Early-Foster Co. v. W. F. Klump & Co.

Early-Foster Company, a corporation, sued W. F. Klump, doing business under the firm name of W. F. Klump Co., to recover an alleged balance of about $1,200, claimed to be due for the price of 2,000 bales of cotton linters sold by appellant to appellee, under contracts dated December 1 and December 7, 1916. Appellee denied liability, and specially answered that he had fully paid the amount due on the contracts, alleging that such payments were made upon drafts drawn by appellant with bills of lading attached through banks in New Orleans, aggregating the sum of about $70,000; that the banks, acting for appellant in the collection of the drafts, accepted this sum in full payment of the amount due by appellee on account of the purchase and sale of the linters; that, upon the payment of this amount, the New Orleans banks delivered the bills of lading and drafts to appellee, and canceled and marked paid the drafts, and that thereafter the appellant, in due course of business, received and accepted the sum so paid in full payment and settlement of appellee's indebtedness, with full knowledge that the sum paid by appellee was in full of the contract. It was further pleaded by appellee that there was a dispute as to the correct amount due, and especially as to certain items making up the sum total of the drafts, which were claimed to be overcharges, but which were authorized by appellant to be deducted from the face of the drafts, and that the acceptance of the balance, and the other facts alleged, constituted a full and complete accord and satisfaction. At the conclusion of plaintiff's testimony, the trial court instructed a verdict for the defendant, upon which judgment was rendered for appellee.

The contracts in question were effected by interchange of telegrams, the linters being sold at a fixed price per pound, f. o. b. Texas common points. The cotton was shipped in due course, and the drafts with bills of lading attached were drawn and sent to New Orleans banks, where appellee was doing business. A controversy arose over certain items included in the amount of the drafts, with relation to certain charges which were claimed by appellee to be unauthorized by the contract, and illegal and excessive demands.

The telegrams and letters, relating to appellee's demands for deductions and appellant's allowance of the same, are as follows:

"New Orleans, La. 338 p. m. Dec. 15, 1916. Early Foster Co. Waco. Drafts here but all advance charges on ladings must be reduced also freight allowance must be made on all stock moving out of Waco over other lines than Cotton Belt also charge of one seventy-one account three hundred Corsicans must be deducted and must have sworn weights as instructed. 4:03 p. m. W. F. Klump Co."

"Waco, Tex. 408 P. Dec. 15, 1916. W. F. Klump and Co. New Orleans, La. Bank wires you refuse pay our draft covering five hundred bales linters account advance charges forty dollars which is demurrage accrued while cars held here pending shipping instructions from you weight sheets attached are compress weights and oked by M. Tonnellet please pay our draft answer. Early Foster Co. 430 P."

"Waco, Texas, 410 P. M. Dec. 15, 1916. W. F. Klump Co. New Orleans, La. Bank wires you returned our draft twenty-four thousand dollars account amount incorrect and routing not per your instructions all shipments routed teepee per your instructions. We sold goods fob Texas common points and made some shipments from points taking rate twelve and half cents less than common points. Please advise quick what amount should draft be for. Early Foster Co. 424 P. M."

"Waco, Tex. 421 P. Dec. 15, 1916. W. F. Klump and Co. New Orleans, La. Answering we sold linters adjusted intoxicate five hundred seventy-five bales concentrated Waco via Katy and shipments made out same way but all shipments made teepee delivery per your instructions all weights furnished were compress and public weighers weights accepted by Tonnelet can forward you duplicates sworn to if we have to make deduction it will be under protest and we will arbitrate. Early Foster Co. 442 P. M."

"New Orleans, La. 506 P. M. Dec. 15, 1916. Early Foster Co. Waco. Full shipping instructions given you within contract time arrange all papers correctly and drafts will be paid duplicate sworn certificates acceptable instructed you to route linters out of Waco Cotton Belt and Texas Pacific. W. F. Klump Co. 522 P. M."

"Waco, Texas, Dec. 15, 1916. W. F. Klump and Co. New Orleans, La. Answering we will forward you duplicate sworn weights linters shipped as wired five hundred seventy-five bales were concentrated Waco but shipped teepee delivery we sold linters fob Texas common points and if we had made shipments from points taking excess freight we would have had to pay same we perfectly agreeable arbitration either according Texas Cotton Seed Crushers rules or three disinterested parties. Early Foster Co. 8:14 P. M."

