Bingham v. Browning

97 Ill. App. 442, 1900 Ill. App. LEXIS 235

• Court: Appellate Court of Illinois
• Decided: October 10, 1901
• Status: Published

Opinion

Mr. Justice Adams

delivered the opinion of the court.

The foregoing somewhat lengthy statement of facts has been made in view of the probability that, whatever our decision may be, the cause will be taken to the Supreme Court for final adjudication. Counsel for appellant rely on the general legal proposition that a contract takes effect, as to the parties to it, at the date of its delivery, and argue that the contract in question having been signed and delivered July 1*2, 1898, the appellee, Browning, is liable, under his contract, to discharge the indebtedness of appellant to the firm of Henry W. King & Co., which indebtedness consisted of sums of money drawn from that firm by appellant between July 6, 1898, and the time of the execution of the contract, amounting in all to $2,000. W e are of opinion, however, that the vital question in the case is as to the effect of the receipt of date December 31, 1898. In the discussion of this question counsel for appellant rely on the legal proposition that the payment by the debtor and acceptance by the creditor of a less sum than is actually due, will not, although agreed to by the creditor, extinguish the debt; citing Hayes v. Mass. L. Ins. Co., 125 Ill. 626, and other cases. The American editor of Smith’s Leading-_ ZD Cases, in the notes to the case of Cumber v. Wane, 1 Smith’s Leading Cases, 9th Am. Ed., 606, 621, after citing a number of cases in which the rule has been applied, says:

“ But it is to be noticed that these are largely early cases. In many of these States attempts have been made in later decisions to overthrow this rule. The foundation of it seems to be that1 in the case of the acceptance of a less sum of money in discharge of a debt, inasmuch as there is no new consideration, no benefit accruing to the creditor, and no damage to the debtor, the creditor may violate, with legal impunity, his promise to his debtor, however freely and understanding^ made. This rule, which obviously may be urged in violation of good faith, is not to be extended beyond its precise import; and whenever the technical reason for its application does not exist, the rule itself is not to be applied. Hence judges have been disposed to take out of its application all those cases where there was any new consideration or any collateral benefit received by the payee which might raise a technical legal consideration, although it was quite apparent that such consideration was far less than the amount of the sum due.’ Brooks v. White, " 2 Met. 283. So that even where the rule prevails it is overburdened with qualifications, nice distinctions and equivocal approbations, and courts are not unready to find grounds for avoiding its application.”

A number of cases are cited in support of the text of the note. Ib. 621-2.

In C., M. & St. P. Ry. Co. v. Clark, 178 U. S. 353, the court, Fuller, C. J., delivering the opinion, say:

“While the general rule must be regarded as well settled, it is considered so far with disfavor as to be confined strictly to cases within it,” citing a number of cases in support of this statement. In the case cited, Clark claimed a much . larger amount than the company paid him, but he signed a receipt for the amount which the company paid, as follows:

“ How, therefore, be it known that I, Heman Clark, have received of and from the said Chicago, Milwaukee and St. Paul Bailway Company the sum oí one hundred and seventy-three thousand five hundred and thirty-two and 49-100 dollars ($173,532.49), in full satisfaction of the amount due me on said estimates, and in full satisfaction of all claims and demands of every kind, name and nature, arising from, or growing out of, said contract of March- 6, 1886, and of the construction of said railroad, excepting the obligation of said railway company to account for said forty thousand dollars, as hereinbefore provided.

Heman Clabk.”

The receipt was not under seal. The court held that the receipt was a bar as to all claims against the company existing when the receipt was given, and rendered judgment in Clark’s favor for the sum of $2,425, on a claim which accrued after the receipt was given, lb. 372.

That the rule is technical and subject to numerous exceptions, is also stated in Tanner v. Merrill, 108 Mich. 58, citing many cases.

It is claimed by counsel for appellant that the amount due from appellee to appellant was liquidated by the contract itself. We understand the rule to be that (if there is a bona fide dispute as to the amount due), it must be considered as unliquidated. In Railway Co. v. Clark, supra, the court, commenting on a finding of the referee, says:

“ If it means that the statement of account as to these items was disputed, then the contention is a reasonable one, that such dispute was a sufficient reason to support the settlement in its entirety.”

The following authorities support the proposition that when any part of the demand is, in good faith, disputed, it is unliquidated. Fuller v. Kemp, 138 N. Y. 231; Nassoiy v. Tomlinson, 148 Ib. 326; Tanner v. Merrill, 108 Mich. 58; Ostrander v. Scott, 161 Ill. 345.

In Fuller v. Kemp, the court say:

“ Where the demand is liquidated, and the liability of the debtor is not in good faith disputed, a different rule has been applied. In such cases the acceptance of a less sum than is the creditor’s due will not of itself discharge the debt, even if a receipt in full is given. The element of a consideration is lacking, and the obligation of the debtor to pay the entire debt is not satisfied. There are many authorities which enforce this proposition, but they have no relevancy to a case like the present, where the debt was unliquidated, and there was a bona fide disagreement in regard to the extent of the debtor’s liability.”

