Quealy v. Anderson

714 P.2d 667, 27 Utah Adv. Rep. 24, 1986 Utah LEXIS 742

• Court: Utah Supreme Court
• Decided: February 3, 1986
• Docket: 19016
• Status: Published

Opinions

HOWE, Justice:

Plaintiffs appeal from a judgment awarding defendants Bruce B. Anderson and Gary S. Anderson attorney fees and costs in the sum of $24,877 pursuant to a provision in a contract.

In July 1977, plaintiffs, as sellers, and defendants, as buyers, entered into an earnest money receipt and offer to purchase, whereby the sellers agreed to sell and the buyers agreed to purchase a ranch situated in Wasatch County consisting of more than nine hundred acres. The agreement required purchasers to satisfy two conditions precedent within sixty days: First, assurance of an adequate culinary and irrigation water system and, secondly, assurance of proper zoning to develop the property into residential lots. The agreement also contained the following provision regarding attorney fees:

We do hereby agree to carry out and fulfill the terms and conditions specified above.... If either party fails so to do, he agrees to pay all expenses of enforcing this agreement, or of any right arising out of the breach thereof, including a reasonable attorneys fee.

In May 1978, the buyers’ attorney notified the sellers’ attorney that the buyers had expended more than $50,000 to drill a producing water well but had been unsuccessful. He gave notice that the buyers would not complete the purchase of the property and requested that the real estate broker, who was holding their $5,000 earnest money deposit, return those funds to the buyers. The realtor complied with that request and returned the $5,000 earnest money to the buyers without the express consent of the sellers. The sellers after-wards sold the property to other parties at a lower price than the buyers had offered. Later, the sellers instituted this lawsuit to recover the damages which they had sustained by the buyers’ failure to perform. The jury found that the condition precedent to performance of the agreement relating to the assurance of proper zoning was not satisfied because Wasatch County had failed to give the buyers such assurance and the buyers prevailed. The jury further found that the claims of the sellers were the subject of a “settlement and accord” with the buyers. In a post trial motion, the buyers moved for and were granted an award of $24,877 attorney fees and costs pursuant to the contract provision set out above. From that award, this appeal is taken.

The accord and satisfaction found by the jury in their special verdict precludes any award of attorney fees to the buyers. It is true, as pointed out by the buyers, that an accord and satisfaction may discharge an entire contract or only a portion thereof if the contract gives rise to several and distinct obligations or liabilities. However, the buyers err in arguing that the accord and satisfaction found by the jury here did not discharge the provision in the contract respecting the remedy of attorney fees. There is nothing in the special verdict nor in the evidence which would provide any basis for this Court to gratuitously impose such a limitation. The scope of an accord and satisfaction is determined by the intention of the parties, as with any other contract. As will be hereafter demonstrated, the conclusion is irresistible that the parties intended to fully and completely settle with each other any and all liability arising from their written agreement, together with the remedies provided therein for its enforcement. Furthermore, the limitation urged by the buyers is entirely inconsistent with the position taken by them in the trial court.

In a trial brief written by counsel for the buyers, he stated that the sellers had an alleged claim against the buyers for breach of contract. He further stated that they .agreed to settle that claim if buyers cooperated in assisting them in reselling the property to one Sheranian, by giving Sheranian a first option to purchase twenty-nine acres which the buyers owned adjacent to the sellers’ property. Continuing his argument, counsel said:

Defendants [buyers] accepted that offer, creating a new agreement between the parties, which was executed by the actual granting of a first right to purchase by letter of June 14, 1978. The consideration is the granting of the first right of purchase, an obligation different from .and in addition to any prior contractual ' obligations of defendants. Therefore, the court should find that plaintiffs entered into an accord and satisfaction in full settlement of any dispute between the parties.

(Emphasis added.)

Thus, the buyers in the trial court viewed the accord and satisfaction as a complete substitute for the earnest money receipt and offer to purchase. That being so, attorney fees are not recoverable by either party unless there was provision for them in the accord and satisfaction. In Golden Key Realty, Inc. v. Mantas, Utah, 699 P.2d 730 (1985), we held that a provision for attorney fees in a written agreement was rendered inoperative by a later agreement of accord and satisfaction which; contained no such provision. In the instant case, the buyers pleaded an accord and satisfaction. The jury found that one was made. The original agreement between the parties cannot now be the basis for awarding attorney, fees. It is undisputed that the oral accord and satisfaction had no provision for attorney fees.