"New Orleans, La., 233 P. M. Dec. 16. Early Foster Co. Waco, Texas. We bought fob common points we control routing deduct all charges per our wire yesterday. W. F. Klump Co. 235 P."

"Waco, Texas, 3 P. M. Dec. 16, 1916. W. F. Klump and Co. New Orleans, La. Answering five hundred seventy-five bales linters shipped you originated different points for convenience we shipped them into Waco and stored them and reshipped out of here and shipments had to go out via same roads over which they arrived in order concentration apply we however instructed delivery via teepee per your instructions why not agree arbitration. Early Foster 338 P."

"Waco, Texas, Dec. 16, 1916. W. F. Klump Co. New Orleans, La. Gentlemen: Referring to exchange of wires, there was no use in our having to send all these telegrams when you were so familiar with the trade and understood the situation clearly. We held the linters in the cars here about seven or eight days waiting for you to give us instructions, and you did not wire us the instructions until two days after the expiration of the contract time, and then changed them two or three times. We would not have sold these linters at the price we did if it had not been that we wanted to move them immediately. As to the difference in freight, you know when a contract reads fob Texas common points, it means that the common point rate to New Orleans applies, and anything in excess of that rate we would have to take care of, and we would be entitled to anything under that. As advised you, 575 bales of the linters were concentrated in Waco, and we had to route them out the same way they came in, in order to have concentration apply. We are sending you through the bank today duplicate weight of the linters, sworn to. Now lets do not have any more bother about this. We are agreeable to doing what our contract calls for, and as advised, will be glad to leave the matter to three disinterested parties, that is we select one, you select one, and they select a third. We don't want anything but what belongs to us. The writer had thought he would visit you within the next few days, but at the moment, does not believe he will be able to go East. Yours very respectfully, Early-Foster Company, per H. M. Foster."

"New Orleans, La. 1035 A. Dec. 18. Early Foster Co., Waco, Texas. Several cars here please arrange papers quickly as instructed avoid expenses. W. F. Klump Co. 1044 A. M."

"Waco, Tex. 156 P. Dec. 18, 1916. W. F. Klump and Co. New Orleans, La. Answering any allowance we make is under protest we instructing bank accordingly. Early Foster Co. 207 P."

"Waco, Texas, 245 P. M. Dec. 18, 1916. W. F. Klump and Co. New Orleans, La. Have wired bank there on payment all our drafts on you deduct four hundred fifty dollars two cents which we understand is amount you demand this not according to sale and we do this under protest. Early Foster Co. 255 P."

"Waco, Tex. 530 P. Dec. 18, 1916. W. F. Klump and Co. New Orleans, La. Wire us exact amount you wish deducted from our drafts we dont understand bank wires as advised any deduction is under protest. Early Foster Co. 556 P."

"New Orleans, La. Night Letter. Dec. 18, 1916. Early-Foster Co. Waco. Invoice seven thirty-four charges ladings sixty-one dollars over charges one seventy-one thirty-nine extra freight caused by improper routing from Waco hundred eleven seventy-two next invoices advances forty dollars improper routing one sixty-six fifty-one next over charge one forty-eight forty-five improper routing one seventy-five forty-three next improper routing hundred nine eighty-six next overcharge twenty-nine eighteen. W. F. Klump Co. 755 A. M."

"Waco, Texas, Dec. 19, 1916. The Commercial National Bank, New Orleans, La. Referring to your telegram of today reduce Klump draft $344.11. Central Texas Exchange National Bank."

"Waco, Tex. Dec. 18, 1916. 250 P Whitney Central Natl. Bank, New Orleans, La. Upon payment all Klump drafts ours fourteenth sixteenth deduct two hundred twenty-five dollars two cents wire immediately if accepted or not. First State Bank and Trust Co."

"Waco, Tex. 916 A Dec. 19, 1916. Whitney Central Natl. Bank, New Orleans, La. Collect Klump drafts less total deduction of seven hundred seventy-nine dollars twenty-nine cents on four drafts as per your last wire payment thanks. First State Bank Trust Co."

On December 19, 1916, and after the drafts had been paid by appellee, appellant brought its suit for the alleged balance, and attached certain linters claimed to belong to appellee at Waco, Tex.

Appellant authorized the banks at Waco, through which the drafts were drawn, to wire the New Orleans banks to make the deductions claimed by appellee, but it was testified by Mr. Foster, of the appellant company, that he did not authorize such banks to wire that the balance would be accepted in full settlement of the contract, or to release appellee from any claim for the amounts deducted from the amounts of the drafts.

