N. C. Monroe Construction Co. v. Coan

228 S.E.2d 497, 30 N.C. App. 731, 1976 N.C. App. LEXIS 2344

• Court: Court of Appeals of North Carolina
• Decided: October 6, 1976
• Docket: 7618SC260
• Status: Published

Opinion

BROCK, Chief Judge.

Defendants’ appeal raises the procedural issue of whether summary judgment was properly granted as to any or all issues in the dispute between these parties.

Defendants contend that Judge Seay erred in finding no genuine issue as to the material fact of accord and satisfaction. The breach of contract alleged by defendants in their answer can be a valid defense to payment of the notes. Stelling v. Trust Co., 213 N.C. 324, 197 S.E. 754 (1938). In order to avoid defendants’ defense and counterclaim, plaintiff alleged the affirmative defense of accord and satisfaction. If proven, accord and satisfaction is a bar to the assertion of any claims on the underlying obligation and thus would preclude defendants from asserting their breach of contract claims. Bizzell v. Bizzell, 247 N.C. 590, 101 S.E. 2d 668, cert. den. 358 U.S. 888, 3 L.Ed. 2d 115, 79 S.Ct. 129, reh. den. 358 U.S. 938, 3 L.Ed. 2d 310, 79 S.Ct. 322 (1958).

In this case the plaintiff has the burden of proof on accord and satisfaction. Moreover, as movant for summary judgment under Rule 56, plaintiff has the added burden of showing no genuine issue as to the existence of an accord and satisfaction. Normally, the existence of an accord and satisfaction is a question of fact for the jury. But where the only reasonable inference is existence or non-existence, accord and satisfaction is a question of law and may be adjudicated by summary judgment when the essential facts are made clear of record. 1 Am. Jur. 2d, Accord and Satisfaction, § 53, p. 352.

The record before Judge Seay consisted of the following: plaintiff’s verified complaint, defendants’ unverified answer and counterclaim, plaintiff’s verified reply to the counterclaim, stipulations, admissions, plaintiff’s affidavit in support of summary judgment, defendants’ affidavit in opposition, and documentary exhibits including the contract, notes, and owner’s and contractor’s affidavit. From these materials it is clear that the project was completed in September 1973. There was a meeting of the parties to discuss the problems with the project, and there was a dispute as to the amount due the plaintiff. An agreement was reached whereby defendants agreed to execute the notes. In return plaintiff agreed to execute an owner’s and contractor’s affidavit which acknowledged complete payment by the defendants. These instruments were subsequently executed and delivered, and defendants went into possession of the project. Plaintiff alleges these transactions constituted an accord and satisfaction. Defendants admit agreeing to the execution of the notes but contend that there was'no'resolution of the problems or complete acceptance.

Accord and satisfaction may result where there is a dispute as to the amount actually due followed by payment of something less than or different from the amount claimed. Products Corporation v. Chestnutt, 252 N.C. 269, 113 S.E. 2d 587 (1960); 1 Am. Jur. 2d, Accord and Satisfaction, § 27, p. 325. In the case at bar defendants, by their own affidavit, admit that at the September meeting the amount remaining due was disputed. Yet they agreed to execute the notes in issue.

Whether or not there is an accord and satisfaction upon the delivery and acceptance of a debtor’s note depends on the intent of the parties. “If the agreement is that the note shall be received in satisfaction and discharge of the original debt or claim, and the note is actually delivered, an accord and satisfaction will result regardless of whether the note was paid.” 1 Am. Jur. 2d, Accord and Satisfaction, § 48, p. 345. That the notes were given in full satisfaction of the original debt is clearly established by the owner’s and contractor’s affidavit:

“All of the persons, firms, and corporations except those whose names, if any, appear on the Waiver of Liens on the reverse side hereof, including General Contractor and all subcontractors, who have furnished services, labor, or materials, according to plans and specifications or extra items, used in the construction or repair of such improvements, have been paid in full, that there are no mechanics’ or materialmen’s liens against said property and no claims outstanding which would entitle the holder thereof to claim a lien against the property (except those claims, if any, which are waived by the Waiver of Liens on the reverse side hereof) and that such construction or repair has been fully completed and accepted by the owner. General Contractor hereby waives and releases his right to file a mechanic’s or materialmen’s lien against said property ...” (Emphasis added.)

This owner’s and contractor’s affidavit was executed and delivered to defendants in return for the delivery and execution of the notes. Plaintiff clearly accepted the notes as a complete resolution of claims, even to the extent of waiving its lien rights. Defendants are careful in their afidavit not to deny that the owner’s and contractor’s affidavit was given in return for the notes. They merely say “[t]hat the owner’s and contractor’s affidavit spoken of in the affidavit of N. Carl Monroe was not given in consideration for the notes sued upon in this action.” Whether or not the giving of the owner’s and contractor’s affidavit was consideration is a question of law, and defendants’ statement is thus a conclusion of law. Regardless of defendants’ statement, they wanted the contractor’s affidavit and relied on it as evidence that the contract had been completed. This is seen in defendants’ admission that they received the contractor’s affidavit and subbmitted it to their lender to secure permanent financing.