While it is true that the buyers did not make any request for attorney fees until after the accord and satisfaction was made, that fact is of no consequence. Unknown claims áhd liability may be extinguished if the parties so intend. A common example is the release used to settle personal injury claims. Here, it appears that it was the intention of the parties to fully extinguish all liability to each other arising out of their written agreement. This included liability for attorney fees which was part of the remedy provided for enforcing the agreement. The buyers could not thereafter, on their own, revive that remedy and rely on it as a source of authority to recover their attorney fees in enforcing the accord and satisfaction.

When the buyers found that they were unable to meet the conditions precedent to their obligation to purchase the sellers’ land, they notified the sellers that they would not purchase the land. They asked for a return of their $5,000 earnest money which they received. Sellers, thereafter, commenced negotiations to sell the property to Sheranian. It was in the cotirse of those negotiations that the sellers asked the buyers to give Sheranian an'option to purchase the twenty-nine adjoining acres. The buyers complied. No reason has been suggested by the buyers, and none appears from the evidence, why the buyers at that time would not want to make and did not intend to make their compliance to. the sellers’ request a full and complete settlement of any and all liability arising from the earnest money agreement. The agreement was not going to be performed. There were no duties or obligations arising from it which were ongoing; neither ■ party at that time expected anything further out of the earnest money agreement. It was in the interests of the buyers to fully and completely extinguish it, and to be completely freed from it.

The buyers freely admit that it was also the intention of the sellers to make a full and complete settlement. In a brief presented to the trial court in support of the motion for a directed verdict, the buyers pointed out that Mr. Quealy, one of the sellers, testified that a settlement had been reached at the time the buyers gave Shera-nian the option. The buyers pleaded and argued that the settlement was an accord and satisfaction constituting a complete defense to the sellers' suit for damages. Not one word appears in any brief or pleading filed in the trial court that the settlement extended to only part of the earnest money agreement, as the buyers now contend. The buyers do not point to any conversations, correspondence, or other evidence from which such a conclusion could be drawn. It would seem to reasonably follow that if, as argued so stoutly by the buyers, they intended to fully and completely absolve themselves of all liability under the agreement, that the sellers would intend to receive the same protection for themselves. No basis exists to deny the sellers the same full discharge for which the buyers successfully bargained. Under the circumstances then existing, the conclusion is inescapable that both parties intended to make the giving of the option to Sheranian a full and complete discharge of all rights and obligations arising out of the earnest money agreement.

In Messick v. PHD Trucking Service, Inc., Utah, 615 P.2d 1276 (1980), Bennett v. Robinson’s Medical Mart, Inc., 18 Utah 2d 186, 417 P.2d 761 (1966), and Dillman v. Massey Ferguson, Inc., 13 Utah 2d 142, 369 P.2d 296 (1962), we found two separate and distinct claims and held that an accord and satisfaction of one did not affect the other. It is obvious that those cases are not controlling in the instant case.

Cases from other jurisdictions are in accord with the Utah cases cited above. They generally hold that an accord and satisfaction reached as to one account, contract, purchase of goods, or item does not bar recovery on other accounts, contracts, purchases, and items unless it appears that such was the intention of the parties. See Crucible Steel Co. of America v. Premier Manufacturing Co., 94 Conn. 652, 110 A. 52 (1920) (separate invoices); Garland v. Linville Improvement Co., 184 N.C. 551, 115 S.E. 164 (1922), and Moore & Kling v. Legace, 55 R.I. 262, 180 A. 339 (1935) (two accounts); Savannah Sugar Refining Corp. v. Sanders, 190 N.C. 203, 129 S.E. 607 (1925), and Clark v. Summerfield Co., 40 R.I. 254, 100 A. 499 (1917) (two distinct contracts); C. & O. Oil Co. v. Curtis Funeral Home, 106 Vt. 342, 175 A. 9 (1934), and Krohn-Fechheimer Co. v. Palmer, 282 Mo. 82, 221 S.W. 353, 10 A.L.R. 673 (1920) (two separate orders of goods); Willred Co. v. Westmoreland Metal Manufacturing Co., 200 F.Supp. 55 (D.C.Pa.1959); and Redman Development Corp. v. Pollard, 131 Ga.App. 708, 206 S.E.2d 605 (1974) (two separate items). In many of the cases there were communications between the parties or written documents or notations on the settlement check which indicated the limited scope of the accord, and made clear that it did not extend to every transaction that the parties had had between them.