Opinion. There are several questions presented in appellant's brief relating to the alleged errors of the trial court in peremptorily instructing a verdict, and in not submitting to the jury the various items, comprising its demand, to which it Is claimed appellant was entitled under the contract, and as to which it is asserted there were issues of fact for the determination of the jury. A decision of these questions will be pretermitted, as, in our view of the case, must turn upon the question whether the trial court correctly held that the testimony conclusively established an accord and satisfaction. This seems to have been the ground upon which the peremptory instruction was given, and, if the trial court's action in this particular was correct, it is immaterial what appellant's rights were under the contract.

Appellant's counsel earnestly and ably argue that the evidence was wholly insufficient to show that appellee's claims for deductions were bona fide, or that the money paid by appellee on the drafts was either offered by him or accepted by appellant in full settlement; but, if mistaken in this, an accord and satisfaction certainly was not established by direct evidence, but could only result from inferences to be drawn from the existence of other facts proved, a matter peculiarly within the province of the jury. This claim requires a discussion and analysis of the documentary evidence, which must chiefly determine whether there was conclusively and indisputably established an accord and satisfaction.

It will be observed that the evidence touching this question is undisputed; and in determining its effect certain established principles of law should be kept in mind.

First. Where there is any material issue of fact, it is error for the trial court to take the case from the jury and to peremptorily instruct a verdict.

Second. Accord and satisfaction is, in essence, a contract, and, like all other agreements, must be consummated by a meeting of the minds of the parties. Railway v. Gordon, 70 Tex. 80, 7 S.W. 695; Bergman Produce Co. v. Brown, 172 S.W. 554; Harrison v. Henderson, 67 Kan. 194, 72 P. 875,62 L.R.A. 760, 100 Am. St. Rep. 386; 1 Cyc. p. 312, par. C.

In 1 R.C.L. p. 183, § 12, after stating the above principle, it is said:

"If the creditor is held to abate his claim against the debtor, it must be shown that he understood, or should have understood, that he was doing so when he received the consideration therefor."

Third. Under the law of accord and satisfaction, a claim will be regarded as unliquidated if it is in dispute as to the proper amount. 1 C.J. § 77, p. 555; Powers v. Harris, 42 Tex. Civ. App. 250,94 S.W. 138.

Fourth. An accord and satisfaction will result if the offer is accompanied with such acts and declarations as amount to a condition that, if the money is accepted, it is accepted in satisfaction, and such that the party to whom it is offered is bound to understand from it that if he takes it, he takes it subject to such condition. In such circumstances, the party to whom the offer or tender is made has no alternative but to refuse or accept, upon the conditions named or necessarily implied; and, if he takes it, his claim is canceled, and no protest, declaration, or denial of such, so long as the condition is insisted upon, can vary the result. 1 Cyc. pp. 333. 334; 1 R.C.L. 197; Hunt v. Ogden, 58 Tex. Civ. App. 443, 125 S.W. 386; Powers v. Harris,42 Tex. Civ. App. 250, 94 S.W. 137; Shelton v. Jackson,20 Tex. Civ. App. 443, 49 S.W. 415; Clopton v. Caldwell Co., 187 S.W. 400; Cristlar v. Williams, 62 Tex. Civ. App. 169, 130 S.W. 608; Daugherty v. Herndon, 27 Tex. Civ. App. 175, 65 S.W. 891; Bergman Produce Co. v. Brown, 172 S.W. 554.

There can be no controversy, we think, that there was a bona fide dispute between appellant and appellee as to the correct amount due by appellee under the contracts. The first telegram of December 15th, from Klump Co., to appellant, challenged the amount of the drafts, and made the unequivocal demand for certain deductions before appellee would agree to pay the drafts. Then ensued an exchange of telegrams, in which appellant insisted upon the correctness of its drafts, but appellee stood pat at all times.

Appellant suggested arbitration, and also plainly stated that any deductions allowed or to be allowed were under protest. However, after inquiring the exact amount of appellee's demands, appellant was plainly advised by appellee's telegram of December 18th exactly what deductions were demanded; and, with due authority from appellant, the Waco banks, on December 19th, authorized the New Orleans banks to deduct all the allowances demanded by appellee, and in effect to accept the remainder. Acting thereunder, appellee paid the balance on the drafts, and they were marked paid and canceled, and the bills of lading delivered to appellee.

