor can this inference be drawn from anything in the evidence. The letter signed by the plaintiff, if it can be construed as an offer to settle the indebtedness, certainly contemplates so doing otherwise than by a mere executory agreement by which he obligates himself to deliver up the note in return for the defendant’s promise to surrender the land and the bond for title. It could only contemplate a settlement of the plaintiff’s obligation represented by the note by an actual surrender of the land and the bond for title. Since the defendant’s undertaking to surrender the bond for title and the bond had not been executed, even though execution may have been prevented by the plaintiff, there has been no accord and satisfaction.

If the plaintiff’s failure to accept performance by the defendant when tendered amounted to a breach of the contract, the defendant’s remedy would not be a plea in accord and satisfaction. He could have no more than a right of action for a breach of this contract. It is not necessary to decide this question here, as the defendant sets up no such breach by way of set-off or counterclaim to the note sued on, and the evidence is insufficient to authorize a finding that the defendant has been damaged by any such breach.

The exact question here presented has been decided by the Supreme Judicial Court of Maine. See White v. Gray, 68 Me. 579. The facts of that case were, as stated by Walton, J., in delivering the opinion of the court, as follows: “Plaintiff held a note against defendants for $800. Defendants were insolvent and were endeavoring to compound with their creditors. In consideration of which, the plaintiff agreed that, if their efforts were successful, he would take in payment of his note a lot of land and new notes for $500, payable, one half in one year, and one half in two years. Defendants’ efforts were successful, and they offered to settle with the plaintiff upon the terms stated in the agreement; but he refused, denying all liability under Ms agreement, and claiming the full amount due upon Ms note. No deed of the land was ever executed, nor were the notes mentioned in the agreement ever made or tendered to the plaintiff.” The court goes on to say: “The question is whether these facts constitute a valid ground of defense to an action on the note. We think not. It is settled law in this State that a defense based on an alleged accord and satisfaction can be sustained only when the accord has been completely executed. Neither an offer to perform nor an actual tender of performance is sufficient. Nothing short of actual performance — meaning thereby performance accepted — will sustain such a defense. The debtor's remedy, if the creditor has wrongfully refused to accept performance, is a separate action upon the agreement. [Citations.] The agreement which, in the case first cited, failed as a ground of defense was successful when made the ground of a separate action. [Citation.] The distinction between an agreement which is per se to satisfy and extinguish an existing debt and an agreement the performance of which is to have that effect must not be overlooked. The former operates as an immediate satisfaction of the debt; the latter only when performed. The agreement set up as a defense in this case is clearly of the latter kind.” The same principle is stated by that court in Mayo v. Leighton, 101 Me. 63 (63 Atl. 298). See also Fouché v. Morris, 112 Ga. 143 (37 S. E. 182); 1 C. J. 532, 533.

The evidence demanded a verdict for the plaintiff in the full amount of the note sued on, and the court did not err in directing such a verdict.

Judgment affirmed.

Jenkins, P. J., and Bell, J., concur.