In the instant case, there are not separate contracts, orders, accounts, or invoices. There was a single, indivisible contract whereby the sellers agreed to sell and the buyers agreed to buy, subject to certain conditions precedent, a tract of land. The buyers claimed and the jury found that the buyers’ performance was excused because the conditions precedent were not met. While that seemingly terminated the duty of the parties to buy and sell to each other, according to the buyers there was in addition a later accord and satisfaction of that same obligation. Unlike the cases cited above in which only a partial accord and satisfaction was found, the buyers can point to no evidence which supports their contention now advanced in this Court that the accord and satisfaction was only partial. The request for attorney fees cannot be viewed as a separate and distinct claim of the buyers unaffected by the accord and satisfaction. Indeed, it is not a claim in the usual sense at all, but is a remedy for enforcing the agreement. See Whiting Stoker Co. v. Chicago Stoker Corp., Ill., 171 F.2d 248 (C.C.A. 7th 1948), cert. denied 337 U.S. 915, 69 S.Ct. 1155, 93 L.Ed. 1725 (1949), for a good example of two separate and distinct claims arising from a single written contract. The buyers admit that the obligation to buy and sell was discharged. It is only reasonable to conclude that in the absence of any evidence to the contrary, the parties intended to likewise discharge all dependent rights and remedies. If the parties intended to discharge something less than their entire agreement, it was the duty of the buyers to see that the record contained such evidence. Silvander v. Ploc, 42 S.D. 539, 176 N.W. 516 (1920).

The buyers cite no cases in support of their contention that the remedy of attorney fees can survive the discharge of the duty to perform under a contract. We have found none. The buyers cite two cases in support of their thesis that they had two separate claims. Neither case is on point. Neither case deals with the survival of a remedy. In Scantlin v. Superior Homes, Inc., 6 Kan.App.2d 144, 627 P.2d 825 (1981), a dispute arose between the builder of a home and a buyer over certain defects of construction. An accord and satisfaction was reached by the buyer placing $1,000 of the purchase price in escrow pending correction of a specific list of defects which was prepared by the parties. Later, additional defects not listed were discovered by the buyer, and she brought suit against the builder. It was held that the accord and satisfaction extended 'only to those defects which were known, or should have been known by the buyer, at the time the accord and satisfaction was made.

In Plywood Marketing Association v. Astoria Plywood Corp., 16 Wash.App. 566, 558 P.2d 283 (1976), the court held that the defendant’s payment of $33,287 as its pro-rata share of the 1966-69 losses of the plaintiff cooperative of which it was a member, did not constitute an accord and satisfaction for other losses, the existence of which was not then known and which could not have been within the contemplation of the parties. We have no quarrel with these cases since in each of them the plaintiff had two separate, unrelated and distinct claims. However, in the instant case, we are confronted with the accord and satisfaction of a single indivisible written agreement. All of its provisions, including the remedy of attorney fees, were well known to the parties when the accord was made. There is no evidence that the parties intended, or that it would have made any sense for the parties to have intended, to discharge their respective duties to perform under the agreement but not discharge the remedy for enforcing the agreement.

The buyers successfully pleaded and the jury found that a substitute agreement had been made. This later agreement was oral and contained no remedy of attorney fees. We cannot go behind the accord and afford the buyers a remedy contained in the agreement it replaced. The breach of the substitute agreement cannot be redressed by a remedy contained only in the earlier agreement. Golden Key Realty, Inc. v. Mantas, supra.

The judgment is reversed. Costs awarded to plaintiffs.

STEWART, J., and DAVID E. ROTH, District Judge, concur. DURHAM, J., having disqualified herself, does not participate herein; ROTH, District Judge, sat.