Under these conditions, it seems plain that the conditions named by appellee were accepted by appellant, and that the payment by appellee, under circumstances whereby appellant knew, or should have known, that the money was tendered and accepted in satisfaction of its claims, unless perhaps a different result might ensue from the fact that several of appellant's telegrams stated that the deductions were made, or to be made, "under protest," constituted an accord and satisfaction. We are of the opinion that this attempted reservation, in the circumstances of this case, was of no effect, We have seen that it is established law that, when a party to a controversy accepts a tender or offer of his adversary, his claim is canceled, "and no protest, declaration, or denial of such so long as the condition is insisted upon can vary the result."

The evidence shows that appellee made his demands emphatic and his conditions plain; also that appellant accepted the same, although unwillingly and under protest. As was said by the Supreme Court of New York, in Matthews v. William Frank Brewing Co., 26 Misc.Rep. at page 48,55 N.Y. Supp. at page 242:

"There is no magical force in the term ``under protest.' It does not establish compulsion, and implies nothing more than that the act done is contrary to the desire of the party making the protest."

To our minds, the use of the phrase "under protest" by appellant did not imply the reservation of any legal right, or manifest a purpose to resort to the courts, or to leave open for future adjustment the deductions it allowed. It was nothing more than a statement by appellant that it unwillingly acceded to appellee's demands, and was a mere protest against what was claimed to be the unjust and illegal position taken by appellee. The correspondence manifests, at most, a reluctant yielding to appellee's conditions by appellant, and it is immaterial how unwillingly a party may yield to his adversary's demands, nor how justifiable may be his protest. It is enough if he meets them, and his secret intentions or future purposes to litigate will not defeat the legal result of an accord and satisfaction.

It is conceded by appellant's counsel that, if the telegrams of appellee had used the words "in full settlement," or their equivalent, in connection with his demands for the deductions, and the allowances had then been made unconditionally, an accord and satisfaction would have resulted. There is, however, no magic in such a phrase. If the language in which the conditions were named was couched in different terms, but was equivalent in plain meaning, the result would be the same. To our minds, the necessary effect of the language of appellee's telegrams was to name conditions, the acceptance of which would close the controversy and satisfy appellant's claims; and it Is immaterial that he did not employ such phrases as "in full settlement," or "in full satisfaction."

We do not think reasonable minds can differ upon the conclusion to be reached from the evidence, and therefore it became the duty of the trial court to instruct a verdict; there being no real issue for the decision of the jury.

It perhaps should be added that our conclusion is not thought to be in any wise an impairment of the principle that there must be a meeting of the minds in order to constitute an accord and satisfaction. In testing this legal principle, as applied to the facts of this case, we must not confuse the matter of the meeting of the minds upon the merits of the controversy with the question of the parties being in accord in the acceptance of the conditions named. In other words, if the parties actually agree on the settlement, it can make no difference that one of the parties is dissatisfied, or that he thinks he has been unjustly treated, and has reached his decision under protest. It may be conceded here that appellant never did recognize the justice and validity of appellee's demands, but it cannot be controverted that it did finally yield to them and accepted appellee's money, under circumstances which imperatively apprised it that the controversy was closed. There was a full meeting of the minds upon the essential question of the acceptance of appellee's conditions, and appellant should have understood, if he did not in fact, that the deductions were demanded as the condition of appellee's compliance with the contracts on his part.

Perhaps our conclusion may be strengthened by the statement of a hypothetical case, which is thought to be in analogy. Let us suppose that A. holds a note for $500, executed by B., and draws a draft on B., attaching the note to the draft. A genuine controversy arises over part payment, B. contending that he has paid $100 on the note. Upon presentation of the draft, B. wires A., demanding that the note and draft be credited with that sum, and offering to pay the balance. Although protesting vigorously, A. wires the bank to allow the credit, which is done, and the balance is paid, and draft and note, marked canceled and paid, are delivered to B. Can it be doubted that the facts would constitute a complete release of A.'s claim, although he stated in his wire that the credit was "under protest," and although B. did not, in his telegram, use any such words as "in full settlement." We think not, as A. must have understood, from the nature of B.'s telegram, that he demanded the deduction as the condition upon which he would pay the balance.

From what has been said, it follows that the trial court did not err in directing the verdict for appellee.

No reversible error having been shown, the judgment is affirmed.

Affirmed.