In that case there was a dispute between the plaintiff and the defendant as to the amount of a physician’s bill of the defendant, the latter claiming $670 and the former contending the charge was excessive. The defendant inclosed to the plaintiff in a letter a check for $400, stating that the check was sent in full satisfaction of the plaintiff’s claim. The plaintiff cashed the check, retained the money, and sent his bill to defendant for the balance, $270, and subsequently sued for it. Held, that the plaintiff having retained the check and its proceeds, there could be no recovery. In Nassoiy v. Tomlinson, supra, the court say :

“ A demand is not liquidated, even if it appears that something is due, unless it appears how much is due, and when it is admitted that one of two specific sums is due, but there is a genuine dispute as to which is the proper amount, the demand is regarded as unliquidated, within the meaning of that term as applied to the' subject of accord and satisfaction.”

In that case the plaintiff claimed there was due to him from the defendant $1,500 commission for his services in selling real estate owned by the defendants. The defendants sent him a letter inclosing a check for $300, expressing it to be “ 1 per cent on $30,000, your commission on the sale,” and requesting him to sign and return a voucher, which was also enclosed in the letter. The voucher was in these words:

“Suspension Bridge, New York, 1887.

Received of the Tomlinson estate three hundred dollars, in full for commissions for sale to J. A. Weston of 66 acre lot, $300.”

Plaintiff retained the check, drew the money on it, and did not sign or return the voucher. He sued to recover $1,200, the balance which he claimed to be due him. Held, there could be no recovery, the court saying, among other things:

“ We think that the undisputed evidence shows conclusively that the offer was made in settlement of the claim, and that the plaintiff so understood it, when, by" using the check, he accepted the offer.” Ib. 331.

The court further say :

“ The plaintiff can not be permitted to assert that he did not understand that a sum of money, offered 1 in full,’ was not, when accepted, a payment in full. As was said in Hills v. Sommer (53 Hun, 392, 394), he was 6 bound either to reject’ the check, ‘or, by accepting it, to accede to the defendant’s terms.’ The money tendered belonged to them, and they had the right to say on what condition it should be received. ‘ Always the manner of the tender and of the payment shall be directed by him that maketh the tender or payment and not by him that accepteth it. ’ (Pinnel’s case, 5 Co. 117.) The plaintiff could only accept the money as it was offered, which was in satisfaction of his demand. He could not accept the benefit and reject the condition, for if he accepted at all it was eum onere. When he indorsed and collected the check referred to in the letter asking him to sign the inclosed receipt in full, it was the same, in legal effect, as if he had signed and returned the receipt, because acceptance of the check was a conclusive election to be bound by the condition upon which the check was offered. The use of the check was ipso faeto an acceptance of the condition. The minds of the parties then met so as to constitute an accord, and, as was said by this court in Fuller v. Kemp (138 N. Y. 231), ‘the acceptance of the money involved the acceptance of the condition, and the law will not permit any other inference from the transaction.’ ”

In Tanner v. Merrill, supra, the court say:

“ The important fact to ascertain is whether the plaintiff’s claim was a liquidated claim or not. If it was, there was no consideration for the discharge. If not, the authorities are in substantial accord that part payment of the claim may discharge the debt, if it is so received. Upon the undisputed facts, the claim of the plaintiff, as made, was not liquidated. It was not even admitted, but, on the contrary, was denied, because the defendants claimed that it had been partially paid by a valid offset. While the controversy was over the offset, it is plain that the amount due the plaintiff was in dispute.”

In Ostrander v. Scott, 161 Ill. 339, the court say:

“ The authorities are numerous and uniform that a payment of a part of a fixed and certain demand which is due and not in dispute is no satisfaction of the whole debt, even where the creditor agrees to receive a part for the whole and gives a receipt for the whole demand. (Bishop on Contracts, Sec. 50; 2 Parsons on Contracts, (5th ed.), 618; Curtis v. Martin, 20 Ill. 557; Morrill v. Baggot, 157 Id. 240; Titsworth v. Hyde, 54 Id. 386.) This doctrine rests upon the ground that the agreement for a discharge of the entire debt is without consideration. But it is limited to cases where the debt is of the character stated. It has no application to the honest settlement of unliquidated or disputed demands. (Hayes v. Massachusetts Life Insurance Co., 125 Ill. 626.) The rule disregards the actual intention of the parties, and if the balance due is disputed and the subject of an honest settlement and adjustment by the parties, such settlement will bar a recovery.” See also Lapp v. Smith, 183 Ill. 179, 183.

