Platt v. Penetryn System, Inc.

OPINION

By SKEEL, J.

This action comes to this court on questions of law. The plaintiff filed his petition in common pleas court of Cuyahoga county seeking a judgment for money claimed to be due him under the terms of a contract of employment whereby said plaintiff was employed by defendant as a construction engineer. It is the claim of plaintiff that he was employed by defendant in November, 1939, at a salary of $100.00 a week and that he left defendant’s employment about Dec. 18, 1946. Some time in 1942 in addition to his weekly salary, defendant voluntarily inaugurated a bonus pian by which it agreed to pay plaintiff and all other superintendents a bonus computed at 35% of the savings or net profit on the separate jobs on which each superintendent was in charge; any losses on any of the jobs of a superintendent during any fiscal year to be deducted in fixing the amount of his bonus. It is the claim of plaintiff that while he received all of the salary to which he was entitled during the time of his employment, there is still due him about $11,000 under the bonus arrangement for which amount, or for such amount as is found due upon an accounting, he asks judgment.

Defendant’s answer admits that plaintiff was employed as a superintendent. The defendant denies specifically and generally all of the other material claims of plaintiff, except the payments made to plaintiff for salary and bonus, and further alleges that in‘1941 an incentive bonus plan was voluntarily adopted for all of its superintendents, Including the plaintiff, whereby they were to receive 35% of the net savings between the contract price and cost price of each job. It is further alleged that any loss suffered on a j'ob was to be deducted from the gross savings of such superintendent for such fiscal year. To insure good workmanship, any fault in construction which had to be repaired on complaint of a customer within a reasonable number of years after the work was done, the cost thereof was to be deducted from the bonus of such superintendent. It was further alleged that the construction costs and bonus for each fiscal year of each superintendent should be determined from the ledger or book records of defendant and such determination should be final.

Defendant then set forth an accounting for three separate fiscal years while the bonus system was in effect during plaintiff’s period of employment, and alleged that they made final and full payment of the amounts thus coming due to the plaintiff. It is alleged that the last and final payment being by check in the sum of $1,108.97 was sent to plaintiff on Feb. 5, 1944, and on the face of said check was set forth “payment in full, all compensation due.” The defendant further alleges that after the plaintiff received said check he held it, making claims for a larger amount until August, 1944, when he accepted said check and cashed same in accord and satisfaction thereof.

Plaintiff’s reply denies that he entered into an accord and satisfaction of his cause of action and denies generally the allegations of defendant’s answer.

Upon trial of the issues thus presented, the court without the intervention of a jury found for the plaintiff in the sum of $3,716.86, with interest from April 30, 1943 and costs.

The defendant’s appeal on questions of law claims the following errors:

“1. The judgment of the court of common pleas is contrary to law because it entered a judgment for plaintiff notwithstanding a defense of accord and satisfaction.

2. The judgment of the court of common pleas is not sustained by sufficient evidence.

3. The court erred in overruling the motion of defendant for judgment made at the conclusion of all the evidence.”

The first question thus presented is whether or not the cashing of the check issued by defendant to plaintiff after he left defendant’s employment with the legend thereon “payment in full all compensation due.” constituted an accord and satisfaction and therefore a bar to this action.

There is no conflict in the evidence as to the fact that plaintiff after disputing the amount of the check claiming a much larger amount due him as bonus (it being admitted by him that his salary was paid in full) cashed the check. The plaintiff’s evidence on this point was in brief as follows:

After receiving the check, which was mailed to him at Pampa, Texas, he wrote a long letter to Mr. Needham, Vice-President of defendant in charge of the territory west of Pennsylvania, making claim for an additional amount. Mr. Needham wrote back that he had no means of knowing what the state of plaintiff’s account with defendant was because the records were all in Albany at the home office, and he advised plaintiff that he had sent all the information plaintiff had sent to him. to Mr. Roth and further advised plaintiff to go to Albany to go over the books with Mr. Roth, auditor of the defendant. The plaintiff, after waiting some time, called Mr. Needham on the telephone and then feeling that he was not making progress on his claim, employed counsel in Amarilla, Texas. After their attempt to negotiate a settlement the Texas lawyers advised the plaintiff to come to Cleveland. In Cleveland he had a conference with Mr. Needham. In telling of the occasion the plaintiff testified in part:

“Q. Did you show him the check?