Plaintiff’s showings coupled with defendants’ admissions are clearly sufficient to show an accord and satisfaction. Defendants claim, however, that since they filed an affidavit opposing summary judgment, in which they stated on personal knowledge that no resolution of the dispute or complete acceptance had occurred, then the existence of an accord and satisfaction was sufficiently put in issue.

Our Supreme Court has held that the movant for summary-judgment with the burden of proof should lose if the opposing party introduces materials showing a clearly disputed issue of fact. Kidd v. Early, 289 N.C. 343, 222 S.E. 2d 392 (1976). But Kidd v. Early also says that in order to resist a motion for summary judgment, it is encumbent upon the opposing party “to show that he has, or will have, evidence sufficient to raise an issue of fact.” Id. at 370, 222 S.E. 2d at 410. Rule 56 does not contemplate the use of affidavits merely to deny allegations in the pleadings.

Plaintiff’s affirmative defense of accord and satisfaction was first raised in its reply to defendants’ answer and counterclaim. Since there were no further pleadings required in the case, defendants’ first opportunity to attack the defense was in their affidavit in opposition to the motion. In that affidavit defendants simply denied any resolution of the problems concerning the project. This amounts to a mere denial of the allegations of plaintiff’s responsive pleading and does not allege particular or precise facts showing in what way or to what extent plaintiff breached the contract or in what way the defendants pressed their objections. Furthermore, in none of the materials properly before Judge Seay do defendants attempt to controvert plaintiff’s showing that at no time from the execution of the notes until suit some year and one-half later did the defendants deny their obligation on the notes by reason of plaintiff’s breach. On the contrary, defendants consistently communicated to plaintiff that their failure to pay was due only to difficulty in obtaining the needed money.

Defendants have failed to show that they have or will have evidence sufficient to raise an issue of fact. The only possible inference to be drawn from the materials before Judge Seay was that an accord and satisfaction had been reached. Summary judgment for plaintiff was therefore appropriate on the issues of accord and satisfaction and defendants’ breach of contract claims.

Defendants raised as a second defense to the notes failure of consideration. Judge Seay found correctly that an accord and satisfaction existed. Thus, defendants received the owner’s and contractor’s affidavit in return for the notes. By that instrument plaintiff admitted being fully paid on the underlying obligation and also waived its rights to file and perfect mechanic’s and materialmen’s liens. The Court, in Bumgardner v. Groover, 245 N.C. 17, 95 S.E. 2d 101 (1956), held:

“Undoubtedly, the release or waiver of a legal right, or a forebearance to exercise a legal right, is a sufficient consideration to support a note made on account of it.”

That the lien waiver constituted value to the defendants is evidenced by their admission of using the owner’s and contractor’s affidavit to obtain permanent financing.

Finally, the defendants assert duress as a defense to the notes. They allege in their unverified pleading and in their affidavit that they were forced to agree to and later execute the notes because plaintiff “implicitly” threatened to discontinue work on two other contracts. A threat to breach a contract does not constitute duress unless the remedy afforded by the courts is inadequate. Smithwick v. Whitley, 152 N.C. 369, 67 S.E. 913 (1910). Further, a threatened breach of contract is not coercive unless the failure to perform as promised would result in irreparable injury to business. 13 Williston on Contracts, § 1617 (3d ed. 1970). Finally, G.S. 1A-1, Rules 8 and 9 require that allegations of duress be stated with particularity.

Nowhere in defendants’ pleadings or affidavit are coercive circumstances alleged or described other than the bare statement that the “defendants were implicitly threatened by the plaintiff with discontinuation” of two other projects. Nowhere do defendants allege inadequate remedies at law or irreparable damage. Defendants have failed to raise a genuine issue of fact as to any duress which would constitute a defense.

It appears that the trial court erred in its computation of interest due on the two notes. Therefore, that part of finding of fact number 9 which determines the interest due; that part of conclusion of law number 2 which concludes the amount of interest due; and that part of the judgment in excess of the total principal sum of the two notes are vacated. Judgment for the principal sum of the two notes ($189,715.53) is affirmed. The cause is remanded to the superior court for a hearing and determination of the interest due on the two notes from their dates (10 September 1973) until the date of judgment (5 February 1976).

Affirmed in part.

Vacated in part and remanded.

Judges Parker and Arnold concur.