o We are of opinion that there was a bona fide dispute between the parties in the present case as to whether the defendant was bound to pay the indebtedness of the plaintiff to the firm of Henry W. King & Co., incurred between July 6, 1898, and the execution of the contract. There was room for such a dispute between men unlearned in the law. In appellant’s proposition to appellee, of date June 11th, he proposed to settle July 1st for $75,000, and estimates interest on an item contained in the proposition to July 1st. The agreement executed July 12th is dated July 1st, and, by the agreement, interest on the deferred payment of $65,000 is to be estimated from July 1st. That there was a dispute is sufficiently evidenced by appellee’s letter to appellant of date December 27, 1898, and appellant’s answer to that letter of date December 29, 1898. The trial court, exercising the province of a. jury, must have found, as a fact, that there was a genuine dispute between the parties as to the amount, and we think this finding of fact warranted by the evidence. Appellant, at the time he gave the receipt in question, had full knowledge of all the facts. He knew its purport, because he at first refused to sign it on the express ground that it purported to be in full of all claims. There is no evidence of fraud, mistake or duress in respect to the receipt. Appellant’s own testimony shows that he fully understood the purport of the receipt, and that in signing it he acted voluntarily and deliberately. He testified :

“ I went over to Mr; Frank King, and I told him that I thought it was entirely unfair, and objected to receiving that amount of money, and I told him that I would like to receipt for the amount that I received. He stated that he could not pay the money without taking a receipt in full, and, as I had to use the money at that time, I accepted it and gave the receipt.”

In C., M. & St. P. Ry. Co. v. Clark, supra, the court say :

“ Without analyzing the cases, it should be added that it has been frequently ruled by this court, that a receipt in full must be regarded as an acquittance in bar of any further demand, in the absence of any allegation and evidence that it was given in ignorance of its purport, or in circumstances constituting duress or fraud,” citing prior decisions of thé court.

In Ostrander v. Scott, 161 Ill. 339, the plaintiff, Scott, had an undisputed bill against the defendants, Ostrander et al., amounting to $5,282.57, but the defendants claimed an offset to the bill of $1,210, which was disputed. The defendants wrote a letter to the' plaintiff, inclosing their check for $4,072.57, and plaintiff’s bill for $1,210. The plaintiff retained the check and drew the money on it. The check was expressed to be “ in full of all demands to date,” and the letter inclosing it stated it to be “ in full of account to date.” Scott sued for $1,210, the balance which lie claimed to be due him. The court held there could be no recovery, saying, among other things:

“ It was the right of the plaintiff to accept the check upon the terms proposed, or to reject it; but there could be no modification of the terms by his will alone, without the concurrence of the defendant.”

The following language of the court is especially applicable to the facts of the present case:

“ The check was made on its face as payment in full of all demands to date, and the effect, when it was received, indorsed and collected, was the same as if it' had been tendered accompanied with a receipt to be signed in full of all demands to date, and the plaintiff had received the check and signed the receipt.”

In the present case the check or draft was accompanied with a receipt to be signed by appellee, “ in full payment of all claims,” etc., and he was informed that the check would not be delivered to him unless he signed the receipt, and he received the check and signed the receipt.

In Lapp v. Smith, 183 Ill. 179, there was a dispute between the parties as to the plaintiff’s claim, the defendant denying that it had matured, and also claiming a set-off. Under these circumstances the defendants wrote to plaintiffs, inclosing a check for $500, and three promissory notes. It was plainly stated in the letter that the check and notes were sent as a settlement. The plaintiffs retained the check, collected it, and credited the amount of it on the defendants’ account, and tendered back to defendants the notes, which they refused to receive unless accompanied with the check. Plaintiffs sued for the balance which they claimed, but the court held they could not recover. The court say:

“In Fuller v. Kemp, 138 N. Y. 238, which involved the same principle, it was said: ‘ The tender and the condition could not be dissevered. The one could not be taken and the other rejected. The acceptance of the money involved the acceptance of the condition, and the law will not permit any other inference to be drawn from the transaction. Under such circumstances the assent of the creditor to the terms proposed by the debtor will be implied, and no words of protest can affect the legal quality of this act.’ And in McDaniels v. Bank, 29 Vt. 230, the court said : 1 When a party makes an offer of a certain sum to settle a claim, when the sum in controversy is open and unliquidated, and he attaches to his offer the condition that the same, if taken at all, must be received in full satisfaction of the claim in dispute, and the party receives the money, he takes it subject to the condition attached to it, and it will operate as an accord and satisfaction. * * * The mere act of receiving the money is an agreement to accept the same on the conditions upon which it is offered.’ The doctrine of these cases is applicable here.”

It will be observed that the Hew York and Illinois decisions cited are not so strong for the defendants, respectively, as is the present case for appellee; because in those cases no receipt was signed by the creditor, whereas in the present case appellant knowingly, voluntarily and deliberately signed a receipt in full of all claims. We are of opinion that the receipt given by appellant is a bar to recovery in the present case.

We find no reversible error in the record, and the judgment will be affirmed.