A. No, I didn’t show it to him, but I had it. And he said that didn’t make any difference about the check. If I was due any moneys that I would get a fair deal on it.”

“Q. When you say “that didn’t make and difference about' the check” what were you referring to?

A. About being marked “payment in full.”

Q. You are referring, then, to the legend across the upper left-hand front corner which says “payment in full all compensation due?”

A. I do. Yes sir.

Q. He said to you that that didn’t make any difference that you should go ahead and cash the check?

A. Yes.

Q. Now, during those two hours, you must have talked a lot of other things besides this one check. I would like to have you go ahead and tell the court What those conversations were about. Tell what you said and what requests or demands ' you made of him, and what he said or what Mr. Babcock said. You had better take one at a time however.

A. Well, I told Mr. Needham unless I could get some kind of a settlement or arrangement, if he could make arrangements or I could make a settlement, that I was going to be forced to enter, suit against them for it.”

“Q. In that conference with me, was the matter of the check brought up?

Mr. Edmiston: I object, Your Honor.

The Court: Now — well he may answer that ‘yes’ or ‘no.’

A. Yes.”

“Q. What did you do, following that time, about the check then?

A. I asked — I told you that I could use the money that was involved.”

“Q. Were you advised by me in reference to the cashing of the check?

Mr. Edmiston: I object.

A. Yes, sir, I was.

The Court: He may answer, subject to a motion to exclude it. You may answer.

A. Yes, I was advised by you.

Q. And what was that advice?

Mr. Edmiston: I object.

The Court: Now, you answer.

A. You advised me that it was all right for me to cash the check, the fact that it says that it was payment in full for all moneys due, or something similar, that it was all right for me to proceed and cash the check.”

In their argument before the court, on defendant’s objection to the foregoing evidence, and in stating what the plaintiff expected to establish thereby, and in explaining upon what grounds the check was cashed, counsel for plaintiff said that the plaintiff “vitally needed the money” because he had been unemployed for some time, and 'second, that it ■ was cashed on advice of counsel because the legend “paid in full all compensation due” did not constitute an accord and satisfaction where there was absolutely no meeting of the minds and where the fact that he (the plaintiff) objected to the proposed settlement and claimed additional remuneration all the way through this matter, that there was no meeting of the minds and that the check was cashed as a result of that advice.

There is not even a suggestion in the evidence that the plaintiff cashed the check relying on any statement of Mr. Needham that the legend on the check was waived by defendant or that Mr. Needham, as vice-president, whose job was to supervise the work west of Pennsylvania, had any authority to waive such provision. The plaintiff complained many times (his testimony is between twenty and forty times) to Mr. Needham about claimed shortages of bonus payments received by him. In all of these conversations, it appeared clearly that all Mr. Needham would do was to advise the home office of the complaint and ask them to see whether or not there was any money due the plaintiff. All of this evidence taken in its most favorable light for plaintiff tends to establish that Mr. Needham had no authority to determine the amount of bonus due plaintiff or to order a settlement thereof or waive an accord and satisfaction placed on a check in tendering payment of the claimed balance due.

In dealing with the claim of the plaintiff that Mr. Needham waived the accord and satisfaction placed on the check, which plaintiff cashed, it must be further observed that the issue of waiver (which would be an affirmative defense) is not raised by the pleadings. The defendant’s answer alleges an accord and satisfaction between the parties in the claims set forth in plaintiff’s petition to which claim the plaintiff by reply alleges: * * *

“Now comes the plaintiff and for his reply to the answer of defendant, The Penetryn System Inc., denies that he entered into an accord and satisfaction of his cause of action against the defendant * * *.”

There was, therefore no issue of waiver presented. And further there is no evidence to support such issue or that Mr. Needham had the authority to waive the condition upon which the check was issued and delivered to the plaintiff. Globe Indemnity Co. v. Wassman, 120 Oh St 72.

We come now to consider whether plaintiff in cashing the check with the legend of “in full all compensation due” thereon after notifying the defendant that he would not accept the check in full settlement of his claim for bonus because he claimed a much larger amount due him, constituted an accord and satisfaction of such claim.

The general rule as to the effect of tendering a check with a legend thereon notifying the payee that the check was issued in full for the payee’s demands against the maker where there is a legitimate controversy as to the amount of the debt of the maker to the payee is settled in this state by the case of Seed Co. v. Conger, 83 Oh St 169. The syllabus of this case is as follows:

“1. Where there is a bona fide dispute over an unliquidated demand and the debtor tenders an amount less than the amount in dispute, upon the express condition that it shall be in full of the disputed claim, the creditor has but one alternative; he must accept the amount tendered upon the terms of the condition, unless the condition be waived, or he must reject it entirely, or if he has received'the amount by check in a letter, he must return it.

2. Where in such case the creditor retains a check which was sent upon the condition that it shall be in full satisfaction of the debt claimed to be due, and received the money thereon and notifies the debtor that the amount is placed to his credit but that he does not intend that the same shall close up the matter in dispute, to which the debtor makes no reply, such silence by the debtor does not amount to a withdrawal of the condition which accompanied the tender, nor to a waiver of it. The transaction is an accord and satisfaction.”

It is the claim of plaintiff that because he notified the defendant that he refused to accept the amount for which the cheek was drawn in full settlement of his claim, and after such notification a long period of negotiation between the parties ensued; whereby plaintiff tried to induce defendant to pay a larger amount, and that defendant having failed during such period'to stop payment on the check or otherwise make the funds upon which it was drawn unavailable to plaintiff, that either by such conduct they consented to the use of the check by the plaintiff without an accord and satisfaction of his claim, or because such facts clearly showed there was not a meeting of the minds of the parties on a settlement of the dispute between the parties that an accord and satisfaction was not accomplished by plaintiff thereafter presenting the check for payment and receiving the money thereon. Such theory cannot be sustained.

The plaintiff in advancing these claims relies on the case of this court, Burton Coal Co. v. Gorman Coal Co., 22 Oh St 383. The facts of the Burton case involved a disputed account between the parties. The Burton Coal Company issued a check for the balance it claimed to be due The Gorman Coal Company with a notation on the check of “in full of account.” Gorman protested the amount of the check and when Burton received notice of such dissatisfaction, his answer to Gorman was in substance that the matter was up to the Gorman Coal Company. The Gorman Coal Company thereupon cashed the check and applied the proceeds on the account and brought action for the balance. The opinion of the court seems to hold that it became a question of fact as to whether the statement of Burton constituted a waiver of the legend of the check “in full of account.” If that be so, then the case is not in point on the issues presented in the instant case. If the opinion of the Burton case should be construed to mean that, after receiving a check with the legend thereon stating it is in full payment of an unliquidated .claim and the creditor notifies the debtor that he will not settle the claim for the amount of the check and thereafter cashes the check and brings action for the amount claimed due less the amount of the check, that the creditor under such circumstances is entitled to recover and an accord and satisfaction is not thereby established because of the fact that there was not a meeting of the minds of the parties on the question of accord and satisfaction, we are not disposed to follow the authority of such holding because it would be in direct conflict with the following cases:

Seed, Grain & Hay v. Conger, supra; Toledo Edison Co. v. Roberts, 50 Oh Ap 74; Keser v. Wilberforce University, 33 Abs 438.

• The trial court in disposing of the question of accord and satisfaction said:

“On the theory of the Conger case, supra, we believe that the facts in the instant case show conclusively that there was no meeting of the minds and that the cashing of the check would not constitute accord and satisfaction.”

The court then concluded, upon the issue of accord and satisfaction that such fact was not established by sufficient proof. The record conclusively shows, however, that unless there was a waiver by the defendant of the legend “payment in full of all compensation due” before the plaintiff cashed the check, the cashing of the check would as a matter of law constitute a complete settlement of plaintiff’s claim for compensation.

Having concluded that the issue of waiver was not presented by the pleadings and there was no evidence in support of such waiver, the judgment of the trial court is reversed and final judgment entered for defendant appellant. Exc. Order See Journal.

MORGAN, J, concurs. HURD, PJ,. dissents. (See dissenting opinion.)